Some good, some bad, but I think we're on the right track.
Hi xaviemb here, I'm 42 and my wife is 38. We have four kids total, two between us (4 and 2) and I have two from a previous marriage (12 and 15) that spend half their time with us. Looking for some advice, tips, motivation or general guidance on smart things to do along the way that I may or may not have come across. Thanks in advance!
Assets - $1.73m
We have two homes (primary and rental) each with approximately 25 and 26 years left on the mortgages at relatively low rates. We bought our primary in 2019 for $631,000 with 10% down and a 4.00% 30yr fixed, and we put about $110,000 into fixing the place up inside an out (which mostly came from the sale of my DW's home at the time). We are extremely happy with the property (10 acres, half wooded up against a creek on the back side and on the end of a half mile driveway - lots of privacy and nature surrounding us) and feel we were very lucky to buy at a fortunate time (just before COVID), and in the process of renovating we discovered the framing and house are in fantastic condition (built in the 1970s, metal roof, single level with 5 bedrooms) and I think (hope) we'll have very little maintenance in the next 20 years because of this investment up front - my commute isn't too bad (35 minutes) and we wouldn't trade the privacy and land for anything. Also a lot of that up front cost/work went into the yard and turning our property into a place we could board and keep horses (a love both my wife and I share). Also gave me an excuse to get a small tractor and play farmer on weekends haha. We've since started boarding horses and collecting approximately $12,000 annually (we put about 3k a year of that into maintenance in fencing and barn etc...), the rest more than covers property taxes.
We're both very hands on and like to do work ourselves that we can, but we'll recognize when it's time to bring in help (like climbing trees to cut back limbs over the barn, as an example). In 2020, just 13 months after moving in, we refinanced into a 2.75% rate when the house appraised for 25% higher than our purchase. This bumped the principal up, but excel helped me to realize this cost would pay for itself in 4.7 years (we're about at that point now) so we're really playing the long game here. It reduced our monthly payment a good bit. Our home is now worth approximately $1.38M, but that's a problem potentially as developments creep our way and are eating up land. To combat this, we've applied for agriculture status, reducing our property taxes (deferring them 5 yr payback required if/when we move) by about 25% annually. This will be very helpful if land values start to become painful (7 miles from us an acre of residental land sells for 1.2-1.5 million), we're really on the fringe of suburb and country life. But this is getting kind of long, but I thought it ws important to communicate we love our house, we're wanting to stay put at least till youngest is out of college... at which point we might downsize (20ish years from now). Now onto the other.
Our rental is a townhouse in a very populated area about 40 minutes from us, we have 3.75% rate and the house is worth $550,000. The principal owed is $355,000, and mortgage is $2,450 (including escrow/insurance/prop taxes). We currently rent for $2,900 and started a 2 years lease with good tenants who have been there for a couple years already.
I have $630,000 in my IRA and $15,000 in 401k (recently started a new job) -- DW has $85,000 in an IRA
We have $18,000 in savings and are putting $2,000 a month into it currently (this is one area we really need to boost, it's not enough right now...)
Overall that equates to $730,000 in retirement accounts, $984,000 in equity from our two homes and $18,000 in savings. I definitely feel like we're high in net wealth, but cash poor in terms of accessible funds as touching retirement early is a no go and equity is locked in the homes for now.
Debts - $1.01m
We owe $591,000 on our primary home (26 years left on 30yr fixed at 2.75%) and we owe $355,000 on our rental (25 year left on 30yr fixed at 3.75%). We have one car loan for $39,000 at 6.5% that we are aiming to pay down by end of 2025, a $1,700 at 0% on a tractor that will be paid off in full this coming January as well as two credit cards at a combined $12,500 that are 0% until April and August if 2025 (we've been rolling 0% credit cards for three years... we always pay them off before they get to a point of owing any interest - DW and I have never paid interest on a CC, but we understand this can be a dangerous game if not managed properly)... we never let this accumulate any higher than what we have in cash to pay them down if we can't roll forward to a new card at 0%... in our view it's just a free loan for a short term. I know we need to stop this and start really accumulating savings though...
Monthly Cash Flow
About a million in debt would normally make me very nervous (I'm sure it's not ideal for most reading), but I'm not too converned about it. I work in a very specialized engineering field where I am confident in job security for the forseeable future. DW stopped working when we had our youngest, and I'm bringing in about $13,000 monthly after taxes and after retirement contributions (we put away about $35,000 annually, and might start to dial that back to reduce some of the debt like the car faster). Our monthly expenses are about $7,500 (mortgage, bills, food, etc...) and I pay child support of almost $2,000 a month. This leaves about $3,500 left over ($2,000 to savings and $1,500 buffer). Between the rental and horse business (if you could call it that) we have another $1,200 a month or so coming in, and that's growing...
My view. I think we're very heavy on retirement savings, and were fortunate from home price surge and getting our dream home at a good price just before things got crazy. Our risk of going negative on the house seem extremely low. The rental is in a high demand area, but does require some pain and suffering dealing with tenants. Right now we have good ones and it's net cash flow positive. I wish we had saved a bit more of what we put into the house... having only $18k in savings isn't ideal right now with about $12,500 in short term debt due within a year to avoid CC interest... but I'm confident we'll pay that down (I receive a guaranteed $12,500 bonus each December). I also want to get this 6.5% on the car paid off asap. DW and I are the types who tend to drive cars till they die... so we'll be in a much better spot there in a few years. I think we really need to focus on getting a pile of money growing that is accessible... so we can do all the things we want to do with our kids (RV, national parks) when we come of an age there that can be memorable. At some point we might look to sell the rental, and put that money into an account growing for that purpose. DW and I believe strongly in not paying for our kids college (which I think is atypical for our area)... we both paid our own way and feel we learned valuable lessons managing loans and career because of doing it on our own. We'll be there to help if they stumble, but we aren't planning to set aside funds for them. In 5 years and 2 months child support ends (but who is counting? haha)... so that'll be a boost.
Career-wise. I'd love to retire and focus on wood working and other hobbies, but I don't mind my job... so I can see myself continuing with it another 10-15 years. I think my hope is to FIRE around 55 or maybe 60... depending on what our retirement accounts do between now and then.
Appreciate anyone who has read to this point. Hoping to learn a lot here
Hi xaviemb here, I'm 42 and my wife is 38. We have four kids total, two between us (4 and 2) and I have two from a previous marriage (12 and 15) that spend half their time with us. Looking for some advice, tips, motivation or general guidance on smart things to do along the way that I may or may not have come across. Thanks in advance!
Assets - $1.73m
We have two homes (primary and rental) each with approximately 25 and 26 years left on the mortgages at relatively low rates. We bought our primary in 2019 for $631,000 with 10% down and a 4.00% 30yr fixed, and we put about $110,000 into fixing the place up inside an out (which mostly came from the sale of my DW's home at the time). We are extremely happy with the property (10 acres, half wooded up against a creek on the back side and on the end of a half mile driveway - lots of privacy and nature surrounding us) and feel we were very lucky to buy at a fortunate time (just before COVID), and in the process of renovating we discovered the framing and house are in fantastic condition (built in the 1970s, metal roof, single level with 5 bedrooms) and I think (hope) we'll have very little maintenance in the next 20 years because of this investment up front - my commute isn't too bad (35 minutes) and we wouldn't trade the privacy and land for anything. Also a lot of that up front cost/work went into the yard and turning our property into a place we could board and keep horses (a love both my wife and I share). Also gave me an excuse to get a small tractor and play farmer on weekends haha. We've since started boarding horses and collecting approximately $12,000 annually (we put about 3k a year of that into maintenance in fencing and barn etc...), the rest more than covers property taxes.
We're both very hands on and like to do work ourselves that we can, but we'll recognize when it's time to bring in help (like climbing trees to cut back limbs over the barn, as an example). In 2020, just 13 months after moving in, we refinanced into a 2.75% rate when the house appraised for 25% higher than our purchase. This bumped the principal up, but excel helped me to realize this cost would pay for itself in 4.7 years (we're about at that point now) so we're really playing the long game here. It reduced our monthly payment a good bit. Our home is now worth approximately $1.38M, but that's a problem potentially as developments creep our way and are eating up land. To combat this, we've applied for agriculture status, reducing our property taxes (deferring them 5 yr payback required if/when we move) by about 25% annually. This will be very helpful if land values start to become painful (7 miles from us an acre of residental land sells for 1.2-1.5 million), we're really on the fringe of suburb and country life. But this is getting kind of long, but I thought it ws important to communicate we love our house, we're wanting to stay put at least till youngest is out of college... at which point we might downsize (20ish years from now). Now onto the other.
Our rental is a townhouse in a very populated area about 40 minutes from us, we have 3.75% rate and the house is worth $550,000. The principal owed is $355,000, and mortgage is $2,450 (including escrow/insurance/prop taxes). We currently rent for $2,900 and started a 2 years lease with good tenants who have been there for a couple years already.
I have $630,000 in my IRA and $15,000 in 401k (recently started a new job) -- DW has $85,000 in an IRA
We have $18,000 in savings and are putting $2,000 a month into it currently (this is one area we really need to boost, it's not enough right now...)
Overall that equates to $730,000 in retirement accounts, $984,000 in equity from our two homes and $18,000 in savings. I definitely feel like we're high in net wealth, but cash poor in terms of accessible funds as touching retirement early is a no go and equity is locked in the homes for now.
Debts - $1.01m
We owe $591,000 on our primary home (26 years left on 30yr fixed at 2.75%) and we owe $355,000 on our rental (25 year left on 30yr fixed at 3.75%). We have one car loan for $39,000 at 6.5% that we are aiming to pay down by end of 2025, a $1,700 at 0% on a tractor that will be paid off in full this coming January as well as two credit cards at a combined $12,500 that are 0% until April and August if 2025 (we've been rolling 0% credit cards for three years... we always pay them off before they get to a point of owing any interest - DW and I have never paid interest on a CC, but we understand this can be a dangerous game if not managed properly)... we never let this accumulate any higher than what we have in cash to pay them down if we can't roll forward to a new card at 0%... in our view it's just a free loan for a short term. I know we need to stop this and start really accumulating savings though...
Monthly Cash Flow
About a million in debt would normally make me very nervous (I'm sure it's not ideal for most reading), but I'm not too converned about it. I work in a very specialized engineering field where I am confident in job security for the forseeable future. DW stopped working when we had our youngest, and I'm bringing in about $13,000 monthly after taxes and after retirement contributions (we put away about $35,000 annually, and might start to dial that back to reduce some of the debt like the car faster). Our monthly expenses are about $7,500 (mortgage, bills, food, etc...) and I pay child support of almost $2,000 a month. This leaves about $3,500 left over ($2,000 to savings and $1,500 buffer). Between the rental and horse business (if you could call it that) we have another $1,200 a month or so coming in, and that's growing...
My view. I think we're very heavy on retirement savings, and were fortunate from home price surge and getting our dream home at a good price just before things got crazy. Our risk of going negative on the house seem extremely low. The rental is in a high demand area, but does require some pain and suffering dealing with tenants. Right now we have good ones and it's net cash flow positive. I wish we had saved a bit more of what we put into the house... having only $18k in savings isn't ideal right now with about $12,500 in short term debt due within a year to avoid CC interest... but I'm confident we'll pay that down (I receive a guaranteed $12,500 bonus each December). I also want to get this 6.5% on the car paid off asap. DW and I are the types who tend to drive cars till they die... so we'll be in a much better spot there in a few years. I think we really need to focus on getting a pile of money growing that is accessible... so we can do all the things we want to do with our kids (RV, national parks) when we come of an age there that can be memorable. At some point we might look to sell the rental, and put that money into an account growing for that purpose. DW and I believe strongly in not paying for our kids college (which I think is atypical for our area)... we both paid our own way and feel we learned valuable lessons managing loans and career because of doing it on our own. We'll be there to help if they stumble, but we aren't planning to set aside funds for them. In 5 years and 2 months child support ends (but who is counting? haha)... so that'll be a boost.
Career-wise. I'd love to retire and focus on wood working and other hobbies, but I don't mind my job... so I can see myself continuing with it another 10-15 years. I think my hope is to FIRE around 55 or maybe 60... depending on what our retirement accounts do between now and then.
Appreciate anyone who has read to this point. Hoping to learn a lot here
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