Plan ahead youngsters !!

[Ramsker]

I've been thinking a lot about this lately . . . approaching 50. We paid off the house 2 years ago and we have no debt at all. I have a 401k at work and have built up a decent chunk (I think) to this point and we've socked away a good amount in savings and in my Etrade account (after the company I work for was acquired and all my stock and ESPP shares vested and cashed out last year). But we have WAY too much tied up in cash at this point and I really want to get that money working for us now that we're at a more comfortable point and can get some additional investments going while still having enough in cash for whatever comes up.

My wife's job ended at the end of 2016 and so we're going to go single income again until the kids go to college in the next 3 years . . . then she'll look for work to help pay for that. But I'm getting a little weary of the rat race at this point. Would like to retire in the next 10 - 15 years if possible. We'll see how it goes.

[Honey Badger282.8]

I'm going through some end of life situations with a few family members right now and I'll add this, plan on having about $100k (2016 dollars) set aside for medical reasons at the end. My great-uncle recently passed at 93 and he was still going Jeeping and fishing up until about 3 years ago. He slowly declined until this past year when he needed around the clock care at the house before ultimately moving into a hospice for his last month. Thankfully he had more than enough saved in his estate for those costs.

My grandmother is another story, she is limited to VA survivor benefits and social security, right now she gets just enough to leave her with about $200 a month for miscellaneous expenses. She's living in a retirement community that provides very basic medical assistance and includes three meals a day. If and when her health declines further the financial burden will come down on the rest of the family.

[Irving]

Oh no, not sarcastic at all.

We made a very tough decision about a year ago, to have the wife stay at home with the boys. Between both of us commuting across town, and paying for daycare, along with my ever changing schedule due to the new job, it just made more sense.

We did lose some money, and have had to endure some financial stress living on one income, but in the long run I feel it's going to be for the best.

With my salary comes a pretty decent retirement, so your post was quite encouraging, as I haven't had much room to think about retirement.

Would you agree that living on one income is easier than you first thought because of the savings of your wife not working full time? No day care, less places to go, less miles on a second vehicle, easier to cook at home, more time to coupon, less stress of who can pick the kids up after school, etc?

[Firehaus]

I LOVE talking about finances and generating income. I don't give financial advice, but I do love to motivate people and help them understand the reality of money compared to the way society fools us throughout life. With that said, I'll provide another little tidbit of encouragement.

A lot (most?) people are suckered into these dumb ideas that they need millions of dollars before they can comfortably retire. A LOT of that is because everyone thinks they should be spending ungodly amounts on education (college) for their kids. The other part is because people think that their level of spending will be the same when they retire as it is now. A financial adviser is likely to tell you that a safe withdraw rate to live off of your saved money is 4%. This isn't false, I'm just laying the ground work here. If you tell that to someone who is middle aged and has a family, they start adding up their current monthly expenses...

Mortgage: $2,000
Car loans: $1,000
Utilities: $200
Cable/Internet: $150
Family cell phone plan: $300
Groceries: $1,000
Day care: $1,500
Credit card debt: $500
Student loans: $500

Just that "basic" stuff already lands you at $7,150 a month.
To find out the amount you need to save in order to withdraw 4% to provide your current monthly expenses, you multiply your monthly expenses by 300.
$7,150 x 300 = $2,145,000

You explain that to someone who is 35 and above and only has maybe $100,000 in a 401k from having worked for 20 years already and they're likely to have a heart attack.
It would take over 21 years of making $100,000 a year at a 100% savings rate to make 2.145 million dollars. Most people in the US may not ever even make 2.1 million dollars in their lifetime, let alone have 2.1 million dollars just from the extra amount of money they've saved here and there over their working career.

Back to what NFA guy said. If you can manage to eliminate your consumer debt (credit cards, auto loans, student loans), and be mortgage free by the time you retire you'll be in good shape.
Let's go back to that over simplified list of monthly expenses I provided earlier. Now you're whatever retirement age (completely up to you) and your kids are grown and out of the house. You made some important life choices and made sure that you paid off your mortgage, car loans, and student loans. The kids are out of the house, they have their own cell phone plan, you aren't paying for day care, and are only feeding and heating two people. Now the list looks like this.

Mortgage: $0
Car loans: $0
Utilities: $200
Cable/Internet: $150
Family cell phone plan: $100
Groceries: $500
Day care: $0
Credit card debt: $0
Student loans: $0

Monthly - $950

$950 x 300 = $285,000

This example is simplified, but not at all extreme.

They need a better financial planner. $2mil leveraged into real estate can get you close to $300k+ / year plus increase equity at the same time.

$600k could get you around $100k / year if you self manage the property.

All depending on the market and rental environment. Some markets you might get more for your money cash flow wise, but resale value wont be much of an increase.

Living below your means is always going to be easier than making more money.



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[hurley842002]

Would you agree that living on one income is easier than you first thought because of the savings of your wife not working full time? No day care, less places to go, less miles on a second vehicle, easier to cook at home, more time to coupon, less stress of who can pick the kids up after school, etc?

Absolutely, the biggest part being trying to figure out how to get the boys picked up, that was beyond stressful. Financially it's been a bit tougher, especially with rent going up, but it's been worth it to not have to worry about my schedule.

[Erni]

Firehaus or anyone else: what financial planners do you use? What is a good way to find and select one?

[Irving]

They need a better financial planner. $2mil leveraged into real estate can get you close to $300k+ / year plus increase equity at the same time.

$600k could get you around $100k / year if you self manage the property.

All depending on the market and rental environment. Some markets you might get more for your money cash flow wise, but resale value wont be much of an increase.

Living below your means is always going to be easier than making more money.

Are you interested in helping me with real estate questions if I have them? I recently came across what I thought could be a good deal on a rental on my local Nextdoor site (3 bed 1.5 bath condo in Thornton for $125,000), but after looking into it and driving by the property I don't think the numbers would work in my favor. I've owned multi-family before, and while I learned a lot, one property didn't make me an expert and I like to chat with active investors to keep me in line.

Absolutely, the biggest part being trying to figure out how to get the boys picked up, that was beyond stressful. Financially it's been a bit tougher, especially with rent going up, but it's been worth it to not have to worry about my schedule.

Excellent! I'm glad to hear it (even though I lost my contact at the only bank that would talk to me about the business I started. )

[Irving]

Firehaus or anyone else: what financial planners do you use? What is a good way to find and select one?

I'm currently working my way through Radical Personal Finance (guy used to be a financial advisor and quit to do his pod cast) and one of his sponsors is http://www.paladinregistry.com/
It sounds like it's a search tool to help you find a financial adviser that fits you.

*The other sponsor of that pod cast is YNAB (www.youneedabudget.com) for those who are familiar.

[Firehaus]

Are you interested in helping me with real estate questions if I have them? I recently came across what I thought could be a good deal on a rental on my local Nextdoor site (3 bed 1.5 bath for $125,000), but after looking into it and driving by the property I don't think the numbers would work in my favor. I've owned multi-family before, and while I learned a lot, one property didn't make me an expert and I like to chat with active investors to keep me in line.

Im just not a fan of single family rentals. Prefer multi-family, less risk I think. From tenant damage to appraisal on the sale end, I think multifamily wins.

But with anything, the deal is mainly won on the buy side. Buying right makes it so much easier to come out ahead. Some have been burned in multifamily by not either knowing what they were buying or having a bad broker shoe horn them inti a bad deal to get a commission.

Right now its not tough to sell, it very hard to find something to buy. Im selling my current place soon. At close to a 7% cap, it should go fast when I'm seeing 5.5%-6% caps on recent sales.

Pm me anytime.


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[Grant H.]

Firehaus or anyone else: what financial planners do you use? What is a good way to find and select one?

I can, and will, highly recommend Jordan Fuerst in Brighton.

He's done very well with my retirement account.

https://fuerstfinancial.website.raym.../jordan-fuerst
Fuerst Financial
36 S 18th Ave
Unit A
Brighton, CO 80601
T: 720.383.7780

I used to work with him in a different industry (wireless, he was a senior software engineer, I was the firmware test engineer), and he is very smart and driven.