Author Topic: What would a true mustachian do?  (Read 2891 times)

Diamondpick

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What would a true mustachian do?
« on: September 30, 2013, 08:22:10 PM »
Do I have enough in assets to FIRE?
Debt:
House 1: 900k. Could sell for 1.6-1.8
House 2: 400k. Could sell for 840ish. Rented and produces 15k/y above expenses if rented
House 3: 400k.  Could sell for 780ish. Rented and produces 15/y above expenses if rented

Looking at buying another house for 350k and rent it long term and gain 6k/y above expenses.

Assets:
Condo: 320k (bought as investment toward kids college in 10 years)
401k: 125k in Roth although I have been contributing for 22 years doesn't seem to grow much.
Bank account: 300k.

I would like to keep my house however can sell all, some or none and continue to pay down as quick as possible from highest to lowest rate. What's is the best route to spend more time with my kids, bike and wife? I can't tell you I will quit working, but I like the option to FIRE.

Thank you



Diamondpick

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Re: What would a true mustachian do?
« Reply #1 on: September 30, 2013, 08:39:47 PM »
4000/mo family living. Could use more but trying to live far below means.
Only other outside that is the 9k house mortgage and heating bills in winter total 6k that I draw from my s corp.

dragoncar

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Re: What would a true mustachian do?
« Reply #2 on: September 30, 2013, 08:53:07 PM »
If you can live within your means, you can retire.

Your RE exposure is way too high for my taste, and doesn't seem to be producing a good return, but that's just me.

desk_jockey

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Re: What would a true mustachian do?
« Reply #3 on: September 30, 2013, 09:08:12 PM »
There is no true Scotsman. 

I, however, would probably sell house #1 and use the proceeds to pay off most of the other debt, ridiculously low interest rates not withstanding.
 

Dicey

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Re: What would a true mustachian do?
« Reply #4 on: September 30, 2013, 09:31:21 PM »
If you want to keep the house you're in, and liquidate enough assets to retire early, I'd consider the following: If the others are rentals, I'd chose one, move into it, fix it up over a two-year period and then sell it. You can keep $500k of your profit tax-free when you're married ($250k for singles).

Repeat every two years or until the tax law changes. When you're done with the process and have invested all the proceeds wisely, move back into the first house (which you've been renting out all this time, for positive cash flow, of course) and live happily ever after.

Make sure you check with your CPA. (Get a good one if you don't have one yet.) There are a few landmines you will want to avoid, but taking advantage of this tax loophole is a hugely mustachian thing to do.

P.S. If you go this route, do NOT pay the others off with the proceeds of the sold houses. Make those little green men work for you to create long-term wealth. You might also consider refinancing everything while you are still working if you don't have great rates on each property.

pom

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Re: What would a true mustachian do?
« Reply #5 on: October 01, 2013, 05:29:44 AM »
I don't see how you can get there without selling house no1.