I'll preface this by saying that I feel foolish even having to ask this question - mostly because I'm in such a situation in the first place. I am quite embarrassed by the debt but am very motivated to escape and move forward toward FIRE. I'm glad to write this out because it shows what an idiot I've been, and that is a striking and motivating incentive.
I currently have just over $16k in 0% CC debts. I was at $0 before a cross-country move for a new job that is a much better opportunity - much better cash flow each month despite an increase in living expenses. Most debt is from the move. I am paying the minimums on these.
I have a personal loan that is $5500 @ 13.5%.
I also have a $37k @ 2.85% vehicle loan. I am aggressively trying to sell it for just what I need to pay off the loan. It's been up for sale on a consignment lot for 4 weeks. A dealer has offerend me $34,500 to buy it straight up. I am considering this offer as it would free up $550/mo despite leaving me with a $2500 debt. I own a 96 4-runner that I use for transport.
I pay $1200 in rent and utilities.
No cell phone, internet, or cable bill (I work for an ISP) though I do pay for netflix (because, despite free cable, I do not own a TV).
Average net pay (over the last 10 pay periods) is $2875 every two weeks. Base net pay is $2015 every two weeks. That is with 10% taken out for a currently unmatched 401k. In January I will start getting a 100% match at 10%. From this net pay I am able to put into savings anywhere from $700-$2500 per month (varies due to overtime).
I have $23,000 in 401k accounts, and $4500 cash savings.
That's the thousand-mile view. Let me know if anything else is needed or relevant. I didn't intend this to be a case study, but if it would be better-formed that way then I will.
The question is this - should I aggressively pay off every cent of debt or aggressively save the 6 month reserves I need to buy a fourplex? In this area, just under the 1% rule is common. I will be using a VA loan, so down payment is not an issue. With a VA loan I can buy at max a fourplex (as far as units go) and at a ceiling of $625,000. I must occupy one of the units.
The reasoning: Though I will be paying myself rent, I will see a monthly cashflow of about what my current rent is (on, say, a $550,000 property with all units occupied). I am also taking into account all the associated risks of vacancies and taxes and whatnot, though still learning more every day. But once the vehicle loan is gone and if I can buy a 4plex... that's about $1750 MORE per month I'll be able to save, on top of my already $700-$2500. In my head, owning a 4plex will allow me to have a total monthly cash savings of $2450-4250 to put toward another 4plex. I have a VERY trusted real estate agent who is a close friend and deals primarily with VA loans and investment real estate, as well as a trusted lender who is a close friend of some close friends. Both are very excited about helping, both are also RE investors themselves and do incredibly well.
I have obviously made some mistakes to get me here, the vehicle loan being the primary. The other debts are mostly due to trying to "buy" myself into a better financial situation (how dumb is that, now that I write it?). The CC debt to move myself here was something I saw as an investment to get myself to a better financial situation. As much as it sucks to have the CC debt, I make enough now to pay it off within a year easily, so that decision is arguably wise.
I don't want to make stupid mistakes because I'm so anxious to move toward FIRE. MMM's "Your debt is an emergency" article says that other than your primary residence or a profitable investment, every cent should be paid toward debt. I see a 4plex, multiple 4plexes, as profitable investments.
I'd hate to work toward paying off debts and not have the cash reserves to buy a great property when it comes up. I've missed two such properties, so that increases anxiety and motivation. Having any debt though is hugely anxiety building. My drive to be debt free is huge, my drive to move faster toward FIRE is huge; I want to do them both in the best way possible and want to start right.
What say? CC debt first, then build reserves for a great property (far longer time)? Or save reserves for a property that could help me wipe those CC debts out within a few months? Should I stop contributing 10% until my company matches? Sell the vehicle at a $2500 loss just to be free of the payment?
Too many variables here for me, and too much emotional investment into the situation. I need some cold advice and some motivating inspiration please. I should be able to do a lot with my current savings rate, I just don't know what exactly!