The runway maths
Months you have, what to cut, what to keep. The numbers behind going slower in exchange for going right.
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Months you have, what to cut, what to keep. The numbers behind going slower in exchange for going right.
The runway is the maths your accountant would do for you in twenty minutes if you asked. Most men don't ask. They imagine the runway, round it up, and start the pivot with three months less than they think.
I've done this myself. I've watched friends do it. The pattern is always the same. The cash position looks fine in February, the new thing takes longer than expected, and by October the conversation at home has changed shape.
This module is the Australian numbers, run properly. It's the boring section. It's also the section that decides whether the pivot survives month nine.
Runway is the number of months you can keep the household running while the new income is below the old income. Three things sit inside that:
Runway = (liquid resources) divided by (expenses minus arriving income).
That's it. The maths is simple. The honesty in each input is what most men dodge.
Open the bank statements for the last six months. Pull every direct debit, every recurring subscription, every regular expense. Then build two columns: "Locked" and "Cuttable".
Locked column (you can't cut these in the next month, realistically):
Cuttable column (you could realistically cut or pause within four weeks):
Add up the Locked column. That's your skinnied monthly burn. For a man at forty-five with two kids, a mortgage on a metro family home and one car running, it usually lands somewhere between $7,000 and $12,000 a month. Higher in Sydney. Lower outside the capitals.
Three pots:
Add the first two. Note the third separately. It's your emergency layer; it doesn't go in the runway maths but you need to know it's there.
What's still coming in during the pivot? In Australia, this typically includes:
Add these. Subtract them from your skinnied monthly burn from step 1. That's your monthly net burn during the pivot.
Liquid resources divided by monthly net burn equals months of runway.
A worked example:
Note how dramatically the partner's income changes the picture. Without it, $35,000 lasts under four months. With it, ten.
A specifically Australian point. While your income drops, you should think about three super-related questions:
This is genuinely worth a one-hour call with an accountant before you make decisions in the months either side of the pivot.
Two principles, in tension. Pick which one you're optimising for.
Principle A: Keep cash liquid. Park your redundancy payment in the offset account, not in the mortgage. The interest saving is identical. The difference is you can pull the cash out tomorrow if the pivot takes longer than expected.
Principle B: Pay down the mortgage. If your runway is genuinely strong (twelve months plus, partner's income carries the household, low-risk pivot shape) you can put part of the lump sum on the mortgage and reduce monthly interest.
Most men over forty-five in Australia, in a pivot year, should default to Principle A. Liquid is king when the income side of the equation is variable.
Don't refinance during the pivot. Banks look at the income that just stopped and the income that hasn't yet started, and they price accordingly. Wait until you're twelve months into the new role.
The runway maths is the spine of the pivot. Get it right and the rest is logistics.
Count it. Pad it. Talk about it.
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