Author Topic: We spawned a third wage earner this year, and a question  (Read 2719 times)

Trudie

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We spawned a third wage earner this year, and a question
« on: December 30, 2015, 10:48:39 AM »
No, I am not in the family way...

But after a careful review of our year-end financials I realized that our retirement stache ($1.1 mil, without home equity) is on par -- with 5-6% returns -- to make more money than I do this year.  And, of course, it will do it in a most tax efficient way because regardless of how I cut it, when we withdraw the funds they will be taken out at lower ordinary income and capital gains rates.  That payroll tax is a killa!

Plus, this employee doesn't require clothes for work, a car, and gets by with minimal supervision.  She's a dream employee!  Maybe eventually I will just stay home and supervise her.

So, I am on the precipice of a job change.  I can't quite imagine quitting cold turkey yet, but am looking for something that is less demanding (no commute; minus the bad boss), yet somewhat stimulating and interesting.  I am taking steps.  But I want to slow down on "feathering the nest", because there is a law of diminishing returns at this point.  We've had about 8-10 years of really getting after it with our savings, and I can see how it's paid off.

And finally, a question for others in the mustachiosphere:
At present, we are a two wage-earner family (no kids) and manage to keep our taxable income -- through some engineering with deductions -- in the 15% bracket.

If I were to make less/work less, staying in this bracket would not be a problem at all, but cash flowing the remaining mortgage would be our challenge.  Here's our house situation:

Estimated value:  $340K
Mortgage Bal:  $119K
Equity: 221K

We have unqualified investments (which I am including in the retirement stache totals), but which I have considered our "mortgage pay off sinking fund."  These funds are currently valued at $110K.  In the next year we should hit the "crossover" point where we basically have the house paid for.  I don't want to go into the bank and just write a check for the lump sum.  I'd rather keep the money working, but have thought about "withdrawing as we go/need it" to make our mortgage payments.  Would you do it?  We'd pay 0% capital gains and it would eliminate mortgage payment stress.






« Last Edit: December 30, 2015, 11:03:11 AM by Trudie »

Cassie

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Re: We spawned a third wage earner this year, and a question
« Reply #1 on: January 01, 2016, 03:52:49 PM »
In that situation I would pay the house off and then you can decrease your work hours if you want which it sounds like you would like to. If you just use the $ to make the payment you are paying interest.

PharmaStache

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Re: We spawned a third wage earner this year, and a question
« Reply #2 on: January 01, 2016, 03:55:52 PM »
What a cool way to look at things!

Heckler

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Re: We spawned a third wage earner this year, and a question
« Reply #3 on: January 02, 2016, 06:57:54 AM »
Why not move to your dream location which is cheaper by 120k?  You won't need to consider your job or commute in the location, so that might be a small place on a beach somewhere with a grocery store and a bank in walking distance.
« Last Edit: January 02, 2016, 06:59:27 AM by Heckler »

Playing with Fire UK

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Re: We spawned a third wage earner this year, and a question
« Reply #4 on: January 04, 2016, 12:15:46 AM »
Congratulations, what a great benchmark.

I would try to keep the investment working rather than pay off the mortgage early, because $1 today is likely worth more than $1 next year. However, if the mortgage is stressing you out then pay it sooner. Can you set up automatic transfers from the investments to make the monthly payments automatically?