Help! Too many expenses and strong desire for FI

[kdaniel1010]

Thanks so much for the comments. Yes, I am pretty much over this situation. The plan is for him to go back home in a couple of weeks and he will not be invited back. I really wanted this to be a situation where it'd be mutually beneficial - we could teach, coach him on business, get him in a different environment from what he was in previously, and see him grow as a person and learn some new skills. In exchange he'd help us out around the house, watch the kids when needed etc. It did not end up working like that, and to be honest, it's put more stress on me than anything.

[ginjaninja]

I am glad that the situation will be over in a couple of weeks, I really hope it helps with your stress levels. Has it been stressful for your husband as well?

[kdaniel1010]

Thanks! Yes, it has, but I think it affects me the most.

Gaja - thanks for the comment. Yeah, owning 3 houses at once would not be a great idea. We are putting the one on the market this week though! I always jump the gun on things and want everything done yesterday, which is why we started searching. The townhome we saw yesterday was ... disappointing. Weird floorplan, lots of updates needed. I'll keep the search going and see what else comes up.

[Car Jack]

There's not any rocket science here, but there's also no unicorns and butterflies, which unfortunately the FIRE community has seemed to make it out as.

Your debt service is a big part of your outgoing money.  Because you've got rental properties, that's not unexpected.  But those debts are not going to go away and you should constantly be looking at them to determine if you really, really are making money from them.  There are tons of people who own rentals and think they're making money and when they finally put together a comprehensive spreadsheet of income and expenses, they're surprised to find that they lose money....even when figuring future sales.

You're looking at the now.  Swim lessons, Amazon Prime (which I have never understood....I just buy $35 in stuff and wait a week for it and it still ships free), gymnastics.  Those are all now expenses.  How about college.  Do you know what colleges cost?  What are the majors available at local community colleges?  State colleges?  Do the community colleges have robust programs so the courses can be transferred?  People say all the time "Your kids can take out loans for college but you can't take out loans for retirement".  Well, they're wrong.  Beyond Stafford loans, all other loans are parent loans.  Even those labeled student loans require a cosigner which means you which means it's your loan.  Where I'm going with all this is that college is expensive.  Some states like CA are cheap.  Some are not.  Resident state college in my state, living on campus is over $30k.  (which to me is cheap as my older son is just finishing at private college....this fall, incoming freshmen pay $70k a year and yes, some people, like me got zip for aid, so we paid full price.  Anyways, know.  Don't go retiring, thinking it'll take care of itself.  College is expensive and takes planning.  For you it's planning times 3. 

While I get that you want to FI early, I honestly think you've got a number of decades ahead of you. 

[kdaniel1010]

There's not any rocket science here, but there's also no unicorns and butterflies, which unfortunately the FIRE community has seemed to make it out as.

Your debt service is a big part of your outgoing money.  Because you've got rental properties, that's not unexpected.  But those debts are not going to go away and you should constantly be looking at them to determine if you really, really are making money from them.  There are tons of people who own rentals and think they're making money and when they finally put together a comprehensive spreadsheet of income and expenses, they're surprised to find that they lose money....even when figuring future sales.

You're looking at the now.  Swim lessons, Amazon Prime (which I have never understood....I just buy $35 in stuff and wait a week for it and it still ships free), gymnastics.  Those are all now expenses.  How about college.  Do you know what colleges cost?  What are the majors available at local community colleges?  State colleges?  Do the community colleges have robust programs so the courses can be transferred?  People say all the time "Your kids can take out loans for college but you can't take out loans for retirement".  Well, they're wrong.  Beyond Stafford loans, all other loans are parent loans.  Even those labeled student loans require a cosigner which means you which means it's your loan.  Where I'm going with all this is that college is expensive.  Some states like CA are cheap.  Some are not.  Resident state college in my state, living on campus is over $30k.  (which to me is cheap as my older son is just finishing at private college....this fall, incoming freshmen pay $70k a year and yes, some people, like me got zip for aid, so we paid full price.  Anyways, know.  Don't go retiring, thinking it'll take care of itself.  College is expensive and takes planning.  For you it's planning times 3. 

While I get that you want to FI early, I honestly think you've got a number of decades ahead of you.

Well that's quite depressing.

[Villanelle]

There's not any rocket science here, but there's also no unicorns and butterflies, which unfortunately the FIRE community has seemed to make it out as.

Your debt service is a big part of your outgoing money.  Because you've got rental properties, that's not unexpected.  But those debts are not going to go away and you should constantly be looking at them to determine if you really, really are making money from them.  There are tons of people who own rentals and think they're making money and when they finally put together a comprehensive spreadsheet of income and expenses, they're surprised to find that they lose money....even when figuring future sales.

You're looking at the now.  Swim lessons, Amazon Prime (which I have never understood....I just buy $35 in stuff and wait a week for it and it still ships free), gymnastics.  Those are all now expenses.  How about college.  Do you know what colleges cost?  What are the majors available at local community colleges?  State colleges?  Do the community colleges have robust programs so the courses can be transferred?  People say all the time "Your kids can take out loans for college but you can't take out loans for retirement".  Well, they're wrong.  Beyond Stafford loans, all other loans are parent loans.  Even those labeled student loans require a cosigner which means you which means it's your loan.  Where I'm going with all this is that college is expensive.  Some states like CA are cheap.  Some are not.  Resident state college in my state, living on campus is over $30k.  (which to me is cheap as my older son is just finishing at private college....this fall, incoming freshmen pay $70k a year and yes, some people, like me got zip for aid, so we paid full price.  Anyways, know.  Don't go retiring, thinking it'll take care of itself.  College is expensive and takes planning.  For you it's planning times 3. 

While I get that you want to FI early, I honestly think you've got a number of decades ahead of you.

Yes.  That's why I keep harping on selling the lower performing properties.  The debt (and related payments) goes away.  If the average is a 6% return, some are probably making 4%, or less.   Ditch them.  The finances will be better in several ways (better returns on average in equities, better cash flow to handle unexpected expenses, etc.).  And the overall quality of life will be better because there is less stress and work.

OP, would you make in investment right now that would return only 3-4% and add to your stress and lack of time?  If not, why do you continue to hold on to the ones you have under the same terms? 

This poster is correct--financial independence is decades away for you is your numbers are even close to reality, and that is your spending doesn't grow at all, other than inflation.  If you want to change that, you need to be willing to consider difficult, intense, probably uncomfortable, out-of-the-box solutions.  Thus far, it doesn't seem like you are willing to do that, which is completely fine.  Working until you are 55 or 65 or 70 is what most people do.  But just know that by deciding to do very little, that's what you are choosing.  If it's not what you want, then you need to consider big changes (quitting your job if the numbers work), dropping expensive kid activities, selling the least attractive rentals, ramping up the side hustle, etc.  You say that it's "depressing", but only you can decide if it is depressing enough to make major life changes in order to avoid it. 

[kdaniel1010]

There's not any rocket science here, but there's also no unicorns and butterflies, which unfortunately the FIRE community has seemed to make it out as.

Your debt service is a big part of your outgoing money.  Because you've got rental properties, that's not unexpected.  But those debts are not going to go away and you should constantly be looking at them to determine if you really, really are making money from them.  There are tons of people who own rentals and think they're making money and when they finally put together a comprehensive spreadsheet of income and expenses, they're surprised to find that they lose money....even when figuring future sales.

You're looking at the now.  Swim lessons, Amazon Prime (which I have never understood....I just buy $35 in stuff and wait a week for it and it still ships free), gymnastics.  Those are all now expenses.  How about college.  Do you know what colleges cost?  What are the majors available at local community colleges?  State colleges?  Do the community colleges have robust programs so the courses can be transferred?  People say all the time "Your kids can take out loans for college but you can't take out loans for retirement".  Well, they're wrong.  Beyond Stafford loans, all other loans are parent loans.  Even those labeled student loans require a cosigner which means you which means it's your loan.  Where I'm going with all this is that college is expensive.  Some states like CA are cheap.  Some are not.  Resident state college in my state, living on campus is over $30k.  (which to me is cheap as my older son is just finishing at private college....this fall, incoming freshmen pay $70k a year and yes, some people, like me got zip for aid, so we paid full price.  Anyways, know.  Don't go retiring, thinking it'll take care of itself.  College is expensive and takes planning.  For you it's planning times 3. 

While I get that you want to FI early, I honestly think you've got a number of decades ahead of you.

Yes.  That's why I keep harping on selling the lower performing properties.  The debt (and related payments) goes away.  If the average is a 6% return, some are probably making 4%, or less.   Ditch them.  The finances will be better in several ways (better returns on average in equities, better cash flow to handle unexpected expenses, etc.).  And the overall quality of life will be better because there is less stress and work.

OP, would you make in investment right now that would return only 3-4% and add to your stress and lack of time?  If not, why do you continue to hold on to the ones you have under the same terms? 

This poster is correct--financial independence is decades away for you is your numbers are even close to reality, and that is your spending doesn't grow at all, other than inflation.  If you want to change that, you need to be willing to consider difficult, intense, probably uncomfortable, out-of-the-box solutions.  Thus far, it doesn't seem like you are willing to do that, which is completely fine.  Working until you are 55 or 65 or 70 is what most people do.  But just know that by deciding to do very little, that's what you are choosing.  If it's not what you want, then you need to consider big changes (quitting your job if the numbers work), dropping expensive kid activities, selling the least attractive rentals, ramping up the side hustle, etc.  You say that it's "depressing", but only you can decide if it is depressing enough to make major life changes in order to avoid it.

I'm not unwilling to make changes. That's why I'm here and why I keep coming back day after day to get more advice. I am looking into less expensive housing and working on our budget to reduce expenses as much as possible. I am also VERY willing to start an investment account in index funds as suggested by MMM and Millennial Revolution. Question first, what type of account do I open? I went to Vanguard I believe it was, and it asked if I wanted to open a traditional or Roth IRA. Does anyone have any recommendation on which one to start with? I know that there are limits on how much can be contributed annually.

In addition, we are working on paying off credit card debt and getting ourselves out of that hole.

I can look into selling the rentals for sure - I'll run the numbers this weekend and talk to our partners.

With my business, I am seeking additional clients and was referred to an HOA to manage last night - I called them and left a message this morning. I'm really not sure what else I can be doing right now to work toward these goals.

Cousin is moving out in August; confirmed w/husband this morning.

What else can I do at this point?

[Hirondelle]

Congrats on your cousin moving out so soon! If it's for that short of a period now, isn't it easier, like previously suggested, to move back into your old house and sell this larger one? That would save you lots of money.

[kdaniel1010]

Thanks! We talked about doing this; however, we have a lot of rehab expenses related to that house that need to be paid back once we sell it. It wouldn't make sense to move back there financially because we'd have the $1112 mortgage plus paying off 4 months of rehab work (we updated the property to sell it for as much as possible).

[gaja]

Thanks! We talked about doing this; however, we have a lot of rehab expenses related to that house that need to be paid back once we sell it. It wouldn't make sense to move back there financially because we'd have the $1112 mortgage plus paying off 4 months of rehab work (we updated the property to sell it for as much as possible).

Is that was has been charged on the credit cards, or do you owe more money somewhere else?

How much do you expect to get in surplus when you sell the new house, and where will that money go?

or

If you increase the mortgage of the original house to incorporate the cost of the rehab, and move back there, what would the new mortgage be?

[kdaniel1010]

Thanks! We talked about doing this; however, we have a lot of rehab expenses related to that house that need to be paid back once we sell it. It wouldn't make sense to move back there financially because we'd have the $1112 mortgage plus paying off 4 months of rehab work (we updated the property to sell it for as much as possible).

Is that was has been charged on the credit cards, or do you owe more money somewhere else?

How much do you expect to get in surplus when you sell the new house, and where will that money go?

or

If you increase the mortgage of the original house to incorporate the cost of the rehab, and move back there, what would the new mortgage be?

Those expenses are due back to my husband's remodeling company because he employed the guys that did the remodeling work. We expect to net $30k after paying that back, all selling fees etc.

That's an excellent question re: refinancing... let me talk to my husband about that!

[kdaniel1010]

I came up with $1,667/month.

[gaja]

I came up with $1,667/month.

And where would you rather live?

[kdaniel1010]

Either one is totally fine. We are looking at a similar townhome in our current neighborhood on Friday which would make our monthly payment around $1400 including HOA, PITI, and it has 3 beds and 2 full baths. The old house has 3 beds and 1.5 baths. I'm fine either way. I just want to make sound financial decisions moving forward. Can't change anything about the past unfortunately.

[MKinVA]

 You are a little all over the place right now. Forget about investments for now. You have to pay off your debts. All the extra money needs to go to those. To create the extra money, in addition to selling your original abode, look through your budget VERY CLOSELY. Use the average of May and June as your benchmarks. Evaluate each and every expense. Come next month, your grocery bill should go down because the cousin will be gone. Capture that amount and apply it to debt before you simply absorb it into the budget. You still have subscriptions at $100. Is that going down or being eliminated? Did you mention earlier that you have 3 cars? Get rid of at least one this weekend. Sell it. Put the money on any debt.
Reaching out into the future and "solving" those situations (like a new townhouse, like worrying about what investments to make) is avoidance of the current issues and will get you nowhere. Also, HOA fees? Aaahh!
No one thing is going to fix your situation. It will be a combination of things, adjustments, and commitments.

[kdaniel1010]

Agreed, we are trying to approach it from all angles so that we can make an impact faster. I’ll focus on one house at a time. And we will decide which car to get rid of ASAP. Thank you!

[kdaniel1010]

Lol no worries at all, my mistake!

Thanks so much - I really appreciate that.

[Morning Glory]

I have 2 bathrooms and you can't use both showers at the same time because it messes with the water temperature and pressure.

[kdaniel1010]

For some reason we're able to do so without a problem most of the time. Aside from the showers it's the getting ready, the hair, the tooth brushing, etc.

[ATR]

PTF

[Christof]

Look, I'm from Europe and almost any SFH in my country comes with 1.5 bathrooms. I've never heard that this is an issue big enough for people to find 2 bathroom houses.

Everyone around here in Germany would say, we have two bathrooms. However, my US friends consider our house to be a 1.5 bathroom house, because we have only a shower in one bathroom and only a tub in the other, which each is like 3/4 bathroom to them.

[kdaniel1010]

I would still consider that 2 bathrooms! But yes I see the distinction.

Anyway, I feel like this thread is coming to an end unless anyone has any advice on stock market investments and opening our accounts. I appreciate everyone's input and responses. I know what we need to do and feel like we have made a good start so far. We have decided which vehicle to get rid of and I even have a business opportunity that has opened up to me in the past week which will help my small business, getting me closer to quitting my FT job and commute! It's not easy to hear people critique on your way of living and decisions made up until this point, and I tried my best to be fair and receptive to everything.

I hope to come back soon to the forums to talk more about our journey, progress and path to FI!

[Freedomin5]

Read jlcollins’ Stock Series for info about investments and accounts.

https://jlcollinsnh.com/stock-series/

[kdaniel1010]

Thanks guys! I may do the journal thing.

[Hirondelle]

Good to hear that kdaniel! Yes it can be hard to have other people criticize your former and current choices, but I guess sometimes that's also necessary to see what are feasible changes/cuts for you vs non-negotiables.

I'm excited to see you progress either in this thread or in a journal.

[kdaniel1010]

I started one at: https://forum.mrmoneymustache.com/journals/kdaniel's-journal/