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re-post: young DAV retiree, 40yo,
Old 02-24-2012, 03:57 PM   #1
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re-post: young DAV retiree, 40yo,

Posted previously in wrong thread.

Hello all.

Situation: tax-free VA COMPENSATION. no other income.

How to invest for continued retirement with already tax-free money.

Monthly disability: $2769 tax-free

1. Primary GA home, modified $120k @2%, pmt $593.00 piti. 6/30 yr mtg.

2. a) AL Rental,$71k @ 5.25%, mtg $688, rents $787 (sec.8) 10/30 yr. Mtg. Equity approx.$25k - $45k range.

b) HELOC $18K/$30k @5% pmt.$269

Sav. $600.00
Stocks: $700.00

Small limits credit cards (5) $3750. Total limits to be paid off in June.

Irs debt from previous business: $150. Month. Once c/c paid off, increase amt. To pay off by June 2013. $7300.00

No car....on purpose. Lol

Confused about investing tax-free money for a tax-free investment.

How to generate investments and additional cashflow through stocks, bonds, eft, etc.?

Ultimate goal, due to my health, I want to live 1/2 - 3/4 of the year in warm climate such as Dominican Republic, Panama, Ecuador or Belize which offers expats with retirement pensions visas to live there. Cost of living is about around $1k a month inclusive. I've already changed my mind to live on less and I really enjoy it.

Looking to do better.[/QUOTE]
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Old 02-24-2012, 04:32 PM   #2
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ML, welcome to the board.

So you want to get to the point where you can spend 2/3 of the year in the tropics at 1k/month. What are your current living expenses? Have you considered selling the houses to free up some equity (hopefully) and reduce the hassles while you are out of the country?
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Old 02-24-2012, 05:15 PM   #3
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Quote:
Originally Posted by brewer12345
ML, welcome to the board.

So you want to get to the point where you can spend 2/3 of the year in the tropics at 1k/month. What are your current living expenses? Have you considered selling the houses to free up some equity (hopefully) and reduce the hassles while you are out of the country?
My current expenses are:

743 GA mtg & hoa
269 Heloc AL house
150 irs
250 c/c
214 base exchange act.

Rental expenses cover by rent
787 rent
688 mtg.

I thought about selling the AL house but I view this as my "401k". My guarantee for money when/if times getting really bad. Plus, I've had it the longest and not affected by the economy.

The Ga home was new construction in 2006 but with the economy, The 154k value is now 80k, on a good day.. I got a mod on this in 2010 @ 2% for 5 years. Fortunately, the 2nd held by chase was charged off last year so I only have a primary of 120k. This is cheaper, but no equity at all.

My goal is to live out of the country from Nov - Aug. My son plays football in College so I will be in the states to support him during Aug - Nov. He has 2 years left then I can go all year or have the flexibility to visit/travel anywhere without having to come back to the states at a specific time.
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Old 02-24-2012, 07:47 PM   #4
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Hi ML, Welcome to ER.org

I've moved this thread from the Health Forum to FIRE and Money as it is more related to financial advice.
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Old 02-24-2012, 09:39 PM   #5
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When you say your GA mortgage is 6/30 is that a fixed 2% for 5 years then switches to an adjustable in years 6-30? If so either increase your payments to pay off in 5 years or switch to a 30 year fixed, now. Paying off in 5 years would more than triple your payments so probably is not an option. Who knows where interest rates will be in 5 years, you could get hit really hard if you wait. I would try and lock in a low fixed interest now while they are still around.

Have you lived in any of the countries you mentioned, know anyone there? I wouldn't commit to anything in any of these countries until spending time there and making sure you know what you're getting into.

Sounds like your AL rental doesn't cover all your expenses (mortgage, insurance, taxes, repair, HELOC). If you move away you'll probably need a management company to take care of it for you which is an additional expense. Can you increase the rent?

Many of us who ER look at zero debt as a requirement before we can ER. Besides two mortgages you still have credit card debt, a HELOC, and IRS debt. I would work on getting these paid off before worrying about how I'm going to invest my money.
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Old 02-24-2012, 10:28 PM   #6
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Quote:
Originally Posted by zinger1457 View Post
When you say your GA mortgage is 6/30 is that a fixed 2% for 5 years then switches to an adjustable in years 6-30? If so either increase your payments to pay off in 5 years or switch to a 30 year fixed, now. Paying off in 5 years would more than triple your payments so probably is not an option. Who knows where interest rates will be in 5 years, you could get hit really hard if you wait. I would try and lock in a low fixed interest now while they are still around.

Have you lived in any of the countries you mentioned, know anyone there? I wouldn't commit to anything in any of these countries until spending time there and making sure you know what you're getting in to.

Sounds like your AL rental doesn't cover all your expenses (mortgage, insurance, taxes, repair, HELOC). If you move away you'll probably need a management company to take care of it for you which is an additional expense. Can you increase the rent?

Many of us who ER look at zero debt as a requirement before we can ER. Besides two mortgages you still have credit card debt, a HELOC, and IRS debt. I would work on getting these paid off before worrying about how I'm going to invest my money.
Let me clarify:

AL: had it 10years on a 30 yr fixed VA loan at 5.25%. Pmt $688 piti inclusive. rent $787. Yes I can raise the rent, but only 5% per year for sec. 8 tenants aa long aa its within the tenants limits.
HELOC $269.
GA: current primary home. Had It 6 yrs. Got a mod in 2010 @ 2% fixed for 5 yrs. It will adjust but will max at 8% and become fixed. Pmt $$593 piti inclusive. By the time it gets to that point I would either have sold It at loss or turn it into a full time rental with positive cashflow and cover the HELOC out of the rents.

I've mapped out my plan (pulling out my spreadsheet)
c/c pd may 2012
Military chrg card paid in aug 2012 & Apr 2013
Irs pd Jul 2013
HELOC pd June 2015

By June 2013 I only have 2 mtgs and the HELOC, one still being a rental. I have the option to rent the GA when I decide to live in the tropics and that lil bring an additional $550-600 a month after paying the mtg.

Yes I've been to all the countries I've mentioned except for Belize. I've been traveling since 2009 after my son went to college. I'm not so attached to the GA house other than it cheaper than renting and moving right now. There's no equity in it because It was new construction when I bought and its a townhome. It also allows me the time and peace of mind to focus on taking care of these things and put my plan in place.I
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Old 02-24-2012, 10:44 PM   #7
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Your plan sounds reasonable to me. Since I assume the disability pension will last as long as you do, I would not spend time worrying about how to set up additional investments. Go play in the sun.
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Old 02-24-2012, 10:51 PM   #8
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Quote:
Originally Posted by brewer12345 View Post
Your plan sounds reasonable to me. Since I assume the disability pension will last as long as you do, I would not spend time worrying about how to set up additional investments. Go play in the sun.
I think I concur. My homes are my only true investment so I think of them as my 401k.

I'm taking this year to lay low to pay off these items then next year "on the road again"
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Old 02-24-2012, 10:57 PM   #9
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BTW, as the son of a partially disabled veteran, I hope you have a great time.
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Old 02-25-2012, 06:37 AM   #10
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I guess I'll have to play the bad guy here, I'd suggest you stick to your plan to payoff the debts. As you get a debt paid off, I'd suggest you take that $$ and start putting it into a short term account like money market (ouch, low low rates) perhaps at your bank or credit union. I'd think you need something like $10-15K in an emergency fund in case you need a new roof, heater, AC or other major repair for either of your homes.

Once you get an emergency fund setup and funded, you could put any other monies aside into a pair of total stock market fund and total bond fund. Others can suggest specific funds, but Vanguard has low cost funds that follow market indexes that would be a good place to park any money for longer term investments.

There is a ton of info that could be helpfull to you and your situation, but I'd suggest you stick to your plan to pay off the debt, then fund the emergency account, and while your doing this start to read about investing and funding retirement. As stated, looks like your VA check should cover expenses for the duration, you still might need to consider other expenses like where will you get medical treatment while out of the country?
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Old 02-25-2012, 03:08 PM   #11
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Old 02-25-2012, 06:24 PM   #12
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Thanks for your service.

Some things to consider; will you need access to VA medical centers or other medical services due to your disability? The problem with going to places like Belize, Panama City, etc is that you are a long way from VA medical hospitals. Perhaps S. Florida would give you the weather you seek during the winter and also give you easy access to VA centers. Ocala seems to be an inexpensive retiree mecca with a VA hospital about 45 minutes away in Gainesville.
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Old 03-09-2012, 03:56 PM   #13
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Quote:
Originally Posted by RetireBy90
I guess I'll have to play the bad guy here, I'd suggest you stick to your plan to payoff the debts. As you get a debt paid off, I'd suggest you take that $$ and start putting it into a short term account like money market (ouch, low low rates) perhaps at your bank or credit union. I'd think you need something like $10-15K in an emergency fund in case you need a new roof, heater, AC or other major repair for either of your homes.

Once you get an emergency fund setup and funded, you could put any other monies aside into a pair of total stock market fund and total bond fund. Others can suggest specific funds, but Vanguard has low cost funds that follow market indexes that would be a good place to park any money for longer term investments.

There is a ton of info that could be helpfull to you and your situation, but I'd suggest you stick to your plan to pay off the debt, then fund the emergency account, and while your doing this start to read about investing and funding retirement. As stated, looks like your VA check should cover expenses for the duration, you still might need to consider other expenses like where will you get medical treatment while out of the country?
RetiredBy90: thank you for the info. I Have good news. My Heloc is now available and I Have A decent amount available for emergency and already paid off the 4 cc's so I'm off to a good start. So the other 2 will be paid by Aug 2012 and April 2013

As for medical, that is in the forefront of my brain. Florida is primary on my radar. I'm actually looking for a decent inexpensive condo in south Florida for my home base.. as for out of the country, Puerto Rico is still US territory and there is a strong medical service there. I'm researching all my option with medical that will work.

I just feel very relieved to know my Heloc is available again.
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Old 03-09-2012, 04:01 PM   #14
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Quote:
Originally Posted by Rowdy
Thanks for your service.

Some things to consider; will you need access to VA medical centers or other medical services due to your disability? The problem with going to places like Belize, Panama City, etc is that you are a long way from VA medical hospitals. Perhaps S. Florida would give you the weather you seek during the winter and also give you easy access to VA centers. Ocala seems to be an inexpensive retiree mecca with a VA hospital about 45 minutes away in Gainesville.
Rowdy: you are correct. Ocala, never thought about it. I'll research and if it is Beae water, may be a good contender.
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Old 03-09-2012, 04:17 PM   #15
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As for medical, that is in the forefront of my brain. Florida is primary on my radar. I'm actually looking for a decent inexpensive condo in south Florida for my home base.. as for out of the country, Puerto Rico is still US territory and there is a strong medical service there. I'm researching all my option with medical that will work.

I just feel very relieved to know my Heloc is available again.
I have travelled quite a bit in PR and I know there are some other posters with some knowledge of the island, so we could probably offer some pointers if you decide to explore this option.
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Old 03-10-2012, 09:47 AM   #16
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Quote:
Originally Posted by brewer12345

I have travelled quite a bit in PR and I know there are some other posters with some knowledge of the island, so we could probably offer some pointers if you decide to explore this option.
That would be great. Always can use good resources.
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