Alex makes $168,000 per year, combined between her full-time job and her side hustle. Her company pays for breakfast, lunch and dinner during the work week, plus a cell phone subsidy, health, dental and vision insurance, a gym membership, and commuting costs. She also househacks, so her living expenses are only $400 per month. What should she do with her ample savings?
Christine is 38 and earns $70,000 per year running her own business. She holds $70,000 in investment accounts, has another $16,000 in savings, bought a condo with 20 percent down, and has no debt. What can she do to fast-track her path to financial independence?
Amy is unsure whether she should pay off her mortgage, downsize to a smaller home, or invest.
Katherine is 23 and househacking into a duplex. How much should she set aside for cash reserves?
Miriam started a podcast and wants to know how to morph a passion into a lucrative income stream.
Nick wonders if the FIRE movement should plan an annual gathering … you know, like a FIRE Festival. (But not like the Fyre Festival.)
I tackle these six questions in today’s episode.
Here are the details:
Christine asks:
I’m 38, I just bought my first home (a condo) at $141,000. I put 20% down, so no PMI, and I have no outstanding debt besides this mortgage. I have $70,000 in retirement savings: $35,000 in a Roth IRA and $35,000 in a brokerage account. I have $13,000 in savings and $3,000 in an emergency fund in liquid cash. I’m self-employed and make approximately $70,000 a year.
I feel like my assets might be a little bit all over the place, and because I started saving so much later in life, I feel like I have a lot of catching up to do. What advice would you give to put me in the best position to become FI? At this point, retirement seems like a dream.
Amy asks:
My husband and I have recently started our journey to financial independence. We would love your opinion on our situation.
We’ve been in our house for a little over a year, we owe about $350,000 on it, and we bring home about $12,000/month after taxes. We don’t have any other debt except for our vehicles, which we’re hoping to crush within the next couple of years, and our mortgage payment is about $2,300/month.
I’m not sure if it would be better to:
- Pay down extra on our mortgage
- Plan to sell our home in a few years and downsize
- Pay extra on our mortgage while also contributing more toward the stock market
What do you think?
Nick asks:
I was watching the FIRE documentary on Netflix and I had an idea: it would be really cool to have a FIRE festival, where everyone in the FIRE community could meet up once a year. Is there something like that already in existence?
Miriam asks:
My husband and I are in our early 30s, we have three young kids, and we work full-time. We’re new to the FIRE movement but we’re on the bandwagon and just getting started.
My husband is going down the real estate path – he and his partner are very excited about that business venture. I’m not, though – I have my own side passions and I don’t have any kind of business background, so I’m not sure where to go next.
After a life-changing illness last year, I knew I wanted to focus on mental and spiritual wellness, so I started a podcast. But I want to make sure that what I love doing (the podcast and coaching others) is eventually going to support me financially. I want to plan wisely for the future of my podcast and business, so my questions are:
- When and how do you make the first steps of taking your passion and turning it into something lucrative?
- What tips do you have for a new podcaster like myself?
Alex asks:
I’m 27 and recently purchased my second home. I currently make $120,000/year at my job and have no debt other than these two properties. I also have a business which pulls in $4,000/month. I invest 10% of my income to my 401(k) and my company matches $6,000/year. I also max out my Roth IRA, and I invest $1,000/mo to an individual account through Fidelity just because. My living expenses are basically $400/mo because I househack.
How else would you allocate the additional income that I’m seeing for the first time?
Katherine asks:
I’m 23 and I just had an offer accepted on my first duplex that I’ll be househacking.
My question is about the savings you keep specifically for rental properties. Do you have separate buckets for repairs and maintenance, vacancies, and capex? On the blog, I see that you recommend having at least six, but preferably eight to ten months of mortgage payments set aside. Is that just a hedge against vacancies, or for everything?
If you have more than one bucket for all of those things, how many buckets do you have, and do you consider these buckets to be fully funded? Or are they never fully funded, and you just put in $X or X% of rent per month in perpetuity and take money out as required?
Assuming there are no issues found in the inspection and I close on the property, my plan is to pay the market rate for rent for the side I’ll be living in out of my W2 income, including the amount that would normally be considered profit, and shovel all of it into beefing up the savings account for the house…but at what point can I stop saving?
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