[USER]

I would like some honest thoughts/opinions as to our status a progress to FI.
I’m 48 and my wife is 49. Civil engineer and teacher with 9yr old son

My salary: 125k.
Her salary: 35k.

380k in IRA and 10k in employer 401k. All in VTSAX/VTI. She has Maine state retirement pension that she can collect at 62 with current cash value of 150k.

Primary residence worth 550k and owe 295k at 3%
Only other debt is HELOC with 50k balance at floating interest currently 7.5%.

Monthly expenses approximately 10k.

My questions:
1. I’m thinking of opening a solo 401k (due to a small side hustle) to roll some IRA money over for a down payment on an investment property.

Looking at turnkey outside our market with modest cash flow for longer term growth and diversity. Any thoughts or suggestions?

2. Any thoughts on Bill Bengen’s new book coming out with suggests the 4 percent rule could possibly be 4.7 or even 5 percent?

Obviously really reduces FI and time to get there.
Thank you all for your advice and help!

[Jule]

You are not ready to add more expenses to your budget. Your expenses are already very high for your income. Don’t add to the mess, clean it up.

Take care of your current bills first, max yours and your wife’s 401k, IRA and pay off the HELOC.

Then ensure you have at least 6 months of expenses in savings.

Being a landlord comes with expenses and you must be prepared to bare both homes, even without a renter.

You are not there yet.

[Liz]

get rid of that heloc!!! as u age you want to have no liabilities if possible and instead of opening another 401k open a roth and max it out every year!!

invest in high paying financial stox like dx or ecc reinvest all divs and make thousands tax free!!!!

we now make 10k monthly and i wouldnt change a thing we’ve done for the past 30 yrs!! good luck!

[Katie]

Those monthly expenses seem very high considering your mortgage is likely only around $2,000/mo.

What are you spending an additional $8,000 on, and can any of that be invested?

[Foster]

Max your retirement vehicles, get rid of heloc, don’t buy that investment property- you are not ready.

Stick to the basics right now and build that net worth. Decrease your spending.

[Scott]

Question 1. Keep in mind, if you buy a property inside of an Ira there are strict rules about you not being allowed to stay there for any length of time.

Additionally, unless you are paying cash the rates will most likely cause negative cash flow. I’m not even sure if you can borrow on an Ira property.

2. I haven’t read the book but I’ve been drawing btw 4.5-5% for 10 years and have more today than I did when I started. (a lot more)
You can absolutely count your equity in your primary residence toward your top line networth.

But, unless you are going to downsize later, I would not use it toward your 4% calculations.

Good luck on your journey, it looks like you’ve got a little ways to go yet. Keep plugging!

[Author]

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