House Rich and Cash Poor

[doneat54]

Good thoughts regarding the cars. I have a full shop at the house and do most all of my car maintenance. But I am in a "phase" now driving a $1300 '02 Taurus Wagon. DWs car is a 2012 VW CC with almost 140K miles on it. I just did a 4 hour intake manifold replacement on it. And my '08 truck has at least 3-4 things wrong with it. So fact is I am just tired of working on cars (except for my antique ones) and dealing with broken stuff. DW wants an Audi which I think are overpriced (but very nice cars) but she has talked about it forever, she still works, so we will find a way to make it happen if she really wants it. I'm still not sure what I would buy either, keep my truck (which I plow our driveway with in the winters), etc. etc. But as I said originally, I am trying to plan for replacing 2 of the cars 2 years from now, not now, and just find a way to pay cash for them when the time comes.

 

[NW-Bound]

If your wife still works, I don't think you should deny her the Audi. Just get a car loan.

 

[doneat54]

If your wife still works, I don't think you should deny her the Audi. Just get a car loan.

Oh yeah, that's a given.

 

[grayv]

if you're living off the wife's earnings, are you really FIRE'd ?

 

[doneat54]

if you're living off the wife's earnings, are you really FIRE'd ?

That's a good point, but does it really matter? I actually got laid off during a "re-org" ONE MONTH before I was going to retire anyway, and was paid handsomely to leave. DW was let go (same company) in 2018 and I told her "if you want to retire now, we could probably make it work with some lifestyle adjustments" and she said "No" and that she wanted to work for 3+ more years.....

 

[jazz4cash]

if you're living off the wife's earnings, are you really FIRE'd ?

Hmm, I need to know the answer to this also.

I can identify with enjoying the task of keeping the family fleet of older vehicles running and then you hit a point where it’s less satisfying and you can afford other options. I wish DW would agree to a new or 2 yr old low mileage car while she’s still working.

 

[BeachOrCity]

if you're living off the wife's earnings, are you really FIRE'd ?

For some reason, this type of comment always makes me wonder if there is some underlying gender bias? Maybe not. But it just seems men are always defaulted to “work longer than their wives” as some type of standard.

It’s just less common to see comments like this when the gender is reversed

Personally I applaud couples who can look at each individually and what they contribute (financially and non financially) and make sensible decisions that both are in agreement with.

 

[Sunset]

For some reason, this type of comment always makes me wonder if there is some underlying gender bias? Maybe not. But it just seems men are always defaulted to “work longer than their wives” as some type of standard.

It’s just less common to see comments like this when the gender is reversed

Personally I applaud couples who can look at each individually and what they contribute (financially and non financially) and make sensible decisions that both are in agreement with.

+1
So true.

That's why when my DW said she wanted to retire, I told her no, not yet as I had another year or two to go.
Didn't want her to feel bad about slacking off while I slaved away...

 

[Sunset]

..... or take it out of your IRA and pay 22% on it? That is where I am struggling a bit.

.....

Take it out of your IRA, because you are going to pay 22% later anyhow, but is it really 22% on all of what you take out each year ??

However, if you are careful, perhaps you can take out a small amount each year and stay below the 22% level,
You have to check with last year's tax return to see how much head space you have between your income level after deductions and the 22% level.

 

[finster869]

We are pretty long-toothed in the economic cycle and you are leveraged to three properties and have next to no emergency fund.

If I were you (and I'm not), I would sell one of the properties NOW to reduce my leverage and get better positioned just in case things don't go as planed.

Plus 1.

 

[DenverCraig]

Plus 1.

+2. I actually typed the exact comment about paying off at least one property and un-leveraging yourself, but forgot to press Post.

The reason I'm typing a new comment is to caution you against buying an Audi unless you want to spend a LOT of time or money keeping it running. I got to know my Audi guys way too well during my tenure driving my A4. Granted I put a ton of miles on it, but a lot of stuff that shouldn't have broken repeatedly did. Never again. I drive a boring Hyundai Sonata Hybrid now and my maintenance is a tiny fraction of what it was with the Audi.

 

[doneat54]

Take it out of your IRA, because you are going to pay 22% later anyhow, but is it really 22% on all of what you take out each year ??

However, if you are careful, perhaps you can take out a small amount each year and stay below the 22% level,
You have to check with last year's tax return to see how much head space you have between your income level after deductions and the 22% level.

DW's salary is already well into the 22% bracket, so anything we take from the IRA would get hit at that rate.

 

[seattledan]

There's also tax implications on selling a 2nd home that you may need to consider

 

[2cheap2eat]

Have you considered working FT or PT for a year+, seems like you need to ramp up cash reserves, especially with cars needing to be refreshed.

 

[catii]

Do you have a hobby you love, that could be turned into a side gig? Doesn't really count as w*rk, in my mind.

 

[W2R]

We have very little hard cash, maybe $15k.

The challenge is that in about 2 years, I'll want to replace 2 cars, and depending on where we go with the property, would want to have $10-$20k or so to work with.

Overall can’t understand why if things are tight OP would buy undeveloped land and second home and not generate income off either.

It makes no sense to me at all, unless there is some reason that he is not communicating or that I somehow don't understand.

I know we all have different ideas of how to fund retirement and what our retirement should look like, but reading this thread makes me so very glad that I am single and like Frank Sinatra, can do things "my way".

I don't have a lakefront second home, or a large parcel of undeveloped land with a view, or antique cars, and I still manage to have more fun in retirement than anybody ever had, along with enough cash to play with.

 

[RobbieB]

"More fun in retirement than anybody ever had"

All bow to the master.

 

[doneat54]

Have you considered working FT or PT for a year+, seems like you need to ramp up cash reserves, especially with cars needing to be refreshed.

I have not. Going back to w*rk, of any kind, is out of the question. I will live in a van down by the river, if need be.......

 

[doneat54]

Do you have a hobby you love, that could be turned into a side gig? Doesn't really count as w*rk, in my mind.

I do have a hobby that generates income. Since 2003. I make some parts for very early VW Beetles, '53 and earlier, and do some part restorations. But it's all "fun money" and I don't ever want it to be "required". I piss it away, DW has some nice finger ornaments from it, and we have taken some great trips...... but I don't want it to ever be something that I feel like I HAVE to do. For now, it acts as a back buffer sometimes, but IMO, it has to remain something I have the choice to do. Or not.

 

[doneat54]

It makes no sense to me at all, unless there is some reason that he is not communicating or that I somehow don't understand.

I know we all have different ideas of how to fund retirement and what our retirement should look like, but reading this thread makes me so very glad that I am single and like Frank Sinatra, can do things "my way".

I don't have a lakefront second home, or a large parcel of undeveloped land with a view, or antique cars, and I still manage to have more fun in retirement than anybody ever had, along with enough cash to play with.

Please go back and re-read, if you are interested. I bought the undeveloped land 25 years ago, purely as an investment. In today's dollars, paid peanuts for it. It has never been on the retirement/portfolio radar at all. Having second thoughts now about selling it, or building on it as a next step home. There is ZERO stress or anxiety here.



I have been into antique cars for 30+ years and have never lost a dime on any of them, making $$ on anything that I have re-sold. And, I would challenge anyone to a contest of "who is having more fun" in retirement. This whole post was about asking for opinions on options that we have, to use a small fraction of retirement portfolio to get us past replacing a couple cars and bridging a period when we are real estate heavy.

But let me get back to the collective brain trust here, and ask this:

If you needed a cash source for a 2 year window, and could tap DWs pension lump sum (which represents about 3% of the portfolio) at a 22% tax rate (because she is still working) OR, tap her Roth which is about enough to source the funds needed tax free, but forego the future growth on it (also tax free), what would you do?? Eat the taxes and leave the Roth alone, or take the Roth funds?

 

[Earlygirl]

My opinion is that a second home is really a splurge, and it requires a lot of ongoing investment to keep a second home going: repairs, utilities, taxes, insurance. It gives me a headache. Do you spend a lot of time there? I would sell it unless you do. Carrying the second home is where a lot of your budget is probably going. The land can sit there without work and it sounds like you may want to build on it? And the taxes are certainly minimal. Keep in mind there will be capital gains taxes due on the sale of either property.

I had an Audi, and it was a beautiful car and I did love it. However, as another person said, they do require a lot of maintenance. So, definitely keep that in mind. You will be doing some work on it. And they are not cheap.

Lastly, one thing to remember is that there is no tax on borrowed money! So if you got a HELOC and used those funds to tide you over, you don't pay any taxes on those funds. There are usually no fees to get a HELOC, only an early termination fee if you sold your home and had to close the HELOC out before two years were up. You will pay interest, and interest rates are at a low right now. So maybe you would want to do that instead of taking distributions and paying the taxes on the distributions? You would want to sit down with pencil and paper and analyze this strategy carefully. And I would be very cautious with the HELOC funds, if I chose the HELOC! You will need to pay those back in full at some point! You don't want to go crazy and start remodeling or vacationing or buying Audis.

 

[Sunset]

....
If you needed a cash source for a 2 year window, and could tap DWs pension lump sum (which represents about 3% of the portfolio) at a 22% tax rate (because she is still working) OR, tap her Roth which is about enough to source the funds needed tax free, but forego the future growth on it (also tax free), what would you do?? Eat the taxes and leave the Roth alone, or take the Roth funds?

I would not touch the ROTH, as it sounds like it's the only ROTH you folks have, and you are young enough that it will grow tax free for many decades. I wonder if you would be so quick to spend the ROTH if it was your ROTH ?

Get a mortgage on the farm/lake house while you ponder what to do with the property, there is zero tax on mortgage money and interest rates are historically low.

 

[MI-Roger]

Your wife's income doesn't support you and your chosen lifestyle.

Either modify your lifestyle by:

• Selling off a piece of property, or
• Selling off some of your car collection

Or go back to work to increase your income.

Three viable solutions.

 

[JustCurious]

The first time I took out a HELOC I was reviewing the paperwork and was shocked to learn that one could make the payments using the HELOC checks - using the loan. I asked the loan officer if this was right and they said "sure".

 

[corn18]

Please go back and re-read, if you are interested. I bought the undeveloped land 25 years ago, purely as an investment. In today's dollars, paid peanuts for it. It has never been on the retirement/portfolio radar at all. Having second thoughts now about selling it, or building on it as a next step home. There is ZERO stress or anxiety here.



I have been into antique cars for 30+ years and have never lost a dime on any of them, making $$ on anything that I have re-sold. And, I would challenge anyone to a contest of "who is having more fun" in retirement. This whole post was about asking for opinions on options that we have, to use a small fraction of retirement portfolio to get us past replacing a couple cars and bridging a period when we are real estate heavy.

But let me get back to the collective brain trust here, and ask this:

If you needed a cash source for a 2 year window, and could tap DWs pension lump sum (which represents about 3% of the portfolio) at a 22% tax rate (because she is still working) OR, tap her Roth which is about enough to source the funds needed tax free, but forego the future growth on it (also tax free), what would you do?? Eat the taxes and leave the Roth alone, or take the Roth funds?

You can ask all the closed end questions you want and the answer will still be to sell property and have a sufficient amount of cash so you can, you know, cash flow things you need to pay for in retirement.