Hello fellow Mustachians,
I am hoping to receive some feedback on my financial situation, especially in light of some very recent additions to our family (twin children). First, I'll give a background on our income and assets.
INCOME: Between my wife and I our current combined salaries amount to approximately $140,000. I also own/manage some rental properties in a nearby college town and net approximately $20,000 in additional profit a year via that means (very conservative estimate). I also estimate that we probably receive around $23,000 per year in dividend/capital gain distributions from holdings in our taxable accounts at this point.
Below is a recent breakdown of our current assets:
Liquid Assets:
Taxable Accounts - $713,000 (combination of Vanguard and other brokerage accounts)
Roth Accounts - $239,000
Traditional 401k - $68,000
Cash - $48,000 (funneling into taxable accounts/Roth IRAs weekly/monthly)
Liquid Net Worth - $1,068,000
Real Estate Assets:
Residence - $215,000 (No debt)
Rental Property 1 - $120,000 (No debt)
Rental Property 2 - $144,000 (Owe $69,000 / 3% mortgage note)
Rental Property 3 - $70,000 (Owe $40,000 / 2.75% mortgage note)
Rental Property 4 - $57,000 (No debt)
Vacant Lot - $50,000 (No debt) and hope to build there one day
Real Estate Net Worth - $547,000
Total Net Worth: $1,615,000
EXPENSES: I have not done as good a job as I have in the past of tracking this, but I estimate that we spend an average of approximately $2,200 to $2,500 per month. We could still trim a little bit of fat but I won't go into too much detail because the primary point of this post is not to see where I can clean up some expenditures.
My wife and I are in our early-to-mid 30s. We currently max out our 401ks and Roth IRAs and contribute several thousand per month into taxable brokerage accounts. Both of our cars are 15 and 6 years old (owned outright), and we live in a relatively low cost-of-living city in the Bible Belt. Overall, I believe that we are doing well financially. We've been ambitious and aggressing saving, with both of us on the same page since we began our careers/relationship. At this point in time, however, I am hoping I can get some fellow mustachians' take on a few issues...
1. First and foremost (as I prefaced above), my wife just gave birth to twin babies, an unexpected (but very satisfying) challenge. Now, we have to consider the costs of health insurance for four people in early retirement as opposed to three (my original projections were based on early retirement for us and one child). As such, it seems more important for at least one of us (either my wife or I) to continue working for an extended period for this benefit alone.
2. Raising children is obviously an immense responsibility, and one we take very seriously. I am still trying to reconcile my desire to achieve our financial goals as soon as possible with the fact that time is much more rare (and thus valuable) now. We have to raise responsible children into this world. Can anyone else here relate to "compromising" their early retirement goals with the newfound goal of raising children?
3. Besides the health insurance factor, the presence of two children will greatly restrict my mobility for managing our rental properties effectively. Regarding the rental properties, they have been good money-makers for us but they do not come without their headaches. As I have gotten older I have become less patient with these headaches and at times I have started to consider life without the rental properties. It takes a minimum of 30 minutes to drive to any of the properties from our principal residence (At this point I also do not feel comfortable outsourcing the property management function to a third party, as I know that no one will keep as close an eye on the properties or find as qualified of tenants as I would). So far I have considered selling 2 of the 4 rental properties, believing that I can perhaps find a better work-life balance (not to mention have much less stress) just worrying about two properties. This whole issue is a struggle for me--for my entire life I have always been about trying to make the greatest rate of return as possible, and "willingly" taking a step back from that is a huge adjustment.
4. I know a lot of folks will look at our net worth and probably say that we can go ahead and retire early, but another goal of ours is slightly UN-mustachian... While we own our current home outright and it does technically meet our needs, we are not huge fans (it's on a busy road and I anticipate needing slightly more space with the children around) and we hope to custom build a house on our plot of vacant land. I'm not even sure what the price-per-square-foot cost would be (we're still a few years away from trying to look into this goal), but I imagine it could easily surpass $400,000 on a 3,000 square foot home. This last bullet point might be a bit off topic from the rest of this message, but it's still a financial/life benchmark I hope to achieve one day.
The root of my stress is that I feel like I've been very successful up to this point, and it's just difficult to consider "taking a step back" with respect to my financial goals at this point. I would love anyone's feedback on my current situation... especially anyone else who has retired early while having multiple children; how children (expected or unexpected) impacted your early retirement and investing goals; how you tackled the health insurance issue. And anyone who has sold off money-making assets such as rental property and instead focusing on a more passive income vehicle (that make less money) and how that made you feel.
I highly value others’ unique perspectives and experiences.