Author Topic: Reader Case Study - I've Found My People! - Please Help Me Strategize My FIRE!  (Read 2624 times)

archistache

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Hello fellow Mustachians! Just discovered MMM this past weekend and it's exactly what I've been looking for. Inspired to hear your stories and get started on mine!

Life Situation: Single male, 43, recently divorced, with one dependent age 12 whom I can claim on my taxes every other year, 2018 included. The divorce left me with a lot of credit card debt as listed below.

One year ago (Oct. 2017) I purchased a 3Bed/2Bath 1300s.f. house for $189,000 now valued at $215,000. (Some have suggested I downsize to a smaller house, but 1 bedroom is for me, 1 for my child, and third is for my home office which I believe needs to be a dedicated room for tax deduction purposes for my side business. Plus it's just much more convenient to have my office work in a room with a door that can close, as opposed to in my living room.) I live outside a small town in a very rural area, at the top of a very steep mountain that gets lots of snow and ice in the winters, which in the list below plays into why I have a 4WD vehicle, but after reading MMM I understand I may not actually need it. My commute is 86 miles round trip, 5 days a week. Bad, I know, but Iím not willing to move closer to work because my child lives with me half the week and I want to be close to her and her school. And there are no similar jobs for me closer to where I live. Also my current income is very high compared to most jobs in the area, so I have few if any alternatives for other jobs.

Currently working as an architect for a small firm and recently started my own architecture business (LLC) on the side for extra money, with plans to become self-employed full time in the next couple years hopefully, and work from home, leveraging the internet to work on projects anywhere in the country, while eliminating commuting. I also have the skills to renovate the house to increase its value over the next few years.

Itís important to note that in approximately 6-7 years (2024 or 2025), after my child graduates from high school, Iím going to move from the East Coast back home to the West Coast. This significant move should be factored into all my financial decisions. By that time I want to have all my debt, except mortgage, paid off, and be well on my way to FIRE. I plan to sell the house at that time, unless thereís a better reason to sell sooner.

Gross Salary/Wages: $83,000

Individual amounts of each Pre-tax deductions: IRA with only $4,700, half of which I owe to my ex-wife. Iím waiting for her to set up her own IRA so I can transfer half without paying the tax penalty. I had several old 401kís from previous employers and consolidated them all into one IRA a few years ago when I changed to my current job that doesnít offer any retirement plan. Have not paid any additional amount into it after consolidating, in order to pay off my debts.

Other Ordinary Income: Approximately $7,000 from side business this year. This could easily double or triple next year as I develop my new business.

Qualified Dividends & Long Term Capital Gains: N/A

Rental Income, Actual Expenses, and Depreciation: N/A

Adjusted Gross Income: $90,000


Current expenses:

Mortgage:  Principal:    $247.14
            Interest:     $695.44
            Escrow:      $212.69 (Includes Annual Real Estate Tax: $1,801.22, part of escrow)
            Sub-Total:$1,155.27

Car:   Loan payment:    $353.59
   Insurance:               $71.01
   Gas:                $250.00
   Property Tax:       $37.07
   Maintenance:       $40.00
   Sub-Total:             $751.67

Child Support:            $600.00
Groceries:              $416.00
Credit card bill min.:   $388.00
Life Insurance:              $58.19
Disability Insurance:    $165.75
Cell phone:        $68.10
Internet/home phone:  $86.17
Netflix:             $9.99
Pandora:                  $4.99
Home Warranty:     $48.17
Amazon Prime:             $12.99
Home Insurance:      $71.01
Home supplies      $225.00
Dining Out:      $134.48
Miscellaneous:      $300.00
Sub-Total:                $2,588.84

Grand Total:           $4,495.78   


Assets:

Home: purchased Oct. 2017 for $189,00. Current market value is $215,000.
Car: 2010 Toyota 4Runner SR5, 172,000 miles, current market value $13,000-14,000.

Liabilities:

Home loan: $183,330.00 original loan amount, 4.625% APR, 30-year fixed, $180,437.23 remaining balance.

Credit Card: $12,940.56, 0.99% APR (FIXED RATE FOREVER, thru my credit union), min. monthly payment: $388.00, I've been paying $500 or more each month to pay down faster.

Car Loan: $18,614.97 original loan amount, 3.69%, 5 year term, remaining balance: $13,129.90, min. Payment: $353.59, Begin date: 01/15/2017, End date:01/14/2022. I've been paying $500 per month to pay down faster.

Specific Question(s):

Since I'm new here, my questions are pretty broad:

What are the smartest moves I can be making to pay off my debt as soon as possible?

Since my car is my second largest expense, but I donít have any cash in savings, does it make sense to sell the 4Runner and get a smaller loan (less than $10,000) for a fuel-efficient car? Iím especially interested in a hybrid or electric, given my long commute.

Does it make sense to sell my house and move down off the mountain to the lowlands where the snow is less of an issue, so that I don't need the 4WD vehicle? Keep in mind I just bought the house 1 year ago though, so capital gains is an issue, I believe. Or am I better off to keep it for the next 6-7 years until I move to the West Coast and let it appreciate in value as much as possible? I already have about $26,000 in equity from day one just by getting a good deal.

What the best approach to handling my home loan, given that I'm going to sell it and move across the country in 6-7 years? Stay as-is and make minimum payments? Refinance to a lower interest rate if I can find one? Renovate it in whichever ways will bring the most return when I sell?

I'm thinking I should probably cancel the disability insurance. And maybe the life insurance, although it seems relatively cheap to me for $500,000 of coverage, so maybe worth keeping. Thoughts?
« Last Edit: November 29, 2018, 11:42:06 AM by archistache »

MDM

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Re: Reader Case Study - Just Getting Started - Help Me Strategize!
« Reply #1 on: November 26, 2018, 10:39:13 PM »
What are the smartest moves I can be making to pay off my debt as soon as possible?
Get the Vertex42 download described in http://forum.mrmoneymustache.com/ask-a-mustachian/which-loan-to-pay-extra-first/msg1307278/#msg1307278 and run your numbers.  I'll leave the "quality of life" decisions to you. ;)

See also Investment Order.

Good luck!

Life in Balance

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Would you be able to see your car for more than the loan amount?  It does seem like your car is costing you a lot per month, but you also need reliable transportation with your commute. 

I think low-hanging fruit might be to track your expenses in Groceries, Home Supplies, and Miscellaneous.  Those expenses seem high for two people.  The life insurance makes sense since you have little savings and a dependent, but I'd get rid of the home warranty. 

archistache

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Re: Reader Case Study - Just Getting Started - Help Me Strategize!
« Reply #3 on: November 28, 2018, 05:58:22 PM »
What are the smartest moves I can be making to pay off my debt as soon as possible?
Get the Vertex42 download described in http://forum.mrmoneymustache.com/ask-a-mustachian/which-loan-to-pay-extra-first/msg1307278/#msg1307278 and run your numbers.  I'll leave the "quality of life" decisions to you. ;)

See also Investment Order.

Good luck!
The Vertex42 spreadsheet was great, thank you. It says I should pay extra on the car loan first, since it's higher interest rate, and then the credit card debt.

archistache

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Would you be able to see your car for more than the loan amount?  It does seem like your car is costing you a lot per month, but you also need reliable transportation with your commute. 

I think low-hanging fruit might be to track your expenses in Groceries, Home Supplies, and Miscellaneous.  Those expenses seem high for two people.  The life insurance makes sense since you have little savings and a dependent, but I'd get rid of the home warranty.

According to Kelly Blue Book and Edmunds, I could only sell it for about what I owe on it. But that is based on selling in my zip code which is a very rural area. I think if I advertised in the larger city an hour away, or sold it to CarMax, I could get about $15,000 for it. I may take it to CarMax to find out for sure. The car is definitely costing me a lot and is a spending category with lots of potential to save if I switched to a small, high mpg car.

And, yes, I'm going to focus this month on reducing Groceries, Home Supplies, and Misc.

Thank you for your input!

expatartist

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No advice, just a welcome to the forum, it sounds like you're off to a great start.

MDM

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Re: Reader Case Study - Just Getting Started - Help Me Strategize!
« Reply #6 on: November 28, 2018, 07:16:03 PM »
What are the smartest moves I can be making to pay off my debt as soon as possible?
Get the Vertex42 download described in http://forum.mrmoneymustache.com/ask-a-mustachian/which-loan-to-pay-extra-first/msg1307278/#msg1307278 and run your numbers.  I'll leave the "quality of life" decisions to you. ;)

See also Investment Order.

Good luck!
The Vertex42 spreadsheet was great, thank you. It says I should pay extra on the car loan first, since it's higher interest rate, and then the credit card debt.
Given
Home loan: 4.625%
Credit Card: 0.99%
Car Loan: 3.69%
one would expect that any extra should go to the home loan before the car loan.

That's if you decide to pay extra on any loan vs. investing the extra, which is a separate and oft-debated question. ;)

archistache

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No advice, just a welcome to the forum, it sounds like you're off to a great start.
Thank you!

archistache

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Re: Reader Case Study - Just Getting Started - Help Me Strategize!
« Reply #8 on: November 28, 2018, 07:23:31 PM »

I left the home loan out of the spreadsheet because I plan to sell it and move in 6-7 years, so I figured it would be better to pay the minimum mortgage payments, pay off my other debts, THEN start investing. Any thoughts on that approach to the home loan?
« Last Edit: November 28, 2018, 07:25:23 PM by archistache »

MDM

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Re: Reader Case Study - Just Getting Started - Help Me Strategize!
« Reply #9 on: November 28, 2018, 07:35:22 PM »
I left the home loan out of the spreadsheet because I plan to sell it and move in 6-7 years, so I figured it would be better to pay the minimum mortgage payments, pay off my other debts, THEN start investing. Any thoughts on that approach to the home loan?
Depends on your definition of "better".

If you choose to pay extra on any loan, paying ahead on the mortgage is guaranteed to increase your net worth faster than paying ahead on either of the lower interest loans.

Investing now, instead of paying extra on any of your loans, is likely but not guaranteed to increase your net worth even faster.

The trade-off between taking a lower guaranteed return vs. a likely higher but not guaranteed return is a matter of psychology as well as mathematics.  Defensible arguments can be made either way.

archistache

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Re: Reader Case Study - Just Getting Started - Help Me Strategize!
« Reply #10 on: November 28, 2018, 08:35:16 PM »
I left the home loan out of the spreadsheet because I plan to sell it and move in 6-7 years, so I figured it would be better to pay the minimum mortgage payments, pay off my other debts, THEN start investing. Any thoughts on that approach to the home loan?
Depends on your definition of "better".

If you choose to pay extra on any loan, paying ahead on the mortgage is guaranteed to increase your net worth faster than paying ahead on either of the lower interest loans.

Investing now, instead of paying extra on any of your loans, is likely but not guaranteed to increase your net worth even faster.

The trade-off between taking a lower guaranteed return vs. a likely higher but not guaranteed return is a matter of psychology as well as mathematics.  Defensible arguments can be made either way.
I like the idea of investing now, because in addition to the faster growth of my net worth, even if I'm only investing a little bit at the start, it gets me in the mindset of investing sooner rather than later. Not sure if there's significant value in that aspect of it, but it just seems like it would feel good to be starting to invest now. However, I wasn't planning on doing it yet because MMM seems to strongly encourage paying off all your debts, except maybe your mortgage, before starting to invest. So I was following that approach, as I understand it. Would love to hear others' thoughts on that.

cchrissyy

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how many miles of that huge commute is just getting down the hill and near the school, and how much is the remaining distance to the office?

it might make sense to sell that house and rent in town. it would save time and money on your commute and be more convenient for the kid. also safer by driving less on steep icy roads! perhaps you could sell the house and car in the spring.

can you work form home even one day a week? again, with a commute that long it would save real time and money.


also your groceries are higher than mine and I'm single with 3 teens. you can find threads here dedicated to optimizing that.

SwordGuy

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I don't know what kind of "home supplies" a batchelor needs that equate to over $200 a month, but that's a lot!  That needs to go.

You have three major expenses that are blowing holes in your budget:

car
home supplies
dining out.


While you have credit card debt, you don't need to be dining out.   Ok, maybe if you go on a date, but otherwise, no.   Just don't do it.   Cut out dining out and get home supplies to $20 a month and you'll really be making good progress on the credit card debt.   I'm assuming this is an introductory rate and at some point the rate will leap into the stratosphere.  Youre CC debt needs to be history before that happens.


That car payment is a lot by my standards, but at least it's only for 4 more years and it's not in the $700s.
You're still coughing up a lot of dough.  Options to consider: 

1) Keep looking for a low mileage used car that will meet your needs that's cheaper than your current vehicle.   Craigslist, newspaper, carmax, sign on car you see driving down the road.  Your goal would be to drop either your debt and your monthly payment by 1/3 to 1/2.  Might take a few months.   Ideally the car will be a few years older but have low mileage.  That will drop your insurance costs, too, for a double win.

2) Find someone to carpool with.  Actively search for one or more people to make the trip with.  I'll bet others are in the same commuting boat and would love to save some money.   Be sure you have something stashed in your office in case your ride has an emergency at work and has to work late.   A change of clothes, some simple toiletries, a small towel and something to make sleeping wherever's handy vaguely comfortable.

3) Now, your house.  Your house is costing you extra money in multiple ways:

a) It's bigger than you need.  You've only got the kids visiting part time.  So you're paying for extra house, plus heating and cooling it, etc.
b) It's costing you a 4WD penalty on cars you buy.
c) I'll give you a pass on the distance to work 'cause I understand the family dynamics.

You could sell now and with a bit of luck, pay off one either your CC or car debt.  Remember, you might or might not get the price you think you should and you'll be paying a realtor commission too.   That sounds about what you could expect if you sell.  You're still early in the loan cycle, right now you're getting about $3000 a year in equity on the house, that's it.  So while waiting 6 years will build you more equity, it's only going to be about $20,000 or so.    If you can avoid having to have a 4WD (and the extra costs that entails) and get cheaper rent, it might make sense to sell early.  Particularly if you can get the full price you want.  Just depends on the numbers.

Another alternative is to get a roommate by renting out one of the spare bedrooms. That should cut your cost on the house in half, plus cut the utilities by 1/3 to 1/2.   That's some real savings that would make your debt melt away.

As for life insurance, keep it.  Your kids need that child support and if you aren't around to work to provide for it, you'll need life insurance to do it for you.  You should also have disability insurance, but Dear God!!! that amount you are paying seems really high.  Start shopping around. 

Best of luck, you're on the right track.  You could make your car and CC debt disappear in 1 to 2 years if you really commit to it.  Particularly if you get a second job for when you don't have architect work to do on your own time.   After that, you'll be in great shape.



MDM

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Re: Reader Case Study - Just Getting Started - Help Me Strategize!
« Reply #13 on: November 28, 2018, 09:11:09 PM »
I like the idea of investing now, because in addition to the faster growth of my net worth, even if I'm only investing a little bit at the start, it gets me in the mindset of investing sooner rather than later. Not sure if there's significant value in that aspect of it, but it just seems like it would feel good to be starting to invest now. However, I wasn't planning on doing it yet because MMM seems to strongly encourage paying off all your debts, except maybe your mortgage, before starting to invest. So I was following that approach, as I understand it. Would love to hear others' thoughts on that.
The "investment order" thread is the collected opinion of multiple credible posters, both here and on other (e.g., Bogleheads) sites. 

Most would agree that "very low" interest rate loans should not be paid early, while "very high" interest rate loans should be paid ahead of ~everything except the 100% or 50% rates one might get on 401k employer matches.

In between "very low" and "very high" the black and white blends to gray.  There are the investment order guidelines, but as noted those are guidelines not rules.

If you are comfortable investing now I'd encourage you to do so, and the reasoning you give in the above quote is as good as any.  Hindsight may tell you if that was "correct" or "incorrect" on a quantitative basis, but there are qualitative benefits attached both to loan payoff and investing.  Different people will experience those qualitative benefits differently, so trust your own judgment.

blingwrx

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Shop around for the auto, home and life insurance. Maybe get it all from the same company you can get a big discount.

Disability insurance looks insanely high and I don't think it's necessary. Usually your job should provide something.

Home warranty i'd drop that too if it's not covering anything that's major.

Pandora I'd cut that and just live with the ads.

Amazon prime don't pay monthly if you choose the annual option you save $37 bucks. You can also save if you have family or friends who can add you as a family member so you can split the bill.

Home supplies, and misc looks a bit high not sure what that's for but try to cut those back and put the savings into debt.

As the other guy said get rid of the CC debt asap if that just an intro rate thats going to sky rocket to 20%+

Some of the things I mentioned may only be a few dollars savings per month but it adds up and looking at those few dollars compounding over the years and saving you interest on your debt it becomes significant.

harvestbook

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I'd ditch the home warranty. Most appliances you can buy used, unless you suspect you might lose the heat pump or furnace (not sure what it covers). That's almost $600 a year. You can get a used washer and dryer for $150.

Also, the extra room is not an IRS requirement for home office--it's a dedicated space used exclusively for business, which can be a closet, corner of the living room, an entire room, or an entire floor of your home. Although I'd understand not renting it out to a stranger if you have a young daughter part time. That home-office deduction for a full room can save you some tax dollars. Partial deductions on your mortgage, internet, electricity, house insurance, RE tax, etc.

Personally I'd pay down house and keep it, and try to reduce car expenses, but then I like to own things and not rent or lease, and abhor debt of any kind no matter what the math says. And if you sell the house right now, you've lost your closing costs, etc. I was in this situation when i got divorced, and my house payment was more than half my take-home pay but I kept up and even paid ahead, and it turned out fine.

If you have the passion for building your business, that is a great place to put your energy and get more flexibility. Because if you move closer to work, you have farther drive to kid, even if less frequent. It's tough but I'd probably choose between either disability or life insurance. Look at disability insurance--you work with your mind, which greatly reduces the list of conditions or injuries that render you unable to work, and you'd save $2,000 a year. That's a risk/reward trade-off but building savings is a guaranteed win for your kid, while insurance is not. Good luck. Things get easier with time.
« Last Edit: December 01, 2018, 01:35:42 PM by harvestbook »

archistache

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how many miles of that huge commute is just getting down the hill and near the school, and how much is the remaining distance to the office?

it might make sense to sell that house and rent in town. it would save time and money on your commute and be more convenient for the kid. also safer by driving less on steep icy roads! perhaps you could sell the house and car in the spring.

can you work form home even one day a week? again, with a commute that long it would save real time and money.


also your groceries are higher than mine and I'm single with 3 teens. you can find threads here dedicated to optimizing that.

It's only 3 miles down the mountain, then 40 miles to work. So moving off the mountain wouldn't reduce the miles significantly but it would give me the option to get a different car that doesn't have 4WD and therefore save me a lot of money in gas. This is definitely an option I'm considering, but since I just bought the house one year ago, I think I'd lose money if I sell now because of real estate agent fees, closing costs, etc.

I'm trying to figure out if a sub-compact front wheel drive car with good snow tires (and chains when needed) could get me safely up and down the mountain.

feelingroovy

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I live in a snowy hilly semi-rural place. I don't have a long steep driveway but some friends and neighbors do. I have found that snow tires make a huge difference in getting up steep snow-covered driveways and are as good as our previous 4wd car.

I would think your neighbors could tell you.

DoNorth

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I had snow tires on my 2 wheel drive sedan in a snow belt state and it handled great on the highways/county roads, but I often got stuck on even small inclines and unimproved roads, so you should make this decision carefully.    I honestly wouldn't move if you just bought the house.  Focus on the low hanging fruit and definitely focus on growing your side business to improve your income. 

archistache

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Thank you all for the input! This is all very helpful!

Boofinator

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Before paying off any of those relatively low interest loans, max you annual pre-tax (traditional) IRA contributions and invest it in the market. (The silver lining of not have a retirement plan available through your employer is the ability to fully deduct your Traditional IRA independent of MAGI). Not only do you get the expected returns of stocks (which beat those loan rates), you also get the stocks at a discount that is your combined income tax rate. You have until you file your taxes to max for the previous year, if needed.

https://www.irs.gov/retirement-plans/ira-deduction-limits

Boofinator

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A few more suggestions given your circumstances:

Worry not so much about the debt, but how you can optimize your finances. As mentioned, given your interest rates, first max the tax-deferred IRA, then maybe start tackling debt (over the very long run, stocks are almost guaranteed to beat those rates; but you are looking at short term, so paying off the debt reduces left-tail risk).

If you decide to pay off debts with your extra money, I generally recommend going with the highest interest rate first, which in your case would be the house (unless you have the possibility of deducting the mortgage interest, which is unlikely). The only downside to starting with the house is that you appear to have very little liquidity (accessible money) and large expenses, so if there were to be any hiccups to your income stream you would be in a world of hurt. Given that's the case, the car loan is probably the wisest debt to pay off at the moment. That way if you have an income hiccup, you could sell the car to free up liquidity that might keep you afloat for a few months while you perform crisis management. Don't pay down the credit card interest at that rate, but invest instead, again to improve liquidity and maximize expected gains.

As for the house, I wouldn't sell just yet. You need to live there at least two years to not pay taxes on capital gains (https://www.irs.gov/taxtopics/tc701), which in your case could cost up to $5 grand if you sold before the two years. At that point, since you are staying in town for only another five years and have a good possibility of working from home, I would probably suck it up and live there. All the transaction costs associated with buying and selling houses become essentially sunk costs as soon as you purchase the house, as there's no way around paying them when you sell. Those costs will likely dwarf what you could save by selling the house, buying another, and getting a more efficient car. Sucks to live on a snowy hill, cause it's about the only situation that justifies 4WD.

As others have mentioned, you have a lot of fat in your listed expenses. Cut Amazon Prime (who needs shit in two days?), dining out (your hair is on fire!), and home warranty; many of the other costs can also be significantly reduced or eliminated.
« Last Edit: December 06, 2018, 07:10:18 PM by Boofinator »

DeepEllumStache

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The good news is that you have a good income that will give you the ability to really accelerate your finances.

Suggestions on expenses -

Your groceries are $416 and your dining out is $134. Your food spending is $550 a month for 1.5 people (assuming you have your kid with you 1/2 the time). You have hair on fire debt, so cut back on the eating out and check out some of the threads on how to have a lower grocery budget.

Home supplies of $225, Misc of $300, and an extra $28/month for Netflix/Amazon Prime/Pandora. That's another $550 on random crap a month. There's always going to be a smallish amount on "other" but you need to be extremely honest with yourself on what fat can be cut in that category. If you got it down to $100-200/month, that'd be an extra $4-5k a year that could pay down your debt or be invested.

MMM posted an article on hypermiling. Since you do have such a long commute, any additional optimization of your driving may save you money on gas.

Suggestions on liquidity -

Is there a checking/savings account I didn't see in your list or are you living paycheck to paycheck right now?

If it's the latter, consider having enough of a cash cushion once you go the self-employment route to cover the cash flow lumpiness involved. You'll have enough experience by then of how much you need based on your growing side business (and extra kudos to you for building that up on the side).

If your work does not offer disability insurance, you are in too much of a precarious position to drop the coverage right now. Someone else may have an opinion on how much it should cost but you need to know how you would fund your life if you couldn't get a paycheck for an extended period of time. It appears that a month off work would sink your finances further into a very unhappy hole. Down the road, it might be more reasonable to self insure if you have the liquidity.

While it's awesome you have the skills to renovate, unless something is in dire straights on the house or there's a very low cost project that you can do for a great return on your investment, it may be better for you to focus on paying debts/investing first.

RunningWithScissors

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Welcome archistache!

No advice, just a 'hello' from a fellow architect.  There's not many of us around on these boards so it's great to see your journey.  I'm on the cusp of FIRE (10 work days to go), so I just wanted to encourage and reassure you that this IS possible!

Good luck!

babybug

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I agree with above: you need a cash cushion. Plus, all your debts are low interest so no need to pay extra. Pay minimum and put the rest in savings.

I'd keep the car at this point, given it's already depriciated a lot first 2 years.

I'd keep the house too if you like it ... the transaction costs of selling and taxes would wipe out the profits..

Priority for now is to streamline spend, max pre tax savings and increase income.

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aneel

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Seems like you're on the right path. I think paying the car off first, and minimum payments to your other debts until you have an emergency fund set up might be worth considering.

Laura33

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  • Location: Mid-Atlantic
Do not, NOT cut life insurance.  You may be divorced, but you still have a kid who needs financial support.  Your desire to FIRE earlier should not come at her expense.

Do NOT cut disability insurance.  The biggest threat to your FIRE plans is your inability to work.  This is especially true because you are single and do not have someone else's income to fall back on.

Honestly, given your loan rates, I think your best approach is to stop prepaying everything and start throwing money into investments.  A 1% CC rate forever?  Damn, that is a serious gift!  You will make a lot more over time in the market than you will lose in interest -- heck, you can get a CD that pays 1% interest, so you could keep cash in an EF and more than break even.  Throw that $$ at an IRA or 401(k) if you have it -- deductible, to lower your taxes.

On the house:  don't let the tail wag the dog.  The tax deduction you get for the home office is minor compared to the costs you incur for everything else associated with a bigger house up a snowy hill far from work.  To my mind, the kid situation is the major driver here -- you need to be close to kid/school, moving several times in just a few years will likely eat any potential profit in closing costs/realtor fees, and you'd pay taxes on any profit you do get.  So stick with the house.

Do take a hard look at the vehicle.  I agree that FWD with snow tires gets you 90% of the way there; the problem is, steep hills may fall within that other 10%.  The problem is that going uphill throws the car's weight onto the back tires, thus de-weighting the drive tires and making it much easier to lose traction.*  So while I never would have recommended the vehicle you chose in the first place (you are paying $25/day just for the privilege of using that vehicle!.  A used Subaru Impreza would have done just fine, and gotten you better mileage to boot), it may be reasonable to stick with a 4WD of some variety.  So look at options that might provide a lower overall cost of ownership while still getting you up and down the mountain safely.

Also:  ditch the home warranty.  Those are useless.  If you want to cut, look at your entertainment/extras -- you don't need to pay Amazon for the privilege of making it easier to buy more stuff; do you need both Pandora and Netflix; what's that miscellaneous; etc. 

*Speaking as someone who decided she needed AWD when the hill up to her house turned into a luge ramp in winter and her little FWD coupe twice left her stranded when she was 7 months pregnant.