Life Situation: Married for 1 year, 45 yrs old, 2.5 year old child, 35 year old husband, also have a MIL living with us who my accountant advised we will be able to claim as dependent this year.
I discovered MMM/FI about a year ago and finally had the clarity for the journey I was seeking.
Gross Salary/Wages: 140k (me only). My husband has had several health issues, but we anticipate a more regular income within a month or 2.
Individual amounts of each Pre-tax deductions 401k, HSA, FSA, IRA, insurance, etc. -
30% 401k ~ 42,000/year
FSA ~ 5K/year
Health Insurance cost- 5.4k/year
Other Ordinary Income: Starting up a side passion business, but no income yet.
Qualified Dividends & Long Term Capital Gains: N/A
Rental Income, Actual Expenses, and Depreciation:
Duplex Property 1 income-38k, expenses - 30k
Duplex Property 2 income - 43k, expenses - 32k (currently evicting a nightmare, planning to try air B&b which may boost income to 60k
Adjusted Gross Income: This should equal the additions and subtractions above.
87.5k -W2
19k rental
Taxes: about 28% total, live in WA State.
Current expenses:
Home - 3k - but have roommate income of 1.1k to offset
Car - 600 lease (I know! New cars were a weakness before discovering FI, I plan to TURO once I quit to offset to 0, I’m currently pre-paid for about 4 more months.)
Childcare - 2-2.5k dropping to 800 in September (I know, insane, but over in September!)
Utilities - 450
Car insurance - 150
Internet & phone - 200
Food - 700 - assuming I’ll be able to get this more under control w/less work
Diapers/Hair/clothes for mom & child - 100
Entertainment/eating out - 150
Gifts/mom - 100
Total: $4550 starting in September
Expected emergency expenses: 15k new roof for rental #1, 19k new retaining wall & fence rental 2, 30k sewer line & repairs at primary residence, 10k additional rental repairs & conversion to air b&b. TOTAL: 74K
Additional planned investment 60k for conversion of garage to air b&b
Assets:
Cash: 6K
Vanguard -17k
401k -504k (targeting not touching this till 59 to allow growth)
Primary Residence - 900k
Rental property 1 - 580k
Rental property 2 - 600k
Pension value - 139k if cash out now (assuming about 100k value after tax hit if I chose to take now)
Total: 2.746 m
Liabilities:
Primary mortgage - 490k/3.75%/30yrs/3k/28 years remaining. (purchased 2015)
Property 1 - 275k/3.75%/20-year/18years remaining (purchased 2011)
Property 2 - 260k/3.25%/15-year/12.5 years remaining (purchased 2013)
Visa - 18k (15K of this is for sewer, typically pay in full)
HELOC - 20k (pre FI discovery, I deposit my paycheck here, so it’s currently not a monthly expense)
Total: 1.025 m
NW: $1.7m
Specific Question(s):
I’m a late FI convert and realize I have a ways to go to get my spending further reduced.
I’m very asset heavy in non-liquid RE, including a primary residence that has high expenses, but I plan to hack to get close to 0 mortgage. The garage convert air b&b could easily earn 1-3k/month, but rough estimate of 1-year to get through all the work.
I’ve been hit with tremendous emergency expenses that I didn’t have appropriate cash reserves for and my FU runway money fund (17k) I started will likely be depleted to pay for some.
I’m very passionate to finally get started on some different work that will provide me more flexibility to stay home with my daughter, work less, and allow me to project manage converting our garage to an air b&b. I think I could start earning 1-2k cash/month fairly quick, but want to estimate 0 for 12 months…
My husband should be bringing more regular income soon, but I’ve been independent for most of my 45 years, it’s so hard for me to consider counting on it.
I think I need to estimate about 1k/month for health insurance for family of 3, but again, hoping husband may get a job with Health insurance.
I’m feeling so desperate to make the leap now, my step father’s health is failing and I want to be there for him and my mom. I feel like I finally found passion projects/work I can truly enjoy and terrified I’ll let it slip through my fingers if I do OMY. While I don’t HATE my job, I just feel very over it. 22 years at a corporate job…
I really want to try air b&b on one side of duplex and the other rental property is very stable - as you can see my interest rates are low, but the payments are high due to the shorter terms. It just doesn’t feel right to sell when they’ve been appreciating well (12%!) and typically net cash flow.
I wanted to cash out pension to fund garage conversion….figure I can live with the tax hit as long as I’m essentially using it to start my pension now instead of 20 years from now…should I use it as runway money instead? This seems terrifying to me, I want to make sure I invest it…
My main question is really looking for someway to make the FI leap ASAP without selling the rentals. Should I do some cash out and re-fi even though rates are higher? Should I go ahead and sell one duplex? I do have the capability to split one and sell as a condo unit, but it just doesn’t feel like the right thing to do.
Is there something in front of my face I’m not seeing? I really appreciate any different perspectives or advice…