Topic Title: FIRE yet? My conclusion at the end of doing this exercise is….NOT FIRE (with current setup) but there are options.
Life Situation: Married couple; I am 47, wife is 44 no dependants. Residence paid off.
Gross Salary/Wages: $92,000 , wife $65,000
Other Ordinary Income: Family trust cash payments $7,000
Qualified Dividends & Long Term Capital Gains: $10,000 (pa approx)
Rental Income, Actual Expenses, and Depreciation: Rental from two properties $61,000 (gross)
Adjusted Gross Income: $170,000 (pre tax)
Taxes: Tax paid $70,000 after tax income in 2017 was $100,000
Current expenses:
I have two Investment Properties (IP):
IP A - Sydney apartment
mortgage repayments interest pa $22,000, principal pa $9,000
rates, strata and utilities pa $4,800
IP B – Regional house
mortgage repayments interest pa $5,000 principal pa $7,000
Rates and utilities pa $3,200
Assets:
IP A - Sydney apartment
Value $1,100,000
Rent: $41,000 pa
IP B – Regional house
Value $400,000
Rent: $20,000 pa
Managed/Index Funds (Australian and International), direct shares
$200,000
Cash in offset (offsetting investment loan)
$120,00
Superannuation; Managed/Index Funds (accessible in 13 years)
$150,000
Liabilities: two secured Investment loans
IP A – owing $510,000 (currently paying P&I)
IP B – owing $220,000 (currently paying P&I)
Living expenses:
Insurances (health etc.), gym, food and clothing, entertainment, travel
$36,000 per annum
Specific Question(s):
Net Worth = $1,240,000
4% x $1,240,000 = $49,600
Living Expenses plus Property costs (interest and rates/utilities) = $71,000
Based on this and largely because of my loan amounts I am not FIRE yet.
Nevertheless I would like to have some feedback on how well I am on track to FIRE. I have been working full time salary work for 20 years and need a break if not a permanent one soon.
Currently investing in equities and managed/index funds $30,000 per year and paying off loans approximately $30,000 per year (approx.)
That is $60,000 per year working towards FIRE.
Other thoughts:
Sell IP A Sydney Apartment would net me $590,000 and move me to FIRE. (Net Assets would be $1,260,000 x 4% = $50,400 and annual costs $44,200 including IP B) ie without the interest and rates cost of IP A of $26,800)
My wife is completing studies and has recently embarked on a new career (full time work) and intends working for the foreseeable future. I have excluded her intentionally from the calculations.
Another way to look at it is to adopt some BADASSITY and reduce my $36,000 per annum spend…with a some help by MMM
I welcome your thoughts.