Sara wants to leave her job to spend time with her children, and she needs help in calculating her FIRE number. But is this possible?
Aisha is moving to the US and wants to start investing ASAP – how should she approach her goal to reach FIRE?
Joe is buying his first house hack and would like to understand if the FHA loan or the doctor loan would be better for him.
Kat received a windfall and is wondering if she should invest it in stocks, real estate, or a combination of both.
Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
Sara asks (at 04:12 minutes): I have three young kids and have very limited time with them because of my job.
I’m working towards leaving my job, so I can spend more time with my kids, relocate to a lower cost of living city, and so that I can find a job that is more meaningful and flexible.
My plan is to leave my job within a couple of years and take some time off to unwind, settle into our new home and figure out what I want to do next.
I would like to work again – I want a job where I can work in between taking the kids to school, and that allows me to take a couple of weeks off or work remotely during the kids’ breaks. I’m not sure if the kind of job I want exists or how much it will pay, so I’m trying to figure out how much I need to never have to work again.
I know the 4% rule, but I don’t expect to have the same cost every year. And the differences are pretty big.
I have some student loan debt that I don’t want to pay off early because it’s at a very low rate. I also have to pay for my kids’ school until they’re old enough to start public school. These two expenses add about $5,000 per month now, but will be done in three years.
My mortgage will be paid off in 28 years max, and I want to pay for my kids’ college if they go in about 15 years.
I’ve heard you and Joe talk about buckets of money for these different times – how does that actually work when I’m trying to find my exact FIRE number? I’m at about $1.8 million now, the 4% rule says I need $3.6 million now with school and student loans for the next three years.
Then, my fire number drops to $2.1 million with a mortgage, and then to $1.2 million after my mortgage is paid off. But these numbers don’t include my kids’ college.
If I think about college as a bucket, I know I can save $500 a month to have the exact amount I want for my kids’ college.
But how does this work with the 4% rule? And which 4% number should I use? I’m assuming it’s going to be somewhere between $1.2M with no mortgage and $2.1M with mortgage, but I’m not really sure how I can calculate my exact FIRE number.
Aisha asks (at 26:27 minutes): I’m a 31-year-old nurse from London, moving to the US in a few months.
I have a private pension, £40,000 in liquid savings, and about six months worth of living expenses in an emergency fund. I also have about £10,000 invested in index funds.
When I get to the US, I’ll be making around $80,000 initially, moving up to $130,000 within two years, and by year five, it will be about $170,000.
I also have a side hustle that earns around $30,000 a year, working remotely about five to 10 hours a week, and with no requirement to do more or less.
I have around £70,000 in student loan debt, but in the UK, there is no pressure to pay it back right away as it doesn’t affect your day-to-day life, credit, or salary. I don’t have any other debt.
I was hoping to reach FIRE by 45 with about £60,000 a year to live comfortably, which I was on track for. That was based on my life in the UK, where we also receive a state pension, free health care, and the cost of living is just lower in general.
I am, however, still comfortable with the $60,000 figure to reach FIRE, however.
Do you have any advice on what priorities should be right away? Is my goal achievable or do I need to change my goal?
Joe asks (at 40:00 minutes): I’m looking for some guidance on some options to acquire my first house hack and I’m torn between two loan types.
I’m 28, my portfolio is good in all other asset types, crypto, physical metals, stocks, mutual funds, and now I want real estate. I’m able to save about $1,500 a month after paying rent and after saving 20% of my income for retirement.
My long term goal is to not need my job by 40.
My short term goal is to acquire a two to four unit house hack.
If I don’t hate being a landlord, I’d repeat the process. By 45, I’d like to cash flow about $3,000 a month.
I’d also like to aggressively pay a small amount of properties off. I’d rather own them outright than keep acquiring more doors and more loans.
The two loan options I have are FHA versus a doctor loan. The FHA is a 30 year fixed and the doctor loan is a seven or 10/6 ARM: 10 years fixed, and then it would adjust every six months.
I only have about $15K in cash, so I want a low money down option and I’m leaning towards the doctor loan because the overall monthly payment is $250 lower, there’s no PMI and I get a better rate by about a quarter to a half a point. I’d really love your advice here.
Kat asks (at 55:02 minutes): My question has to do with the decision around investing money into my retirement account, versus getting started in real estate investing.
I currently only have $20,000 in index funds across traditional and Roth IRAs. I have $18,000 in an emergency fund to act as a buffer during my slow months, to cover about four to five months of expenses. I currently rent my home, which I love. My only debt is a $23,000 car loan, at 3.99% interest.
I have another $20,000, which I received in a windfall, and I’m not sure where to put that $20,000.
I could throw it all into my retirement accounts, or I could use it towards a down payment for my first investment property, and use that as a short-term rental. The income from this property could be saved for another down payment towards a second investment property, or put the proceeds into my retirement accounts.
Is being focused on index fund investing or real estate investing better, or is doing a blend of the two ideal?
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