Life situation: We are a DINK couple in our early 30s (31 to be exact). We live in a suburb of a large metropolitan area. I found out about FIRE at 21 & once graduated started working on it. After almost 10 years of hustling, I've started to shift my mindset to "maybe we should enjoy ourselves better?" also, "IF we have kids, how do we want to raise them?." Honestly, we are still not ready for kids, so don't see us having kids in the next 4 years, we may choose to do it in our mid-30s. [Please I don't want any commentary on the best age to have kids]. If it happens then, it happens. If not, it's going to be ok. After 10 years, we have, also, realized more and more of what we like. One, we are NOT going to be nomads. My husband hates traveling, he's a homebody. Believe me I've tried. So if we ever stop working, we will not be RV people, or traveling the world. I am a pretty active person (hikes, social activities, cultural activities). So knowing that, I want to create a home in an ideal location. We do not want to move cities. I like the city were we live. So for now, we are considering - do we just upgrade our house and move neighborhoods? Finally, get a house in the city (premium)? That is the ultimate question... because we will ultimately be increasing our annual expenses due to the house upgrade. We currently live in a house we bought for $300K in 2018. It was never supposed to be our dream house. We knew that at that time. Hell, we should bought the city house in 2013 when we first bought our first house. Looking back we should have probably bought our house then. But at the same time we didn't really know what we wanted then or had the cash. A house in the city in the neighborhood I want to be in will be in the $700K-$900K. YUP YIKES! HARD TO IMAGINE!!! NEVER EVER THOUGHT WE WOULD EVEN BE CONSIDERING IT! It's all about location. But the location will allow us to be close to city amenities (which I want) and a great neighborhood. Con: I will have a long commute to office.
So here's our financial outlook. I will summarize but do know I keep a detailed spreadsheet to the penny:
Income Household Before Tax: $222,000 + bonus. Bonus is never guaranteed. Bonus potential is $30,000 -$50,000. I never count on the bonus.
- Me - $150K plus 25% bonus
- Husband - $72K plus bonus (it's ranged about $5K a year).
Pre-Tax deductions - Max out 401K + company match + max out HSA = $56,000. Didn't max out ROTH IRA because of income limit. Considering doing a backdoor, but would need to convert traditional IRAs to ROTH first.
Rough summary Expenses: We currently spend between $60,000 - $70,000 a year. Let's call it $70K because that has really been our comfort level.
- Mortgage principal + interest, property taxes (no state income tax state, high property taxes), home insurance = $24,000 20 year REFI 2.875% in April 2021.
- Utilities (HOA, Electric, Gas, Internet, Cell, Hulu/Netflix) = $6,000
- Food, car insurance, medical, personal, gas, home maintenance, etc. = $30,000
- One time shopping events, travel, etc... = $10,000
After expenses, we can invest about $64,000 a year in a taxable brokerage account. Not counting bonus. If we get a bonus, majority gets redirected to taxable.
Investment Assets (all in low cost broad market index funds): $1.17M
- 401Ks: $541,000
- Traditional IRAs: $55,000
- HSAs: $62,000
- ROTH IRAs:$92,000
- Taxable Brokerage - $445,000
- Cash - $36,000
Real estate: $440K plus appreciation
- Rental Property: Purchased for $140K (it was our first house). It has appreciated to ~ $250K.
- Primary House: Purchased for $300K. It has appreciated to ~ $400K.
Debts:($289,627)
- Credit Cards - pay off full amount every month
- Rental Property: ($60,772)
- Primary House: ($228,856)
- No car debt or other debt.
Inheritance - NONE - we end up with a reverse inheritance. Already planning to support my parents.
My target FI goal is to reach $3M in investments by age 40. It doesn't mean we will RE. My husband might, I probably won't. But I would like to have choices. Right now we are plugging about $120,000 (before bonus) between all accounts into the market. My husband still has growth potential (more than me as I have already reached Director level). But I have a pretty good salary with equity grants that will vest in 3-5 years. So we will continue to be a high income household in our 30s unless something CRAZY HAPPENS.
Is it a terrible move financially to upgrade to a house in the city? It will decrease our investment. Plus we don't even have kids....daycare is expensive....and kids are expensive.
I just don't want to ever end up in a situation where one of us gets laid off and shit breaks down. Also, in about 10 years, I will be helping my parents more financially (it's already planned, no point in making comments). But I want to start making stuff happen where I feel like we are enjoying life NOW. Like get that city house I always wanted. But my husband wants to do the FIRE as soon as possible.
How would we fund it? We would actually end up selling both our houses. We are accidental landlords and don't really want to own rental property (done that and crossed it off the list). So we would turn our house equity to fund the house purchase.
I realize by upgrading house, it will be anti-mustachian. But we have spent the last 9-10 years practicing mustachian practices, and I want to relax a bit.
Would appreciate any feedback, thoughts.