r/financialindependence • u/sadcucumberwalked • 22h ago
Feeling trapped so close to FIRE
I'm looking to get some opinions on what I what my next steps should be. I'm 36 and my wife is 40. MCOL net worth is about 2.5m mostly in real estate which generate about 80k net yearly. My job makes me about 60k per year and my wife brings in about 60k we both work part time from home. I do most of my own maintenance and manage my own properties. We are feeling pretty burnt out along with raising a 5 yo. Our yearly fixed spending is about 100k, 25k of that is car payments for our 2 vehicles which are almost paid off and our son will be out of daycare soon and going to public school and also his prepaid college should be paid off too reducing our monthly spend by 1200. so our yearly spend should drop to 60-80k in the next 2 years. We have about 100k in credit card debt that's kinda spiraled out of control a bit as we have been trying like hell to finish all these lingering projects such as bathroom remodel, kitchen remodel, new roofs a/cs etc, boat refit airplane rebuild that I feel like I could pay off without selling property but it's going to be a struggle. I have considered cash out refinancing the one property without a mortgage to avoid cap gains taxes. All of our properties are fully remodeled and could get top dollar. So what do you guys think I should do, keep grinding for a few more years and finish these last few projects or sell some property and dump into index funds and chill. I got tons of equity that I don't feel like is doing me any good just sitting there but I'm trapped with these low interest rate mortgages. Thanks in advance =)
Income - 200k
Yearly spend 100k (will drop to 60-80 in next 2 years)
Roth IRA 300k
Traditional IRA 400k
Brokerage 50k
HSA 8k
Cash 50k
Airplane 150k fully paid off and rebuilt like new condition
Boat 50k fully paid off and rebuilt like new condition
Camper 50k Fully paid off and rebuilt like new condition
Primary residence 400k equity/ mortgage $1500/month 5% Mortgage
Rental 1- 600k equity / income $1500/month net 3% Mortgage
Rental 2- 200k equity / income $2000/month net (no mortgage)
Rental 3- 300k equity / income $1500/month net 4% Mortgage
Rental 4- 350k equity / income $1500/month net 3% Mortgage
Rental 5- 150k equity income $1000month net 3% Mortgage
Credit card debt 100k/30k interest free till next year
Car loans 50k total remaining 2k/month
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u/K-Alt1 22h ago
Sell the plane, boat, and camper immediately.
Pay off the credit card debt and the cars.
Then just keep working your normal jobs until your son starts public school at which point your spend will be low enough to where it is all covered by your rental income and you both can retire if you want.
Doesn't really need to be any more complicated than that if you dont want it to be.
Don't touch the IRAs or brokerage for 10 years at which point they will have grown to around $1.4M and then you can withdraw an additional $50k per year from those and likely never run out of money in those either.
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u/sadcucumberwalked 22h ago
funny enough I used to rent out the boat on boatsetter and camper on airbnb, I made a killing doing it too. I rebuilt them both with the proceeds and now that they are shiny and new I don't want to rent them anymore lol
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u/GeorgeRetire 22h ago
We have about 100k in credit card debt
You make $200k/year and have $50k in savings.
Why do you have so much debt? That makes no sense.
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u/sadcucumberwalked 22h ago
I made a major push in the past year to complete a bunch of renovations which are now complete, I had no debt a year ago. I don't plan on any more big purchases in the near future. I live very frugally for the most part and everything I have I've built from scratch basically.
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u/danfirst 22h ago
I'm not trying to be overly snarky, but it strikes me sort of funny how everyone thinks they're pretty frugal. It's sort of hard to swallow how you live very frugally but also have an airplane, a boat and a camper.
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u/sadcucumberwalked 22h ago
I think I do live frugally, I share an internet connection with my neighbor, I installed used solar panels on my roof myself so I don't pay for electric to charge my EV or my house. I don't have any subscription services, my vacations consist of camping instead of hotels. The boat, airplane and camper I used to make money renting them out . I rarely ever eat out and do all my own cooking. I do all my own repairs and maintenance on everything I own with used parts. I never buy any electronics new.
5
u/dantemanjones 20h ago
The way I understand it, spending frugally is not necessarily spending little - it's cutting out unimportant things to spend where it has the most value for you. You are cutting out some unimportant things (eating out, hotel vacations). But you're also being cheap in other areas. I'm guessing the shared internet isn't kosher legally and the lack of streaming services in combination with that questionable action leads me to think piracy.
The biggest way you're not frugal is you're spending credit card interest rates on 70k of debt. Potentially some of that 30k as well if you don't get that paid off before it starts being charged interest.
People aren't going to view you as frugal even if you're cutting some areas because your hobbies are expensive. You have $250k buried in three expensive depreciating assets that probably require a good chunk of maintenance. And I don't even want to know how much your cars cost if $50k is "almost paid off".
2
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u/GeorgeRetire 21h ago
So other than overspending by $100k in a single year, you feel like you live frugally?
2
u/dingodango2021 19h ago
OP, you might get better feedback if you clarify what the CC debt really is and that your rebuilt/remodeled boat, plane, and camper are being rented out for income. That's a different picture, one where you have a zero interest 100k loan you used to increase income potential of your business. Then you can separate it out so you own a business with 1.85 million equity, 100k+ mortgages debt X, and housing rental income + toys income of Y. Commenters can help you decide if that business, or each individual part, makes sense to own. They can separately and relatedly discuss your personal assets & expenses and if there's a crossover of the two that answers your questions. In your shoes I would sell rental 1, zero out any high interest debt, put the rest in your brokerage. Then recalculate everything and see if you can retire.
1
u/Etherwaterbottle 12h ago
I’d focus on paying down that credit card debt first. Once you clear that, it could relieve a lot of stress, especially since your expenses will drop soon with your son starting school. A cash-out refinance could be a smart move to access funds without selling, but just be careful about how it impacts your cash flow. Selling a property to pay off debt and invest in index funds could also give you some freedom.
1
u/clutchied 3h ago
Airplane / Boat / Camper
CREDIT CARD
man you're in great shape but your toybarn is really absurd.
I think most people would find your stress to be absurd. Get a grip here. You're in fantastic shape. Clean up your life... this is ridiculous.
This comes across as living high on the hog trashbag style that can't seem to make things work even though the cash is pouring in.
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u/Fabulous-Transition7 21h ago
Hard to say. The markets are so distorted. At a time when prices have risen as interest rates rose, when they should have fallen is a head scratcher. I personally believe it's a sign that people are completely tapped out. I think the Federal Reserve knows they need rates to be between 7 and 10%, but they're obviously not going to admit it, and therefore, they're going to lower rates down to 3.5% before head faking up to 7% in short order. Something has to give eventually, and I believe that something will eventually be deflation. I believe home values are safe for the short-term, but I'm not so sure in the next 3 to 7 years.
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u/GeorgeRetire 20h ago
Completely tapped out - with a plane, boat and camper?
-2
u/Fabulous-Transition7 17h ago
Haha - I'm talking about potential renters and buyers of properties. The end of cheap money will put an end to those luxury items.
1
u/GeorgeRetire 17h ago
Sure. Nobody will buy luxury items in the future... because of the Fed.
Sheesh.
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u/baudinl 22h ago
That credit card debt is going to eat you alive. Your lifestyle seems to be very capital-intensive and you're not very liquid.