People of Earth!
So I need some input on my moves going forward with my finances. So I’ll try and paint you a financial/life picture for you and I would appreciate any advice/suggestions you may have.
I will start off by saying I have always been a saver, and pretty financially savvy even from a young age. It wasn’t until the last year or so I really started reading up and learning more and more about FI. I would say I now know the basics and am posting mainly for some ideas and to make sure I’m not making any obvious mistakes I’m unaware of and see were I can optimize my life and investing strategy.
The good, I’m a 26 year old single dude with no hardcore vices, no kids or gambling debts to escape from and I even have a few bucks saved/invested for the future.
I just ended my last job which I had basically been doing full time for the last 3 years, since graduating college and had done for years before that thought out all of college and part of high school. I worked for a family owned landscape construction business. I ultimately decided that this would be my last year because I needed some change in my life, I want to move out of state, find a career I enjoy more and try to increase my annual income/ get into a house hack and possibly some more rental properties in the future.
Financial Picture
Annual income last couple of years ~40k gross at job with an additional 5-7k gross form side work/ reselling on craigslist and eBay
Debt: Nada (Thank you scholarships,community college and parents as well as my young self for never falling into the car or credit card trap!)
Checking (At my local bank) ~2500
Savings (Discover online 1.7% interest) 25,000
CD (Discover online 2.5% matures July for 82k) so lets say 80,800 ish currently
Also have good credit score (high 700’s last I checked) Currently have 3 cash back credit cards (paid in full every month obviously, may try to get into the travel rewards game more this year)
401k - 0 never had a job that offered one
Roth Ira (vangaurd Vtsax) ~36,700
Brokerage (Vanguard Vtsax)~ 5,500 (after maxing my roth this year I just opened this to throw some cash at)
I have a older toyota pickup truck worth about 5k that I work on myself and plan on keeping forever
Bills/Expenses (this is about what I spend now, it will change greatly once I move )
Rent : 0 live with parents
Cell phone: 50 a month
Health insurance 283 a month (COBRA Plan from my moms job, was on her plan until I turned 26)
Car insurance 34 a month
car registration 8.33
Car repair 25 (a month est)
Gas 100 a month
Food: 200
other: 200 a month
As far as once I move I estimate my expenses to be around 1300-1400 a month on the high end. I think I should be able to save and invest about 1,100 per month after taxes. This assumes I get another job making roughly 40k that does pay for some of my health insurance. This is also assuming I get my own apartment for the first year but I may just end up renting a room and that will drop my expenses a couple hundred a month. I will be trying to find a place to live that is close to my work as I like the idea of being able to just bike to work, and only use my truck for the occasional errand or to go out and go camping or hiking or something like that.
As you can see I have way way to much cash just lying around. I had been planing on getting into a house hack in the next year before I decided I wanted to move/ switch carers, so I have just been hoarding cash. Additionally I have always felt like I need to have a lot off cash lying around but Im starting get over this fear. I think I feel comfortable leaving 6 months expenses in a high yield savings account going forward.
So my first question is since I now have a have a High Deductible Health Care Plan is can just go online and open an HSA with lets say fidelity or vanguard (even though I technically never worked for the company my COBRA plan is through)? I wanted to check and see if I could contribute something to this for 2019 and 2020. The whole putting money in an HSA had not occurred to me until I started paying the COBRA premiums towards the end of last year, I also didn’t realize until recently you could actually invest your HSA funds and the tax advantages of it until I did some more digging. Additionally if I can do this for 2019 I could write off the amount on my 2019 tax return, correct?
Next question, since I am hoping my next job will offer health insurance as well as a 401k plan. If they do I will contribute enough to get the match (if they offer one). However should I just tell them I would like to contribute some large amount lets say 80% of my pay check and just live off the money I have saved up for the next year or so? I thought this may be a better option that just putting a bunch of cash into a taxable brokerage account, may this be a bad idea if my new company offers a shitty high fee option?
Next question what would you with the 80k I have siting in a cd. I am hoping to get into a house in the next (6-12 months ) see below but I have a lot of uncertainty in my life right now, may move and not like where I end up, change jobs again ect, ect
Final question any big face punch mistakes I am making (besides all the cash just sitting)? I am going to list out my short term-long term goals down below because I think that could be helpful.
Goals/Time Line
Next 1-3 months enjoy time off with family, take a few mini trips, help with projects around house and find next job. Continue doing my side work to save more money and pay for current expenses and moving expense.
3-6 months get settled in new city at new job, try to make new connections, get going on side work and reselling again.
6-months to year decide if I can see my self staying in area long term, begin investigating purchasing a house or 2-4plex as a house hack (would need that 80k at this point)
1-2 years, hopefully house hacking now, focus on building a side business that covers my other expense, continue to invest and save for more real estate.
As far as a FI goals I think if I had a free living situation (the rents covered all my bills and mortgage payment) and 10-15k of passive income I would feel very comfortable leaving a 9-5 and pursuing other things in life some of which would probably end up making me more money, which I would continue to invest into either more real estate or just index funds. I do want to buy a house mainly to have a garage (to work on projects), and home base somewhere. I also like the idea of working hard for the next few years and then taking a year or two off to travel and then getting back to work to keep building some wealth but at a more relaxed pace.
Anyway, thats my story and I am sticking to it. I appreciate any input and want to offer my thanks in advance. Let me know if there are any details/missing parts that you would want to know. Sorry if this is a bit of a ramble/ dis-organized but this is like a bunch of stuff that has just been bouncing around in my head and its hard to sort it all out in words.