Starter questions:
1. What is your advice for a newbie to this site who is looking for reducing expenses to increase investment money?
2. What is your advice for a married couple where 1 person wants to put more work/save more for retirement than the other person?
3. One lady from Money Magazine is renting a property on AirBNB and putting profits in retirement account. What are your thoughts on AirBNB as an investment vehicle?
My $0.02:
#1: Diligently sort through your spending, separate needs from wants, pay yourself first.
On the needs, inspect how much "want" has slipped into "need."
You need a car...do you need that car?
You need housing...do you need that house?
Even more, do you need that hneighborhood where everyone (especially the kids) are surrounded by a higher level of consumption?
After you sorted your needs, pay yourself first.
Aim for at least 30% of your income and seek to increase over time.
Whatever is left after true needs & savings is what you spend on your wants.
#2: Getting the team aligned on the goals is critical.
In our house, we have pretty traditional roles. I work out of the house while DW stays home with the kids and volunteers in the community.
We've had a good offense and a good defense.
I earn as much as I can, she shops frugally and says "no" to the kids when they want $100 Uggs b/c all the other kids have them. (Bear Paws are perfectly fine, thank you.)
We bank >50% and in good bonus/option years up to 70% of our income. But even if I earned $10M/yr, if DW was spending $9.99M/yr (or more) we'd be jogging in place.
A good way to bridge from where you are to where you both want to be is to settle on a good starting point and then use raises to increase percentage savings. For a long time we put 50% of any raise to savings and the other 50% to lifestyle. At a certain point, we decided that our lifestyle was more than fine and 100% of raises went to savings -- though recently we've invested money in big family experiences with the kids. You can do that if you're on firm foundations.
#3: Focus on Blocking & Tackling First...AirBNB is a tactic not a plan
Get your financial foundations in place...
- Have a written budget & follow it
- Emergency fund of at least 6 months, preferably 12
- Be allergic to non-asset debt (e.g., car loans & credit card debt
)
- Max 401k to get full match;
- Take the time to think thru & write an investment plan.
What are your long term goals (FIRE, college, etc.)?
Are you saving for Harvard or State U?
What will college really cost?
What is you desired post-FIRE retirement lifestyle?
What does that imply in terms of cash flow needs & retirement assets?
Are you aligned with DW on these goals?? Repeat point #2.
What is your plan for saving & investing to reach these goals?
What rates of return are you expecting?
Translate the above into an appropriate asset allocation and methodically follow that investment plan from now until you hit your goals. (There are a zillion threads on these topics.)
If Real Estate/AirBNB becomes part of your disciplined financial plan, that's great...but there are many paths to FIRE.
Part 4...Remember that life isn't a balance sheet exercise.
Live life, share family experiences, pass along your values, send the kid(s) to college, and FIRE happy not just early.
Hope that is helpful.