Author Topic: Got Started Late in Life - Now What?  (Read 5948 times)

TheSokols

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Got Started Late in Life - Now What?
« on: April 28, 2013, 07:01:18 PM »
Hello Fellow Mustachians,

We need advice on how to proceed in the next 5-10 years or so. Here are some facts to help repliers:

Couple over 50 with teen daughter in H.S., originally from NYC, who didn't meet and marry til after age 30 (we squandered our youth)

We are both  old enough to have minor issues that keep us from doing our own sweat equity work (Mrs. used to build houses with Habitat, but alas, significant spine problems have made such activities a thing of the past)

Live in Exurbs west of DC (Northern VA), in a small town with good services, safe, walkability/bikability BUT it is very much a True Southern Town. No real public transportation.

Just re-fi'd our Townhouse, which is VERY underwater. WE bought at peak and have lost >50% of value, but at least now our monthly is lower, but at 30 years, we'll be dead before paying it back most likely. Low property taxes ($4k/yr). 1150sf. Have NOT ruled out a walk away option.

Total Savings (liquid assets) <$80k
IRA/401k's total about $50k

We own a Rental Property - single family home, in MD, in sprawly suburban area. Good renters. Lost value there too (~15%), rent is about $300 over mortgage monthly payment. Have made zero profit due to high maintenance costs. This is owned thru our LLC.

Mr.'s Occupation: Salesman for high-end security software for government agencies - 10 years experience - salary + commissions 50 hrs/wk
Mrs.' Occupation": Speech Therapist working in healthcare (nursing homes) - 15 years experience - high salary, 30 hrs/week
*In the past we have been entrepreneurial and each had our own businesses. Ended up filing for Bankruptcy in 2001 (paid off in 2005)
*We still have "side businesses" on the books to help us keep income taxes down

Used car loan on Mr's fancy car to drive clients around in: $6k - 21mpg. Works from home frequently but has to travel a lot.
Mrs' car is paid for (Go Outback!!) - 27mpg. Commute to work is 50 miles roundtrip, 1/2 hour each way, low to no traffic on a country road. Yes, there are places within walking distance Mrs. could work, however they're not hiring.

Savings for daughter's college: $0. Sorry, baby, mom and dad can't help unless we move in with you ;)

$$$ help from family members over the years: $0 (everyone was always under-employed)

Places we have lived and moved away from: New York City, Suffolk Co. LI/NY, Pinellas Co., FL

We consider our selves deep blue liberal progressive creative socialist agnostics. We are not liking living in the South at all. We have friends/business associates in Charlotte, Greensboro and Asheville NC, New Orleans, Birmingham AL, and Nashville, TN, but having visited we can say none of those places appeal (still the south). Can't afford to return to NYC. Ever.

Mrs. has decided that after 50+ years she'd love to not ever have to shovel snow again. But she also doesn't care for high desert or for endless cloudy days. She would prefer to be within an hour of an ocean and requires sun to keep autoimmune diseases at bay.
Mr. loves the cold and snow and the desert, and water, but not heat and humidity. Has minor chronic health issues that require monitoring, so need decent medical care not too far away.
We purchase most foods at Farmers' Markets, followed by mom-and-pop healthfood stores, followed by Whole Foods and local supermarket.
We don't want to live on an island.
Daughter plans to attend college in VA (yay-low in-state rates!) and settle here.

Side careers: Mr. - pro-level musician and composer; Mrs. - pro-level actress
Hobbies: Tennis, Travel (we splurge but incur no debts to travel), bike, dance.

Once Daughter moves on to college, we'd like to move.
Places where Mr. would find adequate work or be able to start own biz: Silicon Valley, San Diego, Austin, TX.
Places Mrs. can find work: anywhere in US except: Boulder Colorado, San Fran proper, Santa Cruz, Seattle, Portland (Needs elderly population to work with)
Mrs. prefers San Diego (didn't we read somewhere that MMM has a soft spot for the place too?)
Mr. prefers Austin TX or Boulder CO but is OK with San D or Tucson
Both would love San Fran area, but clearly we can afford that no more than we could a return to NYC. We both despise Phoenix.
Thinking San Diego is the best option, but Mr. is concerned about housing and living costs.

Any thoughts/advice appreciated.

Gracias Mustachios!





Joet

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Re: Got Started Late in Life - Now What?
« Reply #1 on: April 28, 2013, 07:05:43 PM »
is there a question in there somewhere? :)
cash for keys on both properties... rent somewhere cheap maybe near current jobs. Try to make/stick to a budget and save ~50% otherwise you will be working in your 70s. my $0.01, not trying to flame/troll, just stating my honest opinion

TheSokols

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Re: Got Started Late in Life - Now What?
« Reply #2 on: April 28, 2013, 07:18:45 PM »
sorry...it's long....like my life ;)

Here's a ?:  What does cash for keys mean?
Selling either house would result in us owing the bank money.
Our primary residence is rentable, but rents here are sky-high, would result in no savings if we move elsewhere just to rent.

When we do move, both properties will be rentals and we will start out by renting in the new city until we figure out an exact plan in that place.

Joet

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Re: Got Started Late in Life - Now What?
« Reply #3 on: April 28, 2013, 07:24:50 PM »
cash-for-keys is a specifc win:win for both sides in an underwater property. You may get a tax bill though for the debt forgiveness [check with a tax attorney], otherwise the point of the affair is to get out from under the debt AND have the bank that owns the property write you a check to get out

Another Reader

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Re: Got Started Late in Life - Now What?
« Reply #4 on: April 28, 2013, 07:42:27 PM »
Why would both houses be rentals?  You aren't making any money on the rental now.  Will you make money on the one you occupy?  If not, short sell them when you are ready to move and be done with it.  You can likely avoid tax on the loan forgiveness on the primary, but verify with your tax person.

Neither one of you have been successful in operating businesses.  What will be different now?

You have not stated your incomes.  Are you covering your current expenses?  How much are you saving?  In what vehicles?

Will your daughter still qualify for in-state tuition if you move?  How is she going to pay for college, especially if she can't live at home?

Bottom line, would you be better off staying put, saving as much as you can while DD attends college and lives at home, amputating the non-performing rental, and considering the refi payment as rent until the kid gets out of school?

DocCyane

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Re: Got Started Late in Life - Now What?
« Reply #5 on: April 28, 2013, 08:24:21 PM »
Without hard numbers including salaries and a detailed budget, I'm not sure what the Mustachians can do for you.

If I were to be an advocate for anyone, I'd be one for your daughter. While you as an adult have made your decisions and must now face the consequences, it sounds like you aren't helping her with the next stage of her life.

If you have no college money to offer her, at least give her good advice.

Tell her:

1) not to borrow her way through school
2) take a year or more off to work and save up for community college where she can knock out her basic classes
3) join the military or ROTC and see what that would mean for her as far as education and a career
4) earn a degree in a field that will assure her a good living, such as engineering or nursing; liberal arts is a waste of time

You probably won't pass on any meaningful advice, but I had to try for her sake.


TheSokols

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Re: Got Started Late in Life - Now What?
« Reply #6 on: April 28, 2013, 09:21:11 PM »
I think I should clarify my question a bit first: are there ANY places that we could conceivably afford to move to where the weather is not extreme, not too far from a coast, not too conservative? And if so, what's a good groundwork strategy?

Hubby wouldn't like me to post incomes anywhere, but we are definitely covering all bills. I can say that income is in 6 figures annually.
We have no credit card debts.
We drive an Outback and an Infiniti.
Hubby saves about 25% of annual income, much of it pre-tax thanks to his employer.
I save about 65% of my income.

DD can remain a resident of VA once she has her own drivers license. We can afford to carve out in-state tuition and room & board. OR she may decide to move with us and go to a state school in a new state with us. She wants to be a physical therapist, so she doesnt need ivy league for that! In fact, she can go to a community college and start working as an aide after 2 years of school. We can totally afford community college.

Dumping the low-performing rental is a good idea. We would either walk away from the current primary residence or rent it out at a tiny margin of profit. There is a small possibility that DD may elect to stay here and rent out extra bedrooms to other young people once she is done with school altogether. She really wants to go away (not far, but just not with her dorky parents), she may have to get a part-time job and take out loans to help finance, we're pretty sure no financial aid will come our way. She is bright and a good athlete, so there's a tiny chance of a partial scholarship out there somewhere.

We don't want to wait til D is done with college to move because we will be too old. We're in our 50s now. If we wait til she's done we'll be in our 60s, which will make us unemployable in a new city.  I recently lost a good job opp due to age-ism, they went with a recent grad to save cash (penny wise pound foolish IMHO).

As for new business ventures in the future, they would be vastly different than what we did before, but I don't have a crystal ball, so...

@DocCyane - she's planning on a healthcare career, and the advice you suggest has already been given, however if she chooses to do it via 4 year state college, we can help, but she'll have to take partial loans.

Bear in mind, if we pay her way through college we will not have enough money to move ever, nor we will be able to consider retirement of any kind, and above all, in spite of the fact we're not able to help as much as other parents, we're trying to at least avoid being a burden to her in our old age.

Thanks!


Iron Mike Sharpe

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Re: Got Started Late in Life - Now What?
« Reply #7 on: April 29, 2013, 12:32:31 PM »
You don't have your real name posted here, not sure why everything has to be clandestine.

crowstache

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Re: Got Started Late in Life - Now What?
« Reply #8 on: April 29, 2013, 12:58:48 PM »
Quote
are there ANY places that we could conceivably afford to move to where the weather is not extreme, not too far from a coast, not too conservative?

Sounds like California to me.  I could be accused of being biased since I live here, but it would probably fit your wants.  Certainly, the further inland you go, the more affordable it becomes.  We live in Sacramento, which may work well for you, as it's only an hour and a half to two hours from the coast and San Francisco.  It's also close to the snow (aka the Sierra Nevada) if you are a winter sports enthusiast.  The only major weather drawback is that it can get very hot here during the summer.  The good thing is that the humidity is still quite low (nothing like in the eastern half of the country), and heat waves tend not to last all that long.  I've also lived in Virginia, the upper midwest, and the high desert, and I'll take the weather here anyday over all of those places!

TheSokols

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Re: Got Started Late in Life - Now What?
« Reply #9 on: April 29, 2013, 01:17:00 PM »
Thanks for the positivity Crowstache. CA is still tops on the list. It definitely meets all the wishlist items, remains to be seen if we'll be able to afford or HOW to MAKE it affordable.

As for you, Iron M., since when are real names required on the interwebz? Are you really made of iron? Feel free to skip replying to any posts for which you have no constructive advice. Still a free country as far as I know.

TheSokols

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Re: Got Started Late in Life - Now What?
« Reply #10 on: April 29, 2013, 01:23:54 PM »
Aha, finally figured out what cash for keys really means.....
Yeah, we'd have to be in foreclosure for that.
Not willing to do that, we've already asked for modifications and been refused due to underwater-ness.
We did re-fi thru HARP 2.0 (fanniemae), cut our interest rate by half. That helps.

If it comes down to walking away, we'll reconsider that option. For now, due to the nature of DH's work, we cannot go backwards in terms of credit ratings.

Gerard

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Re: Got Started Late in Life - Now What?
« Reply #11 on: April 29, 2013, 02:10:48 PM »
As for you, Iron M., since when are real names required on the interwebz? Are you really made of iron? Feel free to skip replying to any posts for which you have no constructive advice. Still a free country as far as I know.

SoCools, I think you've missed Iron's point: as you haven't posted your real name (nor should you, I guess), why not post your actual incomes, so that we can give you better advice?

Generally on this site, if a post can be interpreted as constructive or assholey, you can assume it's usually the first. Unlike the rest of the internet..

TheSokols

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Re: Got Started Late in Life - Now What?
« Reply #12 on: April 29, 2013, 02:14:52 PM »
DH works in high tech, with hi-level gubmint both in US and abroad. Can't divulge his income at all, it would violate his contract. Oh well!
« Last Edit: April 29, 2013, 02:19:39 PM by SoCools »

Ellen

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Re: Got Started Late in Life - Now What?
« Reply #13 on: April 29, 2013, 10:08:08 PM »
Grew up in Sacramento and visit often. Terrific and affordable (for CA) city. Keep to the city proper if you want urban amenities, including the ability to walk to lots of places. The amazing tree canopy in the city really helps it stay cooler than the more suburban areas, especially in the evenings. "It's a dry heat," people like to say. Lots of hospitals and healthcare centers. Good Kaiser network.

Have lived in Santa Cruz for 15 years. Not cheap--at all. But as far as your work is concerned, there are tons of elderly people here.

Mazzinator

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Re: Got Started Late in Life - Now What?
« Reply #14 on: April 30, 2013, 09:03:15 PM »
First, moving is really expensive. Especially if you can't move/lift your own stuff and if you move across the country. So i vote stay put.

You need to focus on saving for retirement!!!!!
1. Keep the $80k cash as your emergency fund.
2. Max out both 401k (or ~)
3. Max out both Roth ira
4. Put any and all extra money into a taxable account.

Sorry, but i would not pay for your dd college. You do NOT want to be a burden on her.

Good luck!!
« Last Edit: April 30, 2013, 09:15:09 PM by MrMurphy »

Mazzinator

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Re: Got Started Late in Life - Now What?
« Reply #15 on: April 30, 2013, 09:19:53 PM »
Oh, and, pay off the car loan...seriously?? Unless it's 0% you've got $80k sitting around for crying out loud..