Poll

Which plan should I take

Plan A
1 (6.7%)
Plan B
0 (0%)
Plan C (describe, plz!)
3 (20%)
Status Quo
11 (73.3%)

Total Members Voted: 15

Author Topic: Bellingham's RE Whanna Be Case Study  (Read 6798 times)

Lord_Ehrgeiz

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Bellingham's RE Whanna Be Case Study
« on: February 06, 2017, 02:00:28 PM »
Hello, mustachians!
I am an emigrant from Ukraine, who currently live and work in Bellingham, WA; 32yo.

In 2016 I made $57K after taxes, including:
$34K - My work
$5K - Wife's work
$14K - Rent income
$4K - Other

2016 Expenses:

$24K - Mortgage (minus $14K into principal, so real is $10K)
$2,645 - bills (electricity, water, gas, garbage, internet, cellphone)
$2,232 - groceries (I get 2/3 of my food for free from volunteering job I have on a side)
$3,182 - household (including $2,000 for new tile in kitchen and two bathrooms; $600 for tree removal)
$2,143 - Relax (including $1,100 for 7 days in Honolulu)
$1,305 - Transportation ($900 - tickets to Honolulu…)
$900 - clothing, books (wife was finishing college), medicine
$552 - kids
$7,045 - charity
$1,070 - other (mostly help money for relatives).
$1,579 -  Taga bike (still not sure if it was worth it! Hehehe)

Savings:
$13K in Savings Acc (0.5-1%)
$1K in LendingClub (10%??)
$7K in 401(K) (4%??)
$6K in mutual fund (8%??)
Around $68K in equity

We are family of four with me working full time and wife some part time; two kids - a toddler and a baby and two host students ($14K of rent income, uhuh!).
Living somewhat super frugal (no cars; one cellphone for family; no debts beside mortgage (172K at 3.25% for 30 years just recently refinanced for this great rate).
The GOAL is to RE this or early next year.

Soooooooo...

Plan A: use somewhat good income to mortgage second property (1bd, $100-130K, with 20% down; rent current property (4brd, 2.5bth townhouse) for $1800 a month (if you calculate it with manager and missing rooms it's more like $1,600 though...).

Income:
$1,600-1,800

Expenses:
$1000 - current Mort
$500 - second Mort
$300 - EVERYTHING ELSE
Kind of tight, but wife wants to keep working (so that's $250 a month!), and like I said we live super frugal.

Plan B: buy lot in HI for cash ($30,000), live next to ocean, build a styrofoam dome house, live on money from renting first property.

Income:
$1,600

Expenses:
$1000 - current Mort
$600 - EVERYTHING ELSE

Plan B looks nice and warm (it's snowing outside at where I am now), but I have no clue, if I can even get a permit to build in Hawaii… A lot of research needs to be done.

So, any thoughts?? What am I missing?? Thanks for any thoughts/comments!

PS: no, I don't want to keep working and save bigger chunk of money, I'm sick of it and kids are 2 and 0.5 - it's time to be with them 24/7!!

DrMoney

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Re: Bellingham's RE Whanna Be Case Study
« Reply #1 on: February 06, 2017, 05:25:44 PM »
I'm absolutely dying to move to Bellingham and can't imagine why you'd want to leave it! Sorry, not helpful, I know. But I'm melting in Miami.

bigalsmith101

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Re: Bellingham's RE Whanna Be Case Study
« Reply #2 on: February 06, 2017, 06:24:29 PM »
Hello Lord_Ehrgeiz,

I lived in Bellingham for 4 years while going to WWU, and currently live in Everett, so I'm familiar with the area.

Plan A. You don't calculate ANY risk. You will have to repair your first (rental) home, you will have to repair your second home, you will have to feed and clothe your children. Do you plan to raise your two children in a 1 bedroom home? Will they sleep in the living room?

Plan B. Crazy.

Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #3 on: February 07, 2017, 07:10:55 AM »
I'm absolutely dying to move to Bellingham and can't imagine why you'd want to leave it! Sorry, not helpful, I know. But I'm melting in Miami.

I like Bellingham and Plan A is mine. We have big Ukrainian community here and some friends, that I don't really want to leave behind. I already left everything behind once (while moving from one continent to another), and don't really want to do it again...
On the other hand, wife does not like 9 month loooooooooong Autumn and wants some sun.

Hello Lord_Ehrgeiz,

I lived in Bellingham for 4 years while going to WWU, and currently live in Everett, so I'm familiar with the area.

Plan A. You don't calculate ANY risk. You will have to repair your first (rental) home, you will have to repair your second home, you will have to feed and clothe your children. Do you plan to raise your two children in a 1 bedroom home? Will they sleep in the living room?

Plan B. Crazy.

I was hoping that "fix" money would come from "safety deposits" and I plan to RE with around $10K in my pocket for any unforeseen emergencies. Also, even now I have $15K deep credit card, which I see as last resort airbag. But yeah, you're right, I'm tending to close my eyes on risks... I will put some numbers into my budget for that, thank you!

As for feeding and clothing my kids (and myself) - I think I can handle that on very-very low amount of money - just like I showed it in my "case study numbers" - we spend ridiculously low on these.

As for sleeping in one bedroom - luckily I have two boys, so two-story bed is MUST HAVE, and I was thinking about giving a bedroom for kids and living room for myself and wife. Maybe one of those transformers type of a bed, that either disappear under couch or turn into one. Slowly, but surely houses are going to be more and more "mine", maybe later that will open a possibility to switch to two-bedroom.

As for Hawaii - I know, right?! That's exactly why I like it! Hehehe... That would be the best adventure one can wish for - to build your small paradise in... paradise?? I know I see this through pink glasses, but I kind of agree with my wife, that 9 month of a rain drizzle can be slightly... depressing.

Gimesalot

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Re: Bellingham's RE Whanna Be Case Study
« Reply #4 on: February 07, 2017, 07:50:11 AM »
You really need to think about this some more.  For example, I see no plan for health care, college, insurance, etc. 

Also, at $300 per month for "everything else" there is no wiggle room is your volunteering benefits change, there's a medical emergency, you need to replace expensive but necessary items, etc.


Guesl982374

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Re: Bellingham's RE Whanna Be Case Study
« Reply #5 on: February 07, 2017, 07:54:28 AM »
You really need to think about this some more.  For example, I see no plan for health care, college, insurance, etc. 

Also, at $300 per month for "everything else" there is no wiggle room is your volunteering benefits change, there's a medical emergency, you need to replace expensive but necessary items, etc.

+1 This seems half baked.

Voted Status Quo - Keep working/saving/investing.

ReadySetMillionaire

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Re: Bellingham's RE Whanna Be Case Study
« Reply #6 on: February 07, 2017, 08:31:27 AM »
PS: no, I don't want to keep working and save bigger chunk of money, I'm sick of it and kids are 2 and 0.5 - it's time to be with them 24/7!!

Seems like you stumbled across that thread where a poster mentioned buying a $30,000 lot in Hawaii and have been daydreaming at work about FIRE.  That has lead to you coming up with a half-baked plan to move to Hawaii. As others have pointed out, you really haven't even come close to thinking out all the logistics of this.

Furthermore, to the above portion of your post, sorry, but what you want to accomplish (no work and all time with kids 24/7) requires leverage.  A predicate to leverage is capital.  You have not worked or saved enough to have the capital necessary to do what you want to do.  Hence the advice that you need to keep working.

havregryn

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Re: Bellingham's RE Whanna Be Case Study
« Reply #7 on: February 07, 2017, 10:19:16 AM »
I think you need to reframe what you want. There is no way that you can retire early in the sense used on this forum with the assets you have. But I get that you probably have a completely different concept of what is risky and  is enough and what not if you grew up in Ukraine. I also grew up in a place like that and most of the people I know live in a financial framework that is often even more insane than what you are planning (especially as I am assuming you are legally entitled to work in the US meaning that you can ultimately always just get a job once you run out of savings). That assuming that you can actually have a positive cash flow from this rental the way you describe, but you say you paid 24 000 in mortgage in 2016 and yet plan for 12 000 per year in the future?

Also, if you can get 14 000 per year in rent while living in the place vs. 19000 if you move out, it really sounds like a bad deal. Actually, from the situation you describe it's unclear why you can't live off the 14000 and the money your wife brings in while you are home with the kids without making any drastic changes to your living arrangements?
As you would end up with far less disposable income if you did any of the things you propose vs you just quitting your job, I'm not sure I get the thinking there?

Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #8 on: February 07, 2017, 10:47:31 AM »
I think you need to reframe what you want. There is no way that you can retire early in the sense used on this forum with the assets you have. But I get that you probably have a completely different concept of what is risky and  is enough and what not if you grew up in Ukraine. I also grew up in a place like that and most of the people I know live in a financial framework that is often even more insane than what you are planning (especially as I am assuming you are legally entitled to work in the US meaning that you can ultimately always just get a job once you run out of savings). That assuming that you can actually have a positive cash flow from this rental the way you describe, but you say you paid 24 000 in mortgage in 2016 and yet plan for 12 000 per year in the future?

Also, if you can get 14 000 per year in rent while living in the place vs. 19000 if you move out, it really sounds like a bad deal. Actually, from the situation you describe it's unclear why you can't live off the 14000 and the money your wife brings in while you are home with the kids without making any drastic changes to your living arrangements?
As you would end up with far less disposable income if you did any of the things you propose vs you just quitting your job, I'm not sure I get the thinking there?

Yes, I see risks absolutely different from Americans (or Ukrainians, that lived here long enough), that might be my weak... but also my strong spot!
I see it as I not tend to get into "what if" trap and keep working to feel "safer"; on the other hand, comes any major accident and here I am, somewhat unprotected. Hmmmm.

As for "keep things as they are and just quit working": before I quit working I want to use this income I have in order to buy a second property, because otherwise I'll either never buy it, or I buy it for cash decades later. And it makes sense to rent out a big one and live in a small one in that case.

But, this rental income I have is from international host-students, that are considered as a part of a family, so I'm bounded to this place and barely can even go for a couple days long trip. That is, on one hand is good on money (it totally covers all my mortgage and bills expenses), and on the other one is bad, because these students are not renters and they come and go almost every other college quarter, and on Summer, for instance, all bedrooms are empty. I want to have more solid renters even if it means same/less money.

I guess I could buy 1bdr, rent it out for 2-5%ROI and use it just to slowly gain in equity, stay within my current property and keep having these host-kids ($1,100-1,200 a month when they are here). Yeah, that's definitely an option! Thanks for that!

You really need to think about this some more.  For example, I see no plan for health care, college, insurance, etc. 


I was thinking kids can do their own college (if they even chose to!), and catastrophic plans with 10K+ deductibles for insurance. I wonder, how much are these per month... Can somebody share some links on that?? Thanks!

havregryn

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Re: Bellingham's RE Whanna Be Case Study
« Reply #9 on: February 07, 2017, 11:08:14 AM »
By the time your kids are of college age, Ukraine might join the  EU (or the EU might fall apart lol but well...) so they can probably study for free in Europe.
Or all education might be free online by then. Or the world might end. In general I think sacrificing quality of life now vs. possible college expenses is 20 years is pointless as there is really no way to tell what that will look like then. But when it comes to healthcare, that's probably more of an issue. While education is becoming more available, when it comes to advanced healthcare I'm not so sure. But  I have zero concept of any of this in the US so can't help you there.
Anyway, I think what you are thinking sounds crazy to most people here and it sounds crazy to me too but I get where that thinking is coming from.  I wish you best of luck with your plan. I guess it definitely is best you keep living here and taking those students, and buy this second place as a rental. Whether or not that can backfire terribly depends on what your local market looks like.I get the impression reading these forums that these kind of investments are at the same time a lot more lucrative and a lot more risky in the US than here in Europe.

With This Herring

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Re: Bellingham's RE Whanna Be Case Study
« Reply #10 on: February 07, 2017, 12:27:59 PM »
I don't think you have a good handle on the costs of these options at all.

In Hawaii, your $600/month is going to cover everything?  What are the property taxes on that $30K plot of land right now?  What will they be once you've built a dome house?  How is a family that spent "$2,000 for new tile in kitchen and two bathrooms," which sound like cosmetic improvements, going to handle living in a non-ornamental, bare bones dome house?

Do you know how very much more expensive groceries are in Hawaii?  Have you accounted for your grocery bill going up when you no longer have your free-food volunteering job?  You will need to scale up a lot of your living expenses, including utilities, because Hawaii is an expensive place to live. 

What about plane tickets to the Ukraine or Washington to see family and friends?

And I don't think your Plan A of "$300 for everything else" is any better.  If you want to scale down to a smaller house and rent out the big one, do, but keep working until you have way more saved up.

We can't give you health insurance quotes for plans of that type.  First, the health market is going to be in flux for a while, and second the quote amounts will probably depend too much on your family's situation.  You must do your own research.  For example, a family catastrophic plan ($14K max OOP) in my zip code starts at almost $500 per month.  It won't be the same for your family.  And the monthly cost WILL change in the coming years.

redbird

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Re: Bellingham's RE Whanna Be Case Study
« Reply #11 on: February 07, 2017, 02:21:05 PM »
Your proposals remind me of my childhood. My parents were very poor and any tiny expense that wasn't part of the norm was catastrophic for them. These didn't even need to be expensive or unexpected expenses. For example, having to get the car license or registration renewed, expenses that are EXPECTED because you can see the expiration dates on them, were not part of the usual budget and made the parents have to scramble - beg their jobs for more hours and/or overtime, beg friends and family to let them borrow money, etc.

Your equity is TINY. That will not last you very long if you have too many/too large of unexpected expenses. And that budget you are going for is razor thin. I lived in Hawaii for 3 years and it's incredibly expensive to live there. Power bills were more expensive on a per kwh basis, food/goods/gas are all more expensive because 99.9% of them are flown/boated in from elsewhere, it's expensive to travel off of the island chain because you essentially have to pay international airfare rates to get anywhere (including back to mainland US), etc.

Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #12 on: February 07, 2017, 02:48:42 PM »
For example, having to get the car license or registration renewed, expenses that are EXPECTED because you can see the expiration dates on them, were not part of the usual budget and made the parents have to scramble - beg their jobs for more hours and/or overtime, beg friends and family to let them borrow money, etc.

Not for me, I don't even have ONE car. Stuff, that is EXPECTED for 90% of "everybody" is NOT EXPECTED for myself. And what jobs? I would not be working at all. ;-)

I lived in Hawaii for 3 years and it's incredibly expensive to live there.

Where you FI then?? Or regular, spendy-pants??

Power bills were more expensive on a per kwh basis,

Go off grid with a couple of solar panels? No? Ok...

food/goods/gas are all more expensive because 99.9% of them are flown/boated in from elsewhere

Haha, I like this one. Hello, 99.9% of your food ARE flown/boated from elsewhere NOW!
For instance, pineapples. ;-)

BTW, 50lbs of rice from random Google link:

B-ham: $22.09
Honolulu: $18.16


it's expensive to travel off of the island chain because you essentially have to pay international airfare rates to get anywhere (including back to mainland US), etc.

Errr... Then - don't travel??

I thought mustachians would be more... modest? I think I can try to live on $300 a month in B-ham, and I think I can try to do it in HI as well (on $600). Just cut off unnecessary stuff like cars and cellphones and eating out and when "WHAT IF ANYTHING HAPPENS" (which is probably wouldn't anyway) happens - deal with it when it happens.

chrisgermany

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Re: Bellingham's RE Whanna Be Case Study
« Reply #13 on: February 07, 2017, 04:06:01 PM »
Couldn't you rent out the idle student rooms in summer at airbnb?

Helvegen

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Re: Bellingham's RE Whanna Be Case Study
« Reply #14 on: February 07, 2017, 04:25:56 PM »
PS: no, I don't want to keep working and save bigger chunk of money, I'm sick of it and kids are 2 and 0.5 - it's time to be with them 24/7!!

Seems like you stumbled across that thread where a poster mentioned buying a $30,000 lot in Hawaii and have been daydreaming at work about FIRE.  That has lead to you coming up with a half-baked plan to move to Hawaii. As others have pointed out, you really haven't even come close to thinking out all the logistics of this.


I was on the Big Island where these cheap lots are because that's where the lava tour started at the time. The flow was not accessible otherwise publicly. I can't say I was impressed. The lots are pretty ugly, no palm trees or beach in the backyard, that's for sure. There are no jobs, very little to no services, lots of poverty. The lots are mainly in Lava Zones 1-3.

I think your plan would be eyebrow raising, but fine if it was just you and your wife, however I am not sure dragging two young children into it is the best idea ever.


Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #15 on: February 08, 2017, 06:36:41 AM »
Couldn't you rent out the idle student rooms in summer at airbnb?

I never tried that one, thanks for the hint. I wonder if Bellingham is popular enough for people to see it as vacation spot??

PS: no, I don't want to keep working and save bigger chunk of money, I'm sick of it and kids are 2 and 0.5 - it's time to be with them 24/7!!

Seems like you stumbled across that thread where a poster mentioned buying a $30,000 lot in Hawaii and have been daydreaming at work about FIRE.  That has lead to you coming up with a half-baked plan to move to Hawaii. As others have pointed out, you really haven't even come close to thinking out all the logistics of this.


I was on the Big Island where these cheap lots are because that's where the lava tour started at the time. The flow was not accessible otherwise publicly. I can't say I was impressed. The lots are pretty ugly, no palm trees or beach in the backyard, that's for sure. There are no jobs, very little to no services, lots of poverty. The lots are mainly in Lava Zones 1-3.

I think your plan would be eyebrow raising, but fine if it was just you and your wife, however I am not sure dragging two young children into it is the best idea ever.



Yeah, I saw these as well, but those (lava!!) are not $30K but more like $10K. For $30K you can get some palms and even a hut: http://www.zillow.com/homedetails/12-4350-Kona-St-Pahoa-HI-96778/80321540_zpid/
It still is awkward and probably not going to happen, but that definitely is possible to do - to move there and live frugal on $600 per month. I guess I would have to use free healthcare from taxpayers to cover my kids, and me and my wife would just skip it for a time being. Then, when kids are going to be older, we might just come back on a main land and maybe even look for a [part time] job!

bigalsmith101

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Re: Bellingham's RE Whanna Be Case Study
« Reply #16 on: February 08, 2017, 07:28:00 AM »
What is your plan for old age? When expenses increase. When you NEED medical attention.

If I were you, and I was committed to Retiring Extremely Early, I would work a few more years, save as much as possible, and at least have some significant money invested so that I could have a buffer on any unexpected expenses.

Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #17 on: February 08, 2017, 07:45:54 AM »
What is your plan for old age? When expenses increase. When you NEED medical attention.

If I were you, and I was committed to Retiring Extremely Early, I would work a few more years, save as much as possible, and at least have some significant money invested so that I could have a buffer on any unexpected expenses.

My plan for old age is in blur. I guess it would be an extension of a plan A - to live in a house that is already mine by that time, and rent the other one (that is already mine by that time too), [or maybe other two??], so if I would be old TODAY, in today's money's worth - I would be getting about $1,400 monthly after tax and property insurance. That looks more than enough for me!

Mariposa

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Re: Bellingham's RE Whanna Be Case Study
« Reply #18 on: February 08, 2017, 08:31:10 AM »
Your basic expenses not including housing are incredibly low (~7k), if you take out the trip to HI, kitchen tile, tree removal, and charity. If you can live without all that, you would be at ERE level of expenses rather than MMM. Does the 24k in mortgage you paid in 2016 include extra principal payments? Later on, you say mortgage payments on this property are 1k a month (=12k a year).

I agree with the above poster who said it doesn't make sense to sink ~20k down payment into a second property. I think you can maybe make it work in your current house, if you're willing to live at ERE level. Which is still wealthier than most people in the world.

12k mortgage + 7k basic expenses = 19k
14k rental income + 5k wife's income + 4k other income = 23k

What are your DIY skills and community resources like? Could you have done the tree removal yourself? If you need a new roof, could you put it on yourself? Could you get friends to come over and help? Do you have access to free building materials where you live? Do you have the space to grow your own vegetables and maybe even keep a couple of chickens?

How would you feel about not giving to family or charity?

As others have pointed out, where do you account for property taxes?

You and your family could get on Medicaid on such a low income level. Hopefully the new government won't do away with it anytime soon.

Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #19 on: February 08, 2017, 09:05:30 AM »
Your basic expenses not including housing are incredibly low (~7k), if you take out the trip to HI, kitchen tile, tree removal, and charity. If you can live without all that, you would be at ERE level of expenses rather than MMM.

I can live without HI, tile was a project for future - renters would just destroy my old  floor (vinyl) in bathrooms and it would be more expensive to fix it, than to set up a tile. So that's why we did it, not because "owwww, I want to renovate!" Tree was big and ugly (taller than my two-story house and leaning towards it!!), there was absolutely no way I could get rid of that on my own.
And yes, I came to MMM through ERE, so Jacob is my "hero" and Pete is my "teacher". At least that's the way I feel it.

Does the 24k in mortgage you paid in 2016 include extra principal payments? Later on, you say mortgage payments on this property are 1k a month (=12k a year).

Yes, I put extra money I had into a principal and refinanced (was 4%; ->  is 3.25%; was $1,250 -> is $943).

I agree with the above poster who said it doesn't make sense to sink ~20k down payment into a second property. I think you can maybe make it work in your current house, if you're willing to live at ERE level. Which is still wealthier than most people in the world.

If I quit my job before I take a second mortgage I would maybe never afford it anymore, and I kind of see rental property as my retirement plan. That's why I want to buy second one. But yeah, I could just rent a second one and keep status quo in my first one - that would just create more money.

12k mortgage + 7k basic expenses = 19k
14k rental income + 5k wife's income + 4k other income = 23k

That is exactly how it is - and my wife was trying to talk me into going semi-FI last year, but I keep insisting on buying that second one, so she gave up.

What are your DIY skills and community resources like? Could you have done the tree removal yourself? If you need a new roof, could you put it on yourself? Could you get friends to come over and help? Do you have access to free building materials where you live? Do you have the space to grow your own vegetables and maybe even keep a couple of chickens?

My DIY skills are miserable... I feel like I have feet instead of my hands and they grow exactly from where feet are suppose to grow. Haha. I hope I'll get better as I age.
Friends & my church community would help if I would ask. If it wouldn't be for free, it would be cheaper than market price. That tile project was done by one of my friends and it was 1.5X cheaper than if I would shop from regular tile-settlers. Chickens sounds awesome, but my backyard is tiny-cozy place that I turned into veggie-beds for some potatoes, carrots, and squashes (as well as garlic and onions). I planted two trees but no fruits yet, planted two vines but no grapes yet, wife planted a couple of strawberries bushes, so older kid already ate some last summer! But that is insufficient, it's more a hobby that a source of food.

How would you feel about not giving to family or charity?

I would give less if I'd had less, but I can not stop on charity - it means a lot to me and my wife. Coming from third-world country into this money-pouring-paradise is so contrast, that I can't stop thinking about all those who are not lucky enough.

As others have pointed out, where do you account for property taxes?

Yup. My mortgage already has escrow in it, and calculations for future has them (taxes) as well.

You and your family could get on Medicaid on such a low income level. Hopefully the new government won't do away with it anytime soon.

I would probably use taxpayers money for kids but not for us adults, I see it as cheating - "to do nothing" and use somebody else's money to cover my @ss. We didn't had health insurance until it became mandatory a couple years ago, so now I'm buying it from work.
« Last Edit: February 08, 2017, 09:15:02 AM by Lord_Ehrgeiz »

Mariposa

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Re: Bellingham's RE Whanna Be Case Study
« Reply #20 on: February 08, 2017, 09:48:28 AM »
People have different risk-tolerance levels, so if you and your wife want to decline health coverage, that's fine. But here's the thing: if anything catastrophic happens to either of you, taxpayers would be on the hook for your medical care anyway.

Sounds like you may not want to take advantage of these other implications of having such a low income:

Suppose you and your wife have a combined earned income of $9k. Even if you are getting an additional $14k in rental income, your federal and local taxes would be 0 for a family of 4, and you would owe ~$700 in FICA taxes. You could GET from taxpayers $3000 earned income tax credit and $2000 child tax credits (both refundable credits).

You would also qualify for SNAP benefits ($650 a month for 4 people), bringing your food costs to zero.

Not saying I recommend any of the above for someone who is capable of working.

If you don't have great DIY skills, depending on the condition of your house(s), I would budget at least $2000 a year in maintenance and upkeep for each property. Taken as a whole, kitchen tile / ugly tree / roof /plumbing problems are expenses that happen regularly. That still leaves maybe a little room for charity.

Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #21 on: February 08, 2017, 10:02:59 AM »
People have different risk-tolerance levels, so if you and your wife want to decline health coverage, that's fine. But here's the thing: if anything catastrophic happens to either of you, taxpayers would be on the hook for your medical care anyway.

Yeah, that sucks, but that's the way it is in here, I guess... Then again, I would be paying some taxes so I put in as well, right??

If you don't have great DIY skills, depending on the condition of your house(s), I would budget at least $2000 a year in maintenance and upkeep for each property. Taken as a whole, kitchen tile / ugly tree / roof /plumbing problems are expenses that happen regularly. That still leaves maybe a little room for charity.

Yeah, you're right - I keep closing my eyes on these in order for my picture of bright FI future to look brighter. I need to fix these numbers!

MayDay

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Re: Bellingham's RE Whanna Be Case Study
« Reply #22 on: February 08, 2017, 10:55:03 AM »
You won't be paying taxes at that income level, you'll get huge refunds.

Of course the IRS will accept if you want to send them a check.


Mariposa

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Re: Bellingham's RE Whanna Be Case Study
« Reply #23 on: February 08, 2017, 11:50:29 AM »
You won't be paying taxes at that income level, you'll get huge refunds.

Of course the IRS will accept if you want to send them a check.

Absolutely. See my estimate above of ~4k tax refund on 9k earned income + 14k rental income for MFJ with 2 kids. If you feel guilty about that, you can always send it back to the IRS, as MayDay says. Good luck on doing ERE your way, & keep us posted how it goes.

Gimesalot

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Re: Bellingham's RE Whanna Be Case Study
« Reply #24 on: February 08, 2017, 12:17:07 PM »
Looking at your expenses, adding in all of the food costs in case the volunteering doesn't work, keeping charity and some other expenses, you seem to be around $32k per year.  Subtract the $14k in rent income, and $9k in other income and you are still $9k short.  This doesn't even take into account that you won't have any kind of insurance to protect you or your children.

So two thought...

1. I think more people would be amenable to plan B, if right now, you actually started living the way that you plan to live.  Get rid of the cell phones, stop traveling, grow your food, etc.  Prove you can do it, and then you know it's possible.  Right now, you say you could, but you haven't actually tried it.

2.  Since you have no safety net, meaning capital, to fund this non-working lifestyle, it seems like your idea is to use a combination of government programs and friends and family to reduce the risk.  While this may be a comfortable position for you, I don't think it jives with the sentiment of this community and that's why you're getting a lot of push back.


Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #25 on: February 08, 2017, 01:03:17 PM »
I don't think it jives with the sentiment of this community and that's why you're getting a lot of push back.

It doesn't go along with my life principles as well, but I just can't safely not have an insurance in USA anymore, so I'm out of options [but to spend $500 on it, which I don't like]. I think we all are smart people here and we do know why insurance companies are there to begin with - because they are profitable! Which means that sh1t happens... but really rarely.

The big thing in which we tend to get stuck in is "but what if" game, that just holds us in our cubicles/work areas. But what if not? I'm just going to spend two (five??) more years, missing all important moments with my kids in order to shield myself from something which is probably never going to happen anyway? I consider it silly [not to insult those who do it].

I see it that way - something bad happens (unless it rips my head away, but even then it's not my problem anymore) - I cover it with credit cards in a moment of impact, and go back to work until I kill the debt. Then - I'm free again. Or even like this - I try semi-FI and monitor that moment when (IF!) budget goes underwater - and then I supplement it with some part time job to break even. Unlit then - I live carefree zero worries life.

Gimesalot

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Re: Bellingham's RE Whanna Be Case Study
« Reply #26 on: February 08, 2017, 01:17:03 PM »


The big thing in which we tend to get stuck in is "but what if" game, that just holds us in our cubicles/work areas. But what if not? I'm just going to spend two (five??) more years, missing all important moments with my kids in order to shield myself from something which is probably never going to happen anyway? I consider it silly [not to insult those who do it].

The thing is that medical issues have been shown to be a matter of when as opposed to if.  Most people will develop conditions that require medical treatment, and in the US that is very expensive.  The probability may be low, but the consequences are HUGE.  Also, I'm not sure where you are on SSI eligability.  Have you reached your required number of credits to get benefit?

I see it that way - something bad happens (unless it rips my head away, but even then it's not my problem anymore) - I cover it with credit cards in a moment of impact, and go back to work until I kill the debt. Then - I'm free again. Or even like this - I try semi-FI and monitor that moment when (IF!) budget goes underwater - and then I supplement it with some part time job to break even. Unlit then - I live carefree zero worries life.

There's a lot of "I"s in this thought for someone with a family...

Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #27 on: February 08, 2017, 02:01:08 PM »
Have you reached your required number of credits to get benefit?

Nope. I only have 20/40 (I have been here in States only for five years so far). I'll take care about it later, when my kids will be teens and they'll be like: "you can go now, dad".

There's a lot of "I"s in this thought for someone with a family...

My wife is riskier than I, so we have to stick with my plans "because I say so". We don't have that gender-equity thing in Ukraine/or in my family in our case. It's monarchy - we discuss it and then we do it the way I say! Hehehe. I just need to be sure she agrees on it not to make it painful for her. But we are on a same page in our views, and I think my wife is even more frugal than I am. And I'll ask kid's opinions when they can contribute in the family, until then - yup, it's monarchy! ;D

Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #28 on: December 18, 2017, 02:07:16 PM »
In a case somebody's interested (probably not, though) - I took money out of my house (31K) by HELOC - and added some cash I had (19K), had bought myself big one-bedroom condo in Albuquerque, NM, quit my job and moved to NM.

Now I have about $1,700-1,800 of monthly income from renting my house in Bellingham, WA through management company.
I have to spend $979+253 on mortgage/heloc, and also $202 on HOA (water, gas and garbage bills are in there) here, in ABQ, so I have around $250-350 monthly to live on.

My wife and I don't work now (we are planning to get some liiiiitle part-time in 2018), so... RE, I guess??

honeybbq

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Re: Bellingham's RE Whanna Be Case Study
« Reply #29 on: December 19, 2017, 11:08:52 AM »

I have to spend $979+253 on mortgage/heloc, and also $202 on HOA (water, gas and garbage bills are in there) here, in ABQ, so I have around $250-350 monthly to live on.


I wouldn't be able to sleep at night with that number, but at least you are happy with your decision!

Rylito

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Re: Bellingham's RE Whanna Be Case Study
« Reply #30 on: December 20, 2017, 06:54:40 AM »
Just curious how you decided on ABQ?  How do you like it there so far?

Ratrem133

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Re: Bellingham's RE Whanna Be Case Study
« Reply #31 on: December 22, 2017, 09:33:28 AM »
That $250-$350 doesn’t even cover house maintence on 2 properties, especially because one is so far away that you can’t DiY. How will eat? Food stamps, subsidized  insurance, federal tax breaks all while owning two properties.  You also mentioned missing out on “all of the milestones”, people that work and have kids definitely don’t miss out on everything... we create lots of memories and time together. This plan just doesn’t seem sustainable in the long run. Your kids are young, the get more expensive as the years go on...  not having health insurance at least catastrophic for you and your wife can ruin you  financially. Someone needs to work with their financial outlook.

Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #32 on: January 05, 2018, 11:00:24 AM »
Just curious how you decided on ABQ?  How do you like it there so far?

I did it for two reasons:

- cheap property (a condo for 50K?? Really??!)
- 360 sunny days per year (my wife got sick of 300 days of rain per year in WA)


Lord_Ehrgeiz

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Re: Bellingham's RE Whanna Be Case Study
« Reply #33 on: January 05, 2018, 11:09:05 AM »
That $250-$350 doesn’t even cover house maintence on 2 properties, especially because one is so far away that you can’t DiY. How will eat? Food stamps, subsidized  insurance, federal tax breaks all while owning two properties.  You also mentioned missing out on “all of the milestones”, people that work and have kids definitely don’t miss out on everything... we create lots of memories and time together. This plan just doesn’t seem sustainable in the long run. Your kids are young, the get more expensive as the years go on...  not having health insurance at least catastrophic for you and your wife can ruin you  financially. Someone needs to work with their financial outlook.

Yeah, it's raw, but hey. I'm here, with my kids, so I think it's worth it.
Insurance - I don't have one - screw it. I don't drink, don't smoke, exercise and I'm 30-ish, so next time I need a doctor is 20 years from now. Kids have state.
Maintenance - my B-ham house is 2005, somewhat new, I did nice fix-up right before I left, so hoppefuly good for a couple next years. Condo - I'm here, so DIY.
Food - same as in B-ham - I volunteer at local foodbank, and get 80% of my food from there. No foodstamps.
For a long run - yeah, it's not gonna work, but I think I mentioned, that we are going to suplement our livestyle with a little part-time work.

Kids are happy, I'm happy, wife is happy - what else matters?? ;-)
« Last Edit: January 05, 2018, 11:15:04 AM by Lord_Ehrgeiz »

honeybbq

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Re: Bellingham's RE Whanna Be Case Study
« Reply #34 on: January 05, 2018, 02:22:52 PM »

Insurance - I don't have one - screw it. I don't drink, don't smoke, exercise and I'm 30-ish, so next time I need a doctor is 20 years from now. Kids have state.


It'd be great if that was all it took to never get cancer or get into a car accident. I won't waste my breath explaining how foolish this is.

MayDay

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Re: Bellingham's RE Whanna Be Case Study
« Reply #35 on: January 05, 2018, 03:36:17 PM »
It doesn't even take cancer.

My kid was playing tag atvrecess, had a collision and needed stitches.

And also, 2005 hour is going to be hitting lots of repairs.