“Barbara,” an anonymous caller from Episode 422, is struggling with a scarcity mindset. How does she stop worrying about the future and build the confidence to enjoy life now?
Samantha and her partner have lived out of their truck for 20 years. They sorta-kinda feel ready to buy a house and settle down. But they’re hesitating. What if they hate it?
An anonymous caller wants to retire and travel in 20 to 30 years. How does she know if she’s saving enough?
Trace plans to take a mini-retirement next year. Where should she keep her savings until then?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
P.S. Got a question? Leave it here.
Here are the details:
Barbara asks (at 01:06 minutes): (Follow-up response from Episode 422: “We’re Saving 72 Percent of Our Income and It Sucks”) Your thoughtful responses to my last call really got us thinking that we’re suffering from a deep-rooted scarcity mindset because of financial insecurity in our past.
My husband is experiencing burnout from running a business he can’t back away from, but I promise we’re not miserable.
We moved closer to the beach during Covid and I shifted to a career I enjoy. We lead a wonderful love-filled life surrounded by two sets of parents and an abundance of close friends.
While we’d be most comfortable waiting until the end of 2024 to increase our spending, I wonder if we’re still letting fear hold us back too much.
We’ve chosen to prioritize saving and investing because we don’t want to end up in the financial situations that our parents are in.
We want to help them out without sacrificing our own future. And we want to get to a point where we no longer feel stressed about money.
We’re on track to be “Coast FI” at the end of 2024, so we’ll no longer need to contribute to our retirement accounts at that point. We’ll also have a brokerage account with $400,000 in it.
We’re debt free, we have a meaty emergency fund and plenty of cash on hand for a reasonable down payment in our medium-cost-of-living area.
Our ultimate dream is to buy a piece of land with a house to live in and a converted barn for an event space.
That said, are we not prioritizing happiness enough? How can we build the financial and emotional confidence to take action now instead of waiting to enjoy more in the future?
Samantha asks (at 10:50 minutes): We’re in our forties and we’ve lived out of our pickup truck or a van for the last 20 years.
We don’t have a primary residence but we’re working towards saving for a house.
We found a place we really love and we bought a piece of land there before the pandemic, but now we’re getting cold feet.
What if we don’t actually want to settle down yet?
We handle work contracts across the U.S., often in the middle of nowhere. We’ll work for a few months until the contract ends and then take off to go to national parks or travel internationally.
Our income ranges from $80,000 to $400,000 a year. We have $350,000 in savings, including a $50,000 emergency fund.
We’ve saved $600,000 in retirement accounts and own three rental properties free and clear. One is a short-term rental and two are long-term. Together they profit anywhere from $40,000 to $60,000 a year.
The area we’ve chosen is incredibly expensive at $500 a square foot for a simple square box. It’ll cost $500,000 to build a 1,000-square-foot house.
We would take out a $300,000 mortgage or HELOC to pay for it.
Our life goals are to work less and we hate debt. We love the freedom we currently have and we’re reluctant to give that up.
On the other hand, I think our future selves would be psyched to have this house paid off in 5 or 10 years.
Could you help us figure out what we want?!
Anonymous asks (at 26:16 minutes): My husband and I started maxing out our traditional retirement accounts this year, but we don’t know if we’re doing enough to retire comfortably in 20 to 30 years.
I’m 33 and he’s 39, and we have two children under 5. We’re both federal employees. He also runs a small project management business.
I make $161,000 and my husband makes $85,000 a year with the opportunity to increase if he takes on more clients for his business.
I’ve saved $100,000 for retirement and he’s saved $70,000.
I have 3 key retirement questions:
- Should we factor in our pensions when looking at our overall plan for retirement?
- How do we figure out our retirement number if the goal is to live comfortably and travel often? I imagine a light version of FAT Fire.
- How do we know if we’re on track? Assuming a 7 percent rate of return, no salary increases, and a continued contribution of $22,500 per year for each of us, I should have $2.5 million by the time I turn 59. My husband should have $1 million by the time he turns 59.
We file our taxes separately because I have significant student loan debt, which makes it hard to contribute to a Roth IRA. But I’m eligible for the public service loan forgiveness program and my loans will hopefully be forgiven in 2.5 years.
We also plan on contributing to a SEP IRA, but I’m not sure how much.
Our mortgage is $2,500 a month and we won’t be done with our 30-year term when we turn 59. Should we increase our working years to cover the difference, or can we make up for it with a separate brokerage account?
With so many moving parts, how do we determine if we’re saving enough and saving in the right places for a successful retirement?
Trace asks (at 40:14 minutes): I’m 27 and I plan to take a mini-retirement in February 2024. Where should I store my funds for a maximum return?
Beyond my emergency fund, investments, and 401k, I’ve saved one-third of the $25,000 I’ll need for my time off.
I’m currently using an Ally high-yield savings account, but I won’t draw from these funds until the summer of 2024. How do I make my savings work harder?
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