Author Topic: Am I FIRE'd?  (Read 2041 times)

nyfireguy

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Am I FIRE'd?
« on: March 09, 2020, 01:40:58 PM »
Been a while since I've posted and was looking for some thoughts from the Mustachians

I haven't worked in 6 months (at age 47). live in a relatively HCOL and have been thinking about being FIRE'd. I guess some would say I am and I know I'd like to possibly find something to make some $$ in the future but based on numbers wondering if I need to, If I am FIRE'd etc

With current market situation numbers are in serious fluctuation but this is mine as of today (so it's obviously lost a significant amount and more by days end today).
 
Monthly Expenses  

Primary home Taxes/Insurance                          $1300 
Secondary home                                                $750
Mobile Phone/Internet/Cable/                             $230
Insurance (health & car)                                    $670
Groceries                                                          $400
Entertainment                                                   $500
Gas                                                                  $100
Misc                                                                 $100 

Monthly Expense                                              $4050
Monthly Income (Rental explained below)           $1200
Total Monthly Outlay                                         $2850 

Just for round numbers my cost of living (based on above) is about 35K or even 40K if I decided to do some extra spending etc.

Asset/Investments
IRA Traditional                                                  950K 
Investment Account                                           600K
Checking/Savings                                              40K  (33K after expenditures below)
Cash                                                                 10K

Total                                                                1.6M                                   

The breakdown below = Asset Value                 595.5K  (575K+20.5K)                         

Primary home with rental income of 14.4K annually and no mortgage value 575K (based on Zillow so not sure how accurate that is)

Secondary (50% ownership with friend) mortgage of 179K at $1500 monthly(so $750 each) which includes all costs including tax/insurance in escrow, value 220K (based on Zillow)

Other considerations - I will need to spend about 7K for some home repairs, appliances, car tires in the coming months or two which will come from savings, outside of that no other expected large expenditures. I do realize I could probably lower some of my monthly expenses like food and entertainment but can't lower cable as it's part of the rental. Looking for thoughts based on current. Thanks


ysette9

  • Walrus Stache
  • *******
  • Posts: 6647
  • Location: Bay Area, CA
    • The Best Is Yet To Come
Re: Am I FIRE'd?
« Reply #1 on: March 09, 2020, 10:14:46 PM »
Your numbers look solid provided your guesstimates of spending are correct.
Congrats on being FI!

Your rental looks to be a terrible investment. Id sell it and invest in something else Id i were you. Even a bond fund would likely be getting you better returns without any headaches or maintenance costs.

nyfireguy

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Am I FIRE'd?
« Reply #2 on: March 10, 2020, 06:25:25 AM »
Your numbers look solid provided your guesstimates of spending are correct.
Congrats on being FI!

Your rental looks to be a terrible investment. Id sell it and invest in something else Id i were you. Even a bond fund would likely be getting you better returns without any headaches or maintenance costs.

Thanks for the response, I thought there would be more. As for the rental it is in my primary home so there really is no 'investment' there. The secondary home (half owned) which is not a great investment and we are looking to sell would go away within the next year (hopefully). I would rather have any amount of $k then the $750 a month outlay.

ontheway2

  • Stubble
  • **
  • Posts: 181
Re: Am I FIRE'd?
« Reply #3 on: March 10, 2020, 07:35:56 AM »
Simple expenditures to investments, yes, you are FIRE'd.  However, your expenditures do not include sinking funds of any kind, and your rental expense only includes the payment. You have flexibility with having more than 25x, but I'd re-evaluate to calculate long term expenses.

nyfireguy

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Am I FIRE'd?
« Reply #4 on: March 10, 2020, 08:04:13 AM »
Simple expenditures to investments, yes, you are FIRE'd.  However, your expenditures do not include sinking funds of any kind, and your rental expense only includes the payment. You have flexibility with having more than 25x, but I'd re-evaluate to calculate long term expenses.

The rental isn't the secondary so not sure what you mean? The total expenses of the rental are my primary home and yes doesn't include sinking funds since it's unknown

ontheway2

  • Stubble
  • **
  • Posts: 181
Re: Am I FIRE'd?
« Reply #5 on: March 10, 2020, 09:34:49 AM »
Simple expenditures to investments, yes, you are FIRE'd.  However, your expenditures do not include sinking funds of any kind, and your rental expense only includes the payment. You have flexibility with having more than 25x, but I'd re-evaluate to calculate long term expenses.

The rental isn't the secondary so not sure what you mean? The total expenses of the rental are my primary home and yes doesn't include sinking funds since it's unknown

Ah, ignore my first comment. Sinking funds can be predicted though. Do you anticipate ever replacing your vehicle? Do you go the 3k beater route, or do you purchase for 18k and drive for 12 years (at $125/month)? Home maintenance is averaged at 1-3% of home value per year. One would obviously not spend1% every single year, but it should average around that. With your home's value, that's $480/month on the low end. Adding in the secondary home is another $92 for your share.

nyfireguy

  • 5 O'Clock Shadow
  • *
  • Posts: 15
Re: Am I FIRE'd?
« Reply #6 on: March 11, 2020, 10:48:34 AM »
Simple expenditures to investments, yes, you are FIRE'd.  However, your expenditures do not include sinking funds of any kind, and your rental expense only includes the payment. You have flexibility with having more than 25x, but I'd re-evaluate to calculate long term expenses.

The rental isn't the secondary so not sure what you mean? The total expenses of the rental are my primary home and yes doesn't include sinking funds since it's unknown

Ah, ignore my first comment. Sinking funds can be predicted though. Do you anticipate ever replacing your vehicle? Do you go the 3k beater route, or do you purchase for 18k and drive for 12 years (at $125/month)? Home maintenance is averaged at 1-3% of home value per year. One would obviously not spend1% every single year, but it should average around that. With your home's value, that's $480/month on the low end. Adding in the secondary home is another $92 for your share.

Thanks again

Vehicle is a 2013, fully purchased, with 45k miles. Previously vehicle was owned for 10 years and had 92K miles only sold because I felt I wanted an update.

You are correct in that i didn't average in 1-3% for home maintenance but I did buffer in extra funds since my numbers were 35K but I was using 40K which would give me over $400 a month extra.

In regards to sinking funds being predictable I think this is my biggest concern in the last two weeks and moving forward since it seems like we are moving into a bear market and recession