2ish year update. I'm 32 now. Yay! Still alive.
I have:
- $105k in retirement
[+54%]- $40.5k outside retirement
[+6.6%]- $354k equity in a $400k condo
[+41.6%]- $152k salary (last year was $169k)
[+15.5%]- $0 non-mortgage debt
- $50k-$100k in about 800 yo-yos... (yo-yos are stilll cool but I'm still crazy for buying them)
No progress on selling any yo-yos (but I did buy one of the rarest / best...
http://www.yoyomuseum.com/museum_view.php?action=profiles&subaction=turboyo). The last six months or so have been a grind b/c I've tried to max the savings, pushing it to ~80% monthly, but I have no real social life. I'm strongly considering selling the condo:
1. The San Jose market is a seller's market, and particularly my neighborhood is a multiple offer environment.
2. I don't really like living in San Jose.
3. I'm going to start looking at a new job soon, and I want the freedom to leave San Jose.
4. I need to work at least 2 more years to reach FI, and I think the possibility of losing $50k in equity is greater than the possibility of gaining $50k
5. Diversify net worth out of real estate.
6. I purchased for $150k, so after the $400k mark I have to pay taxes on gains.
Downside of selling condo is that taxes are based on purchase price so when it resells, the fixed cost advantage will evaporate. If i repurchased, I'd have to pay probably $400 a month instead of $150 for the same condo.
Still looking for opinions!
If I paid off the condo, my fixed housing cost would be $550/month. If I wanted to stay here, that would be cool, but I just don't find it a pleasant place to be. Too many parking lots. I could move to SF and rent it out, but I'm thinking the rental income would be crushed by my ~42% marginal fed/state tax rate, so it's really not that great to make $900/month on a $400k asset.
If I sell it, I now need to decide how to / how quickly to invest $350k. I'll take a hit from selling and moving costs in the short run, or I'll take a long term hit from the opportunity cost of a low return on that $400k. I realize though that selling the condo and then racing to $600k is basically saying I'll leave the Bay Area, since the $2k a month afforded by $600k net worth just isn't enough to live here. I think that's okay.
About selling, I think I'm most worried about dumping the proceeds into the stock market. I think it's inflated. But bonds I think are a bad deal b/c the interest rates are too low. My impression is that bailout cash is sitting in a vault somewhere waiting to cause inflation, and we're due for another recession. The only thing that makes any sense to me is to buy gold... but gold is a crappy long term investment, and I'd want to buy real, actual gold... but also, having $400k in real actual gold sounds incredibly dumb and not diversified. I just don't want to have $600k in an inflated stock market.
My goal is to get savings to match the condo payoff amount ($46k) and then continue saving, but at a lower rate ($5k a month instead of $6k). That way I can have a social life and start becoming less weird/hermit. Keeping the $46k would let me either payoff the condo at will if I wanted to stay and lower risk, or have the money to sell it if I decide that's the right thing.
Any engineers here who transitioned to starting a business? How did you think about risk? How much money did you have and where did you look for investment opportunity?
