Hello to all !!

[Enigma]

Hello from Oregon !

Me: Male, age 39, retail manager. Been with my wife nearly 20 years ( shes awesome)  A son 11 and daughter 8

My dream started at age 19 for me and my wife when we slammed 15% each for years into our 401k's. They are up to about 650k right now in a widely diversified portfolio in which my employer picks up the admin costs of the funds and has a very generous match program in place. My employer compensates me very fairly at 80k a year.

Layer 2 of the plan came into the fold about 6 years ago. Real estate. We are in a highly appreciated market and have 2 rental homes and a 50% cash stake in a 13,000sf new light industrial building under construction. We recently moved a sizeable portion of our real estate portfolio out of state to a more stable market that has been plugging away at 4.5-5% annually for the last 15 years. That building nets us about 34k annually.  Our r/e portfolo including our primary residence is at about 1.9M but the caveat is 400k debt on the primary res and 260k debt on the investment side. Current net postitive cash flow is about 34K (out of are a building) annually but when the industrial building is finished my portion will bring about 24k more net to the bottom line. Next spring we plan to sell the two rentals (about 600k / 260 debt) out of this market into more stable markets. That will buy 4 duplexes in a market that I have already identified and have holdings in. That will gross about 60k annually but I will have to service some debt, and of course there will be expenses as there are with all buildings. Sell our primary residence in about 2 years and walk away with about 350k while retiring the 400k debt. Move to a smaller town cash out a house for 250k put 100k in a mm fund for emergencies and call it quits at age 42 and my wife at 40. At that point we should be at about 100k net (after building maintainence and before taxes) annual income with only the 260k investment debt remaining. Thats a lot more than I need to make me happy so I will probably pay off the 260k debt depending on what the accountant advises.

If you backed out house & car payments we have lived on 2k a month for years.

 

[Nords]

Welcome to the board, Enigma!

Sounds like you've put together a good plan. The question will come up very soon so I'll ask it now-- what are you planning to do for health insurance?

 

[Enigma]

Nords,

A very worthwhile question. Likely fund a MSA account and pair it with a high deductable health care plan $2500 deductable. My wife is healthy as a horse. 20 years barely a sniffle. If anybody has health issues it would be me but they are minor. Most of my issues in my opinion are stress related from being in a pressure cooker job.Kids are healthy but I am prepared to self insure for the cough & cold / medicine or maybe that trip to an emergency room for a broken arm on one of the kids.

OTOH: I really dont see myself ever quitting working completely. I am just not built that way. Maybe take a year off to totally decompress. Find a job working at the parts counter part time at the motorcycle shop or in the back wrenching. Stuff I do for fun now anyhow around people who share the same passion. Likely no benefit pkg with this type of job but the small wage would help offset the insurance cost.

Also, I will retire on basically what I have been making while working. Except, absolutely no debt. Cars, house, toys, etc. As it sits right now the only thing we have debt on is the 1st mortgage on the house. I have a 2000 ford truck and my wife a 2004 toyota both paid for and all the ATV's and trailer to haul them were bought with cash.

Also motorcycles at employee discount

 

[Nords]

Also motorcycles at employee discount 

Well, I guess that simultaneously settles the questions about expenses and "Whaddya DO all day?!?"...

 

[Enigma]

Yeah, I kinda like anything with a motor in it. Particularly ATV's. However, being in retail is brutal on the family. I work nights and weekends. I dont get to be with my wife much and I barely see my kids. Thats going to be the real reward. Being able go with my wife and see my kid in a ball game, guitar performance, ATV riding, Fishing, or just sitting there actually getting to know them. Now that sounds cool......

 

[SteveR]

Welcome to the board. You have done well collecting a nice nest egg for someone your age. I wish I had had the chance (desire, knowledge, etc.) to have done so earlier so I could have stepped off the corporate ladder earlier and spent more quality time with my family.

You apear to be on the right track. Paying with cash, saving as much as you can and living below your income level are all critical aspects of having enough to get off the treadmill and live life your way.

One word of caution on the health. It can turn on you very fast. DW had surgery 2 weeks ago and we had to rush her back to the hospital a week ago. She just returned home on Monday and is in terrific pain. One of her doctors lost his partner over the weeked from a heart attack...he was 37 with no history of heart problems. Moral of the story is don't think your health will stay the same...it just might not.

 

[Enigma]

Moral of the story is don't think your health will stay the same...it just might not. 

first of all how do you do the quote thingy like nords did??

Steve R,

You just tapped into my deepest fear. Any advise / additional thoughts would be appreciated.

My job stress is taking a physical health toll on me. I believe it to be cumulative in nature although thats from a laymans view. I can see what its doing to me and I can see the gradual trend line begin to form. If I stay in the job I am convinced that I will have a major health event by age 50 and either not survive or have a permanent impairment of some kind. I do the exersize / eat right / maintain a healthy weight thing already.

Its a real catch 22. Stay in the job and drop dead or ER, savor as much time as you can. Maybe drop dead, maybe live to be a hundred (the bloodlines say age 70-75 for men in my family). The only thing I can think of is protect my assets and go for it. If I stay in the job bad things WILL happen. It seems like I only have one path to follow. Am I missing something?

The MSA / high deductable health plan is the best I can come up with at the moment. We need to get  a living trust in place with a medical directive and durable power of attorney along with all the other stuff I dont know about that I will probably learn from the atty.

Also likely form a LLC and put all all the investment assets behind the "protective" wall to keep the creditors away should something go "south" on me. We would "pay ourselves" from the LLC as my wife and I would be "managing partners" Sounds so pompus which bugs the heck out of me but thats how they are saying to do it I am sure the Tax / Estate Attorney will have the most sensable solution for that.

I know I have learned 1 valuable thing over the years. Retain the finest quality professionals in their fields, consider their advise very carefully and yeah it hurts, but happily pay them knowing they are worth every penny.

 

[Nords]

I know I have learned 1 valuable thing over the years. Retain the finest quality professionals in their fields, consider their advise very carefully and yeah it hurts, but happily pay them knowing they are worth every penny.

What makes it hard is figuring out who's the best in their fields. And do those high fees come with a money-back guarantee?

 

[Rich_by_the_Bay]

Moral of the story is don't think your health will stay the same...it just might not.  ...
You just tapped into my deepest fear. Any advise / additional thoughts would be appreciated.

Aahh, the health insurance thing again.

My employer does not pay for post-retirement health insurance, but I can continue in the same group policy if I pay the full premium myself (regardless of any preexisting conditions, etc.). So getting insurance is not a problem for me; paying for it will certainly pinch, though. Also, I won't be dropped or rated if I do get sick.

Maybe your employer has that policy in which case I'd go with that. If you get individual insurance, that is fine, but you are subject to being rated or dropped if claims occur (or even if they don't and the plan is eliminated, etc.).

Do a search on "health insurance" to find endless numbers of threads - might be helpful. Whatever you do, I suggest that you not go without it despite being in the best of health. An serious injury or illness can devastate a decent nest egg in a year or two.

 

[Enigma]

What makes it hard is figuring out who's the best in their fields. And do those high fees come with a money-back guarantee?

I did a lot of interviewing and asking friends who did a good job for them. I got burnt a bit a few times but  I found my CPA first. Then the referrals and connections start to develop. I have managed to develop a network of people I trust around me. CPA, 3 Commercial real estate agents in 3 different markets. 3 residential real estate agents in 3 different markets. 1 commercial lender, 3 residential lenders.

Once you start talking to them and asking about referrals you realize that a few of them are networked in very tight with people in very high places and doors start to open that you did not know existed. These guys golf together, have poker nights togeter. They are networked! I am none of that nor do I have the desire to do that. However, I do benefit from their connections.

I assure you I am a very normal guy from a basic blue collar family 3 generations deep. Left for college at 17 with everything I owned in the trunk of my car with 90k on the ODO.  Just do your homework, do research so you can talk to them and not waste their time. Pay your bills the minute you get them and be kind, courteous and polite which is just my way anyhow.

As far as guarantees. NONE, ZILCH, NADA. Kinda like life in general if ya ask me. However, I will say, I feel I would have never made it to where I am without their guidance. For me it has been money VERY well spent and I have met some really nice folks along the way too. BONUS !

 

[Enigma]

Aahh, the health insurance thing again.

Maybe your employer has that policy in which case I'd go with that. If you get individual insurance, that is fine, but you are subject to being rated or dropped if claims occur (or even if they don't and the plan is eliminated, etc.).

The only thing my employer offers is COBRA which is a short term solution at best. It runs over $1k a month for my family.

My employer provides us outstanding insurance at a very modest cost to us. They pick up I think it was like 87% of the total tab according to Money Magazine. (I work for a fortune 500 retailer so they get lots of press coverage). The lifetime cap is 1M however. Which, sadly isnt much nowadays.

 

[SteveR]

Moral of the story is don't think your health will stay the same...it just might not. 

first of all how do you do the quote thingy like nords did??

Click on the quote box at the upper right of the message you wish to quote.  You can manually remove what you wish of it or just use the whole thing.  The end of the quote will have a brace/quotebrace  string to show the end of the quote.  You can also manually add this string when you want to close a quote and add your own words (like I did here).

Steve R,

You just tapped into my deepest fear. Any advise / additional thoughts would be appreciated....

All I can say is that when your number is up it is up.  My dad survived several major heart attacks and had bypass surgery 3X over a 25 year period.  He outlived most of his siblings.  My wife had some long term health issues but that is not what killer her. 

All you can do is the best you can do.  Live each day as fully as you can without being obsessed with dying tomorrow.  Don't put off the important stuff in life too long or you might never get to it.  Always tell our spouse and kids you love them every chance you get because you never know when it will be the last time. 

My brother and I kid each other about which one of us will have the first heart attack.  We both take decent care of ourselves but sometimes that is not enough.  Nature has a way of kicking your butt when you least expect it.  Do what you can to stay healthy but remember you are not immortal. 

 

[Enigma]

All you can do is the best you can do.  Live each day as fully as you can without being obsessed with dying tomorrow.  Don't put off the important stuff in life too long or you might never get to it.  Always tell our spouse and kids you love them every chance you get because you never know when it will be the last time. 

My brother and I kid each other about which one of us will have the first heart attack.  We both take decent care of ourselves but sometimes that is not enough.  Nature has a way of kicking your butt when you least expect it.  Do what you can to stay healthy but remember you are not immortal. 

Boy...Thats a great philosophy !!! I like it alot!!!
Work and research your brains out to put together the best insurance package you can muster then go out and enjoy life.

You cant be foolish about it. Put controls in place and then have fun. You are right. Your last day on earth could be today. Dont mean to sound grim but it does make a person think and think hard about what is truly and uniquely important to you in your life.

 

[Enigma]

BTW: I really like this place. Thank you for your input and kindness.

 

[Martha]

Also likely form a LLC and put all all the investment assets behind the "protective" wall to keep the creditors away should something go "south" on me. We would "pay ourselves" from the LLC as my wife and I would be "managing partners" Sounds so pompus which bugs the heck out of me but thats how they are saying to do it I am sure the Tax / Estate Attorney will have the most sensable solution for that.

I'll throw out a few disjointed thoughts, with the reminder to see your lawyer. It is generally a good idea to have the separate rental properties in separate LLCs. Therefore, if one has a big problem it won't necessarily take the rest down with it. However, remember that you are always liable for your own bad acts and negligence, even if you have a corporation or LLC. Therefore it is important to have excellent liability insurance.

Another issue. Say you committed a bad act or negligent act. Or you simply can't pay your bills. Someone sues you and you end up with a judgment against you personally. If I represented the creditor, I would ask you whether you own any interests in LLCs, corporations, or any businesses. As a creditor I may very well be able to foreclose on your interest in the LLC or other business. Sometimes asset protection trusts and other planning mechanisms can help, but if you retain any control the asset can be vulnerable. Be sure to see someone who knows what they are doing.

 

[Rich_by_the_Bay]

It is generally a good idea to have the separate rental properties in separate LLCs. ..., remember that you are always liable for your own bad acts and negligence, even if you have a corporation or LLC.

Martha,

Curious: how does one distinguish a "bad act" in such matters? What exactly does an LLC protect you from (I know it does not include malpractice)?

Can a creditor legitimately go after the personal assets of the LLC owner for unpaid bills if no torts or deceptive acts were involved?

Inquiring minds...

 

[Martha]

Martha,

Curious: how does one distinguish a "bad act" in such matters? What exactly does an LLC protect you from (I know it does not include malpractice)?

Can a creditor legitimately go after the personal assets of the LLC owner for unpaid bills if no torts or deceptive acts were involved?

Inquiring minds...

If you personally injure someone or someone's property, whether intentionally or negligently, you are liable for any damages. If you are an employee of a business and you injure someone or something while you are working, the business might be liable as welll. For example, if you have a car accident while you are on the job, both you and your employer could be liable for any injury. If you or I commit malpractice, both us and our employer could be liable for the injury.

However, if your LCC/corporation employed people other than yourself, and one of those employees acted negligently, only the LLC or corporation would be liable. Unless you were negligent yourself.

Contract liability is different. Say you formed a LLC or corporation for your business. The business then borrowed money. You don't sign a personal guaranty of the debt. Only the business is liable for the debt. Another example would be "trade debt." For example, your LLC or corporation might order $10,000 worth of supplies. The business gets a bill. If the bill isn't paid, only the LLC/corporation owes the bill. Not the owners of the entity.

Help? Any more hypotheticals?

 

[Martha]

I should add one more example.  Say you own a rental property and put it in a LLC.  Everything goes fine with the rental property.  However, everything doesn't go fine in your personal life.  Maybe you get sued for child support.  Or you don't carry enough insurance and owe a big medical bill.  As a result you end up with a judgment against you personally.

The creditor may very well seek to get any assets you own that are not specifically exempt from creditor's claims under state or federal law.  Odds are your interest in the LLC would be vulnerable and the creditor could "take" that LLC interest you own.  Any asset where you retain control is potentially vulnerable to claims of your personal creditors.   

 

[Rich_by_the_Bay]

Help? Any more hypotheticals?

Thanks. That helps.

If I provide expert witness services through an LLC as its owner, and someone claims my information or opinions were substandard, resulting in damages, does the LLC protect?

Doesn't sound like a whole lot of protection (other than against debts) for professional or consultative type service providers, as long as one plans on behaving legally.

 

[Martha]

Thanks. That helps.

If I provide expert witness services through an LLC as its owner, and someone claims my information or opinions were substandard, resulting in damages, does the LLC protect?

Probably not.

Doesn't sound like a whole lot of protection (other than against debts) for professional or consultative type service providers, as long as one plans on behaving legally.

No there isn't. But if you have co-owners or employees it is vital to have the protection. If you have a general partnership, you are personally liable for all the partnership debts. At least with a LLC/corporation you are not liable for your co-owner's negligence and not liable for trade debt. If one of my co-owners in our professional corporation committed serious malpractice that went beyond our insurance limits, we may lose the business but at least I won't be liable for his negligence.

 

[Enigma]

However, remember that you are always liable for your own bad acts and negligence, even if you have a corporation or LLC.  Therefore it is important to have excellent liability insurance. 

Well I have a 2M umbrella policy. Maybe I need to up it??

The whole liability thing appears to have many pitfalls. It seems a perfect match for qualified council to guide you. A $500 to $2000 attorney bill will be a pittance if you do make a mistake and damaged party goes after you.

Also one of my big commercial buildings is owned 50/50 joint tennancy. It is paid for cash so it provides good cash flow. However there are many expenses to take care of as the lease is negotiated as landlord pays all costs. We have a government tennant that leases the whole 7,000 s/f thats how they like to set up the leases. It grosses almost 100k a year but we pay out 32k in expenses which includes 8k of accrual for repairs. However the checks never bounce

 

[Green Jeans]

Just curious, what are your thoughts about paying for college expenses for the now 11 and 8 year old kiddies?

We've got a set of liabilities - I mean kids - aged 3, 6 & 9 and now have about $80,000 in UGMA accounts plus $100,000 in TSP money earmarked for college. I'm concerned that's not going to be enough. I'm counting on them getting financial aid based on family income being way down in retirement from what it is now.

 

[Enigma]

Just curious, what are your thoughts about paying for college expenses for the now 11 and 8 year old kiddies?   

We've got a set of liabilities - I mean kids -  aged 3, 6 & 9 and now have about $80,000 in UGMA accounts plus $100,000 in TSP money earmarked for college.  I'm concerned that's not going to be enough.  I'm counting on them getting financial aid based on family income being way down in retirement from what it is now.

I have lived very happily on 2k a month for years (If I had no bills). I really dont see that changing a whole lot. I just dont require much in the way of material things to make me happy. My truck has 100k on it. I diligently do maintainance and I will happily drive it to 200k.

That being said I will have a lot more income than I can utilize. That will fund PART of the college. They will be able to live at home and I will foot all the room and board expenses. However, I expect them to take a part time job to HELP pay for college even if it is a token amount.

I saw too many rich kids in college that were there because their parents wanted them there and they had no investment in their future and they did not apply themselves.

I worked nights and did school in the morning and paid for it myself. I worked my buns off in college because I was paying for it. My folks helped me the best they could but they still had 2 kids at home to feed. They both worked their buns off full time but even at that they were not able to help much.

 

[Nords]

Just curious, what are your thoughts about paying for college expenses for the now 11 and 8 year old kiddies?   
We've got a set of liabilities - I mean kids -  aged 3, 6 & 9 and now have about $80,000 in UGMA accounts plus $100,000 in TSP money earmarked for college.  I'm concerned that's not going to be enough.  I'm counting on them getting financial aid based on family income being way down in retirement from what it is now.

I sympathize with your situation, but we have our own kid to send to college and I don't think it'd be appropriate for me to jeopardize her plans (and my ER) to pay for your kid's college educations, too... but I must admit that I'm impressed by your innovative initiative in having the courage to ask a board full of strangers for their assistance!

Maybe the colleges they're planning to attend would be willing to discuss scholarships & financial aid?

 

[Enigma]

Oh, I forgot to add. Even if my kids only are able to contribute a token amount to college I will most certainly pay the rest. I love them dearly and want the best for them. However, I also want them to learn to be responsible citizens that contribute to society instead of take from it. That is something that college does not teach you but in my view is probably more important to impart in a young persons mind than what you learn in college. OK, I will put the soapbox away