Author Topic: 32, trying to find my next step to FIRE  (Read 1648 times)

provin1327

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32, trying to find my next step to FIRE
« on: October 26, 2023, 09:48:56 AM »
Hello MMM community! My wife and I are both 32. I work in advertising tech and she works in healthcare and we've been on the FIRE path for about a year now. It all started last year when we combined our finances to save for our first house. I realized how much we were making, spending, saving, and could be investing and thus our path to FI started. We moved across the country and bought our first home. Now that the dust on that has settled my question for you all is where the heck do we go now and what should our next step be. We thought we'd be interested in real estate investing but with today's market and the stress/cost of owning our first home I'm not so sure anymore. We have some cash set aside and some monthly net income and I'm just not sure where to invest next to stay on the FIRE path.

My wife enjoys her job as a physical therapist but would be interested in modifying it somehow to be part time, travel, something other than M-F 9-5. I on the other hand hate my job in ad tech. I'd like to find something with more meaning and something that actually gives back to people, helps people and helps my community. I would love to work at a CSA farm, teaching or guiding mountain biking, something with therapy/mental health, just something other than a corporate tech 9-5 and something that I do not have to depend on for money.

My wife and I have no children and no desire to have children. We love to mountain bike and have been doing so for the past 13 years. More bike vacations and slow bike vacations would be amazing!

Income

My gross yearly W2 income: $96,943 (excludes 10% yearly bonus)
My take home yearly income: $35,100

Wife gross yearly W2 income: $85,000 (excludes 10% yearly bonus)
Wife take home yearly income: $47,628

House hack rental income (rent 2 of the rooms in our home): $1,600 per month.

Expenses

30 yr mortgage @ 6.4%: $2,825 (just moved in two months ago, remaining balance $384,043)
Grocery: $800
Internet $50
Cell phone: $15
Auto repair/service $100 (budgeted, not always used in full each month)
Utilities: $200
Gas/Fuel: $200
Auto Insurance: $130
Restaurants/Alcohol/Entertainment: $260 (budgeted, not always used in full each month)
Gym: $78
Home improvement/maint: $300 (budgeted, not always used in full each month)
Hair: $55
Sporting goods/mountain bike maintenance: $175 (budgeted, not always used in full each month)

Total Budgeted Monthly Expenses: $5,180

Monthly Net Income after all investments and expenses: $2,300

Annual Saving/Investments

My 401k: $22,500 + $3,910 4% employer match = $26,410
Wife 401k: $22,500
My Roth IRA $6,500
Wife Roth IRA: $6,500
Joint HSA: $6,550 + employer contribution $1,200 = $7,750
Employee Stock Purchase Plan (15% discount): $7,200

Total Invested yearly: $76,860

Account Balances

My 401k: $55,704
Wife 401k: $59,059
My Roth IRA: $13,502
Wife Roth IRA: $13,164
HSA Cash: $3,000
HSA Investments: $8,300
Taxable brokerage account: $2,879
Bitcoin: $15,309
Gold: $3,972
Emergency Fund: $30,000 in high yield savings
Cash: $22,000 in high yield savings
Home value: $405,000 ($384,043 in mortgage debt = $21,000 equity)







« Last Edit: October 26, 2023, 07:07:48 PM by provin1327 »

uniwelder

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Re: 32, trying to find my next step to FIRE
« Reply #1 on: October 26, 2023, 11:01:32 AM »
Congratulations on a great start and high savings rate.  Where do we go from now and what should our next step be?  Keep saving and investing, I suppose. 

Since you only have 5% equity in the house, does that mean you're paying PMI?  If so, what's the interest rate?  Maybe you'll get the best return by paying that off.  You do have 52k just sitting in cash right now.

What about the bitcoin?  I don't follow it much.  Did you buy high or low?  Are you open to selling that off?

I amazed you spend $175/month ($2,100 annually) on your mountain bikes!  Damn expensive hobby.

provin1327

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Re: 32, trying to find my next step to FIRE
« Reply #2 on: October 26, 2023, 12:06:15 PM »
Congratulations on a great start and high savings rate.  Where do we go from now and what should our next step be?  Keep saving and investing, I suppose. 

Since you only have 5% equity in the house, does that mean you're paying PMI?  If so, what's the interest rate?  Maybe you'll get the best return by paying that off.  You do have 52k just sitting in cash right now.

What about the bitcoin?  I don't follow it much.  Did you buy high or low?  Are you open to selling that off?

I amazed you spend $175/month ($2,100 annually) on your mountain bikes!  Damn expensive hobby.

Yes I am paying PMI on the mortgage. It's $61 per month and the rate is 0.19%. Based on the value of my home I'd need to put forth $60,000 to get to 20% equity and remove PMI. Paying down the 6.4% mortgage is one avenue I have been considering.

I bought Bitcoin low but I am a long term holder and will not sell. I'd suggest reading "The Bullish Case For Bitcoin" and "The Bitcoin Standard" to learn more.
« Last Edit: October 26, 2023, 12:27:13 PM by provin1327 »

firestarter2018

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Re: 32, trying to find my next step to FIRE
« Reply #3 on: October 26, 2023, 12:52:44 PM »
Why is your take-home income so low? It's only a bit more than a third of your gross, which doesn't seem right. Even with maxing 401K, HSA and ESPP, it should probably be more than that. Do you two get a big tax refund each year?  If so, might want to switch your withholdings to get more in your paycheck each month for investments or sinking funds.

2Birds1Stone

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Re: 32, trying to find my next step to FIRE
« Reply #4 on: October 26, 2023, 01:39:47 PM »
Why is your take-home income so low? It's only a bit more than a third of your gross, which doesn't seem right. Even with maxing 401K, HSA and ESPP, it should probably be more than that. Do you two get a big tax refund each year?  If so, might want to switch your withholdings to get more in your paycheck each month for investments or sinking funds.

I think that's after expenses.

provin1327

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Re: 32, trying to find my next step to FIRE
« Reply #5 on: October 26, 2023, 02:18:15 PM »
Why is your take-home income so low? It's only a bit more than a third of your gross, which doesn't seem right. Even with maxing 401K, HSA and ESPP, it should probably be more than that. Do you two get a big tax refund each year?  If so, might want to switch your withholdings to get more in your paycheck each month for investments or sinking funds.

We both get a $500-$800 refund each year although you have reminded me that we may want to file jointly this year since we are now married. Besides the HSA, 401k, and ESPP the only other big chunk that comes out of my monthly income is health, dental, and vision insurance. That's $420/mo for both of us.

Why is your take-home income so low? It's only a bit more than a third of your gross, which doesn't seem right. Even with maxing 401K, HSA and ESPP, it should probably be more than that. Do you two get a big tax refund each year?  If so, might want to switch your withholdings to get more in your paycheck each month for investments or sinking funds.

I think that's after expenses.

No, my take home pay is my net w2 income, after taxes and deductions but before any of my expenses.

Freedomin5

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Re: 32, trying to find my next step to FIRE
« Reply #6 on: October 26, 2023, 03:51:13 PM »
Have you checked out the Investment Order?
https://forum.mrmoneymustache.com/investor-alley/investment-order/

Your next step is to open a taxable account and start putting money in there. With the markets being where they are currently, itís a great time to pick up some equity index funds like VTSAX.
« Last Edit: October 26, 2023, 03:53:22 PM by Freedomin5 »

lucenzo11

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Re: 32, trying to find my next step to FIRE
« Reply #7 on: October 26, 2023, 05:02:39 PM »
Your next step is to open a taxable account and start putting money in there. With the markets being where they are currently, itís a great time to pick up some equity index funds like VTSAX.

I second this. You could either start paying off your mortgage or investing in taxable accounts. There's a lot of opinions on here about paying off or not paying off mortgage. Search mortgage and you'll get a lot of results.

But also think about how to approach the job you hate. You have a rough NW of $250k and at current spending and not accounting for the rented rooms, you're looking at a rough FIRE number of ~ $1.5M. This is very rough math, assumes your current expenses say the same, etc, but you are looking at roughly 8 years to get there with no changes. So things to think about:
1. Do you need to get to FIRE before you pursue something else? And...
2. Can you last another 8 years in your current job?
3. Is there a way to increase your income now to accelerate the timeline to FIRE?
4. Is it better to find another job/career, even if it pays less to have better career happiness now? Between the two of you, you are doing well so you could probably handle a few years of career exploration to figure out what to do. You mentioned a lot of different job ideas so it will likely take some time to figure out what you want to do that brings you joy and brings in money.

Last comment, on spending, $800 grocery for two people is high. Although I don't think your spending overall is really a problem as you are saving a good percentage of income.

PMJL34

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Re: 32, trying to find my next step to FIRE
« Reply #8 on: October 27, 2023, 12:02:15 AM »
I think you and your partner are doing awesome! You remind me of myself when I was 32 and ultra motivated.

There isn't anything additional you need to do. Just try to enjoy the "boring middle."

My only advice is to make sure you have some fun along the way. Being hyper focused has its benefits, but def has some downsides as well.

Best of luck!
« Last Edit: October 30, 2023, 10:04:05 PM by PMJL34 »

pdxvandal

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Re: 32, trying to find my next step to FIRE
« Reply #9 on: October 27, 2023, 11:04:59 AM »
Doing great! My only advice is to put more of that $52k of cash to work in a taxable brokerage account. I'd certainly keep a nice chunk in a HYSA, but you're too young to have this much cash, IMO, unless you're socking away for an investment property or other near-term large purchase. Keep up the good work!


MDM

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Re: 32, trying to find my next step to FIRE
« Reply #10 on: October 27, 2023, 04:41:05 PM »
Why is your take-home income so low? It's only a bit more than a third of your gross, which doesn't seem right. Even with maxing 401K, HSA and ESPP, it should probably be more than that. Do you two get a big tax refund each year?  If so, might want to switch your withholdings to get more in your paycheck each month for investments or sinking funds.
We both get a $500-$800 refund each year although you have reminded me that we may want to file jointly this year since we are now married. Besides the HSA, 401k, and ESPP the only other big chunk that comes out of my monthly income is health, dental, and vision insurance. That's $420/mo for both of us.

...my take home pay is my net w2 income, after taxes and deductions but before any of my expenses.
firestarter2018 has a good question.  You might throw your numbers into the case study spreadsheet to see how your
a) MFJ tax return will probably look
b) cash flow numbers look with all income, expenses, and investments

provin1327

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Re: 32, trying to find my next step to FIRE
« Reply #11 on: October 27, 2023, 08:07:30 PM »
Why is your take-home income so low? It's only a bit more than a third of your gross, which doesn't seem right. Even with maxing 401K, HSA and ESPP, it should probably be more than that. Do you two get a big tax refund each year?  If so, might want to switch your withholdings to get more in your paycheck each month for investments or sinking funds.
We both get a $500-$800 refund each year although you have reminded me that we may want to file jointly this year since we are now married. Besides the HSA, 401k, and ESPP the only other big chunk that comes out of my monthly income is health, dental, and vision insurance. That's $420/mo for both of us.

...my take home pay is my net w2 income, after taxes and deductions but before any of my expenses.
firestarter2018 has a good question.  You might throw your numbers into the case study spreadsheet to see how your
a) MFJ tax return will probably look
b) cash flow numbers look with all income, expenses, and investments

Thank you for sharing that spreadsheet, that thing is intense and comprehensive! After putting in my numbers into the sheet the calculations show we should be paying less in tax when filing jointly. I will need to take a closer look at that sheet to get more accurate on my numbers but my expenses and income line up after a quick run through.

I think what I may be seeing with my own analysis of my case study and the advice and opinions of others here is to start dollar cost averaging my cash into the taxable brokerage account. I'll be holding onto $30,000 as an emergency fund. That's likely more than I need but with being a new homeowner and a firm believer that a recession is coming I'd prefer to play it safe. That still means I have $20,000 to start DCA'ing plus my $2,300 monthly net income which could either go to the mortgage or go into the taxable account, or a bit of both.

MDM

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Re: 32, trying to find my next step to FIRE
« Reply #12 on: October 27, 2023, 08:15:00 PM »
Thank you for sharing that spreadsheet, that thing is intense and comprehensive! After putting in my numbers into the sheet the calculations show we should be paying less in tax when filing jointly. I will need to take a closer look at that sheet to get more accurate on my numbers but my expenses and income line up after a quick run through.

I think what I may be seeing with my own analysis of my case study and the advice and opinions of others here is to start dollar cost averaging my cash into the taxable brokerage account. I'll be holding onto $30,000 as an emergency fund. That's likely more than I need but with being a new homeowner and a firm believer that a recession is coming I'd prefer to play it safe. That still means I have $20,000 to start DCA'ing plus my $2,300 monthly net income which could either go to the mortgage or go into the taxable account, or a bit of both.
That all makes sense  good luck!

 

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