Did I just do it?

[Deetso]

Looks like I joined the forum 13 years ago (how the crap did that happen).

I quit the job that drove me to this site everyday after a few months and became self employed and did pretty well. I am now a 40 year old lawyer with a family. Meanwhile, the basics of my goals from 13 years ago did not change.

So while I haven't posted regularly- I would occasionally lurk around. I thought now was a good time to check back in. I have a reasonably successful law firm, my family live pretty modestly and we dumped most of our money into real estate and other small businesses.

I now have a significant portfolio of real estate and own a few small businesses- all with some really great managers. I could take a month or two off and not miss a beat. The only real reason I have to come back is for the law firm- no one else has the license- but the other companies don't actually need me present.

Onto the point of my post- we recently decided to sell one of our properties. Instead of 1031ing that one we have decided to bite the bullet on the taxes, pay off our mortgage, pay off a mortgage we have on the house my in-laws have moved into (that we own) and pay off what's left of my student loans. While I know that this is not the best ROI on those funds it is something I find myself exceptionally excited for.

Then I was looking at the new numbers and realized something today. In our current situation, If I quit my law firm (or something bad happens) I could more than make a living off of the income from the properties and other small businesses (the ones that I don't actually have to work on at all if need be). I think I just became fully "FI" in my mind. I don't actually have to show up if I don't want to!

I will continue in the law firm for now- so I don't think I qualify as "RE"- but there is an exceptional feeling of freedom that I must admit I didn't think I would experience from making a "bad" financial decision (paying off my primarily house mortgage and its 3.5% interest rate).

I am looking forward to figuring out what to do next- how to make myself fully unnecessary in the businesses (though one is a coffee shop and I like to make sure that coffee is hot and the chairs in the café don't float away... ha).

This isn't something many of my peers relate to so- its pretty nice to have a place to say this "out loud" to.

 

[upupandaway]

Awesome work!!! Congrats!! How did you get involved with the coffee shop business? That sounds like an interesting investment.

 

[socca]

... but there is an exceptional feeling of freedom that I must admit I didn't think I would experience from making a "bad" financial decision (paying off my primarily house mortgage and its 3.5% interest rate).

As has been discussed on this board many times, the mortgage payoff decision is partly financial and partly emotional. What is discussed less often are the practical benefits of not having a mortgage, for example not having to deal with a mortgage servicing company and not needing a bank rep to show up at the closing when you sell your house. Congrats on paying off your mortgage - it was a great feeling when I paid off the mortgage on my first house many years ago (after 4 years of ownership). Damn the finances!

I am looking forward to figuring out what to do next - how to make myself fully unnecessary in the businesses...

I'm not sure how you can pull this off - as long as you are the business owner you are liable for everything that happens as the biz operates in the world. Sure, you can insure yourself to the hilt, but you then get to fight an insurance company when they deny a major claim. It's true that a good manager will allow you to delegate operational responsibility, but this isn't the whole enchilada by any measure. As a lawyer you are probably aware of all of this, but I'm in an argumentative mood so I'll just throw this out to be a PITA.

ETA: there are plenty of limited liability biz vehicles out there (e.g. LLC, C-Corp, S-Corp). What I mean is that your financial investment in the entity is at risk. You may not have unlimited personal liability - a good thing.

 

[donheff]

Congratulations on achieving FI at such an early age. It leaves you with lots of choices.

 

[Maenad]

Congrats! Enjoy how good it feels - you deserve it!

 

[ckelly78z]

I don't ever consider paying off a mortgage, and student loans as a bad financial decision. The math says that it might be wiser to invest that money in a high yield fund, rather than paying off a low interest loan, but math has never put a smile on my face, and made me fist pump the air, like I did when I paid off my own mortgage.

It is a visceral feel that pleases the heart to be debt free, whether the numbers make sense or not.

 

[Perryinva]

Wow, a big congrats! I was up to my elbows in debt after divorce number 2 at that age, and just rebuiding my life! Thank goodness, no kids.

 

[Amethyst]

Wow, you are an ER hero.

Looks like I joined the forum 13 years ago (how the crap did that happen).

I quit the job that drove me to this site everyday after a few months and became self employed and did pretty well. I am now a 40 year old lawyer with a family. Meanwhile, the basics of my goals from 13 years ago did not change.

So while I haven't posted regularly- I would occasionally lurk around. I thought now was a good time to check back in. I have a reasonably successful law firm, my family live pretty modestly and we dumped most of our money into real estate and other small businesses.

I now have a significant portfolio of real estate and own a few small businesses- all with some really great managers. I could take a month or two off and not miss a beat. The only real reason I have to come back is for the law firm- no one else has the license- but the other companies don't actually need me present.

Onto the point of my post- we recently decided to sell one of our properties. Instead of 1031ing that one we have decided to bite the bullet on the taxes, pay off our mortgage, pay off a mortgage we have on the house my in-laws have moved into (that we own) and pay off what's left of my student loans. While I know that this is not the best ROI on those funds it is something I find myself exceptionally excited for.

Then I was looking at the new numbers and realized something today. In our current situation, If I quit my law firm (or something bad happens) I could more than make a living off of the income from the properties and other small businesses (the ones that I don't actually have to work on at all if need be). I think I just became fully "FI" in my mind. I don't actually have to show up if I don't want to!

I will continue in the law firm for now- so I don't think I qualify as "RE"- but there is an exceptional feeling of freedom that I must admit I didn't think I would experience from making a "bad" financial decision (paying off my primarily house mortgage and its 3.5% interest rate).

I am looking forward to figuring out what to do next- how to make myself fully unnecessary in the businesses (though one is a coffee shop and I like to make sure that coffee is hot and the chairs in the café don't float away... ha).

This isn't something many of my peers relate to so- its pretty nice to have a place to say this "out loud" to.

 

[GravitySucks]

Congrats!

 

[ERD50]

For reference, if you sold off those properties/businesses in a reasonably tax efficient way (over several years at least?), how much income could a totally passive portfolio provide? Assume a reasonable asset allocation, buy & hold passive low-cost, broad based index funds, providing 3.5% ~ 4% inflation adjusted income for life.

-ERD50

 

[OldShooter]

... as long as you are the business owner you are liable for everything that happens as the biz operates in the world. Sure, you can insure yourself to the hilt, but you then get to fight an insurance company when they deny a major claim. It's true that a good manager will allow you to delegate operational responsibility, but this isn't the whole enchilada by any measure. As a lawyer you are probably aware of all of this, but I'm in an argumentative mood so I'll just throw this out to be a PITA.

ETA: there are plenty of limited liability biz vehicles out there (e.g. LLC, C-Corp, S-Corp). What I mean is that your financial investment in the entity is at risk. You may not have unlimited personal liability - a good thing.

OP, as an attorney you certainly understand that this is complete nonsense. Others, beware.

 

[Deetso]

For reference, if you sold off those properties/businesses in a reasonably tax efficient way (over several years at least?), how much income could a totally passive portfolio provide? Assume a reasonable asset allocation, buy & hold passive low-cost, broad based index funds, providing 3.5% ~ 4% inflation adjusted income for life.

-ERD50

This is exactly what I am going to be thinking about over the next year or so!

I expect I will keep some of the properties and probably even keep trading them around (via 1031s), I am quite sure I will shop the law firm or some of the other businesses- none are businesses that will go fast and I am not in a particular hurry to have it done.