Sadly, both literally and figuratively. My wife and I are not saving what we could, however we make fairly high incomes and have set aside a fair amount of money. I think my wife views my discussions about early retirement as amusing, but I'm going to get a better grip on our spending and work collaboratively with her on how we get there.
Life Situation:
IRS filing status: MFJ
Number & ages of dependents: 2 kids (7 year old boy, 9 year old girl). Boulder, CO
Gross Salary/Wages: Before any deductions
Ages (Me 42, wife 40)
Pre-tax deductions: 6000 IRA for Matching (we have largely stopped pre-tax deductions because we are heavily weighted on that side - feedback is this may not make sense)
Other Ordinary Income: None
Qualified Dividends & Long Term Capital Gains: Minimal
Rental Income, Actual Expenses, and Depreciation: None
Adjusted Gross Income: 365000
Taxes: Federal: 83000 & State: 15000
Current expenses: Provide breakdown and relevant details. Aim to have “Miscellaneous” somewhere ~2.5%. Much lower and you may be providing too much detail, much higher and you have an obvious problem of not understanding your spending.
Mortgage $2,158
Property Tax $708
Home/Rent Insurance $267
Beauty Shop $167
Car, fuel, Car Maintenance, Registration, etc. $333
Charitable contributions $250
Children: music lessons, recreation, clothes, toys, basics $750
Clothing/Shoes $583
Dining (Lunch/Dinner/Etc.) $583
Gifts (not charitable contributions) $83
Electricity, Gas, Water, Sewer for 2 homes: $500
Groceries $1,417
Household; Maintenance $1,833
Internet, Wireless, Voip at two locations $167
Life Insurance $83
Medical (Doctor, Hospital, etc.) $83
Miscellaneous $83
Pets $83
School Tutition/Books/Etc. $167
Sports/Recreation $83
Travel/Vacation $250
Non-mortgage total $8,475
With mortgage total $10,633
Folks have identified some discrepancies here... I'm in the process of re-calculating, but it's relatively close
Assets:
Primary House: 1,150,000
Second Cabin: 290,000
Civic: 6K
Honda Pilot: 25K
Own land outright valued at 125K (prop taxes included with mortgage expenses)
Taxable Savings: 400,000 (250K of this is in form of equity at firms, 50K cash)
Tax Deferred: 1,100,000 (highlights: we stocked away a fair amount in 401K/IRA. We have one family lending arrangement with an industrial property that has worked out well with self-directed retirement accounts and we will receive 6K in interest per month for the next 4 years, with 400K tied up in deal but principal paid down monthly and completely paid off in 2.5 more years. It is backed by collateral so actually fairly low risk. Another 200K is in S&P Index funds, 100K in equity that is not easily extractable but appreciating on paper, 200K in lending for a real estate developer at 12% interest. 13K in 529 for both kids (not enough). Understand this isn’t the typical blend of investments and carries more risk.
HSA: 23K
Total investable savings is roughly: 1.5M
Less likely to sell property at this point in time, but that's around 1.5M
Liabilities:
Owe 326K on Primary, 4th of 30 year fixed, 3.375% - Pay $2221 monthly (620 in principal)
Owe 137K on Second home, 4th of 7 year arm at 2.75% - Pay $938 monthly (340 in principal)
Total: -463,000
Specific Question(s):
My wife would probably prefer to keep working another few years and makes 220K now. I would like to stop my current form of work by EOY 2017, with part time gigs from then on, that interest me. Our net worth is going up at over 400K a year right now between savings, interest, a wave of strong property appreciation, etc. This feels achievable, especially since we have so many opportunities to reduce spending. I'm working to develop a plan to reduce our outrageous spending to bring our savings into better alignment with financial independence.
Commence punches to face, etc
I appreciate any and all advice, education.