34, working in Tulsa. 2016: the year I had a financial epiphany

[TheDarkStorm]

Hello Everyone,

This is my first post, and I definitely have not yet had a chance to read through the forum in any great detail, though I hope to correct that soon.

Born and raised in CO, I have always been a bit of an aggressive saver (10% of salary + Max Roth). But, about 2 years ago, I foresaw the company I was working for implode (it did ~6 months after). I took a new job that, while it was a substantial boost to my AGI, moved me away from where I love.

Just like the people physically around me, the increase in AGI only developed into increasing my spending on "stuff". Late in 2015 I started contracting with a building company on a custom home ($375K++).

During the December holiday, I rented a vehicle and drove back to CO (friends and family). On the way, I was involved in a car accident, in which I was at fault and my insurance will not cover... While I am currently trying to work with my credit card [insurance] to cover the expenses, I realized that I might not be able to afford the house (not that I was honestly looking to be able to afford it and have any excess cash in any case - "house poor" was a concern). To that end, I dropped the contract with the home builder (and lost the earnest money in the process).

It was around this time that I decided that OK will not be my end-all location; that some day I want to go back to CO (where my mind and soul (if such exist) wait for me). I decided that perhaps there would be another way outside of leaving my current job or retiring in 30 odd years. Browsing online I ran into MMM's blog/forum, and read through it. This week, I ran across this website, and I now desire to engorge myself on all of it's knowledge.

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At this time I have a nest egg in long term savings (401K, Pension, IRA, Roth IRA, HSA, precious metals, rental) of approximately $380K. I am actively contributing maximum to 401K.
In short term savings (Dividend Stocks, Checking, Betterment), I have approximately $90K. Excess monthly funds are pushed to Betterment, I maintain 6-9 months of current expenses in checking.
The only debts I have are rental mortgage, maintenance, living expenses (in an apartment in Tulsa), and potentially the car accident. The mortgage is factored in the net worth.

My expenses have been calculated and tracked over the past 3 months, and I know that they can be reduced further (spending a bunch for gym and bio-hacking supplements).

I want to try to retire early. It's is too early//I have not crunched the numbers enough to know when that date will be, but the earlier, the better. I have found a link or two detailing how to access IRA pre-59.5), but I would like to dig into this more//I have concerns. I worry that If I tried to retire in 10 years (mid-40's), how I would access where the bulk of my nest egg resides cleanly. I also envision that my retirement fund should have enough excess to purchase a home in CO when I eventually return.

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Perhaps too much info/backstory. I look forward to reading through all of the great posts, and perhaps contributing where I am able.

[ChicagoGal]

Welcome! Congrats on taking control of your financial life. You've got a good start, both in savings and just being aware of where the money is going!

You will find a lot of good information here by looking through older threads.

[ivinsfan]

Would you care to share why your insurance company will not cover the car accident?

[TheDarkStorm]

Quote:

Originally Posted by ivinsfan Would you care to share why your insurance company will not cover the car accident?

I currently drive a fully paid off, 11yr old Prius. As it is not worth all that much, and I am a good driver (**this was my second reported accident in my driving career, and the other was a parking lot fender bender), I only have Liability insurance.
My current job has me travel for work occasionally, and I carry company insurance and have an account with the rental company in which rental insurance is always declined automatically.
When I rented the vehicle to travel to CO, it was for personal use, and [not thinking] I allowed the auto-default insurance decline.

Potential silver lining is that I found out major credit cards "will" insure you if you decline insurance at the counter and pay for the rental with that card. I am currently testing out that theory with Visa and can update once I have resolution if anyone is curious.

[robertf57]

Welcome and congratulations on realizing the importance of your financial life! I would recommend a couple of first steps.
1. Start tracking ALL your expenses. You are going to find that your expenses are the MOST IMPORTANT data element in retiring early

2. Start learning about investing for yourself. The money you are paying to Betterment is wasted

3. Make sure you spend each dollar consciously. It's amazing how much money just sort of disappears.

You don't need to know everything today. This is just the start of your education.

[ivinsfan]

Yes that can be an issue when driving a rental car. We kept the collision on an older vehicle for exactly this reason. Do keep us updated on the VISA resolution and keep in mind that rental companies often inflate the damage and the value of their cars so you might have a little leverage there as well.

[hnzw_rui]

Quote:

Originally Posted by TheDarkStorm I want to try to retire early. It's is too early//I have not crunched the numbers enough to know when that date will be, but the earlier, the better. I have found a link or two detailing how to access IRA pre-59.5), but I would like to dig into this more//I have concerns. I worry that If I tried to retire in 10 years (mid-40's), how I would access where the bulk of my nest egg resides cleanly. I also envision that my retirement fund should have enough excess to purchase a home in CO when I eventually return.

Consider a Roth IRA conversion ladder. You just need sufficient funds in Roth/taxable for the first 5 years of retirement expenses (and taxes for the conversions). After that, you can withdraw the annual conversion principal penalty-free.

Retire Even Earlier Without Earning More or Spending Less

[TheDarkStorm]

Hello All,

robertf57:
1) I am starting to track expenditures. Being a bit of a engi-nerd, I have created a spreadsheet that I entered all income and expenses (estimated for some) on a monthly scale. I have been updating it over the past month or so.
A few weeks back I started a Mint account and was pleased to see that the past 3 month closely tracked my spreadsheet estimations (+/-10% and those differences were explainable). I want to get more historical data compiled before I can say for certain.
2) I definitely need to learn more about Vanguard and ETF investing in general. I'm hoping that Betterment can "do better" than my online bank in the interim. I signed up with Betterment getting 4 months free, so that should give me some time to look into other avenues.
3) see my response to 1. getting a handle on my expenses and incomes will go far to identify where my money is not spending efficiently.

hnzw_rui:
Thanks for that. Being newbish to this forum, I definitely need to be pointed out common knowledge things like that. I had heard/read about the 72t setup, but only hints about the Roth Ladder. The link you provided was quite informative.

[KmmFIdreamer]

Quote:

Originally Posted by TheDarkStorm I currently drive a fully paid off, 11yr old Prius. As it is not worth all that much, and I am a good driver (**this was my second reported accident in my driving career, and the other was a parking lot fender bender), I only have Liability insurance. My current job has me travel for work occasionally, and I carry company insurance and have an account with the rental company in which rental insurance is always declined automatically. When I rented the vehicle to travel to CO, it was for personal use, and [not thinking] I allowed the auto-default insurance decline. Potential silver lining is that I found out major credit cards "will" insure you if you decline insurance at the counter and pay for the rental with that card. I am currently testing out that theory with Visa and can update once I have resolution if anyone is curious.

I had to use Visa insurance once for a rental car. It did pay for the entire damage, but it was a pain in the backside to get the claim settled. It took maybe 6 months and lots of phone calls. I had to mail a lot of paperwork in too. You need everything from the original rental car agreement to a letter from your own auto insurance stating "no coverage" to a police report - make sure you make copies in case anything gets "lost in the mail". I had to mail some stuff twice.....


*By the way, wise decision on the Colorado living! Keep in mind though that housing is expensive unless you go rural plains or western slope. I own 2 properties in Denver and one mountain property - I couldn't afford to buy any of those now with the current "hot market". Rent is equally outrageous....

[TheDarkStorm]

Quote:

Originally Posted by KmmFIdreamer I had to use Visa insurance once for a rental car. It did pay for the entire damage, but it was a pain in the backside to get the claim settled. It took maybe 6 months and lots of phone calls. I had to mail a lot of paperwork in too. You need everything from the original rental car agreement to a letter from your own auto insurance stating "no coverage" to a police report - make sure you make copies in case anything gets "lost in the mail". I had to mail some stuff twice..... *By the way, wise decision on the Colorado living! Keep in mind though that housing is expensive unless you go rural plains or western slope. I own 2 properties in Denver and one mountain property - I couldn't afford to buy any of those now with the current "hot market". Rent is equally outrageous....

Thankfully, I am a paranoid person, and kept all paperwork. Luckily, of the paperwork I've received so far, I was allowed to scan and upload to the claim I have with Visa, so I still have the original paperwork. I've been having the most fun with the rental company. It took 60+ days to get a call back, and a scary moment when they contacted my company directly... But when they finally did contact me, it came out that I was working with Visa, and they asked for the claim number to work directly with them (I will follow through next week to make sure things are progressing from this point). Im 3.5 months in so far.

The CO market is crazy, Id agree. Im not sure what is causing it at this time as I initially toted it to the Oil and Gas boom, but with that commodity where it's at now... My rental income is a Townhome in CO that I used to live in. I kept it and have been renting it out. The first 9 years I owned that townhome, it depreciated. In 2014, it rebounded to +5K over original purchase price (when I refinanced). In late 2015/early 2016, similar units in the complex started selling for +60K (34% increase in overall value)...

Probably a question for a different area of the forum, but December 2016 is the 3 year anniversary of my move out of that home. If I interpret the taxation laws correctly, and sell the unit before then, I can take the principal tax free (having lived 2 of the past 5 years). If I go into 2017, when I then sell it, I will probably jump 2 tax levels for that year...
On one hand, I am currently getting about a 7% return, and [being green in the investing world] I do not know if I can do better with ETFs? On the other, freeing up that cash might be a good thing?

[Hermit]

If you are comfortable renting the townhouse, you may want to keep it. It is a good investment diversifier and, who knows, you may just decide find another job to move back to CO. You certainly wouldn't be the first to do that.