Kevin wants to hit FIRE (Financial Independence, Retire Early) and believes his motivation comes from witnessing the financial trauma of the Great Recession. He’s wondering if others are motivated to reach FIRE for similar reasons.
Colleen and her husband own SEVEN paid off rental homes. Now they’re heading into retirement and disagree on what to do with some of that equity.
Anonymous wants to learn more about utilizing HSA accounts and Susan is curious about investing in tax liens.
My friend and former financial planner Joe Saul-Sehy joins me to answer these questions on today’s episode. Enjoy!
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Kevin asks (at 03:47 minutes): I’ve given a lot of thought to my motivation for pursuing FIRE.
I believe one of the primary motivations resulted from me being a teenager during the Great Recession. I saw friends and family go through job instability, and some people even lose their homes. I wanted to have financial freedom so something like that doesn’t happen to me and my family.
I’ve noticed a lot of people who are interested in the FIRE movement are Millennials like myself, and some of them had similar trauma from the great recession.
Do you think many people pursue FIRE for similar reasons? If not, what are your thoughts on what motivates FIRE adherence?
Colleen asks (at 20:13 minutes): My husband and I own seven single-family rental homes, free and clear. Their value along with our personal residence is about $4 million.
We also have about $2.5 million in retirement savings invested in the S&P 500.
Given the massive increase in property values over the past few years, I would like to sell at least one rental house. With the one I’m thinking of, we are making about $10,000 net annual cash flow, and I believe we would net about $400,000 after taxes and closing costs.
We could reinvest that $400,000 in a passive real estate fund that we’ve been invested with for several years, which pays out about 10% annually.
Then instead of $10,000, we could have closer to $40,000 in annual cash flow just from selling this one house.
We’re about to retire at the end of 2022 so cash flow is very important. Also, we’re not interested in doing a cash-out refi because we are 100% debt free and we want to stay that way as we head into retirement.
My husband is hesitant to sell as he likes having a real asset that we have some control of, and he thinks values will likely increase in our area for many years to come. He says, “Why should we sell cash flowing, appreciating real estate when we don’t really need to?” But I just keep thinking of that untapped equity.
Anonymous asks (at 30:54 minutes): I recently have been hearing about the advantages of opening an HSA, a health savings account.
Do you think it is a financially sound and wise decision to open one?
What are some of the advantages of HSA’s and are there any tricks to maximize the benefits of an HSA account, like triple tax savings?
Susan asks (at 39:47 minutes): I read Rich Dad, Poor Dad, and then I read The 16% Rule.
I’d really love to hear your opinion on tax lien investing and any sort of tips or advice that you may have.
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