Author Topic: Newbie Case Study - When to FIRE, Need Advice on Moving  (Read 2451 times)

Hot_AZ

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Newbie Case Study - When to FIRE, Need Advice on Moving
« on: March 06, 2015, 10:41:17 AM »
Hi there, pretty new here, done a lot of lurking, not so much posting. 

Could use some advice.  We are planning a move from AZ to WY to be closer to family.  I am hoping to FIRE or at least quit my full time job and launch more into building my side business which I LOVE.  I lost both my parents in their 60's (65 and 69) and I'm concerned about working until I die.  I've had cancer already at 34. 

Currently I make the lions share of our income ($86k before taxes) and spouse's income varies from his own business ($33k before taxes).  My side business brought in $10k before taxes in 2014.  Total = $129,000

We plan to move to WY either this summer or next depending on how quickly we can get the house on the market.  Several extenuating circumstances:  My mom passes away in October and we have to fly back and forth to Wisconsin to clear out her estate.  So getting 2 houses ready for sale plus a full time job, a part time business and a 6 year old might be a bit much to tackle in 5 months hence the possible move NEXT year instead.   We are PUSHING to move this summer before school starts though. 

Age:  Me - 44  Spouse - 40
Income:  129,000/yr

Investments:   $212,500
Cash:  40,000
Inheritance (estimated) we will receive this year:  approximately 247,500k cash after taxes
Total (est) Assets:  462,500

Current house:  We owe $158,000 at 3.75% on a 15 year fixed.  I estimate (based on comps) that if we sell in July/Aug we will walk away with $35,000 equity after fees

No debt other than the house. 

Current expenses including mortgage (1750 pmt) are $3300.  This includes $300 for daycare which will go away when we move (Grandma).

Plan is to move to Wyoming and spouse will get a job and carry benefits.  Pay is not great $28,000-$32,000k a year but will cover insurance and expenses. 

I would like to FIRE and re-start my business in Wyoming.

So my questions...
1.  would you pay cash for a house and invest the rest of the money?  Looking to spend between $165 - $225K (houses are not cheap where we're moving)
2.  Or get a small mortgage and invest more of the $$. 
3.  Is it feasible for me to FIRE?   

If we pay cash for a house  I anticipate our expenses to be around $1700.00 a month (water, electric, car ins, life ins, cell ph, gas/spending $$, groceries, house tax/ins).  College is already taken care of (my mom left $$ for DD's college fund).

Since we are shooting for a move in 5 months, i'm trying to max out my employers 401k plan by August.  Any other suggestions/advice is greatly appreciated.  Please let me know if you need a complete breakdown of monthly expenses and anticipated expenses. 

MDM

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Re: Newbie Case Study - When to FIRE, Need Advice on Moving
« Reply #1 on: March 06, 2015, 10:56:23 AM »
So my questions...
1.  would you pay cash for a house and invest the rest of the money?  Looking to spend between $165 - $225K (houses are not cheap where we're moving)
2.  Or get a small mortgage and invest more of the $$. 
The mortgage, because it gives you more flexibility.  After a few years you could choose to pay it off, or you may decide that it's better to keep paying the monthly amount.

Quote
3.  Is it feasible for me to FIRE?   
The rough estimate of $1700 * 12 * 25 says you need $510,000 in invested assets.  So you are close.  See www.firesim.com to add more details to that estimate.

Hot_AZ

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Re: Newbie Case Study - When to FIRE, Need Advice on Moving
« Reply #2 on: March 06, 2015, 02:03:20 PM »
MDM,
Thank you!  Just a clarification, spouse will continue to work and the small income should cover our regular monthly expenses and health insurance.  So thinking I can FIRE? 

rocketman48097

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Re: Newbie Case Study - When to FIRE, Need Advice on Moving
« Reply #3 on: March 06, 2015, 02:10:03 PM »
So my questions...
1.  would you pay cash for a house and invest the rest of the money?  Looking to spend between $165 - $225K (houses are not cheap where we're moving)

No, I would only put 20% down, take out a 5 year ARM at the lowest rate possible, and invest the rest in an SP500 index fund at Vanguard.

2.  Or get a small mortgage and invest more of the $$. 

Yes

3.  Is it feasible for me to FIRE?   

Not for a long time and some changes, but it's feasible with time. 

MDM

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Re: Newbie Case Study - When to FIRE, Need Advice on Moving
« Reply #4 on: March 06, 2015, 03:22:18 PM »
MDM,
Thank you!  Just a clarification, spouse will continue to work and the small income should cover our regular monthly expenses and health insurance.  So thinking I can FIRE?
I thought you meant FIRE as in stop working instead of "spouse will get a job and carry benefits...[to] cover insurance and expenses."

Sure, if your business and spouse's earnings together are earning enough to cover expenses then you will be fine.  Not sure I'd call that FIRE but now we're getting into semantics.  The main point is that you should be ok.

Hot_AZ

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Re: Newbie Case Study - When to FIRE, Need Advice on Moving
« Reply #5 on: March 13, 2015, 01:56:21 PM »
MDM,
Thanks!  Yes, semantics because I believe i'd actually be considered a SAHM at that point.  Will continue to work on true FIRE.  Appreciate the feedback!