Hello from St. Louis

[docbells]

Hi, I have been lurking for a few months, I thought it was about time I joined in the fun. I was a long time member at the Fatwallet Finance forum, but got fed up with the nastiness that brews over there. I stumbled on this forum and love the fresh and courteous community building here.

I am a 32 year old Optometrist, married with a 6 month old boy and 2 year old girl. The goal is to reitre at 52, but I have a mountain of debt I am paying off from buying into my practice that will in return fund my retirement. My biggest problem is trying to balance aggressively paying down debt while still building my portfolio. My retirement accounts are doing great, but my non-retirement accounts are pretty sick. Those have not been funded in some time...

Hopefully with ideas from this forum and some help on the way, I can move from reading the Young Dreamers Forum, to Life After!!!

[Dawg52]

Welcome. Good luck with your long range plans. 20 years will fly by before you know it. Seems just like yesterday I was 32. Enjoy the ride to retirement though. None of us know how much retirement we may actually get to enjoy.

[Rich_in_Tampa]

Quote:

Originally Posted by docbells I am a 32 year old Optometrist, married with a 6 month old boy and 2 year old girl. The goal is to reitre at 52, but I have a mountain of debt I am paying off from buying into my practice that will in return fund my retirement. My biggest problem is trying to balance aggressively paying down debt while still building my portfolio. My retirement accounts are doing great, but my non-retirement accounts are pretty sick.

Welcome. You'll learn alot here.

Many years ago, I elected to pay off my educational debts as fast as I could. This translated to age 40 for me, way late to get a great start. In those days, there were no IRAs, so it was just a small tax-sheltered annuity each year -- at least I maxed that out.

If I were in your shoes, I would definitely max out your retirement plans first even if it means wisely restructuring your debt somehow. Only then would I work on your debts assuming you can meet minimal payments. This may mean deferring that bigger house or nicer car but if you are serious about 20 and out, that seems like the way to go.

And with the little ones, term life and disability take their share.

Of course, we know nothing about your income, expenses, pensions, inheritance potential and all that but you can factor that in.

Good luck and keep us posted.

[docbells]

Thanks for the welcomes and the input.

To elaborate a bit more. My wife is an Internist and works FT. We both max out our 403b/401k. We moved into our dream house 3 months ago (before I found this forum and before I became interested in ER.)

I have a 60k second mortgage that I have paid down to 10k at 8.5% and I have 17k that I have transferred to 0% credit cards that will be paid off by the time the intro rate of 0% is up.

I have a 175k loan from my companies stock purchase. I get about 60k a year in profit distrubutions from that. So once I get that loan paid off, I will be able to use that to fund some taxable accounts. It will probably take about 4.5 years to pay that off...

I will also be taking out an additional 200k loan for another investment into expansion of this company, that will hopefully pay for itself and much more in 7 to 10 years.

So balancing debt reduction and after tax investments still is my biggest debate. I do want that feeling of being relatively debt free (besides 1st mortgage), but I don't want to neglect my after tax accounts, because that along with my profit distributions, is what I will be living on until I can access the pre-tax retirement accounts.

Whew... - That about sums it up...

[AltaRed]

To me it is all about what is the most tax effective/efficient way to use your funds. I would not worry about funding a taxable account if you are paying >6-7% tax deductible on your debt because you should not count on more than 6-7% return on an investment portfolio.

I chose to focus on debt retirement (my mortgage on which interest is not tax deductible in Canada) and I never borrowed to buy a vehicle, furniture, or anything else. LBYM - no need to keep up with the Jones. Your personal character counts for a whole lot more in your social relationships than material status. Part of the plan was also not to turn around and move up to a bigger house and incur new debt along the way. Discipline, discipline, discipline allowed us to be debt free by 40.

That is when I started to aggressively fund my investment portfolio and that would have allowed me to retire at 55 (I chose to retire at 57 instead). Given you and your wife's income generating potential, I think you could build a very nice 7 digit ($2-3M) nest egg in 10-15 years of disciplined investing (assuming all other debt is paid off by then).

Others choose to do it differently, funding taxable accounts while continuing to carry debt. That is a personal choice that I never felt good about.

[Ed_The_Gypsy]

Roger that, AltaRed.

Ed

[MooreBonds]

Hello docbells,

I'm a fellow St. Louisan, although I have a few years later start (29, single and still looking) than you do ...but also driving onward towards ER.

Just a reminder...when you do officially retire, you can access your tax-deferred accounts penalty free. Do a search for "SEPP" in the forum or on the irs webpage, and you'll learn about how the gov't allows you to do it once you fully retire regardless of your age.