First of all great blog and a great forum. I only discovered MMM a week or two ago and have been hooked. I read how an earlier poster that felt like Neo awaking to the Matrix, and can't agree more with him. I was prepared to be a wage slave until old age, but now I was to:
1. Become FI so that I can sleep easier at night.
2. RE so that I can enjoy life more.
Okay so I am a software engineer and have squandered all the money that I have made in my working life, putting off saving until later. I am 33 years old, married with a 17 month old daughter. We have zero savings, two car loans and a mortgage. I have already started taking steps to get onto the right path, I am selling my car but will have save up to get rid of my wife car. It is currently worth about half as much as she owes I would guess.
Also my wife is not really buying the MMM ideals yet, so I compromised on giving her an allowance. I can do away with mine, but that seems ridiculous as I would basically be forfeiting all of my money for our family's benefit.
Gross Income:
Salary: 116,000
Bonus: 24,000
Rental Income: 9000 (Taxed differently because it is a foreign property I think)
Monthly Net Income:
Salary: 8,152
Bonus: 8,300 May
Bonus: 8,300 November
Rental: 416
My wife is not going to be working for a bit to look after our daughter.
Current monthly expenses: $7,469
401k: 1458
Health Insurance: 400
Rent: 2200 (Kirkland)
Food: 600
Natural Gas: 50
Electric: 80
Garbage, Sewerage: 120
Transport: 200
Mortgage: 1300
Wife's car: 350
Wife's car insurance: 51
Allowance: 250
Wife Allowance: 250
Internet: 70
Netflix: 10
Clothing: 50
Bank fees: 30 (High I know, but this is the fees for a private bank abroad)
Expected monthly ER expenses: $2740
Health Insurance: 700
Rent I want to own a property free and clear.
Food: 600
Utilities: 300
Transport: 300
Mortgage
Wife's car
Wife's car insurance
Allowance: 250
Wife Allowance: 250
Internet: 70
Netflix: 10
Clothing: 100
Car insurance: 100
Property taxes: 60
Assets: 128,000
Home: 120,000
Car: 8,000
Savings: 0
401k: 0
Liabilities: 120,000
110,000 - 12.5% - Foreign home loan. High interest rate due to
13,000 - 13% - Wife's car
Specific Question(s):
So I would like to start being bad ass, luckily I managed to nab a well paying job, moving to the US and due to tax implications there isn't really a possibility of saving until the start of 2015. I plan to pay off my mortgage and wife's car ASAP.
1. Pay off wife's car.
2. Pay off mortgage.
I calculated that if I pump in all my free money (excluding 401k), plus my rental income into my foreign mortgage I should be able to pay it off in about 3 years.
My goals.
1. Reduce required income by minimizing expenses (pay off mortgage, pay off cars).
2. Become FI as soon as possible.
3. Put money aside for schooling for my 17 month old.
4. Have money for her college tuition.
There are basically two FI targets
1. FI in terms of having enough to live without luxuries (food + accommodation)
2. FI in terms of not needing to work to enjoy ER lifestyle.
I was considering property as an invest vehicle. In my country 100k can buy a pretty okay entry level home with an acceptable rent of $700 - $800 a month. After doing a lot of investigation I realised that running a letting business is actually pretty complex and that one would probably only be able to consider a small portion of the after tax income as profit. Mostly because you will need to maintain the property and save for unforseen expenses.
Any help in reaching my goals will be marvelous.