What now

[bye-bye Ms. FancyPants]

Family of 5 (45/44/10/8/5)

Current NW: 1,097,000.00 About $560,000 in cash/investments & the remaining in RE ($200,00 is our personal home)

We are both maxing our our 401k's, using healthcare FSA and childcare FSA. After tax savings: IRA & general savings -    $2750.

Colleges: paid for if they so choose

Income:
Me - 125,000 (just got a $14,000 raise this week!), longer hours & not much flexibility
partner - $65,000. He has the golden pension hand-cuffs & amazing free healthcare for our family, so he won't be leaving for 8-10 more years.
RE: will be paid off 2022, bringing in at least - $2000/month.
Other: $2000/month for next 8 years.

We spend approx: $65,000/year.

The problem: Our only personal debt is our primary residence - balance = $43,000. Our primary home is small 3BD/1.5 BA - about 1200 sq ft with unfinished basement, no garage. We are considering selling and buying something larger which would obviously increase our yearly spending to about $72,000/year.

I'm really ready to be done - possibly work part time somewhere or start a business - either one with some flexibility.  I was hoping I could quit Summer 2022 and spend some time with the kids before starting middle school. I'm not sure its possible either way, but certainly not, if we buy something bigger.


Spending:
Mortgage or rent   $1,400
Phone   $125
Electricity   $230
Water and sewer   $100
Cable/Netflix   $75
Waste removal   $80
health club   $50
medical   $50
cleaning service   $200 (clearly I would stop if I quit my job)
tolls   $20
Car Insurance   $210
Licensing/tags   $65
Life Insurance   $41
Maintenance   $101 (savings until needed)
Personal Care     $75
Groceries         $650   
Dining out         $75   
home needs/pc/lawn/garden   $100   
laundry/paper   $50
pets (food, grooming, medical savings) $100
hair                  $52
Clothing (family)    $100
Vacation savings   $350
gas                  $350
Stuff I forgot   $150
giving fund    $150
xmas savings   $133
daycares          $300 (medical necessary at this time)
diapers         $50
activity         $100

Over the next 6 months, where should we focus our $$$? Increasing cash flow real estate or investments? We else can we do speed this along??

[Morning Glory]

It looks like your husband makes about what you spend every year, so if you quit you can call yourself "coast fire", which means you just leave your money alone and let it grow. So now it's a question of whether you would prefer to get a bigger house or quit your job.

What's the cash flow on your rental? It wasn't clear from your op.

I see some low-hanging fruit in your budget.  Daycare +cleaning is 6k/yr that would go away, but you could also get rid of the cable and shop around for cheaper car insurance,  bathe your pet yourself,  etc. Personal  are and hair categories seem high too.

Your trash bill seems high, as does your laundry/paper category. This makes me think you are using paper plates. Stop it. It would be much cheaper and more eco friendly to get a set of corelle and run your dishwasher every day. That would free up storage space in your house and allow you to switch to a smaller trash bin.  Challenge yourself to reduce packaging waste with your other purchases too.

[joe189man]

Over the next 6 months, where should we focus our $$$? Increasing cash flow real estate or investments? We else can we do speed this along??

it sounds like you are saving quite a bit, great job! If you want to get a bigger home, i would save cash to be ready to jump on a property when you see one you want.

Otherwise its hard to say. Your spouse is stuck with golden handcuffs and healthcare so he's working regardless. it seems like if you can work till you save up the Down payment you want  for a bigger home and stick it out at your current job till your other real estate is paid off you could just quit or find something less stressful.

sounds like you are on a 8-10 year plan and just trying to figure out what to do in the mean time?

if i were you i would save to get a bigger house and/or payoff your rental real estate, and when the extra 2k a month comes along some time in 2022 i would quit and coast, spend time with the kids.

[MDM]

Income:
....
Spending:
...

If you put those numbers into the case study spreadsheet, does the "Available for taxable investment:" amount (cell D144) match what you are investing taxably?

Over the next 6 months, where should we focus our $$$? Increasing cash flow real estate or investments?

Investing in real estate is significantly different than investing in stocks/bonds.  For some it will better, and for others worse.  Often a matter of taste.

We else can we do speed this along??

"Spend less and invest more" is the kneejerk answer.  How does the Investment Order strike you?

[Nick_Miller]

Hey @bye-bye Ms. FancyPants , first congrats on your progress! My wife and I are about your ages, and you're definitely well ahead of us.


One of my main questions would be, other than possibly upgrading in house, would you expect your expenses to stay the same or decrease in the future?

A couple of examples: your groceries are really reasonable right now, but I tell you from having teenagers they can REALLY put away the food, so I might expect that cost to rise a couple hundred dollars a month at some point. I mean, our teens eat as much as the adults eat, if not more. Also, is there any big expense like braces coming up? We're paying almost $5K for our youngest's braces, so I wasn't sure if your kiddos all had good teeth or not? (our older kiddo also needed braces). Also, are the kiddos continuing to go to public schools all the way through? I know a lot of folks who choose to go private for high school. Obviously a huge expense, but since you didn't mention it, I'll assume that's not in the plans?

Also, you put "Vacation $350" twice in your list. I wasn't sure if that was an error. I assumed it was?

And to your investments: How much of that $560K in cash/investments is cash/roth contributions/taxable accounts? I realize the plan might be to coast on your partner's income and the rental income, but it would be helpful to know if there are some taxable accounts/roth contributions to pull from if you end up needing a little more per year.

[Paper Chaser]

Would a larger home definitely be more expensive, or could you move to a cheaper area to get what you want without the premium? What if you were to sell the rental and use any profits to add to a downpayment (keeping tax obligations in mind)?

If you want to keep most things the same as they currently are, and try to get by on your spouse's income/rents alone then you're going to need to tighten up the spending.

Some things from your budget that stood out to me:

$350/mo in gas is over 100 gallons of fuel/mo at current prices. What year/make/model are your vehicles, and how many miles do you drive? Would your retirement impact that expense?

$50/mo in diapers- Your youngest is 5 years old. Is this an expense that's medically necessary, or can you focus on getting everybody toilet trained to eliminate this expense?

$125/mo for phones- is that just you and your spouse? That can probably be knocked down a lot with a cheaper carrier.

[bye-bye Ms. FancyPants]

One of my main questions would be, other than possibly upgrading in house, would you expect your expenses to stay the same or decrease in the future?

A couple of examples: your groceries are really reasonable right now, but I tell you from having teenagers they can REALLY put away the food, so I might expect that cost to rise a couple hundred dollars a month at some point. I mean, our teens eat as much as the adults eat, if not more. Also, is there any big expense like braces coming up? We're paying almost $5K for our youngest's braces, so I wasn't sure if your kiddos all had good teeth or not? (our older kiddo also needed braces). Also, are the kiddos continuing to go to public schools all the way through? I know a lot of folks who choose to go private for high school. Obviously a huge expense, but since you didn't mention it, I'll assume that's not in the plans?

Great questions - so JUST THIS YEAR, our kids finally got into our Traditional Schooling system (trying for 4+ years) which offers a much better middle/high school, otherwise we would have had to move to a different school district ($$$) or send to private school ($$$$).

I would assume our grocery bill would go up as our 2 boys grow, but if I were around during the day I think I could make our food go further.

We adopted our 3 from foster care, so they do qualify for extra medical/dental insurance coverage.

Also, you put "Vacation $350" twice in your list. I wasn't sure if that was an error. I assumed it was?

Fixed!

And to your investments: How much of that $560K in cash/investments is cash/roth contributions/taxable accounts? I realize the plan might be to coast on your partner's income and the rental income, but it would be helpful to know if there are some taxable accounts/roth contributions to pull from if you end up needing a little more per year.

We have about $100,000 is cash (pending housing situation), $53,000 (taxable) & remaining $400,000+ tax advantage

[bye-bye Ms. FancyPants]

Would a larger home definitely be more expensive, or could you move to a cheaper area to get what you want without the premium? What if you were to sell the rental and use any profits to add to a downpayment (keeping tax obligations in mind)?

Since our kids have finally gotten into traditional schooling this definitely opens up more options as far as locations go. ... Selling a rental isn't something we had consider, but will definitely discuss it, thank you!

If you want to keep most things the same as they currently are, and try to get by on your spouse's income/rents alone then you're going to need to tighten up the spending.

Some things from your budget that stood out to me:

$350/mo in gas is over 100 gallons of fuel/mo at current prices. What year/make/model are your vehicles, and how many miles do you drive? Would your retirement impact that expense?

$50/mo in diapers- Your youngest is 5 years old. Is this an expense that's medically necessary, or can you focus on getting everybody toilet trained to eliminate this expense?

$125/mo for phones- is that just you and your spouse? That can probably be knocked down a lot with a cheaper carrier.

You are right - we do spend way to much in gas - a mini van, honda cr-v and sometimes a deasil truck. I think if I quit, this would decrease, however there is a lot of opportunity for improvement.

Diapers - is currently a medical necessity. We have tried to get paid through insurance, but haven't had any luck yet.

Phones - welllll, a couple things here. 1) in my new job the only service that would pick up in the building is sprint. I had to switch from Mint. 2) my husband uses Cricket but we also have to pay for his parents (don't ask, after 10 years I have finally come to accept it)

Thanks for your insight!

[reeshau]

Colleges: paid for if they so choose

Where is this coming from?  Did you leave funding for this off your calculations, or is this coming from the same pile?  Are you planning on the best school they can get accepted?  State Flagship?  Local school, living at home?  CC?  Scholarships?

Unless you put some parameters on this, I think it alone could sink your plans to coast.  You won't ever be paying for 3 at a time, but you will be paying for 2 at a time for the full 4 years your middle kiddo goes.  That could well be as much as your total current spend, if not more.  And it is just when you said DH wanted to quit.

[Nick_Miller]

Colleges: paid for if they so choose

Where is this coming from?  Did you leave funding for this off your calculations, or is this coming from the same pile?  Are you planning on the best school they can get accepted?  State Flagship?  Local school, living at home?  CC?  Scholarships?

Unless you put some parameters on this, I think it alone could sink your plans to coast.  You won't ever be paying for 3 at a time, but you will be paying for 2 at a time for the full 4 years your middle kiddo goes.  That could well be as much as your total current spend, if not more.  And it is just when you said DH wanted to quit.

I have inferred from reading her OP that there were already fully funded college funds somewhere, and that's why she didn't mention the amounts or anything, because that money was set aside for the kiddos. Hmmm I couldn't figure out how to "@" the OP because of her name but hopefully she'll see this.

[Morning Glory]

Colleges: paid for if they so choose

Where is this coming from?  Did you leave funding for this off your calculations, or is this coming from the same pile?  Are you planning on the best school they can get accepted?  State Flagship?  Local school, living at home?  CC?  Scholarships?

Unless you put some parameters on this, I think it alone could sink your plans to coast.  You won't ever be paying for 3 at a time, but you will be paying for 2 at a time for the full 4 years your middle kiddo goes.  That could well be as much as your total current spend, if not more.  And it is just when you said DH wanted to quit.

I have inferred from reading her OP that there were already fully funded college funds somewhere, and that's why she didn't mention the amounts or anything, because that money was set aside for the kiddos. Hmmm I couldn't figure out how to "@" the OP because of her name but hopefully she'll see this.

I was assuming that the husband worked for a university and free college for the kiddos was part of his golden handcuffs.

[Nick_Miller]

Colleges: paid for if they so choose

Where is this coming from?  Did you leave funding for this off your calculations, or is this coming from the same pile?  Are you planning on the best school they can get accepted?  State Flagship?  Local school, living at home?  CC?  Scholarships?

Unless you put some parameters on this, I think it alone could sink your plans to coast.  You won't ever be paying for 3 at a time, but you will be paying for 2 at a time for the full 4 years your middle kiddo goes.  That could well be as much as your total current spend, if not more.  And it is just when you said DH wanted to quit.

I have inferred from reading her OP that there were already fully funded college funds somewhere, and that's why she didn't mention the amounts or anything, because that money was set aside for the kiddos. Hmmm I couldn't figure out how to "@" the OP because of her name but hopefully she'll see this.

I was assuming that the husband worked for a university and free college for the kiddos was part of his golden handcuffs.

I didn't read it that way. She said one kiddo was only 5, and that her husband would definitely have to work for another 8-10 years. If he had to work at a university until the kiddos graduated, he'd need to work another 17 years or so. But I guess we'll see.

[bye-bye Ms. FancyPants]

@Morning Glory & @Nick_Miller  -  thanks for taking to the time to read & give input. To clarify, our children were adopted from the foster system so college is a benefit provided to them from the State. A HUGE weight off our shoulders.

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ALSO - updated: I think we have decided to stay where we are and renovate a bit. Hoping we can do enough.  I'm planning for part time employment (because who knows what the future holds!) in about 6 months or so. I'm excited and a little scared! 

[Nick_Miller]

@Morning Glory & @Nick_Miller  -  thanks for taking to the time to read & give input. To clarify, our children were adopted from the foster system so college is a benefit provided to them from the State. A HUGE weight off our shoulders.

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ALSO - updated: I think we have decided to stay where we are and renovate a bit. Hoping we can do enough.  I'm planning for part time employment (because who knows what the future holds!) in about 6 months or so. I'm excited and a little scared!

Appreciate the update! Your family appears to be in really good shape, and if you do manage to swing PT work, I'm guessing you are still going to be plenty busy for years to come. Best of luck with the renovations!