[USER]

I’ve gone through huge changes recently and I’m looking for a sanity check of sorts. Are my plans good?
Went through a long divorce process.

I have 3 kids, youngest is under 2, I have sole custody and do not receive any support. This can’t be changed.

I had a successful business that has been declining, partly due to the industry and partly due to my situation and lesser involvement.

I plan to close it down which will net me $300k – $1.2 million depending on if a buyer can be found for valuable contracts we hold.

I receive a salary from the company for part time work of $30k/y.

I have about $350k in brokerage. Sale of any assets will cause approximately 80% capital gains or more.
I have about $100k in retirement accounts.

I own my house worth $180k with a mortgage of about $1300.

I own a rental property value $120k rented for $1800 no debt. $8000/y expenses.

I have additional debts, $100k personal loan 10% interest that I plan to pay off with a mortgage on the rental property which has to wait until later in the year to do.

$35k debt to the IRS that is in the process of negotiating a payment plan most likely resulting in $600-$800 monthly payments.

I have a paid for car.
I pay about $150/w in all for childcare, but that’s because I’m barely working.

My plan is to continue focusing on my kids, not career.
I want to build a new house. I’ve already started this process but I’m less than $10k in and it’s on pause due to winter weather.

Total cost of the build will be about $300k. I’m living in a very small home, only 2 bedrooms.

The new house is being built on the same property and the small 2 bedroom house I live in now can rent for around $1600 per month conservatively.

It’s staying and that’s the plan. It’s all been approved by the town.
I’m struggling with the risk aspect of making so many changes, but I believe the numbers are ok.

My total expected yearly expenses is around $60k/y which makes me less than $30k short after closing down the business and only having rental income.

I’d expect to have $600k invested in all at this point, or likely more but with an additional mortgage payment, allowing a 5% rate of withdrawal.

This is contingent on getting more than the bare minimum $300k from the business of course.

Am I crazy to think this is going to work? I am reserving the possibility that I’ll need to work part time to supplement.

Not entirely expecting to not work at all. I’m not anywhere near retirement age.

[Kerri]

Are you sure you expect to qualify for a mortgage later in the year with little income and the amount of debt you’re carrying?

As a former divorced mom of two kids, I wouldn’t feel remotely close to comfortable trying to build a new home and carry that much debt with that income, especially with no child support.

Honestly, I’d be selling everything to wage war on the debt and get it gone.

Trying to manage building a new home, managing rental properties, and some custody of kids etc.

fresh off of a divorce would be the absolute last thing I’d be wanting to do.

[John]

What’s the industry? Could you find a part time consulting job in that industry? This sounds like a tight budget even without building a house and 130k in debt.

I would plan on the business selling for $250k financially and anything more than that is icing. Regardless I think you need a job.

[Julie]

Honestly you sound like someone who has contingency plans and knows how to pivot. See how the sale of the business goes before you proceed so you don’t stress out.

If I was a shark in shark tank I would bet on you.

[Endri]

This all depends on how much you sell the business for, the range is quite huge.

300k and 1 milliok plus makes a difference

[Jamie]

This is a little confusing, but I’m not seeing the math add up here. You have 135k in debt and are building a new house for 300k and have $13,600/yr income.

I think you need to replace the income you will be losing from the business.

I’d be using that business sale income to pay off the debt and build the house instead of trading it for more debt.

Mortage interest rates are not low right now.

[Brian]

With 600k invested does that assume no mortgage on the new house?

[Lori]

Could you build on to your original structure cheaper? The cost of materials is skyrocketing. Taxes and insurance the same.

You need some income for emergencies and you need to have every dollar you can get ahold of making you money not just sitting in a savings account.

You really need to run “the numbers” which you don’t show.

[Author]

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