An update from a dreamer that's been gone for 5 years

[fire2018]

Five years ago, I was single, clueless about stocks, made some money in real estate, and had a net worth of about 470k.

Now, I'm married with a toddler and another kid along the way, not touching anymore stocks, and have a joint net worth of just over $2 million.

The wife's income has been the real factor, grossing about 300k annually in the past 5 years. Other things that helped include selling another property for profit and reinvesting the gains into an income property, an online business that's generating a decent cash flow, and a sizable inheritance. And I'm still chugging along at my steady job which i still hate.

This is how we stack up:
870k in equity from properties.
600k+ in cash
200k+ in 401k/Pension/IRA
240k+ in investment partnerships
200k+ in vesting/vested equity bonus
30k+ in vehicle

My wife and I can't believe we've come this far, but we still don't feel rich. A 3BR condo around here costs more than 1.2 mil, and a house is over 1.8 mil. It's crazy, I know.

Even if we can live somewhere else, we still gotta figure out health insurance. When I did a quote online, the insurance premium for a family of 4 with a high deductible costs 1700/mo. Is there anyway around this? Some advice would be helpful.

I've revised our FIRE to commence in 2020, 2 years later than previously hoped for. By 2020, I would have accumulated enough years at my job to qualify for retirement benefits, which includes participation in the health care benefits. Granted, it won't be subsidized, but I am thinking it'd still be cheaper getting the group rate vs getting insurance on our own. It also seems "safer".

We're still trying to figure things out, and our somewhat "conservative" approach is taking us in the right direction. However, wife's job is taking a toll on her health and time with the family, so a job switch may occur which would lead to lower income. We continue to live below our means and don't have expensive habits. We travel cheap and often free (with points accumulated from online business). I just gotta shed the 30 lbs I've gained in the past 5 years, and I should be good.

[Nords]

Quote:

Originally Posted by fire2018 A 3BR condo around here costs more than 1.2 mil, and a house is over 1.8 mil. It's crazy, I know.

Yes, it is. Yet for some reason you've chosen to live there.

Have you looked at what you'd gain (not lose!) by relocating? Anyone can ER by earning a high salary and working harder for longer. It takes considerable more planning, discipline, and guts to ER by working shorter.

Maybe you have a really good reason for living there. But you'll have to be willing to pay the price, too, and I suspect that there are plenty of choices. Grimly clenching your jaw and gutting it out for a few more years may be more dangerous to your longevity than salary cuts & relocation.

[arebelspy]

Wow, you've come a long way in 5 years, that's impressive!

Have you started tracking your spending to know (roughly) how much you need per year in ER?

[Ed_The_Gypsy]

Quote:

And I'm still chugging along at my steady job which i still hate.

So, what is stopping you from packing it in? If I had 2 mil in assets, I would be gone, baby, gone. I would be financially independent and would choose what I wanted to do. You could, too. I suspect that you are conflicted, afraid to seriously consider getting off the gerbil wheel, trapped by convention.

However, I do not see where your income would come from if you did. Income property? It does not look like you have a serious plan. That is OK, but be honest with yourself.

[arebelspy]

Quote:

Originally Posted by Ed_The_Gypsy So, what is stopping you from packing it in? If I had 2 mil in assets, I would be gone, baby, gone. I would be financially independent and would choose what I wanted to do. You could, too. I suspect that you are conflicted, afraid to seriously consider getting off the gerbil wheel, trapped by convention.

Me too, that's why I'm curious if he's tracked his spending; maybe they spend a lot. He does have young kids.

Still, another 8 years or so (2020) seems like a lot.

[meekie]

Quote:

Originally Posted by Ed_The_Gypsy So, what is stopping you from packing it in? If I had 2 mil in assets, I would be gone, baby, gone.

I know I spend too much, but I'm aiming for 2.5mil myself. Any place that a condo costs 1.2mil, has got to have a pretty high cost of living.

Health insurance is going to be changing a bit in the US over the next few years, so it's going to be pretty hard for you to estimate right now.

8 years does seem like a lot, but I think it would really depend on what you spend in a year, and what returns you're expecting from your investments.

[pletal]

Quote:

Originally Posted by Ed_The_Gypsy So, what is stopping you from packing it in? If I had 2 mil in assets, I would be gone, baby, gone. I would be financially independent and would choose what I wanted to do. You could, too. I suspect that you are conflicted, afraid to seriously consider getting off the gerbil wheel, trapped by convention. However, I do not see where your income would come from if you did. Income property? It does not look like you have a serious plan. That is OK, but be honest with yourself.

I am very afraid to get off the gerbil wheel. Wife and I are up to almost 4 mil and keep on working. This forum is helping. Very conservative, no debt.
Break down as follows
3 mil taxable cd's
200 k in 401k
50k muni bonds
200 k home
250 k IRA
200 k cash/savings accounts
20 k savings bonds

[plex]

Can sort of understand putting RE off for awhile despite having $2M+ assets, gotta keep the wife happy, and if she is making $300k/year now, she probably had to go through a dozen years of busting her butt to get to that point.

Many job paths require a ton of sacrifice early on and just don't pay off financially unless you plan on putting in enough heavy hitting years to make up for it.

[Huston55]

Quote:

Originally Posted by fire2018 Five years ago, I was single, clueless about stocks, made some money in real estate, and had a net worth of about 470k. Now, I'm married with a toddler and another kid along the way, not touching anymore stocks, and have a joint net worth of just over $2 million. The wife's income has been the real factor, grossing about 300k annually in the past 5 years.

Well done! Choosing a mate wisely may be the most important "financial" decision any of us ever make.

[fire2018]

We chose to live here because we grew up here and this is where family is and where the high paying jobs are. We chose this particular neighborhood because it's fun and convenient and provides a decent commute to our work. Wife's role is very specialized therefore the higher pay. She wants to milk it for all she can, before "they" are done with her. Such is the corporate mentality, she feels.

We live in a 2BR condo which will provide just enough space for the four of us. Our monthly expenses are between 7k to 9k a month, of which 3k is for housing, 1k is for pre-school, 1k to 1.5k for parental support (!), and the rest goes to bills and food and miscellaneous. No strict budget but our CC bill range from 2k to 3k a month. Cell phone family plan + Triple Play FIOS + Gas + Auto Insurance is about $800/mo. With the additional kid coming, we'll see an increase of about 1.5k a month.

2013 is when #1 goes to public school and 2017 is when #2 goes to public school. By then, the monthly expense would have dropped by 2k to 2.5k. Add another 3 years, and I'll "lock" in a health insurance plan for the following 22 years.

I hope the wife can call it quits in the next five years, so she can spend more time with the kids. Between the time she winds down to 2020, hopefully I can step up and take over.

The short term plan is to acquire 3 more rental condos, for a total of 5. Accelerate the payments so they will be free an clear by 2020. My projection is that these 5 condos will provide a net income of 9k to 10k a month. We're in contract to purchase #3 with 75% financing, and recently made a cash offer on another property. If everything goes smoothly, we will have condos 3 and 4 by next year. These 2 properties will gross 4300/mo.

Currently my 2 rentals gross $4400/mo, and nets $1600.

[fire2018]

Quote:

Originally Posted by Huston55 Well done! Choosing a mate wisely may be the most important "financial" decision any of us ever make.

Haha. I've known her for 9 years. When we got engaged, I was still making more $$ than her. By thanks! I know I did well.

[FinanceDude]

Quote:

Originally Posted by pletal I am very afraid to get off the gerbil wheel. Wife and I are up to almost 4 mil and keep on working. This forum is helping. Very conservative, no debt. Break down as follows 3 mil taxable cd's 200 k in 401k 50k muni bonds 200 k home 250 k IRA 200 k cash/savings accounts 20 k savings bonds

Just a thought, I would look at some non-AMT muni bonds for some of that $3 million, your taxes would probably go down a lot if you did that.......

[Milton]

Quote:

Originally Posted by Nords Have you looked at what you'd gain (not lose!) by relocating? Anyone can ER by earning a high salary and working harder for longer. It takes considerable more planning, discipline, and guts to ER by working shorter. Maybe you have a really good reason for living there. But you'll have to be willing to pay the price, too, and I suspect that there are plenty of choices. Grimly clenching your jaw and gutting it out for a few more years may be more dangerous to your longevity than salary cuts & relocation.

Give the OP a break. He's doing what works for him, and it is uncalled for to imply that he is a poor planner, lacks discipline, or is somehow less than courageous.

As Nietzsche said, "You have your way. I have my way. As for the right way, the correct way, and the only way, it does not exist". Let's try for a little more tact, please.

[arebelspy]

Quote:

Originally Posted by Milton Give the OP a break. He's doing what works for him, and it is uncalled for to imply that he is a poor planner, lacks discipline, or is somehow less than courageous. As Nietzsche said, "You have your way. I have my way. As for the right way, the correct way, and the only way, it does not exist". Let's try for a little more tact, please.

Part of why I like this board is people challenging me on my thinking. Nords (which autocorrect REALLY wanted to be Nordstrom) made a similar challenging post to me recently.

I don't think he meant any disrespect, just challenging the OP to think a little more, research a little more, etc.

I do like your quote even though I'm no Nietzsche fan. Thanks for sharing it, that's good to keep in mind.

[newb]

Yeah, the easiest way to bring down your costs would be to sell the house and move somewhere housing costs are realistic. you could also look at cheaper preschool, or skip that crap altogether, retire and homeschool. most places in the country would net you a very comfortable lifestyle with 3-4 million in assets. If not, you arent looking hard enough or have unrealistic expectations.

[sirion]

Not to be a downer, but I wanted to point out that many new parents think that expenses will decrease drastically once daycare and preschool expenses go away. The unfortunate reality is that they don't decrease that much. As the parent of a Kindergartner, I'm astounded at how much money we spend on her recreation. She takes piano and swimming and needs to go to camp in the summertime and sometimes on holidays. I teach ballet to save on that expense since she comes free to the class I teach at the community center. Add college savings of $600/month and we have not seen our expenses decrease much, if at all, once she started school.

I think it is important for you to be realistic about your expenses since you are talking about retiring before your children are 10. Adding even one or two activities per child will be a drain on your expenses.