New to FIRE. Hello!

[MMM79]

Hi, I'm Manny(40 yrs old). I discovered MMM by accident. Last 2 years I've been heavely invested in Biggerpockets community. One day I don't know why, but  I decided to listen to their new podcast BP money. Very first episode I listened to was of MMM. It got me thinking and came over to MMM website. Since that moment I've been hooked on personal finance, trying to read one MMM blog daily. I paid of my $40k debt in 1 month. I had kept this money for real estate investment but was making $800 a month in payment on my Motorcyle ($475) and personal loan($325). I decided it was best to pay this off and understand personal finance ground up. I used to work at Wal-Mart and still have 401k account with them which is at $213,000 as of today. Wish I had come across MMM 10 yrs ago, over this time period I blew away close to $600,000 in lifestyle design. Today from the moment I wake up to the moment I goto bed I regret not handling my money well. I serioulsy don't know what I was thinking all this time. What a shame!

Here's my current situation.

Salary : $113,000/yr
Wal-Mart 401k : $213,000
Savings Account: $35,000
Rental 1 Single family residence : Rent $1000 (Morgage $745) - Value $ 170,000
Rental 2 Duplex : Rent $735 (Mortgage $991) I live in one unit and rent other unit out.  - Value $160,000

Currently I do not have any other debt other than those 2 morgages I've listed. It's been more than a month I ate out and have cancelled most my monthly subscriptions including my Dogs health Insurance($80/month). I'm trying to save as much as I can. Used to travel almost every other month and its been more than 6 months and I'm still not interested to travel until I have first $100,000 saved. Presently I'm able to save more than 50% of my take home pay.

At present I do not have any active 401k or any other fancy investment accounts like FIRE community. This is would be my first intentional step in 40 yrs on what to do with every penny I save from here on. And I'm interested to learn from your input what to do next.

Thank you for taking time to read and I'm looking forward to your guidance. Hope to achieve FI like you guys one day. You guys/gals are my hero.

[CheapScholar]

Are you self employed?  That’s a nice salary to not have a 401(k) offered.

Family or plans to have family?

Why aren’t you maxing out an IRA for the tax benefits?

[FLOW]

Give up the regret -- you're doing great.  You're in the catbird seat.  What specific questions do you have?

In general, the FIRE community don't use any "fancy" investment accounts.  It's mostly whole market index funds. VTSAX for stocks, VBTLX for bonds... We aim for time in the market vs. trying to time the market.  There are also quite a few landlords here, so you're in good company.

[SwordGuy]

You're in a great position to move forward.

Please tell me more about rental #1.

How much equity do you have in it?   How much did you pay for it and how much down?
What % are you setting aside for repair set asides and vacancies?
Any other expenses not covered by PITI, repairs and vacancies?   Property manager or do you do that yourself?

[wageslave23]

You're in a great position to move forward.

Please tell me more about rental #1.

How much equity do you have in it?   How much did you pay for it and how much down?
What % are you setting aside for repair set asides and vacancies?
Any other expenses not covered by PITI, repairs and vacancies?   Property manager or do you do that yourself?

Yes.  My first thought is dump the first rental.  I tell myself that less than $350 a month cash flow is not worth my time.  You make a good income, focus on that and don't worry about $3k in potential profits from rental 1.

[SwordGuy]

You're in a great position to move forward.

Please tell me more about rental #1.

How much equity do you have in it?   How much did you pay for it and how much down?
What % are you setting aside for repair set asides and vacancies?
Any other expenses not covered by PITI, repairs and vacancies?   Property manager or do you do that yourself?

Yes.  My first thought is dump the first rental.  I tell myself that less than $350 a month cash flow is not worth my time.  You make a good income, focus on that and don't worry about $3k in potential profits from rental 1.

The problem is that it's NOT $350 a month cash flow.  Stuff is wearing out every day.    Money has to be set aside for repairs.   Tenants come and go.  When they go and a new one doesn't come along, you still have to pay the mortgage and minimal utilities.   So money has to be set aside for that.    Someone has to do the property management and if changes in their life prevent them from doing it, they have to be paid, too.

That's why I asked for more details. 

[wageslave23]

You're in a great position to move forward.

Please tell me more about rental #1.

How much equity do you have in it?   How much did you pay for it and how much down?
What % are you setting aside for repair set asides and vacancies?
Any other expenses not covered by PITI, repairs and vacancies?   Property manager or do you do that yourself?

Yes.  My first thought is dump the first rental.  I tell myself that less than $350 a month cash flow is not worth my time.  You make a good income, focus on that and don't worry about $3k in potential profits from rental 1.

The problem is that it's NOT $350 a month cash flow.  Stuff is wearing out every day.    Money has to be set aside for repairs.   Tenants come and go.  When they go and a new one doesn't come along, you still have to pay the mortgage and minimal utilities.   So money has to be set aside for that.    Someone has to do the property management and if changes in their life prevent them from doing it, they have to be paid, too.

That's why I asked for more details.

That's correct its maybe $250/mo at best which is why I said dump the rental.  $250 is < $350 so the details don't really matter.  Dump it.

[MMM79]

Are you self employed?  That’s a nice salary to not have a 401(k) offered.

Family or plans to have family?

Why aren’t you maxing out an IRA for the tax benefits?

I'm not self employed ad do not plan to have family. And I'm not much familiar with IRA. I've read few things but nothing in-depth. Although my friend recommends me to atleast start roth IRA.

[MMM79]

You're in a great position to move forward.

Please tell me more about rental #1.

How much equity do you have in it?   How much did you pay for it and how much down?
What % are you setting aside for repair set asides and vacancies?
Any other expenses not covered by PITI, repairs and vacancies?   Property manager or do you do that yourself?

Yes.  My first thought is dump the first rental.  I tell myself that less than $350 a month cash flow is not worth my time.  You make a good income, focus on that and don't worry about $3k in potential profits from rental 1.

The problem is that it's NOT $350 a month cash flow.  Stuff is wearing out every day.    Money has to be set aside for repairs.   Tenants come and go.  When they go and a new one doesn't come along, you still have to pay the mortgage and minimal utilities.   So money has to be set aside for that.    Someone has to do the property management and if changes in their life prevent them fromm doing it, they have to be paid, too.

That's why I asked for more details.

That's correct its maybe $250/mo at best which is why I said dump the rental.  $250 is < $350 so the details don't really matter.  Dump it.

I bought it for $155k and put 20% down 5 yrs ago and self manage that property. I have $11k set aside for repairs and maintainence. I've been thinking of getting rid of that 1st rental for few weeks now. Tenants lease expires in April 2020. I'll let them know 2 months in advance that they wont be able to renew their lease. It will give me one month to clean up, paint and put that rental on market by May 2020.

At present I'm trying to save more than 60% of my income. Hopefully when I sell my 1st rental and with current savings rate, I'll have $100,000 cash in hand by summer 2020. I plan on investing that 100k in a decent multiunit property. Besides that 100k every penny I save, Should I open an account at Vanguard and start investing in index funds ? I'm little lost, this is my first time in life intentionally thinking of what to do with money. I'm trying to soak as much as possible here on MMM and Biggerpockets.

Thank you everyone for your inputs. This clears my head and helps me make a right choice.

[NWOutlier]

Hey MMM79!  I'm in WA too!

remember personal finance is personal; what works for you.  that said, if I had 100k come in, it would go directly to index funds lump sum, specifically VTSAX in my taxable account.... now, that's what "I" would do.

Here is the interesting part - I believe I need another income source, realestate or home business has come up a lot in my mind, but - it would be great to learn from someone with experience (you)... I don't want to deal with tenants, I would be more interested in maybe a managed property, multi-tenant for cash flow purposes... my only other thought is to buy REIT's in my ROTH accounts... but in short, I know I need something more than my job and index funds...  Maybe we can share points of view, and see what works from each of us?

Best Regards,

NWOutlier - (steve)