Good day fellow Stachers,
Assuming I stay the course and my job (of 12+ years) remains stable I expect to reach FI in 9 years at $1MM (+/-20% for non-average market returns).
Currently $50K of my funds are in accessible VTI (Roth contributions & Taxable account), $3K is in Fundrise private REIT, and $55K is in IRA & 401K. I also have $6K in cash (which is in a 2.3% account, primarily for planned house/car/pet maintenance buckets).
The current funds would be significantly higher had I not concentrated on paying off all my high interest debt. With all but my 3.875% mortgage (194K) and 5.01% student loan (41K) my investment savings has accelerated significantly.
My historical take on Emergency funds is that I can always liquidate VTI from the Taxable account and the Roth Contributions. As such, I currently have over a year of living expenses easily covered (over 2 as we would realistically go extreme lean during a true emergency).
I have been considering using the majority of my investment money to save $30K in cash for 2 reasons.
1 - I would very much like to jump into cashflow realestate IF it can accelerate my path to FI. Also, IF I can leverage it into a tool that covers my monthly living expenses so that my day job status does not impact our living levels I would be ecstatic.
2 – My historically industry assured business has taken a management driven turn which allows for the first time in 30 years competitors to step in (for a chance that the owners receive increased revenue). As such, a job that was highly unlikely to disappear in the next decade+ has taken a turn in which it is possible. It would be a shame if I needed to liquidate VTI during a market downturn if that timeline corresponds with a higher unemployment rate.
I do not lose sleep over this, however RealEstate (in my area) is currently a bit frothy. The market/unemployment cycle/etc is also a bit frothy (IMHO). I TOTALLY understand the dollar cost averaging will almost always work out in my favour however we all know that at some point the Stock and/or RealEstate market is going to correct.
What are the community thoughts of accelerating cash savings for up to a year to have reserves that can be used to
1 – prevent liquidation of VTI to cover a job move should my current path hit a rocky patch,
2 – to have the funds to dump buy in a market dip, and/or
3- to have the cash for a downpayment on a distressed property (preferably through probate led, foreclosure, or divorce mandated quick turn) that can be converted into a 3+ unit rental (I have my eye on older 2 story homes with basements, turning each floor into a unit within biking distance to the local university).
Thanks folks!
Just an aside, my current home does not hit the 1% rule. During the housing crisis equivalent homes rented for $100/m more than my mortgage payment and currently it rents for $500 more than that payment. As such, renting it in a market downturn is an option vs selling should I choose to live in one of the rental units to take advantage of a tax play within 5 years of moving out of the current house.