Time to introduce myself...

[bugs8]

Hi everybody! I'm 48 single (widow) and just became an empty nester as of March 31 and I love it! Don't get me wrong love the kids but now it's ME TIME! Really glad I found this forum. After reading this forum for a couple of months I realize how much I do not know. I would like to post my investments and let all of you tell me what you think. I've been playing with FIRCAL and well I think I need to play with it some more...

Fidelity 401k Low Pr Stk $93,395.70
Schwab IRA JMCVX $14,068.00
Schwab IRA JNJ $30,474.00
I am making min contributions to the 401k because I was trying to pay my house off . Not sure thats the way to go. The IRA was my husbands and I have not made any contributios to it. It was a 401k rollover 6 years ago when he died.
Mortgage 155,000.00 approx 12 more yrs
Rental Property $0
I own the rental property. My mother passed away 3 years ago
and I have it rented out. After expenses it nets about $1000.00 monthly
I could sell my residence for $495,000.00 and the rental for $425,000.00.
The numbers are very realistic given todays market in So. Cal. The properties are within 12 miles of each other. I work approx 3.2 miles from home. My income from my job is $64,000.00. My tax person is trying to convince me to sell the rental he says' I can do much better in the market. I have no idea. I feel a little frozen and really scared to make mistakes. I would like to sell the rental and pay off my residence and be completely debt free. I don't really like the idea of paying the real estate fees and capital gains taxes but that's life. I really want to retire asap but it looks impossible to me. Life is so very short. I thought about moving to a low COLA but my entire family is here and I don't want to leave. So, if you have time to offer some advice please do. I don't know if I've given enough information. I do live below my means but not by much. Thanks for listining ...

[Nords]

Welcome to the board, Bugs.

Originally Posted by bugs8

My tax person is trying to convince me to sell the rental he says' I can do much better in the market.

Ha ha, that's a good one!

He might be right, and he might be wrong. I'd have a hard time calling today's market "undervalued" with the DOW and S&P500 nearing/exceeding all-time highs.

The whole debate is really an asset-allocation question, and you have to sort yours out for your comfort level. Have you read Bernstein's "Four Pillars" book or taken a look at what asset mix you want?

For tax-deferred compounding it's probably a better move to contribute the max to your 401(k) and your IRA before trying to accelerate the mortgage. But if you sell the rental then you can pay off the mortgage altogether and decide how best to allocate the rest of the after-tax profits. It'll also eliminate management & tenant hassle, although you may have decided by now that you enjoy being a landlord. Do you have any attachments to the place?

Speaking of taxes, the rental property may have a stepped-up basis that will eliminate some of the taxes. Or you could sell your primary residence, possibly paying lower cap gains taxes (maybe none at all) and move into your mother's house as your primary residence. The finances of the whole situation need a CPA's analysis of the after-tax profits, which should give you more numbers to crunch in FIRECalc...

[macdaddy]

Originally Posted by bugs8

I own the rental property. My mother passed away 3 years ago
and I have it rented out. After expenses it nets about $1000.00 monthly
I could sell my residence for $495,000.00 and the rental for $425,000.00.

I'll chime in on the property because that's what I'm familiar with. How much does the rental rent for per month? Have you raised the rent in the last 3 years? What are your tenants like? I assume you have very low (under $1000/year?) property taxes - since proposition 13 allows you to inherit without a property tax reassessment. $1000 net profit per month seems low. What are the expenses?

[Sam]

Welcome aboard, Bugs.
Have you thought of selling your residence, and moving into the rental instead?

[JohnDoe]

Originally Posted by bugs8

Fidelity 401k Low Pr Stk $93,395.70
Schwab IRA JMCVX $14,068.00
Schwab IRA JNJ $30,474.00

I would consider diversifying that portfolio. You are taking on an alot of risk with those holdings.
You should come up with an asset allocation plan

[jdw_fire]

Originally Posted by bugs8

Hi everybody! I'm 48 single (widow) and just became an empty nester as of March 31 and I love it! Don't get me wrong love the kids but now it's ME TIME! Really glad I found this forum. After reading this forum for a couple of months I realize how much I do not know. I would like to post my investments and let all of you tell me what you think. I've been playing with FIRCAL and well I think I need to play with it some more...

Fidelity 401k Low Pr Stk $93,395.70
Schwab IRA JMCVX $14,068.00
Schwab IRA JNJ $30,474.00
I am making min contributions to the 401k because I was trying to pay my house off . Not sure thats the way to go. The IRA was my husbands and I have not made any contributios to it. It was a 401k rollover 6 years ago when he died.
Mortgage 155,000.00 approx 12 more yrs
Rental Property $0
I own the rental property. My mother passed away 3 years ago
and I have it rented out. After expenses it nets about $1000.00 monthly
I could sell my residence for $495,000.00 and the rental for $425,000.00.
The numbers are very realistic given todays market in So. Cal. The properties are within 12 miles of each other. I work approx 3.2 miles from home. My income from my job is $64,000.00. My tax person is trying to convince me to sell the rental he says' I can do much better in the market. I have no idea. I feel a little frozen and really scared to make mistakes. I would like to sell the rental and pay off my residence and be completely debt free. I don't really like the idea of paying the real estate fees and capital gains taxes but that's life. I really want to retire asap but it looks impossible to me. Life is so very short. I thought about moving to a low COLA but my entire family is here and I don't want to leave. So, if you have time to offer some advice please do. I don't know if I've given enough information. I do live below my means but not by much. Thanks for listining ...

How soon you can retire really depends on how much your expenses are. You appear to have about $900k in assets which at a 4% WR will throw off $36K per year adjusted each year for inflation. How bad do you want to retire? This would require you selling both houses.

When it comes to the rental, it is only yielding about 2.8% which isn't all that good so I would agree with your "tax person" about selling it, however I would consider doing what was recommended here about moving into it prior to selling in order to establish it as your primary residence (for 2 yrs) to get the favorable tax treatment.