Author Topic: 5-Year Plan to Leave NYC toward FI. What would you do?  (Read 2376 times)

Deleuze

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5-Year Plan to Leave NYC toward FI. What would you do?
« on: June 04, 2017, 01:59:22 PM »
Hello Mustachians,

I'm a long time voyeur on this board but have never made a post. So here goes...

My wife and I live in Brooklyn, NY. I am 38 and she is 32, I am a small business owner
and she is in the education field. We dream of leaving the city behind and heading to
the country to live a more peaceful and self sustainable lifestyle but for now we make
decent money in the city. However, we do not necessarily know what to do with our
money in order move toward FI.

At the moment we have zero debt, we have one vehicle fully paid and a combined income
of 170k after taxes per year. We both just got out of student loan debt, so this is the first
year we have had the opportunity to use what we make to our advantage. We have around
$70k in our bank account and this year we will have about $8k per month leftover after our
monthly expenses. We currently have no investments, that includes no retirement investments.

What would you do with this $8k per month? I'm fairly certain we make to much to have IRA
accounts. And i've read tons of opinions on Index Funds on this board and it def. seems to
be a positive way to go. Aside from that if we did find a house now to purchase we have the
down payment just sitting in our savings to do so but this would mean we would have to
commute weekends (which we don't mind because leaving this city for some peace is fine
with us) but we do realize a house means added expenses: taxes, upkeep, gas to and from
city.

We would love to hear some veteran Mustachians chime in here, we know we won't always
have this type of income and want to make sure we invest accordingly.

Godspeed!
Don

ChpBstrd

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Re: 5-Year Plan to Leave NYC toward FI. What would you do?
« Reply #1 on: June 04, 2017, 03:28:15 PM »
Your optimal investment order is covered in this thread:
http://forum.mrmoneymustache.com/investor-alley/investment-order/

With take-home pay of 170k and savings of 96k/year, your savings rate is 56%. According to the calculator on networthify.com (and accounting for your 70k in the bank), you can retire in 13.3 years. However, this can probably be shortened a year or so based on the assumption your post-FIRE cost of living will be less than your current Brooklyn cost of living, which at 74k/year is doing well for that location, BTW.
http://networthify.com/calculator/earlyretirement?income=170000&initialBalance=70000&expenses=74000&annualPct=5&withdrawalRate=4

I would advise against getting a 2nd home in the country and commuting weekends. If you want to live the country lifestyle on weekends and vacations, AirBnB gives you the luxury of trying out dozens of country homes at a tiny fraction of the cost of ownership. Then when you achieve FIRE, you know exactly what you're looking for - or perhaps by then you've been there done that.

I know that some jobs simply don't exist outside of big cities (e.g. fund manager, art auctioneer), but do you have the option of moving somewhere more suburban/country and keeping most of that high income?

Deleuze

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Re: 5-Year Plan to Leave NYC toward FI. What would you do?
« Reply #2 on: June 04, 2017, 03:55:17 PM »
Thanks for the tips and sharing the links.

I estimate our post-FIRE cost of living to be half of what we spend here in the city
which is great because it shortens the time to achieve that goal according to the
retirement calculator.

But, in the future if we were to say spend 300-400k on a home, how would this
attribute to FIRE? It seems as though these calculations don't necessarily take
into consideration the idea of purchasing a home either now or in the future.

monarda

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Re: 5-Year Plan to Leave NYC toward FI. What would you do?
« Reply #3 on: June 04, 2017, 04:00:56 PM »
In the education field, does your wife have access to a 403(b) and a 457(b)?
If so, max those, whatever else you decide to do.

Fomerly known as something

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Re: 5-Year Plan to Leave NYC toward FI. What would you do?
« Reply #4 on: June 04, 2017, 05:04:06 PM »
As a business owner you have the ability to set up a SEP IRA and some other types of retirement accounts  (I'm not self employed so I don't know the specifics.)  Talk to an accountants/financial advisor to get the specifics here is a case where having an expert at least help you set up the plan will be useful.  I do know there are likely no income limits but some of them do allow you to shelter the full $53,000 that you and your business can contribute to the account.

Deleuze

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Re: 5-Year Plan to Leave NYC toward FI. What would you do?
« Reply #5 on: June 04, 2017, 09:01:02 PM »
Car is paid for, has been for years. It's value is in how we use it in the future and
is great for traveling out of town and exploring on weekends, which to us is worth
more than reselling it.

 

Wow, a phone plan for fifteen bucks!