Hey I bought a house as an investment - it came with 18 acres of land and shares of irrigation water. I can subdivide (fuck that) or start some small scale agricultural enterprise like dried flowers or local veggies for some side money.
The Financial Fitness Thread
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I'd bet his mtge has a 4% rate currently. 4% > 2.5% on a 30yr $400k mtge will be $330 less per month. If you were to go from a 30 > 15 and drop 2%+, that would also make sense.
That sounds like an agricultural property...
Running the numbers a little more half that value comes from taking out a 30 year mortgage after already paying off 15% or so of the original amount. If I were to refinance and maintain current payment levels, I would pay it off 4 years faster. Which would be the ultimate goal. Not willing to increase my monthly liability with a 15 year and 20 year loans seem to have higher rates
It used to be rural ag land but has been passed by residential development. It rides the fence and could go either way - houses or agriculture. About 9 acres is useable for farming. 9 acres on the edge of town is not good for much in the local ways of conventional ag. Plenty of land for a vertically integrated small hippie farm of some sort. When we were wrangling the sale, a pair of doc's from Seattle fought hard and lost. They wanted to turn the home into and office/tasting room and plant grapes around it. They were desperately trying to get it from us. Haha, local bicycle community vetted me from the beginning.
With rates that low, I tend to push towards investing the spread instead. I look at it as making better use of the funds. Inflation has averaged around 2.5% the last 30 years. If you can get a loan at that rate, it's in your advantage to let someone else eat the loss of value (inflation in a fixed investment) while you take the spread on the investment vs. cost of the mtge.
I used to be very gung-ho about retiring early. But now I'm less so as my schedule is pretty sustainable.
Instead my current project now that I've made my garage sane (and paid off!) is paying down the loan for the extra solar on my house and then buying a second house near-ish to Winter Park around the time the solar loan is gone. I think my family's quality of life would be positively impacted by having a place we can spend basically every weekend at, both during ski and summer activity seasons, and that this would be better overall than, say, dropping to 0.8 FTE at work.
I don't think we'd rent it out regularly because my fear of having it trashed is great.
So as to preserve liquid cash in my slush fund I'm going to look into 10% down doctors loans for second houses in about March or April. (These do exist, much more rare than the low-down loans for primary residences. Doctor loan == no PMI, with a marginally worse rate than for a conventional loan.)
Instead my current project now that I've made my garage sane (and paid off!) is paying down the loan for the extra solar on my house and then buying a second house near-ish to Winter Park around the time the solar loan is gone. I think my family's quality of life would be positively impacted by having a place we can spend basically every weekend at, both during ski and summer activity seasons, and that this would be better overall than, say, dropping to 0.8 FTE at work.
I don't think we'd rent it out regularly because my fear of having it trashed is great.
So as to preserve liquid cash in my slush fund I'm going to look into 10% down doctors loans for second houses in about March or April. (These do exist, much more rare than the low-down loans for primary residences. Doctor loan == no PMI, with a marginally worse rate than for a conventional loan.)
This is pretty much the approach my wife and I take now, and it's served us pretty well, with my income being the "primary" income. Our emergency fund is also structured around the expectation that if anyone is going to lose their jobs, it's also me. I remember when we bought our first house in WA, being absolutely blown away by the lenders attempts to just bury us in a loan that GREATLY eclipsed what we were actually trying to get. This was 2003 IIRC. When we moved here in 2005, again the experience was the same, but we stuck to our "model" of my income only, and praise the @FSM we did.
When I got hit in 07, it's fair to say that the wife and I were not too financially savvy, and we only wound up not being in a pile of debt and/or evicted through sheer dumb luck, the generosity of my coworkers vacation time contributions, and a pretty good short term disability plan. That experience left us horribly paranoid about our household debt, not that we had any sort of credit card debts or anything of that sort, but car payments, mortgage, etc. It's been mentioned already in this thread, but our "goals" have been different from others in that our primary consideration in terms of savings and such has been to eliminate or mortgage, first and foremost. I recognize that what we are doing isn't "smart money" or "putting our money to work," but not worrying about keeping a roof over our heads is our goal. Wife thinks were 12 months away from having cash on hand to pay off the mortgage, I think 18 is probably more realistic, but either way, we are close.
Elsewise, I'm not maxing out 401k (and roth) contributions yet, but I'm also contributing more than twice what my employer matches, and we save a decent chunk of cash every month into a general slush fund. What we do after the mortgage is gone is still the subject of debate, but the general plan is maxing out the things we can max out, saving more for kid college fund, and perhaps a foray out into the investment world beyond things we get through work. Perhaps we rent the house out and move someplace else, perhaps an A frame up in the hills, perhaps none of the above.
It's my plan to keep "working" at the airline so long as we are obligated to feed and shelter a kid and perhaps put her through college. As @stoney said, I'm of the opinion that the wife and I come first, and while I'm certainly going to help in every way we can, we also aren't going to take on debt to finance said higher education for the woman-child. Obviously not having a mortgage goes a long way in that particular endeavor. The other kicker of course is health care coverage, and will probably be what keeps me at what ever the bare minimum hours to be considered "full time employee" are, at least until I can qualify for Medicare and Social Security.
That's been our approach, it was going well until wife lost her job in April to COVID's. We've always had the desire to not have debt, no credit card interest, no car payment etc. Hopefully as she gets spun up again we'll be in a similar 18 month window to lose the mortgage.
Yeah, COVID really put us into "panic mode" when it came to paying down the mortgage. My employer has returned to about 70% of its pre-COVID flying levels, so I'm probably okay in terms of "remaining employed", but the fear was real. The three month furlough I took also really drove home how much I don't want to work, as soon as I can.
I looked at Betterment this morning and cashed in on some of the irrational exuberance of the market, withdrawing enough to pay off the rest of the solar loan.
I'll start poking around for 10% down second house lenders soon and apply with them formally/look actively right around the end of ski season, when it is divulged how much our paid-end-of-April bonus will be. (Tax refund will hit around then as well, recalling that the big solar installation was this year @ 26% tax credit.)
Trying my damndest to do the same, but fuckin A its tough around here. I make 150% of the median income in the Boston area, which puts us solidly into the middle class, theoretically, but sub 400K homes can't be found within 30 miles of the city unless you want to live in an undesirable area or don't mind a sub-1000 sqft gut.
Even going west or into Southern NH offers little relief, as houses that were in the mid-200s last year are now in the mid to high 300s. Insane. Funny how well off we *should* be, yet aren't.
This is the new norm. Real estate is for investing, not living.
Stoney did a check with Ruth and gave her planning a thumbs up. We could retire today and keep our house and lifestyle. I get Medicare next year she has four more to go for that. We each have side work that we are winding down. I need more play time while I can still play hard.
If you can retire now I don't see why you're spending all your time driving around dialysis patients at the crack of dawn in a kevlar vest...
because Ruth says she is not going to Retire until she reaches 65 and she has made it abundantly clear that is she is working I am working. I know better than to argue with her.
That's stupid, imo. I don't imagine that she gets up at the hours you do, and she's certainly not working as she rides in the weekend horse shoes you're also at as an EMT...
She makes 5x what I make and provides me with a very comfortable lifestyle. Plus I like what I do, I'm good at it, and it's really easy work ( for me anyways). She's the boss of our partnership and I'm good with that.
To be fair, if we were moving here today, I doubt quite strongly we could do it. I suppose this is highly dependant on income and location, but if you're blue collar college drop out, the only places left were a family could survive on a single income with this airline are Fort Wayne or South Bend. We actually considered South Bend for a bit because we could have bought a nice place on acreage for cash with what we could have sold this place for, but then we realized we'd be living in either NW Indiana or SW michigan.
Oh and Toshi. She gets up at 4:30 to get on Conference calls to the Corporate HQ in the Netherlands. She works a way harder and more stressful job than I do. Something like 60 hours a week reviewing the corporations taxes in 3 different countries ( Federal , State, Provincial, as well as import/ export, VAT, asset depreciation, etc) coordinating with Tax firms and auditors. I can almost do my shit with my eyes closed
Ok. Just don't want you to get a bum deal.
I'm a little late to this thread but I'd have a pretty hard time seeing a path to retirement that didn't involve heavily investing. I only have a tiny slush fund for messing around with individual stocks or whatever, but accumulating enough cash without at least investing in index funds seems like an impossible task. Are you really just socking away cash in savings accounts?
For my own personal situation, I'm saving around 40% of my gross income. About half of that is some form of tax-advantaged or retirement-focused investment (generally using a 4-fund portfolio with ~85% equities). This last year, I've kind of hit some liquid savings goals that make me wonder what to do next; I'm maxed out on my tax-advantaged retirement accounts, my emergency fund has about 18 months of expenses (and I have no kids and no house, so that's probably dramatically higher than it needs to be), so all I'm doing now is shoveling it into a brokerage account that's tracking a slightly more conservative investment mix than my retirement funds.
Don't get me wrong, I feel really lucky to be in the financial situation I'm in, but I'm not sure what comes next. Landlording sounds like way too much work.
Build a greenhouse? Food security is overlooked... who has 18 months of dry goods stashed away?
Maxing out HSA contributions too? That's another place to park spare cash.
Either way, I dare say your position is an enviable one. Next up, IMO, is parking that money in dividend paying investments, using those to generate income, working towards reducing the number of hours required at a 9-5. Let that money buy your time back.
Do you have access to a HSA via a HDHP? That's another tax advantaged place to sock money into...
ETA: @Adventurous beat me to it by SECONDS, apparently.
Not sure that's gonna make sense for him, seeing as he doesn't own property.
I know it's paranoid, but the TP hoarding at the beginning of teh COVID is sort of what fueled our brief interest in my aforementioned South Bend relocation. I started thinking about food. 5-10 acres with no mortgage, a big garden, couple dozen chickens and a hog or three.......Not fool proof, but it would take the edge off if food supply got weird.
Then I realized I was mentally venturing into "prepper" territory.
My HSA is already maxed out, it's basically the first thing I fund after my employer-matched 401k contributions. I don't draw on it for medical expenses, just save my receipts in case I want to reimburse myself in the future.
Triple tax advantaged FTW.
I guess maybe I'm not as familiar with dividend stocks as I could be. My impression is that dividend vs. non-dividend stocks were basically a wash in terms of actual growth, so they made no difference for long-term savings, but could be advantageous once you start wanting to live off those investments (which makes sense for buying your time back if that's the immediate goal).
In the short term, cutting back work hours probably isn't in the cards. I've converted to full-time remote, so the job is affording me a tremendous amount of flexibility, I generally don't need to work outside of 9-5, and the income is good considering those two big perks. I'm definitely eying an early retirement, though.
I'm mostly just not sure if, right now, I could be doing something more efficient with money that's currently going into a taxable brokerage account.
Triple tax advantaged FTW.
I guess maybe I'm not as familiar with dividend stocks as I could be. My impression is that dividend vs. non-dividend stocks were basically a wash in terms of actual growth, so they made no difference for long-term savings, but could be advantageous once you start wanting to live off those investments (which makes sense for buying your time back if that's the immediate goal).
In the short term, cutting back work hours probably isn't in the cards. I've converted to full-time remote, so the job is affording me a tremendous amount of flexibility, I generally don't need to work outside of 9-5, and the income is good considering those two big perks. I'm definitely eying an early retirement, though.
I'm mostly just not sure if, right now, I could be doing something more efficient with money that's currently going into a taxable brokerage account.
Sounds like you could use a Financial Adviser. Make sure they are a fiduciary and fee-only. No commission bullshit or that sort of stuff. i.e. Stay away from Edward Jones.
Yeah, I was leaning that way.Sounds like you could use a Financial Adviser. Make sure they are a fiduciary and fee-only. No commission bullshit or that sort of stuff. i.e. Stay away from Edward Jones.
A decade ago I opened my first IRA with a financial advisor who sold me on a managed John Hancock fund. A lot of financial education later, I realized how ridiculous the costs were, between JH and the advisor. It wasn't an egregious recommendation - his percentage was nominal - but it's amazing how much money can get bled off your long-term retirement funds that way.
I never even considered an HSA, but looks like my $0 contribution and $300 deductible health plan doesn't allow me to qualify.
Dayum - you still apparently have an old-skool health plan. That's like a unicorn any more. I wonder how much the company is spending on that plan per month... I'd wager it's a *shitload*...I never even considered an HSA, but looks like my $0 contribution and $300 deductible health plan doesn't allow me to qualify.
For me it's great. $19/mo pre-tax premium contribution from me (employer picks up the vast majority). $6k/year in-network family out of pocket max. Then take the HSA contributions against my marginal rate and it's a no-brainer.I never even considered an HSA, but looks like my $0 contribution and $300 deductible health plan doesn't allow me to qualify.
Last year it cost my company $10k for my plan. That plan cost me $60/month. This year I went with a University of Washington plan which has no payroll deduction and I can't walk more than a few blocks without running into a UW health facility.
I'd rather have an old school pension instead.
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Man, that's pretty nice. Our health plan is decent - we have a high deductible plan, but the company directly funds half of the deductible into our HSAs every year. So if your healthcare costs are low or fall into the preventative category, the HSA contribution is just free money.
That said, the whole healthcare/insurance system is total fucking insanity, so I'd rather have a plan that just covers everything.