Author Topic: Is it possible for us to FIRE in 2 years??  (Read 1309 times)

wives2stache

  • 5 O'Clock Shadow
  • *
  • Posts: 1
Is it possible for us to FIRE in 2 years??
« on: September 23, 2018, 05:08:56 PM »
I am new to the mustache community, but have become completely obsessed with the possibility that we could leave our soul crushing jobs earlier than I once thought. I am 54 and my wife is 52. We both work in the field of healthcare management. We work long hours (10-12 per day x 5 days per week). We have 24/7 accountability for our departments.
      
My wife and I have 4 children between us. Two are independent, one is 18 and in college with a scholarship the other is 16 and will likely receive a full athletic scholarship.

I have been talking about "early retirement" for a while. I was aware of the 4% rule and we have tried to create some diversification of income for when we retire. However, I recently lost my grandmother who I was very close to. This event brought me to the awareness that I had lost much of the joy in my life. My job seems to gobble up all my energy for creativity and human interaction.

We are not accountants or engineers. Neither of us really have a good sense of where we are or what the next step should be. Over the years we have not been intentional with investing and saving but we are generally frugal. Since reading the blog we have upped our frugal game and are really ready to challenge ourselves.

My questions (see attachment):

1. We are in a high tax bracket (married filing jointly). We have been saving the max in our 403b accounts for the past couple of years. We have saved less money in non-retirement accounts. Should we continue to max out our 403B accounts as long as we are still in our jobs?

2. We (and the bank) own three homes. Once our last child leaves for college we are planning to sell our current home. We could, at that time, pay off our rental investment property or pay down the mortgage on the house that we plan to live in. Would it make more sense to keep the mortgage on the rental home and pay down our primary residence?

3. Our investments are spread all over the place (see our spreadsheet). Should we consolidate?

4. Finally, please offer any advice to help us FIRE in 2 years. We could both work on a parttime basis in our fields.

Thank you for listening to our case and please ask any questions that might help. I apologize in advance for the crap job of detailing our financial situation (again, no head for $$ here).







maizeman

  • Magnum Stache
  • ******
  • Posts: 2998
Re: Is it possible for us to FIRE in 2 years??
« Reply #1 on: September 23, 2018, 05:19:35 PM »
#1. Yes definitely.

#2. FIRE wise you'd be best off investing the freed up equity in the stock market rather than paying down either house. If you don't feel comfortable doing that, just pay down whichever mortgage has the higher interest rate.

#3. Probably. I wouldn't worry about this too much, but if tracking that many accounts is a source of stress you could definitely consolidate from 19 accounts to ~8 (one each of 403b, IRA, 401a, and taxable per wife).

MDM

  • Walrus Stache
  • *******
  • Posts: 8771
Re: Is it possible for us to FIRE in 2 years??
« Reply #2 on: September 23, 2018, 08:07:13 PM »
wives2stache, welcome to the forum.

1. We are in a high tax bracket (married filing jointly). We have been saving the max in our 403b accounts for the past couple of years. We have saved less money in non-retirement accounts. Should we continue to max out our 403B accounts as long as we are still in our jobs?
In short, yes.  See Investment Order for more.

Quote
4. Finally, please offer any advice to help us FIRE in 2 years. We could both work on a parttime basis in our fields.
What do the simple calculations in the case study spreadsheet, and more sophisticated ones such as those in Best and/or Recommended Retirement Calculator - Bogleheads.org, tell you?

Laura33

  • Handlebar Stache
  • *****
  • Posts: 2094
  • Location: Mid-Atlantic
Re: Is it possible for us to FIRE in 2 years??
« Reply #3 on: September 24, 2018, 10:23:32 AM »
I think you need a bit more of a plan.  It seems that you've been throwing money at your investments and throwing it at rental properties because you don't really know what to do with all the extra cash you earn.  But those rental properties are not good rental properties -- the first one's not horrible (clearing @$100/mo, not counting depreciation, on a @$115K house), but the second one is costing you even more than you're making on the first one!  There are many people who have FIRE'd on rental properties, but that only works if they are good rentals -- i.e., rentals that put cash in your pockets every month.  As it is now, you have about $90K of equity locked up in investments that are losing you cash every month (not counting depreciation).  If you want to FIRE, you need all of your assets deployed in places that are bringing in money.

On the flip side, if you sell both rental properties, it looks like you'd have about $700K to invest.  That would provide about $28K to live off of.  If you sell all three properties, that gives you about $800K, or $32K/yr -- but it would also free you of the @$1800/mo. mortgage (though you'd then have to pay rent somewhere else).  Run the numbers for yourself, but it looks like you've got some work to do either way if you want to make it in 2 years (although you could certainly afford to switch to part-time or contract work).

IMO you just need to decide which path you want to follow.  If you want to own rental properties, sell the two existing properties, start looking for properties that will generate good cash-flow every month (even after expenses), and do a Starker exchange into those properties.  If you don't want to be an active landlord, then sell your existing properties and put your money into VTSAX or something similar.