One week in. (Three Year Update)

[RethinkTheRatRace]

I found the MMM blog and forums on Friday last week and in the past week I've:

• bought a bike (and have rode it to the grocery store twice already)
• cut my cable
• lowered my hot water heater
• lowered my A/C (this is a big one because Alabama in the summer isn't comfortable)
• & most importantly, got my SO on board

I'm looking forward to cutting costs, so we can get to FI much sooner than expected. Next we are cutting the gym membership (we have a powerlifting competition this weekend so we decided to keep it at least until then). I'm listing one of our unnecessary cars for sale. I've been looking into refinancing our mortgage at a lower interest rate, and lower year terms. And my goal is to have our first rental property before the year is up. I understand that this isn't a sprint, so much as its a marathon, but I figure why not get a quick start so our wealth can accumulate while we are pacing ourselves.

Thanks!

One Year Update:

Still going strong. My wife and I have been maxing our 401k, and Roth IRAs. I sold one of our unnecessary cars (we had three...don't punch me, I said I got rid of it) and ended up making a little money on it. And I had bought a 2012 VW Golf TDI for $9k before we found MMM and ended up getting $23k for it. (recalled from dieselgate) and replaced it with a 2007 Nissan Versa with 150k miles for $2k. I've been riding my bike daily, so I'm putting very few miles on the car. We have purchased two rental properties (a condo and a duplex) with plans for 1-2 more before the year is up. And we are in the process of selling our first property (I can't wait to be rid of this leech. 1500/month with mortgage and HOA, would be lucky to rent it for 1200.). My wife volunteered for temporary relocation for a work project, so she got a 10% bump in pay, her employer is paying us an allowance for rent (which of course we are pocketing the excess because we found a cheaper place), and they are paying per diems for both of our food. So we are coming out ahead on being flexible and willing to move. Our next goal is once we sell the terrible property, to put the profits into another property, once we have 5 individual properties we will use the mortgage snowball strategy and pump all the profits from the rentals into paying off one mortgage at a time. At that point we will assess the rental income vs our yearly expenses and purchase a few more properties if needed. I honestly think we could pull the trigger on RE before I'm 30, which will be 4 years from now.

I do want to say that the forums have had a huge impact on the progress we've made. I haven't posted a ton...mostly done a lot of lurking. And I've been a little more active on the facebook groups recently, but they don't hold a candle to the invaluable information on here.


Three Year Update

Wanted to drop in and give an update now that we've been on the path for 3 years. We are officially FIRE'd! Well, as of next month anyways. My wife and I have put in our notices to our employers and are going to be moving abroad to Cyprus at the beginning of September. Real estate has definitely propelled us down our path to FI, as we chose to not pay off any of our rentals early, and use that cash flow toward purchasing more. We now have 10 rental units (we had 11, but sold one a couple weeks ago for a decent profit) and the cashflow from those will be providing us with our FIRE funds. We have around two years of living expenses in a high interest rate savings account. We will spend from that account initially and replenish that account with the cash flow from the rental properties. We are not planning to touch any of our 401k or IRA balances and hope to let them grow for a few years before we tap into them at all, somewhat for minimizing sequence of return risk, but also because I don't believe that we will need it unless we plan to purchase more properties.

The path to FIRE has been great. Our priorities have definitely changed (we think for the better). We are coming to terms with the fact that money isn't the goal, it's just one of the many tools to reach the goal, but we will see how our mindset changes once we are no longer working! And, we have made many friendships and met dozens of great people that we never would've met had we not been on this path.

Edited to add update in original post.

[gggggg]

Way to go, excellent start!

[CmFtns]

Lowering my A/C and save money... witchcraft
I assume you meant raise the temperature

Don't burn yourself out in 5 days this is a long game

[RethinkTheRatRace]

Lowering my A/C and save money... witchcraft
I assume you meant raise the temperature

Don't burn yourself out in 5 days this is a long game

Lowering the A/C usage, by raising the temperature. But rest assured, I've got the long game in mind. Thanks for the advice though. I'm currently scouring through the forums to see how many things I hadn't thought about yet.

[Laserjet3051]

"The power of no" is one of the most effective and easy ways to radically cut expenses.

Buddy wants to know if I'll go out to that concert with next weekend? NO.
Kids want me to buy them a new plastic watcha-m-callit? NO
Tempted to go out for sushi tonight? No

You get the drift.

[CmFtns]

Lowering my A/C and save money... witchcraft
I assume you meant raise the temperature

Don't burn yourself out in 5 days this is a long game

Lowering the A/C usage, by raising the temperature. But rest assured, I've got the long game in mind. Thanks for the advice though. I'm currently scouring through the forums to see how many things I hadn't thought about yet.

In my opinion there are 3 topics to learn about/implement to reach Financial Independence.
Make sure you are implementing this from all fronts and not cutting all spending.

-Learn to live efficiently and mercilessly slash your spending on every single thing that doesn't matter to you
Some people go overboard at first and cut out everything only to fall back on old habits. Some things in life are worth spending a little bit of money on. I believe the real way to win at this category is to figure out what's actually important and what is not. That way you can completely cut out all random spending that really doesn't affect your life while also learning to efficiently spend money on the things that truly have value to you and can improve your life. Retiring early is as much if not more about controlling your spending than it is about how much you have saved. Finding a balance you can live with is where the real, long term savings come from because people can stick with that lifestyle... forever.

-Know what/where to invest choose a plan and consistently and always throw all your extra money at it
Emotions can not control this at all you need to be a robot and strictly follow the investment rules/goals you set up. Understand then set up an asset allocation and invest in it consistently over time and never panic it will be okay. Total stock market index funds are a great start and Vangaurd is a great company to invest it with.

-Understand how to efficiently battle taxes both during accumulation and when retired
I really like mad fientist's articles about this
http://www.madfientist.com/retire-even-earlier/
http://www.madfientist.com/how-to-access-retirement-funds-early/

[arebelspy]

Lowering my A/C and save money... witchcraft
I assume you meant raise the temperature

Don't burn yourself out in 5 days this is a long game

Lowering the A/C usage, by raising the temperature. But rest assured, I've got the long game in mind. Thanks for the advice though. I'm currently scouring through the forums to see how many things I hadn't thought about yet.

In my opinion there are 3 topics to learn about/implement to reach Financial Independence.
Make sure you are implementing this from all fronts and not cutting all spending.

-Learn to live efficiently and mercilessly slash your spending on every single thing that doesn't matter to you
Some people go overboard at first and cut out everything only to fall back on old habits. Some things in life are worth spending a little bit of money on. I believe the real way to win at this category is to figure out what's actually important and what is not. That way you can completely cut out all random spending that really doesn't affect your life while also learning to efficiently spend money on the things that truly have value to you and can improve your life. Retiring early is as much if not more about controlling your spending than it is about how much you have saved. Finding a balance you can live with is where the real, long term savings come from because people can stick with that lifestyle... forever.

-Know what/where to invest choose a plan and consistently and always throw all your extra money at it
Emotions can not control this at all you need to be a robot and strictly follow the investment rules/goals you set up. Understand then set up an asset allocation and invest in it consistently over time and never panic it will be okay. Total stock market index funds are a great start and Vangaurd is a great company to invest it with.

-Understand how to efficiently battle taxes both during accumulation and when retired
I really like mad fientist's articles about this
http://www.madfientist.com/retire-even-earlier/
http://www.madfientist.com/how-to-access-retirement-funds-early/

Good post.  I'd add earning more as a fourth one.

And I'd add that deficits in some of them can be made up by being hardcore on the other ones.

The wife and I earned low (public school teachers), I know nothing about taxes, and we never tried to cut spending, but the two strengths we had were our spending being naturally quite low, and our investment side going really well.

But if you are really strong in one or two areas, the others can lag a little (e.g. if you can earn a TON and optimize taxes, your spending and investments don't have to be quite as good... or if you can spend very, very little, your tax and income don't have to be as good).

[boarder42]

i'd also add if you're looking to do rentals its all about leveraging your money.  so a REFI is Great but it should be done to a 30 year at a lower fixed rate.  dont try to lower your term if you're going into rentals or even investing in indexes for that matter.  b/c with the rate climate in the US right now your money is better served invested in RE or the markets.   Its also a giant inflation hedge as well so

[arebelspy]

i'd also add if you're looking to do rentals its all about leveraging your money.  so a REFI is Great but it should be done to a 30 year at a lower fixed rate.  dont try to lower your term if you're going into rentals or even investing in indexes for that matter.  b/c with the rate climate in the US right now your money is better served invested in RE or the markets.   Its also a giant inflation hedge as well so

100% agree.

I didn't notice this in the OP the first time:

I've been looking into refinancing our mortgage at a lower interest rate, and lower year terms. And my goal is to have our first rental property before the year is up.

But those two strategies are counter-productive, financial strategy-wise.

[RethinkTheRatRace]

i'd also add if you're looking to do rentals its all about leveraging your money.  so a REFI is Great but it should be done to a 30 year at a lower fixed rate.  dont try to lower your term if you're going into rentals or even investing in indexes for that matter.  b/c with the rate climate in the US right now your money is better served invested in RE or the markets.   Its also a giant inflation hedge as well so

100% agree.

I didn't notice this in the OP the first time:

I've been looking into refinancing our mortgage at a lower interest rate, and lower year terms. And my goal is to have our first rental property before the year is up.

But those two strategies are counter-productive, financial strategy-wise.

Thanks for the advice, that definitely makes sense now that I think about it. Although, our current home is a condo that we are house hacking so we are planning on moving out within the year anyway. But, I guess keeping it a 30 year mortgage will help the house cash flow a little more per month, which would be useful for reinvesting in more RE in the area.

Also, the first things I did was just cutting some fat off in areas that were easy. We didn't really use the cable, and our hot water was to the point of scalding. I think that once you have the epifany of FI, you realize that most of your spending is unnecessary, and the things you've been meaning to trim anyway become much more of a priority to get the ball rolling. But I'm always open to advice.

[RethinkTheRatRace]

One Year Update:

Still going strong. My wife and I have been maxing our 401k, and Roth IRAs. I sold one of our unnecessary cars (we had three...don't punch me, I said I got rid of it) and ended up making a little money on it. And I had bought a 2012 VW Golf TDI for $9k before we found MMM and ended up getting $23k for it. (recalled from dieselgate) and replaced it with a 2007 Nissan Versa with 150k miles for $2k. I've been riding my bike daily, so I'm putting very few miles on the car. We have purchased two rental properties (a condo and a duplex) with plans for 1-2 more before the year is up. And we are in the process of selling our first property (I can't wait to be rid of this leech. 1500/month with mortgage and HOA, would be lucky to rent it for 1200.). My wife volunteered for temporary relocation for a work project, so she got a 10% bump in pay, her employer is paying us an allowance for rent (which of course we are pocketing the excess because we found a cheaper place), and they are paying per diems for both of our food. So we are coming out ahead on being flexible and willing to move. Our next goal is once we sell the terrible property, to put the profits into another property, once we have 5 individual properties we will use the mortgage snowball strategy and pump all the profits from the rentals into paying off one mortgage at a time. At that point we will assess the rental income vs our yearly expenses and purchase a few more properties if needed. I honestly think we could pull the trigger on RE before I'm 30, which will be 4 years from now.

I do want to say that the forums have had a huge impact on the progress we've made. I haven't posted a ton...mostly done a lot of lurking. And I've been a little more active on the facebook groups recently, but they don't hold a candle to the invaluable information on here.

[Mr. Green]

You're rockin'! It's so cool to see people's progress once they have a goal and go after it. Sounds like you have a great plan in place to get you across the FIRE finish line.

[RethinkTheRatRace]

You're rockin'! It's so cool to see people's progress once they have a goal and go after it. Sounds like you have a great plan in place to get you across the FIRE finish line.

Thanks man! I occasionally talk to friends or family members about FIRE, and not only do they not understand it, but they also think my goals are unrealistic when I tell them I think I'll be able to retire before 30. I tell them that even if I'm off on my calculations by a little bit and have to work longer, even a few years, 33 is still plenty early enough for me. And, even more importantly, my calculations aren't off haha!

[boarder42]

One Year Update:

Still going strong. My wife and I have been maxing our 401k, and Roth IRAs. I sold one of our unnecessary cars (we had three...don't punch me, I said I got rid of it) and ended up making a little money on it. And I had bought a 2012 VW Golf TDI for $9k before we found MMM and ended up getting $23k for it. (recalled from dieselgate) and replaced it with a 2007 Nissan Versa with 150k miles for $2k. I've been riding my bike daily, so I'm putting very few miles on the car. We have purchased two rental properties (a condo and a duplex) with plans for 1-2 more before the year is up. And we are in the process of selling our first property (I can't wait to be rid of this leech. 1500/month with mortgage and HOA, would be lucky to rent it for 1200.). My wife volunteered for temporary relocation for a work project, so she got a 10% bump in pay, her employer is paying us an allowance for rent (which of course we are pocketing the excess because we found a cheaper place), and they are paying per diems for both of our food. So we are coming out ahead on being flexible and willing to move. Our next goal is once we sell the terrible property, to put the profits into another property, once we have 5 individual properties we will use the mortgage snowball strategy and pump all the profits from the rentals into paying off one mortgage at a time. At that point we will assess the rental income vs our yearly expenses and purchase a few more properties if needed. I honestly think we could pull the trigger on RE before I'm 30, which will be 4 years from now.

I do want to say that the forums have had a huge impact on the progress we've made. I haven't posted a ton...mostly done a lot of lurking. And I've been a little more active on the facebook groups recently, but they don't hold a candle to the invaluable information on here.

good work.
not paying down your rentals in a mortgage snow ball and either investing in index funds or more property will lead to a faster FIRE.

[RethinkTheRatRace]

One Year Update:

Still going strong. My wife and I have been maxing our 401k, and Roth IRAs. I sold one of our unnecessary cars (we had three...don't punch me, I said I got rid of it) and ended up making a little money on it. And I had bought a 2012 VW Golf TDI for $9k before we found MMM and ended up getting $23k for it. (recalled from dieselgate) and replaced it with a 2007 Nissan Versa with 150k miles for $2k. I've been riding my bike daily, so I'm putting very few miles on the car. We have purchased two rental properties (a condo and a duplex) with plans for 1-2 more before the year is up. And we are in the process of selling our first property (I can't wait to be rid of this leech. 1500/month with mortgage and HOA, would be lucky to rent it for 1200.). My wife volunteered for temporary relocation for a work project, so she got a 10% bump in pay, her employer is paying us an allowance for rent (which of course we are pocketing the excess because we found a cheaper place), and they are paying per diems for both of our food. So we are coming out ahead on being flexible and willing to move. Our next goal is once we sell the terrible property, to put the profits into another property, once we have 5 individual properties we will use the mortgage snowball strategy and pump all the profits from the rentals into paying off one mortgage at a time. At that point we will assess the rental income vs our yearly expenses and purchase a few more properties if needed. I honestly think we could pull the trigger on RE before I'm 30, which will be 4 years from now.

I do want to say that the forums have had a huge impact on the progress we've made. I haven't posted a ton...mostly done a lot of lurking. And I've been a little more active on the facebook groups recently, but they don't hold a candle to the invaluable information on here.

good work.
not paying down your rentals in a mortgage snow ball and either investing in index funds or more property will lead to a faster FIRE.

I'll look into my options when I get the properties, but right now, my return would be better with paying down the mortgage on one of my properties. I owe a little over $30k and at that point without my mortgage the current rent will net me ~$225 more a month. If I invested that $30k the 4% SWR would net me $100/month.

[acroy]

Badass!!!

[boarder42]

One Year Update:

Still going strong. My wife and I have been maxing our 401k, and Roth IRAs. I sold one of our unnecessary cars (we had three...don't punch me, I said I got rid of it) and ended up making a little money on it. And I had bought a 2012 VW Golf TDI for $9k before we found MMM and ended up getting $23k for it. (recalled from dieselgate) and replaced it with a 2007 Nissan Versa with 150k miles for $2k. I've been riding my bike daily, so I'm putting very few miles on the car. We have purchased two rental properties (a condo and a duplex) with plans for 1-2 more before the year is up. And we are in the process of selling our first property (I can't wait to be rid of this leech. 1500/month with mortgage and HOA, would be lucky to rent it for 1200.). My wife volunteered for temporary relocation for a work project, so she got a 10% bump in pay, her employer is paying us an allowance for rent (which of course we are pocketing the excess because we found a cheaper place), and they are paying per diems for both of our food. So we are coming out ahead on being flexible and willing to move. Our next goal is once we sell the terrible property, to put the profits into another property, once we have 5 individual properties we will use the mortgage snowball strategy and pump all the profits from the rentals into paying off one mortgage at a time. At that point we will assess the rental income vs our yearly expenses and purchase a few more properties if needed. I honestly think we could pull the trigger on RE before I'm 30, which will be 4 years from now.

I do want to say that the forums have had a huge impact on the progress we've made. I haven't posted a ton...mostly done a lot of lurking. And I've been a little more active on the facebook groups recently, but they don't hold a candle to the invaluable information on here.

good work.
not paying down your rentals in a mortgage snow ball and either investing in index funds or more property will lead to a faster FIRE.

I'll look into my options when I get the properties, but right now, my return would be better with paying down the mortgage on one of my properties. I owe a little over $30k and at that point without my mortgage the current rent will net me ~$225 more a month. If I invested that $30k the 4% SWR would net me $100/month.

this is an incorrect way to think about the math.  you have to consider the full return on the 30k + the return on the house after the mortgage. 

[RethinkTheRatRace]

One Year Update:

Still going strong. My wife and I have been maxing our 401k, and Roth IRAs. I sold one of our unnecessary cars (we had three...don't punch me, I said I got rid of it) and ended up making a little money on it. And I had bought a 2012 VW Golf TDI for $9k before we found MMM and ended up getting $23k for it. (recalled from dieselgate) and replaced it with a 2007 Nissan Versa with 150k miles for $2k. I've been riding my bike daily, so I'm putting very few miles on the car. We have purchased two rental properties (a condo and a duplex) with plans for 1-2 more before the year is up. And we are in the process of selling our first property (I can't wait to be rid of this leech. 1500/month with mortgage and HOA, would be lucky to rent it for 1200.). My wife volunteered for temporary relocation for a work project, so she got a 10% bump in pay, her employer is paying us an allowance for rent (which of course we are pocketing the excess because we found a cheaper place), and they are paying per diems for both of our food. So we are coming out ahead on being flexible and willing to move. Our next goal is once we sell the terrible property, to put the profits into another property, once we have 5 individual properties we will use the mortgage snowball strategy and pump all the profits from the rentals into paying off one mortgage at a time. At that point we will assess the rental income vs our yearly expenses and purchase a few more properties if needed. I honestly think we could pull the trigger on RE before I'm 30, which will be 4 years from now.

I do want to say that the forums have had a huge impact on the progress we've made. I haven't posted a ton...mostly done a lot of lurking. And I've been a little more active on the facebook groups recently, but they don't hold a candle to the invaluable information on here.

good work.
not paying down your rentals in a mortgage snow ball and either investing in index funds or more property will lead to a faster FIRE.

I'll look into my options when I get the properties, but right now, my return would be better with paying down the mortgage on one of my properties. I owe a little over $30k and at that point without my mortgage the current rent will net me ~$225 more a month. If I invested that $30k the 4% SWR would net me $100/month.

this is an incorrect way to think about the math.  you have to consider the full return on the 30k + the return on the house after the mortgage.

Sorry, I misread the part where you said I could purchase more properties instead of paying down the mortgages. Right now in my accumulation phase, I'm very risk tolerant, but at a certain point (Likely when I become FIRE) I think I will be a little more risk adverse. I am continuously debating whether it would be better to have 7 or 8 paid off properties generating a lump of my income, or if I should continue acquiring properties and having 10-12+ properties with a few mortgages. Honestly, I've been acquiring them at a faster rate than I expected, so I think I'll end up with 10+ before I really start focusing on paying all the mortgages off, and I think I could still have them paid off in a pretty timely manner considering the low cost of most of the properties I'm getting.

[coldestcat]

Thanks for the advice, that definitely makes sense now that I think about it. Although, our current home is a condo that we are house hacking so we are planning on moving out within the year anyway. But, I guess keeping it a 30 year mortgage will help the house cash flow a little more per month, which would be useful for reinvesting in more RE in the area.

Also, the first things I did was just cutting some fat off in areas that were easy. We didn't really use the cable, and our hot water was to the point of scalding. I think that once you have the epifany of FI, you realize that most of your spending is unnecessary, and the things you've been meaning to trim anyway become much more of a priority to get the ball rolling. But I'm always open to advice.

Ive been on the boards and reading articles for a few weeks but never read the term house hacking. Is this a real term?
Glad I read this thread!

[RethinkTheRatRace]

Thanks for the advice, that definitely makes sense now that I think about it. Although, our current home is a condo that we are house hacking so we are planning on moving out within the year anyway. But, I guess keeping it a 30 year mortgage will help the house cash flow a little more per month, which would be useful for reinvesting in more RE in the area.

Also, the first things I did was just cutting some fat off in areas that were easy. We didn't really use the cable, and our hot water was to the point of scalding. I think that once you have the epifany of FI, you realize that most of your spending is unnecessary, and the things you've been meaning to trim anyway become much more of a priority to get the ball rolling. But I'm always open to advice.

Ive been on the boards and reading articles for a few weeks but never read the term house hacking. Is this a real term?
Glad I read this thread!

House hacking is a technique where you buy a property, fully aware of the fact that you are planning to move out in a year to rent it out. The benefit being that you qualify for better financing if it's your primary residence. BiggerPockets and Coach Carson are very useful resources if this interests you. I'm planning on making a blog post about it in the future, but nothing in depth written up yet.

[Roboturner]

Lowering my A/C and save money... witchcraft
I assume you meant raise the temperature

Don't burn yourself out in 5 days this is a long game

Lowering the A/C usage, by raising the temperature. But rest assured, I've got the long game in mind. Thanks for the advice though. I'm currently scouring through the forums to see how many things I hadn't thought about yet.

I think the biggest needle-mover for most people will be cutting out restraunts/bars in favor of good ol cooking

[boarder42]

One Year Update:

Still going strong. My wife and I have been maxing our 401k, and Roth IRAs. I sold one of our unnecessary cars (we had three...don't punch me, I said I got rid of it) and ended up making a little money on it. And I had bought a 2012 VW Golf TDI for $9k before we found MMM and ended up getting $23k for it. (recalled from dieselgate) and replaced it with a 2007 Nissan Versa with 150k miles for $2k. I've been riding my bike daily, so I'm putting very few miles on the car. We have purchased two rental properties (a condo and a duplex) with plans for 1-2 more before the year is up. And we are in the process of selling our first property (I can't wait to be rid of this leech. 1500/month with mortgage and HOA, would be lucky to rent it for 1200.). My wife volunteered for temporary relocation for a work project, so she got a 10% bump in pay, her employer is paying us an allowance for rent (which of course we are pocketing the excess because we found a cheaper place), and they are paying per diems for both of our food. So we are coming out ahead on being flexible and willing to move. Our next goal is once we sell the terrible property, to put the profits into another property, once we have 5 individual properties we will use the mortgage snowball strategy and pump all the profits from the rentals into paying off one mortgage at a time. At that point we will assess the rental income vs our yearly expenses and purchase a few more properties if needed. I honestly think we could pull the trigger on RE before I'm 30, which will be 4 years from now.

I do want to say that the forums have had a huge impact on the progress we've made. I haven't posted a ton...mostly done a lot of lurking. And I've been a little more active on the facebook groups recently, but they don't hold a candle to the invaluable information on here.

good work.
not paying down your rentals in a mortgage snow ball and either investing in index funds or more property will lead to a faster FIRE.

I'll look into my options when I get the properties, but right now, my return would be better with paying down the mortgage on one of my properties. I owe a little over $30k and at that point without my mortgage the current rent will net me ~$225 more a month. If I invested that $30k the 4% SWR would net me $100/month.

this is an incorrect way to think about the math.  you have to consider the full return on the 30k + the return on the house after the mortgage.

Sorry, I misread the part where you said I could purchase more properties instead of paying down the mortgages. Right now in my accumulation phase, I'm very risk tolerant, but at a certain point (Likely when I become FIRE) I think I will be a little more risk adverse. I am continuously debating whether it would be better to have 7 or 8 paid off properties generating a lump of my income, or if I should continue acquiring properties and having 10-12+ properties with a few mortgages. Honestly, I've been acquiring them at a faster rate than I expected, so I think I'll end up with 10+ before I really start focusing on paying all the mortgages off, and I think I could still have them paid off in a pretty timely manner considering the low cost of most of the properties I'm getting.

10-12 with mortgage would be lower risk. As you have a large diversity of property.

[YYK]

Zero to FIRE in five years, badass!

[nouveauRiche]

RRR - so glad you came back with an update.  Great to see you rocketing toward FIRE.

[RethinkTheRatRace]

Zero to FIRE in five years, badass!

Thanks man! We are super excited to hit FIRE. The goal once we hit it is to pull a Go Curry Cracker! and move over to Europe for an extended "vacation". My wife has family in Cyprus and her grandparents have a MIL apartment at their place that they'd be glad to let us stay in so we are planning to use that as a base for other travels in the area. The more I think about it, the quicker I want to get there haha!

RRR - so glad you came back with an update.  Great to see you rocketing toward FIRE.

Thanks! I'm sure from my initial post, most people probably thought I was going to last a month before I fell off the wagon. There are so many unorthodox ways to cut costs. Had you told me last year that I was doing some of these things and still happier than ever, I wouldn't have believed you.

[coldestcat]

Thanks for the advice, that definitely makes sense now that I think about it. Although, our current home is a condo that we are house hacking so we are planning on moving out within the year anyway. But, I guess keeping it a 30 year mortgage will help the house cash flow a little more per month, which would be useful for reinvesting in more RE in the area.

Also, the first things I did was just cutting some fat off in areas that were easy. We didn't really use the cable, and our hot water was to the point of scalding. I think that once you have the epifany of FI, you realize that most of your spending is unnecessary, and the things you've been meaning to trim anyway become much more of a priority to get the ball rolling. But I'm always open to advice.

Ive been on the boards and reading articles for a few weeks but never read the term house hacking. Is this a real term?
Glad I read this thread!

House hacking is a technique where you buy a property, fully aware of the fact that you are planning to move out in a year to rent it out. The benefit being that you qualify for better financing if it's your primary residence. BiggerPockets and Coach Carson are very useful resources if this interests you. I'm planning on making a blog post about it in the future, but nothing in depth written up yet.

Thanks, I checked out both these sites and have been looking at them. Wife and I are considering the house hacking idea now.

[arebelspy]

Way to go with the rental purchases! Keep rockin' it!

Had you told me last year that I was doing some of these things and still happier than ever, I wouldn't have believed you.

Totally!  That's the crazy thing about becoming FI--people always think you have to "deprive" yourself, but the reality is that you're happier than ever, not just in FIRE, but while in the process of becoming FI.  :)

[Basenji]

I love update threads, thanks. Way to go!

[RethinkTheRatRace]

I love update threads, thanks. Way to go!

No, thank you! I appreciate any and all encouragement!

[Step37]

Posting to follow your impressive accomplishments!

[BTDretire]

One Year Update:

Still going strong. My wife and I have been maxing our 401k, and Roth IRAs. I sold one of our unnecessary cars (we had three...don't punch me, I said I got rid of it) and ended up making a little money on it. And I had bought a 2012 VW Golf TDI for $9k before we found MMM and ended up getting $23k for it. (recalled from dieselgate) and replaced it with a 2007 Nissan Versa with 150k miles for $2k. I've been riding my bike daily, so I'm putting very few miles on the car. We have purchased two rental properties (a condo and a duplex) with plans for 1-2 more before the year is up. And we are in the process of selling our first property (I can't wait to be rid of this leech. 1500/month with mortgage and HOA, would be lucky to rent it for 1200.). My wife volunteered for temporary relocation for a work project, so she got a 10% bump in pay, her employer is paying us an allowance for rent (which of course we are pocketing the excess because we found a cheaper place), and they are paying per diems for both of our food. So we are coming out ahead on being flexible and willing to move. Our next goal is once we sell the terrible property, to put the profits into another property, once we have 5 individual properties we will use the mortgage snowball strategy and pump all the profits from the rentals into paying off one mortgage at a time. At that point we will assess the rental income vs our yearly expenses and purchase a few more properties if needed. I honestly think we could pull the trigger on RE before I'm 30, which will be 4 years from now.

I do want to say that the forums have had a huge impact on the progress we've made. I haven't posted a ton...mostly done a lot of lurking. And I've been a little more active on the facebook groups recently, but they don't hold a candle to the invaluable information on here.

good work.
not paying down your rentals in a mortgage snow ball and either investing in index funds or more property will lead to a faster FIRE.

I'll look into my options when I get the properties, but right now, my return would be better with paying down the mortgage on one of my properties. I owe a little over $30k and at that point without my mortgage the current rent will net me ~$225 more a month. If I invested that $30k the 4% SWR would net me $100/month.

this is an incorrect way to think about the math.  you have to consider the full return on the 30k + the return on the house after the mortgage.

Sorry, I misread the part where you said I could purchase more properties instead of paying down the mortgages. Right now in my accumulation phase, I'm very risk tolerant, but at a certain point (Likely when I become FIRE) I think I will be a little more risk adverse. I am continuously debating whether it would be better to have 7 or 8 paid off properties generating a lump of my income, or if I should continue acquiring properties and having 10-12+ properties with a few mortgages. Honestly, I've been acquiring them at a faster rate than I expected, so I think I'll end up with 10+ before I really start focusing on paying all the mortgages off, and I think I could still have them paid off in a pretty timely manner considering the low cost of most of the properties I'm getting.

I think you are missing the idea of leverage.
A simplistic explanation:
Say you have $100,000 to invest.
You buy one house for all your cash and it generates 10% or $10,000.
vs, leverage, you buy 5- $100,000 houses with 20% down at 5%.
Because of the interest payment, you are only earning $5,000 per house,
But you have 5 houses, so you have 5 x $5,000 = $25,000 vs the $10,000 if you paid of the mortgage on one house.
 Plus if you have 3% price appreciation on one $100,000 house you gain $3,000 a year vs
3% on 5 -$100,000 house is $15,000.
 If you combine those two, you get a yearly gain of $13,000 for one house or $40,000 for 5 houses.
 Also, if you can raise the rent 3%, on one house that might add $360 a year, 5 houses is $1,800 a year.
 And then there are the tax benefits of 1 vs 5 houses.
 Many RE investors would say leverage is more magical than compound interest!
 The point-- don't pay off a Mortgage if you can earn more than the interest rate you are paying on the mortgage.

 Note: owning rentals is a job, it's not passive investing.
Over leveraging can get you in trouble.
 My two cents, after I had kids, I got tired of the job, sold my
properties and moved to Florida!

[arebelspy]

Indeed, MMM covers this in a blog post that is now 5 1/2 years old (!).

See strategy two, which I wrote, here: http://www.mrmoneymustache.com/2012/02/24/pay-down-the-mortgage-or-invest-more-a-winwin-question/

[TheAnonOne]

Indeed, MMM covers this in a blog post that is now 5 1/2 years old (!).

See strategy two, which I wrote, here: http://www.mrmoneymustache.com/2012/02/24/pay-down-the-mortgage-or-invest-more-a-winwin-question/

It's funny how he called the stock market "High" back then.

[arebelspy]

Indeed, MMM covers this in a blog post that is now 5 1/2 years old (!).

See strategy two, which I wrote, here: http://www.mrmoneymustache.com/2012/02/24/pay-down-the-mortgage-or-invest-more-a-winwin-question/

It's funny how he called the stock market "High" back then.

A lot of us thought that. It had risen 3 straight years. In 2013 sol and I were talking about how it seemed overvalued and due for a crash. Luckily we ignored our feelings and just kept investing. It has been a crazy run though.

[RethinkTheRatRace]

Bump for three year update!

[happy]

Thanks for the update and your story. Inspirational!

[arebelspy]

Wow, congrats!

In 3 years going from 0 rentals to 10 and FIRE'd is great work.

Time to start figuring out "what's next," especially given your young age. Enjoy Cyprus.

Thanks for the update!

[Chris Pascale]

Lowering my A/C and save money... witchcraft
I assume you meant raise the temperature

Don't burn yourself out in 5 days this is a long game

Where I live, we use heating oil. Initially, I had a rental that included this, so when I bought a house the size of the bill was larger than expected, and the 100 gallons I initially purchased was gone in 3 weeks, conking out on a Friday night.

My wife and I balked on paying extra to have emergency service for a fill-up on our credit card, and instead bundled the kids in blankets and bought four space heaters that went from bedrooms to common areas as needed. We showered at the YMCA for a week, and then got the oil tank filled, YouTubing our way to getting the pilot light back on instead of paying $70.

From that point on we kept the thermostats at 58, and cut our oil costs by a few grand every year - money that would have been literally burned up so that we could wear t-shirts while walking around barefoot.

One summer our drier died so we hung our clothes on a line.

[A Fella from Stella]

Lowering my A/C and save money... witchcraft
I assume you meant raise the temperature

Don't burn yourself out in 5 days this is a long game

I just went and turned off my AC units. It's about 70 right now, and there's just no need. But we can thoughtlessly spend if we're not careful

[A Fella from Stella]

Wow, congrats!

In 3 years going from 0 rentals to 10 and FIRE'd is great work.

Time to start figuring out "what's next," especially given your young age. Enjoy Cyprus.

Thanks for the update!

Yes, this is incredible. I did not do well in real estate investing before because my first purchase was a bad one, but maybe I need to look into it again.

[RethinkTheRatRace]

Yes, this is incredible. I did not do well in real estate investing before because my first purchase was a bad one, but maybe I need to look into it again.

Thank you! We definitely couldn't have done it this quickly without real estate. The best part is that it only took a few good buys here and there. We didn't want to get 100+ units and trade day jobs for full-time landlording (although we do manage our own properties).

[EscapedApe]

Awesome, thanks for the update. It's really encouraging to read stories like yours.

[Kem]

Amazing work!