Emily is saving aggressively for financial independence, but it’s hard to enjoy the present. Is it time to increase spending?
Monroe wants to stop working. Forever. Which is more important: debt payoff or investing?
Another anonymous caller and his spouse dream of building a homestead on an expensive piece of land. How much is too much to spend on housing?
Given the high costs of moving, Sarah wonders if buying a starter home is the best decision. Should she and her fiancé jump straight to buying their forever home?
Former financial planner Joe Saul-Sehy and I tackle these four questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
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Here are the details:
Sarah asks (at 01:53 minutes): My fiancé and I are ready to start a family and we’ve found a community we want to settle in.
The area is expensive, especially with today’s mortgage rates.
If we plan on staying in the area, does a starter home truly make sense? Should we spend more on a house we want for the long run?
I’m considering one of four options:
- We could purchase a forever home, despite the high costs.
- We could purchase a small fixer-upper and upgrade down the road.
- We could buy a house with a basement apartment that would generate rental income, but this would only moderately offset the cost.
- We could rent.
I like the control that comes with being an owner, so I’m leaning toward a starter home. But what about moving and real estate transaction costs? I also worry about being priced out of this market whenever we’re ready to upgrade.
I’m 29 years old and make $155,000 a year with a 25 percent target annual bonus. I have $150,000 in cash, $320,000 in taxable brokerage accounts, and $160,000 in retirement funds.
I own two properties, one of which I live in. The combined rental income is $15,000 per year with $210,000 of equity. I don’t plan to sell either of them.
My fiancé makes $65,000 a year and doesn’t have any significant assets. He’ll likely pay a quarter of the monthly housing costs, and I’ll be responsible for the rest.
I’m not pursuing early retirement, but I value financial freedom and flexibility. How do I find a balance when my financial concerns seem to be in conflict with my ideal lifestyle?
Monroe asks (at 26:12 minutes): I want to generate enough passive income and wealth to stop working.
I sold a property that netted almost $500,000. With the proceeds, I bought seven rental units that generate $4,000 a year in income.
I also have $65,000 in the market, $30,000 in a 403b retirement plan, and $100,000 invested in a syndication deal that I expect to get back within the next year.
Should I pay off my mortgages with the income from my rental properties, or is there a better way to spend that money?
Should I prioritize investing or debt payoff?
Anonymous asks (at 36:38 minutes): My husband and I are on track to reach financial independence within a decade. It’s also hard to enjoy the present with such aggressive savings goals.
We bring in $250,000 a year, spend $70,000, and save the rest. (Editor’s note: holy smokes … assuming that you’re bringing in $250k after taxes, that’s a 72 percent savings rate!!)
My husband co-owns a business and has already agreed to terms that may allow him to sell it in three years. The lump sum payout would surpass our FI number.
We haven’t included the possibility of this sale in our financial plan. But now that it’s close, can we loosen the reins? What if the sale doesn’t go through?
Anonymous Caller asks (at 52:53 minutes): My spouse and I want to buy a property for small-scale farming or homesteading in a high-cost-of-living area.
It’s hard to grapple with the $1.6 million price tag for our dream.
We’re 30 years old and our combined gross income will be $450,000 in the next month. We have no debt, we save 60 percent of our income, and have a $350,000 net worth allocated mostly in retirement accounts.
We’re not interested in a McMansion, but most of the properties in our ideal location have McMansions on them. We’re considering buying land to build on instead.
Our plan is on a 10-year timeline: We would first put two tiny houses on the property to live in while we build our permanent home. Eventually, we would rent out the tiny homes and possibly one of our bedrooms to offset the costs.
We estimate $800,000 to buy the land and $800,000 to build a 1,500-square-foot house. Many calculators I’ve seen suggest we could afford $1.9 to $2 million based on our salaries.
But we’re in sticker shock.
Is this a fool’s errand? Or is it appropriate for our circumstances?
Resources Mentioned:
- How to Talk to Practically Anybody About Practically Anything | Barbara Walters
- Money and Investing Has Changed, with Chuck Jaffee | Podcast
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