Am I missing something? Or just too poor?

[microscopes]

Recently found this website and really enjoy the theories behind it. However when I try to do the math to make it work for me, it doesn't work out. Am I missing something or do I just not make enough money?

$80,000 salary ... $50,000 take home pay after paying health insurance.

Even if I cut that in Half, I could save/invest $25,000 per year.

It would take 40+ years to save enough to have a withdrawal rate of 3-4%.

So I'm guessing everyone else is just making significantly more and can save double/triple that amount?

[microscopes]

Very sorry about the duplicate posts! My internet is a little laggy.

[Mod Note: No worries.  Merged them together.]

[makincaid]

Yes. You are missing compound return. I recommend this post:

http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

[forgerator]

I'm assuming you are single which is why your take home is that low. make sure to contribute as much as possible to your 401k first. that should give you a significant boost in savings

[PaulMaxime]

If you are spending only 25K per year you only need $625K to cover that. You were calculating that you needed $2M.

You are also assuming that your income is fixed, which it is probably not. I'm betting that you can find ways to improve that over time.

[microscopes]

I'm assuming you are single which is why your take home is that low. make sure to contribute as much as possible to your 401k first. that should give you a significant boost in savings

I am new to this so forgive the ignorance.

I thought you can't touch your 401k until you're 62?

Wouldn't that defeat the purpose of MMM early retirement?

[zataks]

Let's say your spending is actually $30,000/year instead of $25,000 to account for that health care cost but that you're still saving $25,000.

$30,000 / 0.04 = $750,000

$750,000 / $25,000 = 30 years.

But that's if you had zero market returns.  Let's assume an annualized rate of 5% return for your $25,000.

That put's you at about 16 years until your investments return your $30,000

If you do the favored 7% returned, you're looking at ~11 years.


EDIT: you're missing investment returns.

[redcedar]

Recently found this website and really enjoy the theories behind it. However when I try to do the math to make it work for me, it doesn't work out. Am I missing something or do I just not make enough money?

You are missing something but do not feel bad at all. When I first learned of the FIRE concept, I read all that I could find, kept reading, and kept reading. It is very much like drinking through a fire hose at first but it will get easier. Also, I found that had to 'unlearn' many things about finances leading me to re-read some things and get a better understanding of it the second or third time around.

Here are a few articles that I have found very helpful:

Savings Rate - http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/


Tax Rate Planning- https://blog.personalcapital.com/financial-planning-2/average-american-pay-no-taxes/


Roth IRA Laddering - http://rootofgood.com/roth-ira-conversion-ladder-early-retirement/

[Bracken_Joy]

Recently found this website and really enjoy the theories behind it. However when I try to do the math to make it work for me, it doesn't work out. Am I missing something or do I just not make enough money?

You are missing something but do not feel bad at all. When I first learned of the FIRE concept, I read all that I could find, kept reading, and kept reading. It is very much like drinking through a fire hose at first but it will get easier. Also, I found that had to 'unlearn' many things about finances leading me to re-read some things and get a better understanding of it the second or third time around.

Here are a few articles that I have found very helpful:

Savings Rate - http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/


Tax Rate Planning- https://blog.personalcapital.com/financial-planning-2/average-american-pay-no-taxes/


Roth IRA Laddering - http://rootofgood.com/roth-ira-conversion-ladder-early-retirement/

I liked the personal capital link, thanks for that! Hadn't seen it before.

[maizefolk]

If you are spending only 25K per year you only need $625K to cover that. You were calculating that you needed $2M.

You are also assuming that your income is fixed, which it is probably not. I'm betting that you can find ways to improve that over time.

This.

You want to save 25x your spending  ($625k) to have enough to live on a 4% withdrawal rate, not 25x your pre-tax income ($2M). This also means that if you find a way to save $30k/year instead of $25k it has a double effect since you'll save more money every year, but also reduce your sending and hence how much you'd need in retirement.
 
Folks are making very use other points about how you can increase your savings rate (pre-tax 401k contributions which yes, you can access before conventional retirement age), and the power of compounding returns, but I think PaulMaxime has hit the nail on the head as far as the original misunderstanding.

[MDM]

I thought you can't touch your 401k until you're 62?

See http://forum.mrmoneymustache.com/investor-alley/how-to-withdraw-funds-from-your-ira-and-401k-without-penalty-before-age-59-5/.

[microscopes]

If you are spending only 25K per year you only need $625K to cover that. You were calculating that you needed $2M.

You are also assuming that your income is fixed, which it is probably not. I'm betting that you can find ways to improve that over time.

I should have clarified. My fault.

I can't spend only $25,000 per year. My FIXED bills (mortgage etc) is more than that.

I was saying, even if I could do that, I still couldn't figure out how the math would work.

I'm starting to learn more so thank you to everyone for the links.

Looking at my 401k this year. It's increased very very little.

[MDM]

Looking at my 401k this year. It's increased very very little.

And it is likely that in some years it will actually decrease in value - maybe significantly.  That is why it can be unwise to put money needed "soon" (e.g., within 3 years) into equities.  Over longer times, however, it is likely that good investments will increase in value.

[arebelspy]

If you are spending only 25K per year you only need $625K to cover that. You were calculating that you needed $2M.

You are also assuming that your income is fixed, which it is probably not. I'm betting that you can find ways to improve that over time.

I should have clarified. My fault.

I can't spend only $25,000 per year. My FIXED bills (mortgage etc) is more than that.

I was saying, even if I could do that, I still couldn't figure out how the math would work.

I'm starting to learn more so thank you to everyone for the links.

Looking at my 401k this year. It's increased very very little.

Well post what you do make and spend, your actual numbers, and we may be able to make some suggestions.

Play around with the networthify calculator here, too: http://networthify.com/calculator/earlyretirement

[PaulMaxime]

If you are spending only 25K per year you only need $625K to cover that. You were calculating that you needed $2M.

You are also assuming that your income is fixed, which it is probably not. I'm betting that you can find ways to improve that over time.

I should have clarified. My fault.

I can't spend only $25,000 per year. My FIXED bills (mortgage etc) is more than that.

I was saying, even if I could do that, I still couldn't figure out how the math would work.

I'm starting to learn more so thank you to everyone for the links.

Looking at my 401k this year. It's increased very very little.

This year was flat in the market. This is a good thing since you are continuing to buy at a 'low" price. The ideal situation for anyone adding funds to the market is for it to stay low while they save and to go up before they need it. So don't worry about stagnant markets for one year. I expect we'll have several years over the next couple decades where the market drops 20-30% or more in a year. This is of no concern to an overall plan.

As you pay more attention to how you save and where you spend your ratios will inevitably improve.

But don't be discouraged by one flat year in the market. In fact, you need to be ready for sizable swings in value from year to year. Just remember that it always comes back. Always.

[Tetsuya Hondo]

I can't spend only $25,000 per year. My FIXED bills (mortgage etc) is more than that.

Looking at my 401k this year. It's increased very very little.

Don't say can't. There's always a way. You just haven't found them yet. But, that's ok. It's a journey. Stick around. Keep reading. You'll get more ideas. When I first started trying to trim my expenses some years ago, I took a look at all my expenses and found how to save $200 a month. I didn't think it was possible to go below that. Post-MMM, I've now figured out how to trim over $2k a month.

As for the 401k, nobodies 401k increased much this year. That's how the markets go. Some years up, some years down, some years flat. But, on average, it tend to go up. Historically, 7% is a pretty conservative estimate depending on what's in your 401k.

[MDM]

...do the math to make it work for me, it doesn't work out.
$80,000 salary ... $50,000 take home pay after paying health insurance.

I can't spend only $25,000 per year. My FIXED bills (mortgage etc) is more than that.

Perhaps you are having way too much tax withheld from your pay?  Yes, you get it back in April but it would be better to keep it during the year and invest it.

See below for some quick estimates.  You can download a template for these calculations - and get good suggestions on case study post format - at http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-%27case-study%27-topic/.

Category	Monthly	Comments	Annual
Salary/Wages for earner #1	$6,667		$80,000
Pretax Health Ins.	$400		$4,800
FICA base salary/wages	$6,267		$75,200
Federal Total Income	$6,267		$75,200
Federal tax	$873	2015 rates, S, item. ded., 1 exempt.	$10,478
State/City tax	$379	Guess, using 7.00% * Fed. Taxable	$4,543
Soc. Sec.	$389	Assumes 1 earner paying	$4,662
Medicare	$91		$1,090
Total income taxes	$1,731		$20,774
Income before other expenses	$4,536		$54,426

Filing Status	1	1=S, 2=MFJ, 3=HOH
# Exempt.	1
	Earner #1
Ages	30
# of earners	1
Total Income	$75,200
Std. Deduct.	$6,300
Act. Deduct.	$12,463
Exemption	$4,000
AGI	$75,200
MAGI	$75,200
Taxable	$58,737
1040 Tax	$10,478
Saver's credit	$0
Tax after n-r credit	$10,478
Child Tax Cred.	$0
EIC	$0
Net Tax	$10,478
Monthly	$873
Mtg. Int. (approx.)	$7,920
State tax	$4,543	7.00%
Item. Deduct.	$12,463
Version	V7.05

Loans:	Orig. Prin.	Orig. Length	Curr. Prin.	Yrs left	Rate
Mortgage	$200,000	30	$200,000	30	4.000%

[microscopes]

If you are spending only 25K per year you only need $625K to cover that. You were calculating that you needed $2M.

You are also assuming that your income is fixed, which it is probably not. I'm betting that you can find ways to improve that over time.

I should have clarified. My fault.

I can't spend only $25,000 per year. My FIXED bills (mortgage etc) is more than that.

I was saying, even if I could do that, I still couldn't figure out how the math would work.

I'm starting to learn more so thank you to everyone for the links.

Looking at my 401k this year. It's increased very very little.

Well post what you do make and spend, your actual numbers, and we may be able to make some suggestions.

Play around with the networthify calculator here, too: http://networthify.com/calculator/earlyretirement

Ok here you go.

$50,000 take home pay.

$1,600 mortgage payment ($170k mortgage - Balance $165k)
$300 second mortgage payment on rental property ($100k home - Balance $25k)
$400 car payment ($8k and 22 months left on loan)
$300 credit cards payment per month (paying off old debt - not using cards anymore)
$600 groceries per month
$100 gas and electric
$100 fuel for cars

Total fixed payments: $3,500 per month.

Rental property brings in $1,100 rent - $300 mortgage - $450 taxes - $115 insurance = $330 net profit.

I've tossed around the idea of selling the investment property. I'd get around $55,000 after mortgage payoff and fees if I sold it.

[microscopes]

...do the math to make it work for me, it doesn't work out.
$80,000 salary ... $50,000 take home pay after paying health insurance.

I can't spend only $25,000 per year. My FIXED bills (mortgage etc) is more than that.

Perhaps you are having way too much tax withheld from your pay?  Yes, you get it back in April but it would be better to keep it during the year and invest it.

See below for some quick estimates.  You can download a template for these calculations - and get good suggestions on case study post format - at http://forum.mrmoneymustache.com/ask-a-mustachian/how-to-write-a-%27case-study%27-topic/.

Category	Monthly	Comments	Annual
Salary/Wages for earner #1	$6,667		$80,000
Pretax Health Ins.	$400		$4,800
FICA base salary/wages	$6,267		$75,200
Federal Total Income	$6,267		$75,200
Federal tax	$873	2015 rates, S, item. ded., 1 exempt.	$10,478
State/City tax	$379	Guess, using 7.00% * Fed. Taxable	$4,543
Soc. Sec.	$389	Assumes 1 earner paying	$4,662
Medicare	$91		$1,090
Total income taxes	$1,731		$20,774
Income before other expenses	$4,536		$54,426

Filing Status	1	1=S, 2=MFJ, 3=HOH
# Exempt.	1
	Earner #1
Ages	30
# of earners	1
Total Income	$75,200
Std. Deduct.	$6,300
Act. Deduct.	$12,463
Exemption	$4,000
AGI	$75,200
MAGI	$75,200
Taxable	$58,737
1040 Tax	$10,478
Saver's credit	$0
Tax after n-r credit	$10,478
Child Tax Cred.	$0
EIC	$0
Net Tax	$10,478
Monthly	$873
Mtg. Int. (approx.)	$7,920
State tax	$4,543	7.00%
Item. Deduct.	$12,463
Version	V7.05

Loans:	Orig. Prin.	Orig. Length	Curr. Prin.	Yrs left	Rate
Mortgage	$200,000	30	$200,000	30	4.000%

Your calculations were very close.

Problem is, I'm paying $11,400 per year for health insurance. $950 per month.

[MisterTwoForty]

A few suggestions:

1) sell the rental.  If you can net $55,000 after fees, its needs to go.  Your pay back period to keep it would be almost 14 years if you did not pay off the mortgage on it. 

2) Look for lesser expensive health care.  Your state exchanges may be an option.  $950/month on your income is too much.

3) Cut back your grocery budget.  Try to spend about half of that - go to the envelope system.

4) Is obvious - pay off or get rid of the car.  No car payments - ever.  Also, close the credit card account and pay it off. 

That'll save you quite a bit.  I also think you have a big too much house for your income level.  38% of your take home pay is too much.  Save even more here if you down size.  Or, take the $55K you net from the house as a downpayment and refi to lower your payment.

[dandarc]

Sell the rental.  You're only clearing $330 / month, and ignoring maintenance and vacancy and such.  That's not good cash flow.  With $55K, you can payoff your car, and still have $47K left.  Would that clear your CC debt?  If so, you've cut your 'fixed expenses' by $1K per month in one fell swoop.  Even if not, you can pay off a big chunk of what I'm imagining is high-interest debt.

[microscopes]

Would you guys put it on my existing mortgage and Redon to lower the payment?

Or just put it against principal?

Or something else?

[Bracken_Joy]

Would you guys put it on my existing mortgage and Redon to lower the payment?

Or just put it against principal?

Or something else?

You mentioned CC debt? What interest rate?

You're probably looking at:
Pay down CC, pay down car, THEN work on mortgage.
Let the math do the work for you.

The overall plan I see around a lot is this:

WHAT
0. Establish an emergency fund to your satisfaction
1. Contribute to 401k up to any company match
2. Pay off any debts with interest rates ~5% or more above the 10-year Treasury note yield.
3. Max HSA
4. Max Roth or Traditional IRA based on income level
5. Max 401k (if 401k fees are lower than available in an IRA, swap #4 and #5)
6. Fund mega backdoor Roth if applicable
7. Pay off any debts with interest rates ~3% or more above the 10-year Treasury note yield.
8. Invest in a taxable account with any extra.

WHY
0. Give yourself at least enough buffer to avoid worries about bouncing checks
1. Company match rates are likely the highest percent return you can get on your money
2. When the guaranteed return is this high, take it.
3. HSA funds are totally tax free when used for medical expenses, making the HSA better than either traditional or Roth IRAs.
4. Rule of thumb: trad if current marginal rate is 25% or higher; Roth if 10% or lower; flip a coin in between
5. See #4 for choice of traditional or Roth for 401k
6. Applicability depends on the rules for the specific 401k
7. Again, take the risk-free return if high enough
8. Because earnings, even if taxed, are beneficial

[bacchi]

$1,600 mortgage payment ($170k mortgage - Balance $165k)

What's your rate? I assume you have PMI? You need to get rid of it (after CC and car debt, probably). That's a hefty PITI for $170k.

$600 groceries per month

?? This is for one person? Are you shopping exclusively at Whole Paycheck? Is your salt hand picked by Oompa Loompas? You can get this to $300 easy.

[Peony]

If you're one person living in a whole house, could you rent out a room for awhile? The extra income could help you knock out the car payment and credit cards. You might even find you like the company.

[letired]

I'm also single and make about as much as you My baseline goal for the coming year is to save $30k (max 401k + company match + max tIRA + max HSA +  playing savings chicken with post-tax savings). My ultra stretch goal is to hit $40k, which could happen now that I have a roommate.

It can be done! It takes paying careful attention to expenses and taking advantage of the pre-tax savings opportunities available to you.

Also, cultivating an attitude of abundance and thankfulness. I'm making 80k a year?!?!?! THAT IS A LUDICROUS AMOUNT OF MONEY (relative to my past salary history). For the salary negotiation, I had to practice saying that number with a straight face.

[kathrynd]

Keep the rental.Pay off all personal debt asap.

Reduce your expenses..$600 is a lot for groceries...unless you are feeding 8 people?
Try to find 0% balance transfers for the credit cards and car loan.


on an income of 29K...and 3 teenage boys living at home
In 2004 my husband and I bought our first rental property.
2005 we bought our first apt building (11 unit)
then we just kept on buying and developing more properties.
In 2010, employed income was given up....and we live solely off rent....at the age of 46 &50

Yes, we are still paying off mortgages.
We have everything we want and need.
We will be debt free in about 10 years....or less.

[microscopes]

$1,600 mortgage payment ($170k mortgage - Balance $165k)

What's your rate? I assume you have PMI? You need to get rid of it (after CC and car debt, probably). That's a hefty PITI for $170k.

$600 groceries per month

?? This is for one person? Are you shopping exclusively at Whole Paycheck? Is your salt hand picked by Oompa Loompas? You can get this to $300 easy.

5.125

Really gotta re-finance that for a lower rate. Yes, I have PMI as well.

Nope, family of 5. Plus a dog and a cat.

I am the sole income in the house though.

[microscopes]

Keep the rental.Pay off all personal debt asap.

Reduce your expenses..$600 is a lot for groceries...unless you are feeding 8 people?
Try to find 0% balance transfers for the credit cards and car loan.


on an income of 29K...and 3 teenage boys living at home
In 2004 my husband and I bought our first rental property.
2005 we bought our first apt building (11 unit)
then we just kept on buying and developing more properties.
In 2010, employed income was given up....and we live solely off rent....at the age of 46 &50

Yes, we are still paying off mortgages.
We have everything we want and need.
We will be debt free in about 10 years....or less.

Kathy, that's fantastic.

My rental property is a single family home and I've always said if I go into real estate again, I want a multi unit complex.

How did you get a loan for a 11 unit complex on only $29K salary. I figured the bank wouldn't approve such a loan.

[MDM]

Your calculations were very close.

Problem is, I'm paying $11,400 per year for health insurance. $950 per month.

family of 5.

I'm back to "you are withholding way too much" as the only way going from $80K gross to $50K take-home (after tax and insurance only) made sense was at single rates.  MFJ with 5 exemptions (and eligible for child tax credit also?) makes a big difference.

Really might be helpful if you filled in the case study spreadsheet, if only for your own purposes.  If you are comfortable doing so, posting those numbers here will help the audience understand your situation better and thus give better suggestions.

[horsepoor]

If you're one person living in a whole house, could you rent out a room for awhile? The extra income could help you knock out the car payment and credit cards. You might even find you like the company.

With a family of 5, I might change my tune, but reading this thread I was wondering if you could sell your main residence and move into the rental?

If not, you need to re-fi and get out of PMI and get a lower interest rate on your home.  We have a very similar mortgage and it's just a hair over $1,000, so yours is ridiculous unless you've got crazy property taxes.

As far as your original question about attaining FIRE - recalculate your annual spend without car payments, credit card payments, and with a new mortgage payment, and you'll probably be much more pleased with the results.  Also, those kids won't be in the house forever, so remember that your expenses will change eventually.

Selling the rental, getting into cheaper cars without payments and refinancing your home could put you in a much more favorable position almost immediately (some people will say keep the rental, and that's fine, but it always felt like a huge liability when we owned one due to the possibility of giant repair bills, vacancies, legal fees and whatever else).

[teen persuasion]

$1,600 mortgage payment ($170k mortgage - Balance $165k)

What's your rate? I assume you have PMI? You need to get rid of it (after CC and car debt, probably). That's a hefty PITI for $170k.

$600 groceries per month

?? This is for one person? Are you shopping exclusively at Whole Paycheck? Is your salt hand picked by Oompa Loompas? You can get this to $300 easy.

5.125

Really gotta re-finance that for a lower rate. Yes, I have PMI as well.

Nope, family of 5. Plus a dog and a cat.

I am the sole income in the house though.

Ok, this changes my view of things (vs single).  Income taxes are obviously not the issue that I'd thought.  Most of your so-called fixed expenses are only temporary - the car payment ends in 22 months, the credit cards will get paid off, and PMI should eventually go away.  You can just wait them out, or move to aggressively pay them down and eliminate them early.  You can refinance, soon, since rates are rising.  You can work to cut other expenses, like the food.

You are not too poor.  Last year was the first year our combined income reached $50k.  We have 5 kids.  Our mortgage rate was 9.75%.  We paid it off 15 years early, at a time when DH was the sole earner and made $35k max.  During that time frame, DH was also unemployed and went back  to grad school for a career change (little income, new student loans).

I gradually learned how saving for retirement affects tax credits when you have kids at home, and learned to use them to our advantage.  Putting more in DH's 401k not only lowered our taxes, but increased our refundable credits (which our state partially matches).  I used those refunds to rapidly pay down our mortgage, due to the ugly rate.  As we eliminated other expenses, I gradually increased his 401k contributions, increasing the refunds, snowballing things.  By the time the mortgage was gone, we changed DH's 401k contributions to 50%, and redirected the refunds to funding Roth IRAs for both of us.  As oldest was beginning college, I also learned how retirement contributions affect financial aid (it's complicated).  Now 3 kids are out of the house/ off our taxes, and the child tax credits are winding down for us.  Having children at home under 17 is a finite window of opportunity, use it well. 

[Teacherstache]

Ok here you go.

$50,000 take home pay.

$1,600 mortgage payment ($170k mortgage - Balance $165k)
$300 second mortgage payment on rental property ($100k home - Balance $25k)
$400 car payment ($8k and 22 months left on loan)
$300 credit cards payment per month (paying off old debt - not using cards anymore)
$600 groceries per month
$100 gas and electric
$100 fuel for cars

Total fixed payments: $3,500 per month.

Rental property brings in $1,100 rent - $300 mortgage - $450 taxes - $115 insurance = $330 net profit.

I've tossed around the idea of selling the investment property. I'd get around $55,000 after mortgage payoff and fees if I sold it.

If I'm reading this right, it looks like you are paying $450 taxes per month on a $100K rental property. Is this right? If so, I would definitely get out by selling.

[kathrynd]

Keep the rental.Pay off all personal debt asap.

Reduce your expenses..$600 is a lot for groceries...unless you are feeding 8 people?
Try to find 0% balance transfers for the credit cards and car loan.


on an income of 29K...and 3 teenage boys living at home
In 2004 my husband and I bought our first rental property.
2005 we bought our first apt building (11 unit)
then we just kept on buying and developing more properties.
In 2010, employed income was given up....and we live solely off rent....at the age of 46 &50

Yes, we are still paying off mortgages.
We have everything we want and need.
We will be debt free in about 10 years....or less.

Kathy, that's fantastic.

My rental property is a single family home and I've always said if I go into real estate again, I want a multi unit complex.

How did you get a loan for a 11 unit complex on only $29K salary. I figured the bank wouldn't approve such a loan.

I was the sole income earner at the time...
Husband was stay at home dad, which you need with teenagers. Daughter was already on her own.
We found this 11 unit property, which the owner didn't care about and was half empty. The trick is  to find 'problem' properties.
I started working all the overtime at work I could (extra 32 hrs each week)
You're right, banks wouldn't lend to us,but the OT now helped increase my income.
We had almost the required down payment...but not quite.

After 8 months of going to banks and mortgage brokers, we finally found a MB who was willing to take a chance on us...and the vendor was also willing to hold a small second mortgage, to make up the difference of the downpayment.

After we bought the building, we started painting, cleaning etc..to get this property rented.
Within a year, the value increased 30%. We withdrew this money, and withdrew all the equity from our personal house.
Used this money to fund down payments on other rental  properties.

One property we bought, was a BIG house, with lots of rooms. We developed it into another 11 unit bachelor apt building. (furnished, all inclusive units)...always full.

Another property we bought was a cheap older mobile on its own land. CHEAP !!!. We are doing a rent to own with the tenant...we will make 4x+ profit ...it funds other projects.

One property had a house on it and 4 older mobile homes. The mobiles, according to the bank, had no value. Except, they brought in more money, than I earned working at my job. I quit after doing a practice year, of living off rental income.

Other properties we have purchased using a credit card.
If you are able to do most of the work yourself (cleaning, painting, etc) go after properties, no one else wants. That is where you Make the Money.

[microscopes]

Ok here you go.

$50,000 take home pay.

$1,600 mortgage payment ($170k mortgage - Balance $165k)
$300 second mortgage payment on rental property ($100k home - Balance $25k)
$400 car payment ($8k and 22 months left on loan)
$300 credit cards payment per month (paying off old debt - not using cards anymore)
$600 groceries per month
$100 gas and electric
$100 fuel for cars

Total fixed payments: $3,500 per month.

Rental property brings in $1,100 rent - $300 mortgage - $450 taxes - $115 insurance = $330 net profit.

I've tossed around the idea of selling the investment property. I'd get around $55,000 after mortgage payoff and fees if I sold it.

If I'm reading this right, it looks like you are paying $450 taxes per month on a $100K rental property. Is this right? If so, I would definitely get out by selling.

That's correct. $450 per month in taxes. Welcome to NYS!

We pay $683 per month in taxes on our primary residence.

[MrsPete]

$50,000 take home pay.

$1,600 mortgage payment ($170k mortgage - Balance $165k)
$300 second mortgage payment on rental property ($100k home - Balance $25k)
$400 car payment ($8k and 22 months left on loan)
$300 credit cards payment per month (paying off old debt - not using cards anymore)
$600 groceries per month
$100 gas and electric
$100 fuel for cars

Total fixed payments: $3,500 per month.

Here's why you're not getting ahead: 

- You're spending 45% of your take-home pay on your two mortgages.  This is too much.
- You're spending 12% of your take-home pay on transportation.  Again, too much, and you didn't mention insurance or maintenance. 
- You're spending 7% on things you used last year or the year before (credit card bill -- I hear you saying that you're not using it anymore, but you still have to finish paying for those meals you ate and clothes you bought in the past.). 
- You're spending 15% on food -- is this all groceries, or does it include eating-out? 

Short and simple:  You're over spending on all these things, and that's why you have no money left to save.  True, the majority of Americans would say you're spending within your means ... but the majority of Americans aren't even trying to save. 

[teen persuasion]

Ok here you go.

$50,000 take home pay.

$1,600 mortgage payment ($170k mortgage - Balance $165k)
$300 second mortgage payment on rental property ($100k home - Balance $25k)
$400 car payment ($8k and 22 months left on loan)
$300 credit cards payment per month (paying off old debt - not using cards anymore)
$600 groceries per month
$100 gas and electric
$100 fuel for cars

Total fixed payments: $3,500 per month.

Rental property brings in $1,100 rent - $300 mortgage - $450 taxes - $115 insurance = $330 net profit.

I've tossed around the idea of selling the investment property. I'd get around $55,000 after mortgage payoff and fees if I sold it.

If I'm reading this right, it looks like you are paying $450 taxes per month on a $100K rental property. Is this right? If so, I would definitely get out by selling.

That's correct. $450 per month in taxes. Welcome to NYS!

We pay $683 per month in taxes on our primary residence.

$5400 in taxes on a $100k home?  Our taxes are maybe $3500 and we're assessed ~ $100k+, also NYS.  Yikes!

[JLee]

Refinance the car via Penfed @ 1.99%. I also agree with selling the rental property if you're only pulling $330/mo net out of it (and if you'll end up with $55k when you're done).

[Bearded Man]

Relocation seems like a good move for FIRE. Unless you have something really tying you down somewhere, it makes no sense to plan on retiring in a HCOL area. By all means, live and accumulate in one. Let that house appreciate, but retire to a LCOLA. I can rent an entire house with utilities included in a nice small town with everything I need, for what I would pay in taxes and insurance alone on my primary residence.