Life Situation: Married,Husband and Wife both Age 26, No kids yet
Income:
W-2: $230,000 (roughly 50/50 between both of us)
Rental Properties Cash flow: (After mortgages, reserves, and after income tax):$75,000
Side Hustles/Misc: $15,000
Individual amounts of each Pre-tax deductions: $37,000 (Max out 401k)
Current expenses:
Rent 29,900.00
Restaurants 7,798.00
Travel 5,950.00
Clothing/Shoes 3,732.00
Household/Personal Care 2,324.00
Groceries 3,079.00
Utilities 1,474.00
Internet/Cable 1,862.00
Gym/Fitness 268.00
Taxes: ?
Insurance 1,293.00
Car 2,160.00
Healthcare $0
Gifts 1,536.00
Pets 384.00
Cash 1,626.00
Miscellaneous 3,393.00
Total 66,779.00
Assets:
Cash $104,406
Investment Accounts $0
Investment Accounts: Retirement Accounts $160,100
Real Estate: Investment Property $2,706,540
Car ($15k)/Other Assets: $63,300
Total $3,034,346
Liabilities
Mortgages: Investment Property $1,198,774
Car Loan (3%): $14,000
Net Worth: $1,822,172
Specific Questions:
1) How do early retirees estimate changes in expenses due to life changes? This is my biggest "fear" when it comes to quitting my W-2 and focusing on other things full time. For example, we are in a HCOL and still rent in a city, once we have kids we will most likely buy a house. How should I factor in these increases? My three largest concerns are healthcare, child expenses, and housing (we rent a studio as is-wouldn't be a long term fit!)I don't want to be over conservative and budget double, but not sure where to start with expected increases. I don't think I can wait the 10 years to find out!
2) Real Estate: I almost have nothing in the markets that are accessible before 59.5 unless I use 72t. Is it too risky to rely on real estate to get me through the first 30 years? I'm hoping the $160k of retirement savings can grow tax deferred to provide diversification later in life. It's hard for me to believe we are FI because I can't feel like I can't use the 4% rule or something similar.
3) I would love to quit my job and remove half of our W-2 income, but questions 1 and 2 are causing hesitation. I've been able to accumulate rentals as a side hustle and love it, and think I may actually be better off focusing on it full time, although a lot of the savings for down payments would diminish.
Are we actually FI at this point?
Thanks in advance!