Super confused... feeling DEVASTATED & hopeless... need advice on my plan?

[Tropical]

+1 on both. OP, you seem a little frantic; some professional financial help should go a long way for you IMO.

There's lots to learn on this forum and some fantastic, knowledgeable people, but sitting F2F with someone for an hour or two will be well worth the money.

I agree 100% I am more than frantic I am flipping out. My sure fire plan to retire at age 40 was looking very good... then the you know what hit the fan. It is NOT going to happen. I did NOTHING to protect myself at all. I was so confident it would be OK... and it backfired. Now I am here almost age 50... I feel sick to my stomach.

So you recommend I find a FLAT FEE financial advisor to talk to? I hear they are EXTREMELY difficult to find?? I don't want a financial advisor... I mean the type who will try to sell me this or that or take % of my portfolio to manage it... I hear that tiny percentage takes a MASSIVE amount when it comes to compounding interest?

So I need FLAT FEE financial advisor.

 

[marko]

I agree 100% I am more than frantic I am flipping out. My sure fire plan to retire at age 40 was looking very good... then the you know what hit the fan. It is NOT going to happen. I did NOTHING to protect myself at all. I was so confident it would be OK... and it backfired. Now I am here almost age 50... I feel sick to my stomach.

So you recommend I find a FLAT FEE financial advisor to talk to? I hear they are EXTREMELY difficult to find?? I don't want a financial advisor... I mean the type who will try to sell me this or that or take % of my portfolio to manage it... I hear that tiny percentage takes a MASSIVE amount when it comes to compounding interest?

So I need FLAT FEE financial advisor.

A certified financial planner (CFP) will charge you by the hour. I'm guessing it'll run you about $500 for an hour or two.

They will not try to sell you anything but will work with you to understand your goals, risk tolerance, your financial competence and explain what and how things work. I'd assume that they'd give you some options based upon those inputs and help get you started.

Based on your posts, you're already in good shape so no need to panic; you just need some coaching....this is a long game.

 

[pb4uski]

Thanks! I was playing around with the calculator and when I enter only 2 years or work... it shows person would still receive a rather high amount of social security benefits. I am confused... it seems that calculator is not accurate at all? If you enter only one or two years of work.. you will see what I mean...

I was using this calculator: https://www.ssa.gov/OACT/anypia/index.html

... this leads me to believe that calculator is not accurate!?

Go to your most recent annual social security statement and see what years of income you have been credited and how much. It is all laid out on the second page.

 

[Tropical]

+1 extreme frugality might grow your wealth but make your current life miserable. Balance saving for tomorrow with living for today.

Slow and steady wins the race.

If you were to invest your $300k and add to it $6,500 annually for each of the next 20 years and it earned 8% then you would have almost $1.7 million at the end of 20 years.

Thanks!! I will show some of these recommendations to a flat fee financial advisor. I am SUPER confused... is it financially better for me to KEEP my house or SELL it. If I rent out of my house with NO mortgage... look at how AWFUL the ROI is... I am lucky to get 3% or 4%.... AND this house will never get me compounding interest like a 3 fund portfolio at Vanguard can... here are the numbers if I rent out my house for 3k/month rent (IF I can even ask that much)...

Monthly cash flow
$2,044 /mo

Income
$3,000 /mo

Expenses
$956 /mo

CoC ROI
4.12%

I doubt my house will be worth $1.7 million in 20 years?? It seems I am MORE LIKELY to do better with index/bond investing?

I am super confused. To me it seems best to sell the house... buy a CHEAER house for me to live in... I DREAM of living off grid like I used to when I lived in Hungary. It was a DREAM. To live in NATURE, grow my own food... hike in the moutains etc. I am beyond MISERABLE where I live now (miserable is too delicate of a word). I do not belong in the city, I do NOT belong in suburban areas... I need solitude and to live in very rural country side areas living a simple peaceful life (most would consider BORING but to me it is pure HEAVEN). This is my DREAM. I only bought my current house as a future investment because the area it is in a very desirable area in AZ.

When you say: If you were to invest your $300k and add to it $6,500 annually for each of the next 20 years and it earned 8% then you would have almost $1.7 million at the end of 20 years

... I assume that means I should invest 300k where? Sorry if you already said where.... I will go back and re-read this entire thread later today. In conclusion it seems I have TWO problems I need to solve with a flat fee financial planner...

1. KEEP house or SELL house?
2. Where exactly to invest if I SELL house.
Invest into: 3 fund portfolio of VTSAX, VITSAX, Bonds or....
Invest into: "Money Market Savings Account" I think it was called?... but then I lose benefits of compounding interest...

 

[TheWizard]

OP needs to find a way to calm down.
ZOLOFT perhaps...

 

[Aerides]

I agree 100% I am more than frantic I am flipping out.

We get that. But...none of that is going to be helpful to you, and might work against you, if you approach this super-emotionally vs. facts and figures.

Your plans may well have been blown to shreds, but here you are, with a decent amount of assets, a place to live, presumably no chance of being destitute, and young enough to continue to earn a living while investing. You're ahead of the game vs. 90% of your peers.

Finding a good fiduciary might be hard, sure, but isn't everything that's really worth it? So don't let that creep in. Do the work. Don't rush, you have plenty of time to start learning and go slowly.

 

[pb4uski]

One thing that you are missing is that if you keep the house, not necessarily in any particular year, but over time your house will appreciate. So if it was 3% the appreciation would be $18,000 in the first year, $18,540 in the second year, etc.

The other thing that you are missing is that if you sell the house then you need to find somewhere to live and would have to pay rent but you can't live out of your car because you sold that too!

Just curious, how did you qualify to buy a $600k house if yur taxable income is only $35k a year? Or even a $300k house for that matter.

 

[Tropical]

OP needs to find a way to calm down.
ZOLOFT perhaps...

Many have suggested alcohol but I don't drink at all. I don't even like coffee. Which could be a good thing consider my current state

I have a massive DREAM board and VISION board on my wall. Needless to say things did not work out the way they were supposed to by now age. The crap it the fan BIG TIME and now I have to move forward with a completely new plan....

 

[athena53]

1. KEEP house or SELL house?
2. Where exactly to invest if I SELL house.
Invest into: 3 fund portfolio of VTSAX, VITSAX, Bonds or....
Invest into: "Money Market Savings Account" I think it was called?... but then I lose benefits of compounding interest...

1. I vote for selling it. Clearly it's a hindrance to the simpler life you want and it comes with plenty of other expenses such as maintenance, insurance and property taxes. I know people who have become rich being landlords but you've said you don't think you could get 1% of the fair market value in rent and you've still got all those ongoing expenses in addition to the headaches of being a landlord.

2. Take your time and talk to a good fee-only planner on this one. Not sure what you mean about losing the value of compounding on a money market account. Compounding is just "interest on your interest". If you buy a one-year CD for $1,000 paying 5% annually and then renew it (including interest collected) for another year you'll have $1,102.50 at the end of 2 years ($1,000*1.05*1.05). A money market account would work the same way except that the interest rate may vary.

 

[tutan]

From ssa.gov:

How You Qualify For Benefits


To qualify for benefits, you earn "credits" through your work - up to four each year. This year, for example, you earn one credit for each $1,640 of wages or self-employment income. When you've earned $6,560, you've earned your four credits for the year. Most people need 40 credits, earned over their working lifetime, to receive retirement benefits. For disability and survivors benefits, young people need fewer credits to be eligible.

We checked your records to see whether you have earned enough credits to qualify for benefits. If you haven't earned enough yet to qualify for any type of benefit, we can't give you a benefit estimate now. If you continue to work, we'll give you an estimate when you do qualify.

 

[Tropical]

One thing that you are missing is that, not necessarily in any particular year, but over time you house will appreciate. So if it was 3% the appreciation would be $18,000 in the first year, $18,540 in the second year, etc.

The other thing that you are missing is that if you sell the house then you need to find somewhere to live and you can't live out of your car because you sold that too!

My current plan was that I CANNOT sell or rent out my house until my business is profiting at least 6 figures with my business (this is a must and crucial). My mother is moving back to Hungary because she cannot afford to retire in the US (she only gets $1,300/month from social security and she is STRUGGLING and she tried to move to Mexico but didn't like it there I don't know why).

Once she moves to Hungary I could easily stay with her until I get a cheap off grid or semi off grid property in Hungary. Real estate in Hungary is much cheaper than in the US and cost of living is almost 50% cheaper. My business is online based so I can operate form anywhere in the word. My DREAM was to live off grid in Colorado or Idaho but it seems I will NEVER be able to afford that! I LOVE LOVE the moutains there. Hungary does not have same terrain unfortunately.... so it looks like I have to put Idaho or Colorado on hold by at least 20 years!!?

Moving to Hungary would allow me to live my dream life offgrid in nature (doesn't have the same mountains like Colorado but close enough I guess), growing my own food, renovating my own house (LOVE that stuff) and saving lots of money so I can focus on investing like crazy. I would own a truck... I enjoy riding my bike everywhere and do not miss having a car at all but I would need one there... a truck so I can play "farmer".


My FI number is 3M.

Is it even REALISTIC for me to reach my FI number in 20 years? I feel hopeless right now I really do. In 20 years, very short time, I will be 65yrs old! So in the interim I just SUFFER like I have been my entire life it is HORRIBLE. It is AWFUL not having income coming in from assets. Extremely stressful.

 

[Tropical]

From ssa.gov:

How You Qualify For Benefits


To qualify for benefits, you earn "credits" through your work - up to four each year. This year, for example, you earn one credit for each $1,640 of wages or self-employment income. When you've earned $6,560, you've earned your four credits for the year. Most people need 40 credits, earned over their working lifetime, to receive retirement benefits. For disability and survivors benefits, young people need fewer credits to be eligible.

We checked your records to see whether you have earned enough credits to qualify for benefits. If you haven't earned enough yet to qualify for any type of benefit, we can't give you a benefit estimate now. If you continue to work, we'll give you an estimate when you do qualify.

Thanks, yes this is what my account says... I only have 8 credits in total so far. I am trying to figure out... if someone earns only 30k/year and worked for 20 years... how much would their social security benefit be based on those 20 years... since they will have a LOT of ZEROS for 10 or 15 years...

 

[Aerides]

You are 43.
You have a free and clear house.
You have a business.
You have an accountant.

Please dial down the freaking out and the HYPERBOLE as it is confusing to read and doesn't help anyone get to the information with which we can help.

 

[mrfeh]

I need whatever money I invest to GROW into something large within the next 15 or 20 years. That is imperative.

All you can expect is what the market gives. You seem to be under the impression that you can do something concrete in the next 20 years to reach a certain portfolio value.

You can't.

I encourage you to keep reading/posting on bogleheads. First step is determining what asset allocation you can live with.

 

[RetiredAndLovingIt]

I'm concerned that you might fall victim to anyone that promises you a get rich quick scheme because of your obvious desperation.
In my opinion, mentally you are in no condition to be making any financial decisions right now, your mind is all over the place.
Take care

 

[athena53]

In my opinion, mentally you are in no condition to be making any financial decisions right now, your mind is all over the place.
Take care

I agree- clearly the failure of the "can't-fail" idea that was going to allow you to retire early has hit you hard. You need to work through that before you make any major decisions. You're (relatively) young, you have a valuable asset and a business you can do from anywhere. Your ideal life sounds pretty low-cost. You may want to consider therapy before you make any moves- and I say that as someone who's worked with a psychologist a few times in my life when I needed a mid-course correction.

 

[Tropical]

I'm concerned that you might fall victim to anyone that promises you a get rich quick scheme because of your obvious desperation.
In my opinion, mentally you are in no condition to be making any financial decisions right now, your mind is all over the place.
Take care

I am trying my best to figure out a plan. Seems I need to keep researching and once I'm ready I will be meeting with a fee only financial planner... more than one if necessary so that I can figure out a plan... it's NOT having a plan whatsoever that is driving me CRAZY. I'm 44 in 3 months. Age 50 is right around the corner. I have NO assets, nothing in place saved for retirement and my income is very random (not solid). I do not have my health. So no, I do not have any time to waste. My situation is not good.

I know what needs to get done... (increase business profit substantially)... that will realistically take 2 or 3 years. I need to increase my income to make up for lost time so I can invest like crazy. In the interim I will be contributing as much as I can each month.... and I also hope to know more later this year whether selling house or keeping house and investing the left over money in index funds/bonds or money market account is best.

... but in the interim I'm going to keep learning much as possible (figure out what asset allocation works for me)... next week I will have finished reading the bodgleheads guide to investing book. Then have 2 more books after that which I will finish ASAP.

 

[Tropical]

I agree- clearly the failure of the "can't-fail" idea that was going to allow you to retire early has hit you hard. You need to work through that before you make any major decisions. You're (relatively) young, you have a valuable asset and a business you can do from anywhere. Your ideal life sounds pretty low-cost. You may want to consider therapy before you make any moves- and I say that as someone who's worked with a psychologist a few times in my life when I needed a mid-course correction.

Trust me... this happened last year. I have had PLENTY of time to deal with it. Took entire year off dealing with it. Enough is enough of that. I am actually enjoying learning about investing in index funds etc... but have long way to go.

 

[GaryInCO]

If you are self employed then you are contributing to SS each year through the unemployment taxes that you pay. You only need 40 quarters of paying in to receive benefits.

Really ?? I was self-employed for 31 years. When self-employed, I always had a CPA do my taxes. Had a payroll company do the misc unemp/SS/etc filings. I thought I paid SS/medicare through the payroll company, but maybe that was part of the unemp payment? I'll have to dig up my papers and see if I can figure it out.

 

[Fermion]

You say you have no assets but then I thought you said you had a paid off $600,000 home...that is a pretty big asset.

In fact, you say you live on $25,000 a year. $600,000 in a money market right now at 5% throws off $30,000 a year. The 1bd apartment we rent right now is $550 a month, $6600 a year. You could sell the house, put the money in a money market, rent our apartment, and only need $1600 of other income a year to meet your expenses.

I am not saying you should do this, but you do have an asset if the home thing is real.

As for SS, the zero years don't really mean squat if your income is high. We have 13 years of zeros and will be getting near $60k/year combined in SS. Working 13 more years would get us about $4k/year more.

 

[Tropical]

You say you have no assets but then I thought you said you had a paid off $600,000 home...that is a pretty big asset.

In fact, you say you live on $25,000 a year. $600,000 in a money market right now at 5% throws off $30,000 a year. The 1bd apartment we rent right now is $550 a month, $6600 a year. You could sell the house, put the money in a money market, rent our apartment, and only need $1600 of other income a year to meet your expenses.

I am not saying you should do this, but you do have an asset if the home thing is real.

As for SS, the zero years don't really mean squat if your income is high. We have 13 years of zeros and will be getting near $60k/year combined in SS. Working 13 more years would get us about $4k/year more.

A primary residence that I live in is anything but an asset. It is a massive LIABILITY! As Robert Kiyosaki teaches... an asset puts cash in your pocket whereas a liability takes money out of your pocket.

Many people get into trouble not knowing the difference between an ASSET and a LIABILITY. Now if I want to put a tent in my backyard and rent my house out as I live in a tent with the cockroaches... then sure it becomes an asset but so long as I live in it... it's a liability.

I have property taxes, home insurance (which doubled by the way this year for no reason), repairs/maintenance.... my AC just bit the dust by the way... HUGE expense!!

A primary residence is NOT an asset!! I have ZERO assets, my health is not the best, my income is VERY unstable and I have NOTHING growing or put away for retirement as I am hitting 50 yrs of age very soon.

I couldn't care less that I might have it "better" than others just because my mortgage is 95% paid off. That does not take away from the fact that I am in an AWFUL situation (considering my age) and I am trying to figure out my plans going froward after being hit with the most devastating thing I have dealt with in my life... when the you know what hit the fan and my plans to retire at age 40 or mid 40s is dead.

I have been through CHEMO, multiple sclerosis, melanoma (HUGELY serious issues in my life) and other huge events in my life... NOTHING compares to not having FINANCIAL FREEDOM. I see what my mother deals with it is awful she is having to retire in poverty and is struggling tremendously. Another reason why I want to be able to give my mom at least 100k.... because she is the one who helped me pay off HUGE chunk of my mortgage (that 100K is hers not mine)... and because of this now she has nothing! I NEED to help my mom also... at my age I should be helping her.

I have a 600K liability... when in reality I would be HAPPY living in a 300k liability and invest the rest and give my mom at least 100k... all this stuff I hope to figure out soon...

 

[Fermion]

Well, if you are going to stay in your $600,000 house, give your mom $100k and do the other things, I think you will be working until 65.

On the plus side, that is plenty of time to get those SS credits.

 

[Tropical]

You say you have no assets but then I thought you said you had a paid off $600,000 home...that is a pretty big asset.

In fact, you say you live on $25,000 a year. $600,000 in a money market right now at 5% throws off $30,000 a year. The 1bd apartment we rent right now is $550 a month, $6600 a year. You could sell the house, put the money in a money market, rent our apartment, and only need $1600 of other income a year to meet your expenses.

I am not saying you should do this, but you do have an asset if the home thing is real.

As for SS, the zero years don't really mean squat if your income is high. We have 13 years of zeros and will be getting near $60k/year combined in SS. Working 13 more years would get us about $4k/year more.

Thanks... I was thinking about that earlier... I will be sure to discuss with financial planner. What's driving me the most crazy is I wish I could just push a button and the button would tell me which decision is the correct one and would produce the best outcome.

This of course is not possible... this is what is driving me the most crazy!! I have made so many AWFUL decisions in my life and each one is worse because the older I get the more difficult it is to climb out of the hole.

So I need to really make sure the plan I use going forward is the "best" one.... if that is even possible LOL which of course it isn't...

 

[Tropical]

Well, if you are going to stay in your $600,000 house, give your mom $100k and do the other things, I think you will be working until 65.

On the plus side, that is plenty of time to get those SS credits.

My mom would REFUSE to accept the 100k. I would have to force it into her bank account. It feels awful at my age I am not able to help my own mom. The ONLY way I could give my mom 100K is to sell my house of course... I would no longer be living in it... I would retire at age 105 then if that's the case. I would retire in my GRAVE.

What are the DOWNSIDES if I were to sell my house and invest the 300k into a money market account rather than into a 3 fund portfolio of VTSAX, VTIAX and Bonds? I am not sure of the asset allocation to use in this example question... what am I "missing out on" if I went with this route?

Thanks!

 

[pb4uski]

Robert Kiyosaki is a quack. Don't pay attention to anything that he says or writes.

Since your house is such a liability, I'll do you a huge favor assume said liability for free. Let me know where and when to meet and bring the title to sign it over to me.

If you're not interested in doing that then perhaps it isn't really a liability. Think that through.