Life Situation:
Married
Me - 44,
DW - 37
Two kids, ages, 7, 8
Income:
My Gross salary per year (prior to layoff): $160,000
Wife’s Gross salary per year: $115,000
Approx Current Expenses (yearly).
Auto, $7,000 (no car payments, gas, maintenance and comprehensive car Insurance)
Clothing, $6,400
Dining out, $ 6,400
Education, $ 12,000 (kids camp during summer, some private tutoring, childcare, kids do go to public school)
Groceries, $10,000
Life Insurance, $1,100
Housing, $2,500 (shampoo, laundry detergent, new furniture/replacement of anything breaking etc. )
Medical, $1,200
Personal Care, $3,000
Recreation, $8,000 (personal travel, vacation related etc.)
Rent Expense, $25,200 (decent deal on my rent from a family member who is the landlord. Market rate would be $48K per year)
Subscriptions, $6,000 (group fitness classes, kids swimming, kids tennis classes etc.)
Telephones and Internet, $2,088
Utilities, $4,000
Total expenses per year are $94,100 per year
Assets:
Tax Advantage accounts (Rollover IRA, Roth IRA, Health Equity, 401K):
$666,000
Brokerage (non tax advantage):
$650,000
The assets in Tax advantage accounts and Brokerage are invested with an Asset allocation of (80% stocks, 20% bonds). Funds being VTSAX and VBTLX. The bond fund is only in tax advantage accounts due to tax efficiency.
Former Primary Home now a rental property (about 6 hours driving distance from current residence). Still in a position where I can sell this and avoid paying capital taxes since I have lived there for two years out of the past five years.
Market Value $550,000
Mortgage outstanding $260,000
Cash flow - Breaks even on a yearly basis (considering vacancy, repairs etc.)
I am keeping the above property mainly because it is in a top notch neighborhood and expect decent appreciation overtime (not beyond stock market historical returns). May sell this property once we purchase a new home around the area we currently rent and use the equity in the rental to pay towards the new home mortgage.
Cash
$250,000
The cash above is sitting in a Money Market account. I am keeping it there as a down payment on a primary residence. For the time being, I am deferring the purchase of a primary residence (which will cost about $700K) because not only will it make our expenses go up but will also increase my wife’s work commute and my proximity to quality jobs.
Liabilities:
No other liabilities, apart from the mortgage on the rental property listed above.
Summary of Assets:
Current Investments in Stock Market: $1,316,000
Equity in Rental Property: $205,000 (after selling expenses - real estate commission etc., fix up etc.)
Cash reserves to purchase primary residence: $250,000
Other info:
Currently renting in a HCOL area.
While I consider myself as Mustachian, my Wife not so much. She rather enjoy the material luxuries of life and doesn’t mind working longer in the corporate world. For me, I value my time & freedom over being forced to work.
Questions:
1. Please provide optimizations on the above? Since my wife is not a mustachian, I can’t trim the budget much. I have tried methods/ideas recommended by others on this forum but DW is not ready for any major/decent shift in cutting any costs.
2. I am considering taking a few months off from work before going back to work. However, a part of me also tells me to defer freedom and gratification for later once I achieve the FIRE number. My FIRE number (for me and wife) assuming we purchase a new home (about $700K) would be $2,775,000. The home purchase will mean a new mortgage, property tax, HOA and insurance. My yearly expense will increase to $111,000. FIRE number calculated = 25 years * 111,000 = $2,775,000. Any comments here?
3. Any other constructive financial feedback would be appreciated.
