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36 YO Shooting for FIRE by age 50. Current net worth $1.8 million
Old 01-11-2016, 05:33 PM   #1
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36 YO Shooting for FIRE by age 50. Current net worth $1.8 million

Hi all,

Little background. My working life didn't start until I was 31 years old. Prior to that I was paying to work then graduated to making minimum wage, then started real work at age 31.

Current income: $550,000 from all sources.
Current Debts:
Primary residence: Value $2,200,000. Mortgage $730,000 remaining @ 3.8%. $4700/month PITI.
Rental property #1: Value $65,0000. Mortgage $41,000 @ 4.875% generating $400/month cash flow.
Rental property #2: Value $70,000. Mortgage $40,000 @ 4.875% generating $400/month cash flow.
Student Loan: $70,000 @ 2.9% over 30 years, 6 years into repayment. $340/month.
Total Roth/i401K: $330,000 (contributed $87,000 in 2015).
Taxable Brokerage: $100,000


No consumer debt. No car payments. Net worth $1.8 million and dropping with the stock market, lol.

I drive a 2006 Honda Civic with 100,000 miles on it that I bought for $8,000 3 years ago. My wife drives a 2012 BMW X5 that I paid 66% of face value for (2011 write off entire value of car on business) and has a current value of $37,000.

In 2015 we saved 60% of my take home income or $229,000. Prior to that as you can see from my unbalanced net work, we had been playing the real estate game for a while. Wife bought her first house in 2003 and sold in 2006 for profit of $200,000. We sat on that until 2011 and bought a $750,000 place. Finished that and sold for $1,200,000. Bought the worst house in the best neighborhood in the best location for $1,300,000. This is where it got a little ugly because this place was a huge dump and cost us ridiculous amounts of money to get sorted. Upside is that we bought under market and our area has appreciated since we bought to $2,200,000.

I have a daughter 2.5 years old and one on the way. I'm torn between how much I want to "give" them for their higher education because my parents saved ZERO for me and gave me ZERO for college/post grad. I was thinking maybe I'll save enough for a public 4 year college and let them handle their own post grad. That would be more than generous of me in my opinion. Currently we save $500/month for my daughter into a Vanguard 529 plan which should be about right for a 4 year public education for college.

If I was single, I'd be retired now.

Such is life.

Anyway, I figure that I could retire comfortably on $5000 of after tax money per month with no debt which means I need about $1,800,0000 to 2,000,000 of investments. If I could convince my wife to move I'd be able to retire probably 7-10 years earlier. I've been working on that for 10 years, and it hasn't happened yet so I'm not holding my breath. I think I've done ok for only having been "working" for 5 years, but it could always be better I know.
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Old 01-11-2016, 08:30 PM   #2
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I hate to be a downer, and maybe I missed something.

You make $550K. I see investable assets of only $430K (330+100). And you say you can live on $5K a month For 40years? You are not even close.

Most people do not count their residence, (or cars) you have to live somewhere. Are you going to sell the home and move to a cheaper place?

Your kids are going to be expensive. Your wife will see to that.
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Old 01-11-2016, 08:49 PM   #3
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Your current situation is fabulous, but with a $2.2 M house I don't see how you could live off of $5K/mo with a family. Also, I hope you do not resent your family for keeping you from RE now. You have all that you need to run a plan for FIRE, but you need to make sure that your spending is under control relative to your investable assets and income potential. To cover your kids' 4 yr college is reasonable, as even that is pricey, but you do not have to be so emotionally tied to what your parents did (or didn't do). Good luck.
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Old 01-11-2016, 10:11 PM   #4
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Originally Posted by Senator View Post
I hate to be a downer, and maybe I missed something.

You make $550K. I see investable assets of only $430K (330+100). And you say you can live on $5K a month For 40years? You are not even close.

Most people do not count their residence, (or cars) you have to live somewhere. Are you going to sell the home and move to a cheaper place?

Your kids are going to be expensive. Your wife will see to that.
Hmm, I guess I don't see it your way.

My plan to FIRE would include no more children draining my income.

$5000 per month is plenty to live on with no debt for us. I guarantee you I could do that 100%.

I have passive income of $800/month now. I need $3200 more with no debt.

Using the 4% rule that would mean I would need $1.4 million. That is $1,000,000 more than I have now. If I am saving circa $200K per year I will achieve that number in 5 years or less. Or I prolong it 10 years, and pay down mortgage along the way. I may or may not move when I retire, but am currently not planning to do so. Even with $5000 of after tax money I could stay where I am.
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Old 01-11-2016, 10:16 PM   #5
Confused about dryer sheets
 
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Your current situation is fabulous, but with a $2.2 M house I don't see how you could live off of $5K/mo with a family. Also, I hope you do not resent your family for keeping you from RE now. You have all that you need to run a plan for FIRE, but you need to make sure that your spending is under control relative to your investable assets and income potential. To cover your kids' 4 yr college is reasonable, as even that is pricey, but you do not have to be so emotionally tied to what your parents did (or didn't do). Good luck.
Saving 60% of my income would allow me to FIRE at my current spending level in 11 years (age 47 for me). And my spending level in retirement would be less than half what it is now.

Wall Street Bonus Withdrawal Means Trading Aspen for Coupons - Bloomberg Business

I do not resent my wife, children, or parents. I call it "life". And "life" doesn't always conform to your own ideals of the "perfect" life.
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Old 01-11-2016, 10:17 PM   #6
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Originally Posted by Common Cents View Post

My plan to FIRE would include no more children draining my income.
There goes your "Father of the Year" award...
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Old 01-11-2016, 10:29 PM   #7
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Hmm, I guess I don't see it your way.

My plan to FIRE would include no more children draining my income.

$5000 per month is plenty to live on with no debt for us. I guarantee you I could do that 100%.

I have passive income of $800/month now. I need $3200 more with no debt.

Using the 4% rule that would mean I would need $1.4 million. That is $1,000,000 more than I have now. If I am saving circa $200K per year I will achieve that number in 5 years or less. Or I prolong it 10 years, and pay down mortgage along the way. I may or may not move when I retire, but am currently not planning to do so. Even with $5000 of after tax money I could stay where I am.
Your daughter is 2.5 years old. You have another on the way. How do you plan to cover the gap between when you reach your "child-free" independence nest egg - and actually being child free.

You also talk about being debt free - but have mortgages on 3 properties... So there's a conflict between the $5k/month debt free - and your mortgages.

I think you need to realize that you can't have your cake and eat it too. Enjoy your family, save your money, and work the plan.
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Old 01-11-2016, 11:23 PM   #8
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There goes your "Father of the Year" award...
LOL. Kids were never a "must" for me, but they were for my wife. We see how that's working out for me don't we.
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Old 01-11-2016, 11:35 PM   #9
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Your daughter is 2.5 years old. You have another on the way. How do you plan to cover the gap between when you reach your "child-free" independence nest egg - and actually being child free.

How I see it is this. I will not be funding their college educations at the expense of my retirement plan. So I will contribute as much as I can for as long as I can which may be 10-12 years or $60,000 each. That covers their education. The amount I saved this year is after contributing to my daughters 529.

As for the "cost" of housing/feeding/raising a kid; that I include in $5000/month and would in my opinion be quite doable.

You also talk about being debt free - but have mortgages on 3 properties... So there's a conflict between the $5k/month debt free - and your mortgages.

Let me expound.

I am saving $229,000 per year approx. $60,000/year towards primary residence mortgage to pay off in 9-10 years. $129,000 savings left invested in equities or real estate. $129,000 x 10 is $1,290,000 plus the $430,000 I already have equals $1,720,000 if there is zero investment return. The other two mortgages are on investment property that are paid by the tenants with losses scheduled for vacancy/mgmt/utilities/maintenance/lawn mowing/utilities/taxes/interest/etc. That leaves my student loans which I may have to buy an extra investment property to cover the $340/month payment with circa $20,000 down.


I think you need to realize that you can't have your cake and eat it too. Enjoy your family, save your money, and work the plan.
I'm not sure how I'm having my cake and eating it too. I consider it saving judiciously and reaping the benefits.

What's going to end up happening in all likelihood is when I reach this number in 10 years, I will cut back to work 2-3 days per week until the youngest is 18. Then I will cut back to 1 day per week just for fun.
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Old 01-12-2016, 07:49 AM   #10
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Originally Posted by Common Cents View Post
Hi all,

Little background. My working life didn't start until I was 31 years old. Prior to that I was paying to work then graduated to making minimum wage, then started real work at age 31.

Current income: $550,000 from all sources.
Current Debts:
Primary residence: Value $2,200,000. Mortgage $730,000 remaining @ 3.8%. $4700/month PITI.
Rental property #1: Value $65,0000. Mortgage $41,000 @ 4.875% generating $400/month cash flow.
Rental property #2: Value $70,000. Mortgage $40,000 @ 4.875% generating $400/month cash flow.
Student Loan: $70,000 @ 2.9% over 30 years, 6 years into repayment. $340/month.
Total Roth/i401K: $330,000 (contributed $87,000 in 2015).
Taxable Brokerage: $100,000


No consumer debt. No car payments. Net worth $1.8 million and dropping with the stock market, lol.

I drive a 2006 Honda Civic with 100,000 miles on it that I bought for $8,000 3 years ago. My wife drives a 2012 BMW X5 that I paid 66% of face value for (2011 write off entire value of car on business) and has a current value of $37,000.

In 2015 we saved 60% of my take home income or $229,000. Prior to that as you can see from my unbalanced net work, we had been playing the real estate game for a while. Wife bought her first house in 2003 and sold in 2006 for profit of $200,000. We sat on that until 2011 and bought a $750,000 place. Finished that and sold for $1,200,000. Bought the worst house in the best neighborhood in the best location for $1,300,000. This is where it got a little ugly because this place was a huge dump and cost us ridiculous amounts of money to get sorted. Upside is that we bought under market and our area has appreciated since we bought to $2,200,000.

I have a daughter 2.5 years old and one on the way. I'm torn between how much I want to "give" them for their higher education because my parents saved ZERO for me and gave me ZERO for college/post grad. I was thinking maybe I'll save enough for a public 4 year college and let them handle their own post grad. That would be more than generous of me in my opinion. Currently we save $500/month for my daughter into a Vanguard 529 plan which should be about right for a 4 year public education for college.

If I was single, I'd be retired now.

Such is life.

Anyway, I figure that I could retire comfortably on $5000 of after tax money per month with no debt which means I need about $1,800,0000 to 2,000,000 of investments. If I could convince my wife to move I'd be able to retire probably 7-10 years earlier. I've been working on that for 10 years, and it hasn't happened yet so I'm not holding my breath. I think I've done ok for only having been "working" for 5 years, but it could always be better I know.

Oh no. I fear this will not end well. You have asked for validation but you haven't received any thus far and reject what others are suggesting. I'm not certain what you were expecting.

I'm not sure if you are mad at your parents because they didn't have enough money to fund your education, or mad because they did have the funds but still didn't pay for your degrees. I see that you are a Dr. and are currently making $550,000/year, yet you ponder paying only for a 4 year public undergrad with the statement "That would be more than generous of me in my opinion." That along with your multiple angry faces that you would be retired now if you had not had any children is off putting for me at least.

Good luck figuring this all out.
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Old 01-12-2016, 08:03 AM   #11
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If i was in your financial situation, i'd cash out and retire within the next year and only do things that i wanted to do for the remainder of my life. Your problems are not financial ones.


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Old 01-12-2016, 09:06 AM   #12
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Originally Posted by Common Cents View Post

I have a daughter 2.5 years old and one on the way. I'm torn between how much I want to "give" them for their higher education because my parents saved ZERO for me and gave me ZERO for college/post grad. I was thinking maybe I'll save enough for a public 4 year college and let them handle their own post grad. That would be more than generous of me in my opinion. Currently we save $500/month for my daughter into a Vanguard 529 plan which should be about right for a 4 year public education for college.
Congrats on getting yourself well educated! My situation was somewhat similar but my parents didn't have anything left to give me - was spent all on older siblings. But I didn't mind at all. It made me a strong person and taught me how to do things on my own at very early age. I'm planning to fully fund my kids education for six years---expect them to earn minimum Masters. My daughter's education is fully funded for PharmD and two boys will have 250K/each by the time they attend college in six years. If my kids go to Med School I'll pay for that too.... But I'll never share my plan with kids. Plan is for them to work hard and take a loan(Stafford Only). Rest I'll pay from their 529 plan but will tell them that I've taken a Home Equity Loan. Once they graduate, I'll pay their stafford loan, Open a brokerage account on their name and ask them to pay me back the full amount of College cost in that account - sort of forcing them to save.....and once they pay back....I'll tell them it's their money to keep. My daughter is in 2nd year of college and plan has worked so far.
Good luck with your plan and enjoy time with your kids!
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Old 01-12-2016, 10:40 AM   #13
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Oh no. I fear this will not end well. You have asked for validation but you haven't received any thus far and reject what others are suggesting. I'm not certain what you were expecting.

I'm not sure if you are mad at your parents because they didn't have enough money to fund your education, or mad because they did have the funds but still didn't pay for your degrees. I see that you are a Dr. and are currently making $550,000/year, yet you ponder paying only for a 4 year public undergrad with the statement "That would be more than generous of me in my opinion." That along with your multiple angry faces that you would be retired now if you had not had any children is off putting for me at least.

Good luck figuring this all out.

Angry faces were a joke fyi. Thanks!!
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Old 01-12-2016, 10:42 AM   #14
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If i was in your financial situation, i'd cash out and retire within the next year and only do things that i wanted to do for the remainder of my life. Your problems are not financial ones.


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Hi Dallas,

I agree with your assessment 100%. Life it seems to me grabs hold of you and "change" becomes more difficult the more entrenched you get in your location, ie grandparents close by, wife with her support system, same job for 6 years, etc etc. I've had many people offer the same advice and I believe it is sound. Thanks so much.
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Old 01-12-2016, 10:45 AM   #15
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Congrats on getting yourself well educated! My situation was somewhat similar but my parents didn't have anything left to give me - was spent all on older siblings. But I didn't mind at all. It made me a strong person and taught me how to do things on my own at very early age. I'm planning to fully fund my kids education for six years---expect them to earn minimum Masters. My daughter's education is fully funded for PharmD and two boys will have 250K/each by the time they attend college in six years. If my kids go to Med School I'll pay for that too.... But I'll never share my plan with kids. Plan is for them to work hard and take a loan(Stafford Only). Rest I'll pay from their 529 plan but will tell them that I've taken a Home Equity Loan. Once they graduate, I'll pay their stafford loan, Open a brokerage account on their name and ask them to pay me back the full amount of College cost in that account - sort of forcing them to save.....and once they pay back....I'll tell them it's their money to keep. My daughter is in 2nd year of college and plan has worked so far.
Good luck with your plan and enjoy time with your kids!
Hi retire,

That's actually very intelligent of you to do that. I don't bemoan my folks for not planning for my education, and I took the same things as you did. Made me strong, budget efficiently, and live on $5000 per year during my lean years. It was very good and in my opinion very good preparation to not overspend/overindulge/outspend my earnings.

Thank you for providing your input on the college education portion of this. I think I will employ something very similar.
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