Age 32 Status Check

[thriftyhipster]

Hi Everyone,

I posted my stats here a few years ago - here's my prior post.

It's the ~3yr anniversary of that post so I thought I would provide an update. Your thoughts and feedback appreciated.

I'm newly married and 29 y/o. Currently living in Chicago. We rent an apartment in the city and own a rental property in our home state. The majority of our debt comes from school loans - interest rates are high, averaging 6.8%. We have a combined income of $190k and 91k net worth (including equity). I travel M-TH for work and she works in healthcare.
Still married, now live in Minneapolis. Have a 1.5 year old and another baby on the way. No more student loans. Combined income has risen to ~$250k gross. Wish we saved more but I've accepted we're not frugal by this forum's definition, and of course - many new child-related expenses (e.g. childcare for 1 @ $20k/yr).

Cash: 8k 11K
HSA: 1.5k 2K
401k: 71k 164K
Roth IRA: 65k 96K
(DW) 401k: 2.7k $61k
(DW) Roth IRA: 4.8k $21k
Total Cash and Investments: 153k $354k

Student Loan: 16k $0
(DW) Student Loan: 70k $0
Total Debt: 86k - average 6.8% $0

SFH Rental Property: 24k equity (146k loan @ 3.75%, 170k value after realtor fees) - cash flows $250/mo
Sold rental property
Primary residence equity after realtor fees: $40k
Gold / other: $6k

Net: 91k $400k

 

[exnavynuke]

Three years ago you had 80.5% of your income saved in investments.

Now you have ~142% of your higher income saved in investments. That's pretty good progress.

While you ostensibly *could* be saving a lot more (assuming growth in your portfolio approximately keeping up with the broad markets you're probably only investing ~15% or so of your relatively substantial income per year), you're still doing fine saving for a normal retirement. At this rate, however, I don't see you pulling off "early" retirement, which is fine if that's not your goal. If your goal is to retire in your 40's or 50's, however, you probably need to cut back on some spending and increase your savings rate.

Out of curiosity, what made you decide to get out of the rental property?

 

[ponyboy]

Start investing more. You're still young...let your money work for you...not the other way around.

 

[pb4uski]

You're doing great.

I look at it this way... in 3 years you have probably grossed ~$660k [($190K +$250k)/2*3].

Your net worth has increased $309k ($400k now vs $91k 3 years ago)

So between savings, debt paydown and growth your net worth has increased by ~47% of your gross earnings.... that's excellent in my book.

 

[flintnational]

In addition to significant progress on your net worth, you paid off the student loans. Great job. You also have good incomes to work with. One of the tricks my DW and I used was to become comfortable with our standard of living somewhere around your age. All future raises and bonuses after that went to savings or the kids college funds. Our incomes kept increasing over the years and we only increased our spending occasionally for inflation.

FN

 

[exnavynuke]

In addition to significant progress on your net worth, you paid off the student loans. Great job. You also have good incomes to work with. One of the tricks my DW and I used was to become comfortable with our standard of living somewhere around your age. All future raises and bonuses after that went to savings or the kids college funds. Our incomes kept increasing over the years and we only increased our spending occasionally for inflation.

FN

I missed the student loans... looks a lot better considering that in the equation.

 

[Aerides]

You're 32 with babies and a fantastic start, so I would not try to save more for now (unless you are spending in silly ways that make sense, doesn't sound like you are.

You're well on your way. Do you have an age-goal for ER? If you don't, that's fine, probably best to wait until both kids are in school before you chart the course for the back half of your plan.

 

[thriftyhipster]

Thanks for the feedback everyone.

Regarding the rental property, I sold this summer because the time seemed right and it was a very simple transaction where I sold to existing tenant with no realtor fees. The tenant had unusual circumstances which allowed me to be a tough negotiator. I couldn't be more happy with the result. Overall the rental property was a decent investment and experience - I bought in 2009 for $162k (also received $8k Obama credit) with ~$5k down and sold in 2017 for $220k; roommates and tenants paid the mortgage. No cap gains because I lived in the house for 2 of the last 5 years of ownership. Much of the proceeds of the sale went to student loans - feels awesome to no longer have that student loan cloud over our heads but was hard letting go of so much cash.

Regarding age goal for retirement, right now it's more about being FI than anything else, which I estimate to occur somewhere in early 40s. I like my job and make good money for my age, if I still like it and make a lot more, it will be hard to step away later. But so much changes (even in just 3 years), so we'll have to see.

 

[pb4uski]

In addition to significant progress on your net worth, you paid off the student loans. ....

I missed the student loans... looks a lot better considering that in the equation.

Keep in mind that the reduction in loans results in an increase in net worth.... so they are one and the same.

 

[pb4uski]

OP, suggest that you run a plan in Quicken Lifetime Planner and then use Quicken to monitor your progress.

 

[flintnational]

Keep in mind that the reduction in loans results in an increase in net worth.... so they are one and the same.

Yes. Yes. That's what happens when I read quickly and type even faster. This j*b has to pay more if I am required to be accurate.

FN

 

[kgtest]

I like my job and make good money for my age, if I still like it and make a lot more, it will be hard to step away later. But so much changes (even in just 3 years), so we'll have to see.

You make great money, about 25% more than us. We still have the town home rental, and man didn't you love that Obama credit? Getting that 8 grand back was awesome.

I used it to buy a SFH and flipped that home after 2 years for 25% ROI. I spend more than you though, we spend a lot on travel with fam and I spend a decent amount on hobbies. No point being the richest guy in the graveyard. I spent some of what I would have invested on an expensive lesson trying to sustain in Hawaii. But it was fun.

My advice, lower your child care expenses. I pay 10k for one child in MN.

 

[nerdyJON]

Great job! Hello from Chicago as well

I am happy you paid down that student loan debt at 6.8%! That was definitely a thorn.