I'm just starting to get my feet wet on early retirement planning (just found this website this week) and I was hoping to receive any input/advice on my work-in-progress plan...
Right now, I make just under $70k a yr, not including overtime (all overtime money goes towards my travel fund). I am in my mid twenties, single, and have had this job for about 8 months. Had a temp job right out of college for a year with no benefits, but saved pretty much everything and paid my 21k in student loans off in a year after graduation. I also inherited about $20k around 9 mo ago.
My take-home pay is around $3,600 a month and I spend about $600-$800. I contribute to employer 401k (about $7,300/yr with match)
I have $25k in a money market deposit account as an emergency fund (yes I know, wayyyy too much)
I have $10k in another money market and contribute $625/mo for down payments for investment properties I plan to start buying
I will be inheriting another 30-40k soon that I want to use as a down payment for my first investment properties (then buy w/ money I'm saving)
I opened a Roth IRA at Vanguard that I contribute $250/mo to (3,000k/yr)
I am saving $1100/mo for a down payment on my own house to buy in ~1.5 yrs
This leaves me with about $700/mo extra to invest in taxable accounts right now (haven't opened this account yet)
I really don't want to max out my retirement accounts because I won't have any money leftover for taxable accounts, which I think is very important to have when you are shooting for ER. I am going to invest in Vanguard's total stock market index fund.
In the future (1.5 yrs) when I own my house my take-home pay will rise to about $3800 (have built-in raises)
So I will have about $1500 living expenses (cost of living in my area is very low, plan on buying a house for less than $100,000 with 20% down)
$1,000 will go to taxable accounts
$1,000 to money market for investment property purchases
$250 to Roth IRA
Also $7300 a yr minimum (not including OT) goes into my 401K with my contributions and employer match
I plan to do this for 10 years then hopefully retire and live off of my investment property income and not touch any of my investment accounts
I plan on spending $25,000 in ER (which I hope is in ~11.5 years) so I want enough rental property income to cover this, I know I won't have enough saved up in investment account for 4% withdrawal rates by then.
Does this sound reasonable?
Should I take $10k or $15k of my emergency fund and invest it into taxable account right now?
Should I not invest so much of my money now ($625/mo) and in 1.5 yrs ($1,000/mo) into money mark. for investment properties and just put this money into the taxable account and pull out when I need it?
Give me a good reason why maxing out retirement accounts instead of contributing to taxable is more beneficial for me
Am I in way over my head?
