Hey there! My wife and I are somewhere along our journey to early retirement and think its time to get some feedback from the community. We believe we're on track to retiring by 40. Do you see any major flaws in our plan? Any tips to stay on track? Thanks for taking a few minutes out of your day to take a look at this.
I'm 34 and my wife is 31. We live in a major city in British Columbia, Canada and have no kids. We plan on having a kid sometime in the next few years, but not immediately. As you'll see we are aggressively paying down our mortgage while we don't have a child in the picture.
Gross incomes: Me: $82,000. Her: $85,000 (167K combined) from our full-time jobs. After tax combined incomes: Roughly $125,000/year or $10,500/mo. I co-own a software company and she works in a bank.
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My assets/investments:
* My company is roughly valued at 1.3M today and I own 50%. I plan to exit in the next few years when it gives me 1.2M after tax (the company is rapidly growing and that scenario is realistic in roughly 2 years).
* $9000 TFSA (in ETF's)
* $5500 RRSP (in ETF's)
* = total $14,500 (plus potentially ~1M once business sells, but not liquid yet)
Her assets/investments:
* $72,000 RRSP (stocks, averaging +15%/year returns)
* $24,000 TFSA (stocks, averaging +15%/year returns)
* $24,000 RRSP cash
* $30,000 RRSP mutual funds (w/maxed employee contribution limit)
* = total $150,000
Our shared assets:
* home purchased for $400,000 6 years ago
* our home is valued at roughly $750,000 in todays market but we don't plan on moving (enough room for a kid if we have one)
* mortgage remainder: $210,000
* = $540,000 home equity if we were to sell in todays market
* $15,000 car (paid off)
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My monthly expenses:
* $750 TFSA contributions
* $100 RRSP contributions
* $70 life insurance
* $40 MSP (BC health insurance)
* $1,300-$1,500 personal expenses (food, gym, everything else)
* = total: roughly $2275/month
Her monthly expenses:
* $650 TFSA contributions
* $350 RRSP contributions
* $900 everything else + personal expenses (life insurance and all personal expenses)
* = total: roughly $1900/month
Shared monthly expenses (equally shared):
* Mortgage: $4,850 (average per month) - we are making much higher payments on purpose because we want to be mortgage free as soon as possible
* roughly $4600 to principle, $250 to interest every 2 weeks (2.57% is our mortgage rate)
* anticipating payoff in 2022 because we plan to increase payments by ~$400/month every year until its paid off (we average 3-10% raises/year and plan to keep expenses roughly the same)
* $1400 everything else (shared groceries, strata fee, car insurance/gas, etc.) we share a car
* = roughly $6250/month
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We have no debt other than our mortgage. Credit cards/LOC's all paid off in full each month.
Once we're mortgage-free, our shared monthly expenses will drop down significantly. Hopefully by that time I would have sold my business and able to FIRE with 1.2M, by investing in index funds and living off 4% (48K/year). She would be able to majorly increase her investment contributions and hopefully do the same before she's 40.
Our plan is to be mortgage free by the time we have a baby. Mat leave gives her 85% of her income for 1 year (or spread over 1.5 years) so we'll be able to keep up our mortgage payoff as she plans to stop investing during that period). We won't have big daycare costs if we have a child because both our parents are retired and live close by, and are willing to babysit often. Also, I'm more than willing to be a stay-at-home dad at least part-time when I'm FI.
So, what do you think? If I end up selling the business and walking away with 1.2M and she keeps her job/income/investments on track can we retire by 40?