Hello. I stumbled across the whole FIRE movement 1 month ago and have been reading blogs and forums ever since and certainly value the opinion on the many knowledgable people on this forum. I’m curious what people would do in my situation.
My situation
Me: 40, UK and Australian citizen
Wife: 38 Canadian & Australia citizen
Children: 2 & 4
We live and work in NY as US-tax residents having moved here a little over a year ago, previously lived in Australia.
Gross Salary per month $33.5k
Pre tax deductions (monthly)
FSA Dependent Care $417 max $5000k allowance
Healthcare $429
HSA $265 max for annual family allowance
$401k $2620 max for annual contribution
Total $3731
Net income $15.5k/month
Expenses (monthly)
Child care $3267 full time 5 day, 2 children
Property taxes $1220
Car lease+fuel $833 (two cars)
Vacation $500 (conservative budget $6k for annual vacation domestic and overseas)
Utilities $458 Gas, water electric
Groceries/Food $1380 includes eating out 2 month, lunch weekdays
Insurance $313
Other $700 (internet, TV subscription, gym, kids sports activities, clothes)
Total $8671
Net income after expenses (monthly) $6,829
Assets
House paid off $950k
Cash $110k
401k $58k combined balance
Vanguard brokerage $31k
Company shares $93k
Real estate crowdfunding $44k
HSA $1k
Subtotal $1.287m
Overseas 401k $350k => can’t access till 65
Overseas Investment Property: $1.75m (valuation), mortgage $800k, Cash in offset account $800k => no interested owed on mortgage, like a line of credit set up.
Overseas sub-total $2.1m
Net Rental income after all expenses $3400/month
Liabilities - None beyond the overseas mortgage
Some of you may look at this and think this guy is crazy and is already into FIRE status. The expenses are ridiculously high, this is partly living in expense NY suburb due to my work and clearly some luxury expenses. We’ve always been savers and yes we have high paying jobs which has helped a lot. My wife and I started from nothing literally, both from working class families and have built this up over 15 years. Clearly, luck has played a role with real estate appreciation along the way. Although our asset position is very strong, there’s not a huge amount of passive income except from our overseas investment property.
Here’s points to note about our plans and I’d be curious to know what you would do in our position.
A) Our plans for ‘retirement in 3-5 years is:
i) Move to Canada=> one of the major consideration is the tax implication of all our US investments if we move and become non-US residents. I am eligible for a Green Card. What should we do with the investment in the meantime?
ii) We have a huge passion for travel and we would like to consider travelling with our children and home schooling them for 1-2 years, perhaps before moving to Canada.
B) What steps would you take to create a passive income stream into the future? Let’s say we want to live on $75k on annual expenses.
C) What else would you change.
D) Selling the property overseas is something we’d like to avoid as this could generate a CGT liability > $500k!
Welcome any thoughts or questions you may have.