Author Topic: Case Study - Newly engaged and need to pay of debts  (Read 3487 times)

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Case Study - Newly engaged and need to pay of debts
« on: July 26, 2017, 11:20:22 AM »
Hey all,

After being all consumed in the FI/Real Estate space (Books, Sites, Podcasts) - I wanted to share my numbers with everyone. The fiance and I are recently engaged, and are both beginning our path to FI and optimizing life. The last year or so has been a bit of a wild ride, but super exciting. We are looking forward to hitting some big FI milestones in our future. Taking financial control of our lives has probably been the single most motivating thing that has happened.

I've the more active participant in finances and will continue to lead that path. The GF came into this relationship with a few thousand in CC debt, a car lease, around 10k in student loans and hardly any savings. I've always been frugal, have no car payment, but I did liquidate my savings (50k) and put another 40k on no interest CC's to renovate a multifamily investment property. We live in one unit, and airbnb the other unit. We just finished the renovation and I'm paying off the CC debt with a cash out refi in a few weeks.

We have combined incomes and I plan to pay all of our debts off prior to the wedding.

Short term goals - Pay off CC/Student loan debt, have 100k in investments.

Long term goals - 10k in positive RE income per month - FIRE - 1 Million in net worth

What I struggle with are the best next steps for this journey...  Short term challenge is 2400/month budget for non mortgage/rental expenses. Mind taking a look? We've already started to cut down on our expenses.

CategoryMonthly
Comments
Annual
Salary/Wages for earner #1$8,694$104,322
Salary/Wages for earner #2$2,102$25,229
Pretax Health Ins.$9$102
Pretax Vision/Dental Ins.$14$169
Employer-sponsored HSA$208Room to increase?$2,500
FICA base salary/wages$10,565$126,779
401(k) / 403(b) / TSP / etc.$753Room to increase?$9,031
Employer Match$753$9,036
Subtotal 1$9,812$117,749
Pension contribution$348$4,173
Subtotal 2$9,465$113,576
Rental income$5,875$70,500
Rental real expenses$300$3,600
Rental depreciation expense$1,000$12,000
Rental taxable income$4,575$54,900
Federal Total Income (for IRS tax)$14,387$172,649
Federal tax$2,4532017 rates, MFJ, stand. ded., 2 exempt.$29,440
State/City tax$0Guess, using 0.00% * (AGI - Exempt'n)$0
Soc. Sec. tax$655Assumes 2 earners paying$7,860
Medicare tax$153$1,838
Total income taxes$3,262$39,138
Other Untaxed Income$1,500Bonus Paid Yearly$18,000
Income before other expenses  $13,278$159,337
Monthly Average Expenses:
Mortgage$1,225Input to Itemized Deductions$14,700
HOA$20$240
Beauty Shop$20$240
Bicycle Maintenance$20$240
Cable TV$65$780
Car Insurance$220$2,640
Car Maintenance, Registration, etc.$100$1,200
Charitable contributions$20Input to Itemized Deductions$240
Clothing/Shoes$75$900
Dining (Lunch/Dinner/Etc.)$100$1,200
Electricity$200$2,400
Entertainment$150$1,800
Fuel/Public Transport$200$2,400
Gas/Oil for heating$150$1,800
Groceries$500$6,000
Internet$60$720
Medical (Doctor, Hospital, etc.)$10Input to Itemized Deductions$120
Medical Insurance (if not paid pre-tax)$140Input to Itemized Deductions$1,680
Medicine (OTC + Prescription)$10Input to Itemized Deductions$120
Parking/Tolls$10$120
Pets$40$480
Phone (cell)$60$720
Subscriptions (paper/magazines/etc.)$13$156
Travel/Vacation$150$1,800
Umbrella Insurance$20$240
Wine/Beer/Tobacco$50$600
Non-mortgage total$2,403$28,836
Loans:
Student Loan$100SL$1,200
Student Loan$125SL$1,500
Mort$1,168Duplex$14,015
Mort$1,139$13,663
Other tax-advantaged investments:
529 plan/ other college$40$480
Total Expense$6,199$74,393
Total to invest$7,079$84,944
Summary:
"Gross" income$17,871$214,451
Income taxes$3,262$39,138
After-tax income$14,609$175,312
IRA+401k/403b/TSP/457$753$9,031
HSA$208$2,500
ESPP+529/other$40$480
Living expenses$3,998$47,980
Non-mortgage loans$2,531$30,377
After-tax investable$7,079$84,944
Time to FI?:
Time to FIRE8years
Safe Withdrawal Rate4.00%percent
Real return on tax-deferred investments5.00%percent
Real, after tax, return on taxable investments4.25%percent
Expected retirement total tax rate15.00%
Current Savings
Taxable$8,000
Tax-deferred (e.g. trad. IRA/401k)$4,350
Roth + HSA$6,000
Projected Savings at Retirement
Taxable$825,962
Tax-deferred (e.g. trad. IRA/401k)$178,948
Roth + HSA$32,736
Total projected stash$1,037,646
Projected Expenses in Retirement
Non-loan, non-work expenses$24,663

#ERROR!
#ERROR!
Total$29,015
Total loan principal due at FI$337,677
Stash needed for retirement @4.0% SWR$1,063,063
Need $25,417 more.


Filing Status21=S, 2=MFJ, 3=HOH
# Exemptions2
Adult #1Adult #2
Age3429
# of earners2
Total Income$172,649
Std. Deduct.$12,700
Act. Deduct.$12,700
Exemption$8,100
AGI$172,649
MAGI$172,649
Taxable$151,849
1040 Tax$29,440
Tax after n-r credit$29,440
Net Tax$29,440
Monthly$2,453
Mtg. Int. (approx.)$5,104
Charity$500
Item. Deduct.$5,604
VersionV9.1

Loans:Orig. Prin.Orig. LengthCurr. Prin.Yrs leftRate
Mortgage$112,50030$111,474294.625%
Mort$157,10230$150,898303.625%
Mort$175,43230$156,138254.750%
« Last Edit: August 01, 2017, 05:23:34 PM by grusso1016 »

Feivel2000

  • Stubble
  • **
  • Posts: 168
  • Age: 33
  • Location: Germany
Re: Case Study - Newly engaged and need to pay of debts
« Reply #1 on: July 31, 2017, 03:54:36 PM »
I don't know exactly why nobody is commenting, but one reason could be the lack of drama. You have a solid income, savings rate and not much debt. Good work!

You're also not asking any questions.

That said, I have two problems with your case study:

1) 10k rental income per month while you aim for a net worth of 1m? Your rental properties would need to yield way over 12% and I don't think that's a sustainably assumption. If it is, please let me know where I can invest my money.

2) Your retirement spending is planned to be 25k. Currently you are spending almost 50k. And I don't see horrible work connected expenses. How does this work? Will you switch to bread and water as soon as you are retired? What will happen if you get children?
« Last Edit: July 31, 2017, 04:30:27 PM by Feivel2000 »


MDM

  • Walrus Stache
  • *******
  • Posts: 7222
Re: Case Study - Newly engaged and need to pay of debts
« Reply #2 on: July 31, 2017, 09:57:49 PM »
2) Your retirement spending is planned to be 25k. Currently you are spending almost 50k. And I don't see horrible work connected expenses. How does this work? Will you switch to bread and water as soon as you are retired? What will happen if you get children?
The $25K/yr (aka $24,663) is "non-loan, non-work expenses."  Not sure what caused the two #ERROR! lines, but it appears the OP included an extra $4352/yr to get a total retirement spending of $29,015/yr. 

Eight years from now the remaining loan balances will be $337,677. 

The "stash needed for retirement" is calculated as $29,015/4% + $337,677 = $1,063K.

Given the income, maximizing all possible tax-advantaged contributions seems worth doing.  I.e., put $36K/yr into 401k, $6750/yr into HSA, and $11K/yr into Roth IRA (because the AGI is too high to deduct tIRA).  See Investment Order.

One minor question: why both pre-tax and post-tax medical insurance?

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #3 on: August 01, 2017, 11:55:34 AM »

1) 10k rental income per month while you aim for a net worth of 1m? Your rental properties would need to yield way over 12% and I don't think that's a sustainably assumption. If it is, please let me know where I can invest my money.


Great catch! 10k a month in rental income is purely a goal. The fiance just finished her RE licence and we plan to add more RE assets to the portfolio in the next 5 years or so.

Thanks for the reply!

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #4 on: August 01, 2017, 11:58:35 AM »
2) Your retirement spending is planned to be 25k. Currently you are spending almost 50k. And I don't see horrible work connected expenses. How does this work? Will you switch to bread and water as soon as you are retired? What will happen if you get children?
The $25K/yr (aka $24,663) is "non-loan, non-work expenses."  Not sure what caused the two #ERROR! lines, but it appears the OP included an extra $4352/yr to get a total retirement spending of $29,015/yr. 

Eight years from now the remaining loan balances will be $337,677. 

The "stash needed for retirement" is calculated as $29,015/4% + $337,677 = $1,063K.

Given the income, maximizing all possible tax-advantaged contributions seems worth doing.  I.e., put $36K/yr into 401k, $6750/yr into HSA, and $11K/yr into Roth IRA (because the AGI is too high to deduct tIRA).  See Investment Order.

One minor question: why both pre-tax and post-tax medical insurance?

Great info! Currently the fiance has Obamacare health insurance, so I factored that in as post tax. That'll change soon enough.



tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #5 on: August 01, 2017, 12:05:15 PM »
I was able to refinance my current investment loan to a primary residence and cashed out close to 75k while lowering my rate.

This might be a no brainer, but paying all of that CC debt off would be the obvious move, correct?

I did have intentions with purchasing another property, but focus has shifted to build my emergency fund and stash along with maxing out my tax deferred accounts

Also - I did just bump up my HSA to annual limits.

Any other advice?

MDM

  • Walrus Stache
  • *******
  • Posts: 7222
Re: Case Study - Newly engaged and need to pay of debts
« Reply #6 on: August 01, 2017, 12:09:05 PM »
This might be a no brainer, but paying all of that CC debt off would be the obvious move, correct?
Probably, assuming the CC interest rate is the usual >10%.

See Investment Order for more.

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #7 on: August 01, 2017, 12:14:20 PM »
Most/all of them are locked in at 0-1.99 percent but will be expiring shortly. I must pay them off.

I did just go ahead and open a vanguard account to set it and forget it it. 2k a month.

401k - Currently, I'm contributing 6 percent and they match that. Would it make sense to bump that up to the 17k federal limit, or keep building my emergency fund first?

Great stuff here guys. Thanks a bunch
« Last Edit: August 01, 2017, 12:56:16 PM by grusso1016 »

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #8 on: August 01, 2017, 12:17:24 PM »
Also - We did talk to the accountant and we plan to get married on paper by the end of the year. So we will be filing jointly.

The wedding has been a hot topic. We are interested in keeping that cost as low as possible.

Lady SA

  • Stubble
  • **
  • Posts: 217
  • Age: 26
  • Location: Midwest
Re: Case Study - Newly engaged and need to pay of debts
« Reply #9 on: August 01, 2017, 01:02:57 PM »
I scoured the OP but I must be dumb and can't find the balances of debts and the rates besides the mortgages. How much do you owe on the SLs and what are the rates on those?
Depending on the rates you could look into refinancing some or all of your loans for lower rates to lower the amount of interest you pay over the life of the loan. Sofi and Earnest (check my sig) are good ones. I've heard positive things about Lendkey too.
https://www.earnest.com/invite/lillian2 --> Use this referral to refinance your student loans with Earnest and get a $200 bonus!

Lady SA

  • Stubble
  • **
  • Posts: 217
  • Age: 26
  • Location: Midwest
Re: Case Study - Newly engaged and need to pay of debts
« Reply #10 on: August 01, 2017, 01:09:01 PM »
The wedding has been a hot topic. We are interested in keeping that cost as low as possible.

How open is your fiancee in eloping or having a small destination wedding? The BIGGEST impact you can have on lowering wedding cost is to keep the number of guests very low. Fewer people means less food (catering will be one of your biggest costs), smaller venue (definitely one of your biggest costs), fewer rentals required (chairs, tables, centerpieces, etc). You need to be ruthless when culling the guest list, which is hard. Eloping or small destination wedding with just close friends and immediate family gives you a guilt free "excuse" to keep great aunt nancy or steve your second cousin twice removed off the guest list. Also, try to keep yourselves firmly planted in reality. A wedding/reception is just a party. It's up to you how fancy this party is, but seriously, it is just a party. Don't put so much pressure on the day and feel like you have to do everything by the book.

If we had to go back, we would definitely elope to somewhere beautiful instead. Less stress, less money, win-win. However, even with our real 120 guest wedding, we only spent $15k total (which included our honeymoon too), which is pretty impressive considering the awesome party we threw, but damn those months leading up to it were GOGOGOGOGOGOGO and so stressful, and we would really like that $15k in our pockets instead. Or actually, $10k -- we could have had an AWESOME honeymoon for $5k, and that would have been more valuable to us than the party.
« Last Edit: August 01, 2017, 01:20:23 PM by Lady SA »
https://www.earnest.com/invite/lillian2 --> Use this referral to refinance your student loans with Earnest and get a $200 bonus!

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #11 on: August 01, 2017, 01:11:14 PM »
I scoured the OP but I must be dumb and can't find the balances of debts and the rates besides the mortgages. How much do you owe on the SLs and what are the rates on those?
Depending on the rates you could look into refinancing some or all of your loans for lower rates to lower the amount of interest you pay over the life of the loan. Sofi and Earnest (check my sig) are good ones. I've heard positive things about Lendkey too.

We have about 25k total in student loans.

12k (Me, locked at 3.125)
13k (Fiance, locked at 3.5 and 4.5 I believe)

Lady SA

  • Stubble
  • **
  • Posts: 217
  • Age: 26
  • Location: Midwest
Re: Case Study - Newly engaged and need to pay of debts
« Reply #12 on: August 01, 2017, 01:18:01 PM »
I scoured the OP but I must be dumb and can't find the balances of debts and the rates besides the mortgages. How much do you owe on the SLs and what are the rates on those?
Depending on the rates you could look into refinancing some or all of your loans for lower rates to lower the amount of interest you pay over the life of the loan. Sofi and Earnest (check my sig) are good ones. I've heard positive things about Lendkey too.

We have about 25k total in student loans.

12k (Me, locked at 3.125)
13k (Fiance, locked at 3.5 and 4.5 I believe)

The ones at around 3% are awesome. You are only paying minimums on these, right? With your relatively low balances, its likely you won't save too much by refinancing. Depending on how much principle the 4.5% one has, it could make sense to refinance just to eek out a bit more optimization, but also, thats still a pretty low rate and the balance is likely low enough that the hassle likely isn't worth it. Nice job getting such low rates!
https://www.earnest.com/invite/lillian2 --> Use this referral to refinance your student loans with Earnest and get a $200 bonus!

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #13 on: August 01, 2017, 01:26:43 PM »
The wedding has been a hot topic. We are interested in keeping that cost as low as possible.

How open is your fiancee in eloping or having a small destination wedding? The BIGGEST impact you can have on lowering wedding cost is to keep the number of guests very low. Fewer people means less food (catering will be one of your biggest costs), bigger venue (definitely one of your biggest costs), more rentals required (chairs, tables, centerpieces, etc). You need to be ruthless when culling the guest list, which is hard. Eloping or small destination wedding with just close friends and immediate family gives you a guilt free "excuse" to keep great aunt nancy or steve your second cousin twice removed off the guest list.

If I had to go back, I would definitely elope to somewhere beautiful. Less stress, less money, win-win. As it was, we only spend $15k which included our honeymoon too, which was pretty impressive, but damn those months leading up to it were GOGOGOGOGOGOGO and so stressful, and I would really like that $15k in my pocket instead.

Love this. Great advice. Fiance and I are pretty much on the same page here. Oddly enough, I am probably more interested in the 'reception/party' than she is... She would totally be ok eloping and having a really small destination or smaller ceremony wedding. We are considering having a very small wedding in her parents back yard down south. We are up in the Northeast

nottoolatetostart

  • Bristles
  • ***
  • Posts: 424
Re: Case Study - Newly engaged and need to pay of debts
« Reply #14 on: August 03, 2017, 05:26:48 AM »
The wedding has been a hot topic. We are interested in keeping that cost as low as possible.

How open is your fiancee in eloping or having a small destination wedding? The BIGGEST impact you can have on lowering wedding cost is to keep the number of guests very low. Fewer people means less food (catering will be one of your biggest costs), smaller venue (definitely one of your biggest costs), fewer rentals required (chairs, tables, centerpieces, etc). You need to be ruthless when culling the guest list, which is hard. Eloping or small destination wedding with just close friends and immediate family gives you a guilt free "excuse" to keep great aunt nancy or steve your second cousin twice removed off the guest list. Also, try to keep yourselves firmly planted in reality. A wedding/reception is just a party. It's up to you how fancy this party is, but seriously, it is just a party. Don't put so much pressure on the day and feel like you have to do everything by the book.

If we had to go back, we would definitely elope to somewhere beautiful instead. Less stress, less money, win-win. However, even with our real 120 guest wedding, we only spent $15k total (which included our honeymoon too), which is pretty impressive considering the awesome party we threw, but damn those months leading up to it were GOGOGOGOGOGOGO and so stressful, and we would really like that $15k in our pockets instead. Or actually, $10k -- we could have had an AWESOME honeymoon for $5k, and that would have been more valuable to us than the party.

Totally agree. DH and I have routinely discussed that we would have just had a kick ass dinner. Get reservation on Open Table. Closest family/friends to celebrate (under 20 ppl, most likely 15), pick up cake that afternoon (or heck, I'd have time to make one since I would not be so busy with wedding stuff), wear something nice in closet, married at courthouse, maybe hire photographer for night ($150)....savings probably 18k and a lot of time saved. It's the people that make it special. Too much drama. Too much drama. It's a night. A few hours. We did something similar to this for my son's baptism dinner and it was so darn special to have everyone together (many flew or drove in) so it was amazing and special.

Celebrate your 10-year with a huge party if you want.  You can't afford it now. Sorry.

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #15 on: August 07, 2017, 06:25:51 AM »
Just an update - The cash out refi on the primary residence cleared on Friday ($72,838) - and within an hour, I paid off a 16k 401k loan, and about 40k in CC debt.

Must say, it was a good feeling. I woke up early just to see the 0 balances. :)

Our mortgage payment went from around 850 to 1225 PITI. Without factoring in us making a payment to rent/mortgage and utilities,  we should still cash flow around $1775 (3000+ airbnb rev -minus 1225 PITI) for the property. And we still retain 20% equity in the property.

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #16 on: August 15, 2017, 06:53:49 AM »
Just a small update  - Attached our current PC info. (Doesnt include about 17k in a pension account. Company contributes 4 percent per year. And also a HSA which has about 4500 in it)

New mortgage needs to be updated too, so that'll add 70k of debt to the net worth

Some recent life enhancements....

 - Fully paid off all of my CC debt and a portion of the fiancees. The remaining 8k is the fiancee's which is locked at 0 percent. We have a plan to pay off before the end of the year.

 - I put 6500 into an EC, and will grow that to 10k by the end of the month.

 - I bumped my HSA to max.

 - Opened a vanguard taxable account, contributing 2k a month.

 - Although our SL's are at a lower rate, I really want to knock those out and only have mortgage debt going forward. Thoughts on this? I know what the order should be, but I cant stop obsessing over paying that debt.

Also - We are in the middle of a 'frugal month'  -  300 total for food/entertainment. For the first time in a long time, I can directly feel the value of a dollar. We've been enjoying the challenge and have started to really prioritize value items and experiences. We take out the cash and only can spend that... I literally found one dollar yesterday in the office, didnt pack enough lunch and had to think twice about spending 70 cents on a small bag of almonds :)

And yeah, we were totally out of control with eating out and happy hours.

FIREby35

  • Bristles
  • ***
  • Posts: 424
Re: Case Study - Newly engaged and need to pay of debts
« Reply #17 on: August 15, 2017, 07:44:13 AM »
Sounds like you have an awesome plan going.

I especially like the idea of your fiance getting a Real Estate license. Her income is relatively low. If you get her involved in the real estate side she might be able to add much more value to your combined business ventures. I'm an attorney and very lucky to have an accountant for a wife. While she often is told by those who just don't understand that she is "just a stay at home mom" she add MAJOR value to our small law firm. My point is simple, consider getting your fiance/wife involved in building the real estate empire. 

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #18 on: August 15, 2017, 07:59:50 AM »
Sounds like you have an awesome plan going.

I especially like the idea of your fiance getting a Real Estate license. Her income is relatively low. If you get her involved in the real estate side she might be able to add much more value to your combined business ventures. I'm an attorney and very lucky to have an accountant for a wife. While she often is told by those who just don't understand that she is "just a stay at home mom" she add MAJOR value to our small law firm. My point is simple, consider getting your fiance/wife involved in building the real estate empire.

Thanks man! Love your thinking and we feel the same way about her bringing some value and at the same time, having flexibility when we decide to have kids.

I may or may not have been 'nudging' her in that direction for the last year or so and she was excited about it. She positioned herself to work in the front office of a major RE office here, established some great connections, and just obtained her licence. We are excited about the next steps and look to grow this thing together! Things are coming together.

SeaEhm

  • Bristles
  • ***
  • Posts: 443
  • The Guilt is Real
Re: Case Study - Newly engaged and need to pay of debts
« Reply #19 on: August 15, 2017, 08:09:43 AM »
Just a quick question  - where do you live that you can buy a duplex with a $400k mortgage and get nearly $6k in rent per month?
Just here to feel guilty about my purchases which are often irrational, wants, and in an atypical budget.

bocopro

  • 5 O'Clock Shadow
  • *
  • Posts: 12
Re: Case Study - Newly engaged and need to pay of debts
« Reply #20 on: August 15, 2017, 08:12:13 AM »
The wedding has been a hot topic. We are interested in keeping that cost as low as possible.

How open is your fiancee in eloping or having a small destination wedding? The BIGGEST impact you can have on lowering wedding cost is to keep the number of guests very low. Fewer people means less food (catering will be one of your biggest costs), bigger venue (definitely one of your biggest costs), more rentals required (chairs, tables, centerpieces, etc). You need to be ruthless when culling the guest list, which is hard. Eloping or small destination wedding with just close friends and immediate family gives you a guilt free "excuse" to keep great aunt nancy or steve your second cousin twice removed off the guest list.

If I had to go back, I would definitely elope to somewhere beautiful. Less stress, less money, win-win. As it was, we only spend $15k which included our honeymoon too, which was pretty impressive, but damn those months leading up to it were GOGOGOGOGOGOGO and so stressful, and I would really like that $15k in my pocket instead.

Love this. Great advice. Fiance and I are pretty much on the same page here. Oddly enough, I am probably more interested in the 'reception/party' than she is... She would totally be ok eloping and having a really small destination or smaller ceremony wedding. We are considering having a very small wedding in her parents back yard down south. We are up in the Northeast

Hello, newlywed here! Also working toward FI and weren't interested in a huge, 200 person bash (two introverts with party-hardy family...not the easiest combo.) We ended up getting married in the morning in a small chapel in a national park, followed by a buffet brunch for 30 at an outdoor location. EASY, still the loveliest day imaginable. We were engaged 4 months...people said we were insane, but honestly, can you plan a retirement party, a super bowl party, a work conference - in under 18 months? you bet.

I know the pressure to please ALL of the family, to get 10,000 designer Instagrams, whatever. The short engagement was so key to ignoring all of this - "oh, maybe we'll think about that full orchestra Cousin Sally demands we have....well, wasn't time! Sorry!".

Highly recommend this route, especially if you and spouse are both on board. Our biggest motivation was actually to get to spend quality time together ON our wedding day - hard to do when you're hosting a 72 hour party for 200.

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #21 on: August 15, 2017, 08:24:14 AM »
Just a quick question  - where do you live that you can buy a duplex with a $400k mortgage and get nearly $6k in rent per month?

I have 3 properties which total about 400k in mortgages.

Single Family - Cash flowing 100 (Selling early next year)
Duplex - Cash flowing 625
Duplex (We live in one unit) - We've been airbnb'ing the other unit. Easily netting over 3k per month

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #22 on: August 15, 2017, 08:29:34 AM »
The wedding has been a hot topic. We are interested in keeping that cost as low as possible.

How open is your fiancee in eloping or having a small destination wedding? The BIGGEST impact you can have on lowering wedding cost is to keep the number of guests very low. Fewer people means less food (catering will be one of your biggest costs), bigger venue (definitely one of your biggest costs), more rentals required (chairs, tables, centerpieces, etc). You need to be ruthless when culling the guest list, which is hard. Eloping or small destination wedding with just close friends and immediate family gives you a guilt free "excuse" to keep great aunt nancy or steve your second cousin twice removed off the guest list.

If I had to go back, I would definitely elope to somewhere beautiful. Less stress, less money, win-win. As it was, we only spend $15k which included our honeymoon too, which was pretty impressive, but damn those months leading up to it were GOGOGOGOGOGOGO and so stressful, and I would really like that $15k in my pocket instead.

Love this. Great advice. Fiance and I are pretty much on the same page here. Oddly enough, I am probably more interested in the 'reception/party' than she is... She would totally be ok eloping and having a really small destination or smaller ceremony wedding. We are considering having a very small wedding in her parents back yard down south. We are up in the Northeast

Hello, newlywed here! Also working toward FI and weren't interested in a huge, 200 person bash (two introverts with party-hardy family...not the easiest combo.) We ended up getting married in the morning in a small chapel in a national park, followed by a buffet brunch for 30 at an outdoor location. EASY, still the loveliest day imaginable. We were engaged 4 months...people said we were insane, but honestly, can you plan a retirement party, a super bowl party, a work conference - in under 18 months? you bet.

I know the pressure to please ALL of the family, to get 10,000 designer Instagrams, whatever. The short engagement was so key to ignoring all of this - "oh, maybe we'll think about that full orchestra Cousin Sally demands we have....well, wasn't time! Sorry!".

Highly recommend this route, especially if you and spouse are both on board. Our biggest motivation was actually to get to spend quality time together ON our wedding day - hard to do when you're hosting a 72 hour party for 200.

Hey there! Congrats on the marriage! Although I haven't commented directly on the wedding responses, your suggestions have been fantastic! We are definitely going the frugal route for the wedding. Just trying to iron out the details and figure out what brings the most value. We've narrowed down some details so far... Wedding will be in fiancees back yard. We will have no more than 75 people on the invite list. And we will go to SE Asia for the honeymoon! I'd love to cap the budget at 5k if possible.

FIREby35

  • Bristles
  • ***
  • Posts: 424
Re: Case Study - Newly engaged and need to pay of debts
« Reply #23 on: August 17, 2017, 06:53:09 AM »
Sounds like you have an awesome plan going.

I especially like the idea of your fiance getting a Real Estate license. Her income is relatively low. If you get her involved in the real estate side she might be able to add much more value to your combined business ventures. I'm an attorney and very lucky to have an accountant for a wife. While she often is told by those who just don't understand that she is "just a stay at home mom" she add MAJOR value to our small law firm. My point is simple, consider getting your fiance/wife involved in building the real estate empire.

Thanks man! Love your thinking and we feel the same way about her bringing some value and at the same time, having flexibility when we decide to have kids.

I may or may not have been 'nudging' her in that direction for the last year or so and she was excited about it. She positioned herself to work in the front office of a major RE office here, established some great connections, and just obtained her licence. We are excited about the next steps and look to grow this thing together! Things are coming together.

Man that is really smart. If you get her learning the industry she will be able to spot deals, help systematize collecting rent, finding tenants, knowing the market rental rates, all kinds of things. It won't be long until you have your own company.

I have a friend who is a real estate barron - he owns over 100 properties including at least two major commercial properties (think towers). Anyway, he has his RE license and when he does a deal the commission for the sale comes straight to him! You wife will get the same deal and that cash can used toward principal paydown, repairs, or just as a cash sweetener on the deal.

I just had lunch with him yesterday. He says deals are hard to come by right now but not impossible to find. He is getting into a highly liquid cash position so he can scoop up more buildings from distressed buyers - he is big enough that he was literally talking about have a million in cash! For you the point is to have patience now while trolling for the diamond in the rough but build experience and cash reserves so you are ready to pounce if/when the market downturn delivers an opportunity to scoop up a bunch of deals. Don't overextend on "ok" deals now.

Good luck!

PS - Think about getting the commission on a million dollar building. His real estate license is extremely valuable. You wife's will be as well if you pursue this path.

Playing with Fire UK

  • Handlebar Stache
  • *****
  • Posts: 2070
Re: Case Study - Newly engaged and need to pay of debts
« Reply #24 on: August 30, 2017, 06:29:07 AM »
Just an update - The cash out refi on the primary residence cleared on Friday ($72,838) - and within an hour, I paid off a 16k 401k loan, and about 40k in CC debt.

Must say, it was a good feeling. I woke up early just to see the 0 balances. :)

I'm not trying to piss all over your celebrations here, but you do realise these debts have been transferred rather than vanished, right?

For the wedding, if you want a party, consider having it on a different day to the wedding. I've been to a few of these and the energy of the guests (particularly the family and close friends who get overly excited at weddings) was totally different. There was none of this "you must have a photographer/doves/cake/bridesmaid/ring cushion/first dance" nonsense that people feel the need to comment on for weddings.

If I was getting married again, I'd invite people to a casual but big engagement party, and then announce that we'd actually got married earlier that day/week/year and this was it. The people who wouldn't like it are the same people who would be a nightmare in the run up to a wedding.

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #25 on: August 30, 2017, 07:00:22 AM »
Just an update - The cash out refi on the primary residence cleared on Friday ($72,838) - and within an hour, I paid off a 16k 401k loan, and about 40k in CC debt.

Must say, it was a good feeling. I woke up early just to see the 0 balances. :)

I'm not trying to piss all over your celebrations here, but you do realise these debts have been transferred rather than vanished, right?

For the wedding, if you want a party, consider having it on a different day to the wedding. I've been to a few of these and the energy of the guests (particularly the family and close friends who get overly excited at weddings) was totally different. There was none of this "you must have a photographer/doves/cake/bridesmaid/ring cushion/first dance" nonsense that people feel the need to comment on for weddings.

If I was getting married again, I'd invite people to a casual but big engagement party, and then announce that we'd actually got married earlier that day/week/year and this was it. The people who wouldn't like it are the same people who would be a nightmare in the run up to a wedding.

Yeah man, I totally get that about the debt, but I had to get those CC's paid prior to the balance transfer lapsing. I've never been one to carry or have CC debt, but in this particular case, the debt was used as an investment since my cash on hand was too low and we had an opportunity. I know using CC's as an investment is typically a no no, but it seems to have worked out in this case.

We went from splitting $1700 (I know. Crazy) in rent in a HCOL area to owning/living in a duplex. (We literally house camped with space heaters and no functional kitchen for the winter) And now we have $1225 total mortgage, over 50k in home equity, and earn well over $3000 of airbnb gross income coming in monthly. Also, we are positioned to purchase the next investment property. Leveraging the CC's/401k loan enabled this.

We have also started our frugal journey. Tracking all expenses, Fiance is biking to work, packing lunches, aldi/costco food buying, and slashing various spending categories across the board.

About the wedding/party - We were just talking about the whole event this AM! (our deadline to have a loose plan is tomorrow) - I sent your reply to the fiance and she loves the idea. I do too! Either way, we were planning on heading to the courthouse in early November, so having a party a few weeks later would actually be perfect. We went from a 10k budget, to 5, and now we want to stay under 3k.

I'll definitely let you know what we do.

Thanks for the great reply

Raenia

  • Bristles
  • ***
  • Posts: 372
Re: Case Study - Newly engaged and need to pay of debts
« Reply #26 on: August 30, 2017, 08:03:18 AM »
Looks like you've got lots of advice on the real estate and investment sides of the equation, and on the wedding (congrats!), but I didn't see anyone fine-tooth-comb your expenses yet, so I'll do that!  First off, are these budgeted categories, or actual historical spending?  It's important to know if you're actually staying within these numbers or if they're goals not yet reached.

Beauty Shop - $20/mo - Not completely awful, but could come down.  How often do you need to cut your hair?  Can you do it cheaper?
Cable TV - $65/mo - Cancel cable and get Netflix or Amazon Video instead.  Surprised no one's jumped on it yet, honestly, cable is low-hanging fruit by MMM standards.
Clothing/Shoes - $75/mo - This is a lot of money on clothes.  Make sure you're shopping sales, second hand stores, etc, and not buying anything you don't actually NEED to replace worn out items.  You should be able to bring this down easily.
Groceries - $500/mo - For two people, this is very high.  I spend only about $100/person/mo.  Read MMM's article on Costco, stock up on sales, use stores like Aldi, and most importantly make sure you're not wasting food.
Subscriptions - $13/mo - Are you getting good value out of this?  Most people don't actually need/read the subscriptions they have.

You could easily put a few hundred dollars a month toward savings or debt repayment by reexamining your budget and ensuring you're getting good value for your spending.

Playing with Fire UK

  • Handlebar Stache
  • *****
  • Posts: 2070
Re: Case Study - Newly engaged and need to pay of debts
« Reply #27 on: August 30, 2017, 11:39:07 AM »
Yeah man, I totally get that about the debt, but I had to get those CC's paid prior to the balance transfer lapsing. I've never been one to carry or have CC debt, but in this particular case, the debt was used as an investment since my cash on hand was too low and we had an opportunity. I know using CC's as an investment is typically a no no, but it seems to have worked out in this case.

Cool, I like what you've done with the real estate - using the CC's made sense and so did the refi (I use CC BTs as well). 

I'm seconding Raenia's advice to have another look at your spending. There are cost cutting opportunities and it will accelerate the debt repayment and savings. If you get to your debt free + $100k goal and are still pining for cable or new clothes then look at the costs you've cut and decide if they brought significant value to you.

tucktucktuck

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Case Study - Newly engaged and need to pay of debts
« Reply #28 on: October 18, 2017, 08:23:21 AM »
Hey Everyone!

Just an update here!

We took some advice from here and we are having a small private ceremony in our backyard! Our guest list is at 12, and since we live in PA, we can obtain a self uniting licence. Our parents are just going to say something, and then we will. After that, the 12 of us are going to a dinner...

After the dinner, we are inviting other friends and family to a local gastropub to hang out if they'd like to... We are asking for no gifts; really just a hang out/celebration.

This is all happening in a few weeks, on 11/3!

Pretty exciting stuff, but who would've thought how stressful something so small could be? You definitely feel pressure to add more layers/costs with everything.  But we have bigger goals, and honestly couldn't justify spending/planning a larger wedding.

Within the next few weeks... I'm traveling for work, closing on an investment property, and have a few other offers in on fixer uppers for us to move into (We currently live in a duplex. We rent one unit out on Airbnb full time, live in the other, and it's been very successful. We have it ready to go as another Airbnb and that's the plan for when we move into another house)

These are exciting times and we (I like the challenge and she is totally on board with keeping all of this frugal) wouldn't have it any other way.

You guys have been super helpful with your suggestions

Thank you so much


Playing with Fire UK

  • Handlebar Stache
  • *****
  • Posts: 2070
Re: Case Study - Newly engaged and need to pay of debts
« Reply #29 on: October 18, 2017, 09:28:44 AM »
Great news, have an amazing day on 11/3!

ysette9

  • Handlebar Stache
  • *****
  • Posts: 1890
  • Location: Bay Area, CA
Re: Case Study - Newly engaged and need to pay of debts
« Reply #30 on: October 19, 2017, 04:11:21 PM »
It sounds like you are in a pretty solid position. I wish you the best with your plan for rentals. Congratulations on your upcoming wedding and more importantly, finding a partner who shares you goals. That is a huge win in of itself.
"It'll be great!"