Sara wants to quit her job to spend time with her children and she needs help calculating her FIRE number. But is it possible?
Aisha is moving to the US and wants to start investing as soon as possible – how should she approach her goal to reach FIRE?
Joe is buying his first home and would like to know if the FHA loan or the doctor loan would be better for him.
Kat has received a windfall and wonders if she should invest it in stocks, real estate, or a combination of both.
Former financial planner Joe Saul-Sehy and I tackle these questions in today’s episode.
PS Do you have a question? Leave it here.
Sarah request (at 04:12 minutes): I have three young children and I have very little time with them because of my job.
I’m working on quitting my job, so I can spend more time with my kids, move to a city with a lower cost of living, and find a more meaningful and flexible job.
My plan is to quit my job in a few years and take some time to relax, settle into our new home, and figure out what I want to do next.
I’d like to work again – I want a job where I can work in between outings with the kids and where I can take a few weeks off or work remotely during the kids’ holidays. I don’t know if the kind of job I want exists or how much it will pay, so I’m trying to figure out how much I need to never have to work again.
I know the 4% rule, but I don’t expect to have the same cost every year. And the differences are quite large.
I have student loan debt that I don’t want to pay off sooner because it’s at a very low rate. I also have to pay for my children’s schooling until they are old enough to start public school. These two expenses add about $5,000 per month now, but will be made three years from now.
My mortgage will be paid off in 28 years maximum, and I want to pay for my children’s university if they leave in about 15 years.
I heard you and Joe talking about lots of money for these different time periods – how does it actually work when I’m trying to find my exact FIRE number? I’m at about $1.8 million now, the 4% rule says I need $3.6 million now with school and student loans for the next three years.
Then my fire number drops to $2.1 million with a mortgage, then to $1.2 million after my mortgage is paid off. But those numbers don’t include my kids’ college.
If I think of college as a bucket, I know I can save $500 a month to have the exact amount I want for my kids’ college.
But how does it work with the 4% rule? And what number of 4% should I use? I’m guessing it will be somewhere between $1.2m mortgage-free and $2.1m mortgage-free, but I’m not sure how I can calculate my exact FIRE number.
Aisha request (at 26:27 minutes): I am a 31 year old nurse from London, moving to the US in a few months.
I have a private pension, £40,000 in cash savings and around six months of living expenses in an emergency fund. I also have around £10,000 invested in index funds.
When I get to the US, I’ll be making about $80,000 initially, then I’ll grow to $130,000 in two years, and by year five it’ll be about $170,000.
I also have a hustler who makes about $30,000 a year, working remotely about five to 10 hours a week, and no obligation to do more or less.
I have around £70,000 in student debt but in the UK there is no pressure to pay it off immediately as it does not affect your daily life, credit or salary. I have no other debt.
I was hoping to reach FIRE at 45 on around £60,000 a year to live comfortably, which I was on track for. This was based on my life in the UK, where we also get a state pension, free healthcare and the cost of living is just lower in general.
However, I’m still comfortable with the $60,000 figure to reach FIRE.
Do you have any advice on what priorities should be right away? Is my goal achievable or do I need to change my goal?
Jo request (at 40:00 minutes): I’m looking for advice on some options for acquiring my first home hack and I’m torn between two types of loan.
I’m 28, my portfolio is good in all other types of assets, crypto, physical metals, stocks, mutual funds, and now I want real estate. I am able to save about $1500 per month after paying the rent and saving 20% of my income for retirement.
My long-term goal is to not need my job in 40 years.
My short-term goal is to acquire a house with two to four units.
If I don’t hate owning, I would repeat the process. At 45, I would like to earn about $3,000 a month.
I would also like to aggressively pay for a small amount of properties. I’d rather own them than keep getting more doors and more loans.
The two loan options I have are FHA versus a doctor loan. The FHA is a 30 year fixed loan and the doctor loan is a seven or 10/6 ARM: 10 year fixed, then it would adjust every six months.
I only have about $15,000 in cash so I want a low down payment option and am leaning towards the doctor’s loan because the overall monthly payment is $250 less, there is no of PMI and I get a better rate of about a quarter to a half a point. I would really like your advice here.
Kat request (at 55:02 minutes): My question is about the decision to invest money in my retirement account, versus getting into real estate investing.
I currently only have $20,000 in index funds in traditional and Roth IRAs. I have $18,000 in an emergency fund to buffer my sluggish months, to cover about four to five months of expenses. I am currently renting out my house, which I love. My only debt is a $23,000 car loan at 3.99% interest.
I still have $20,000, which I received as a windfall, and I don’t know where to put that $20,000.
I could throw it all into my retirement accounts, or I could use it for a down payment for my first investment property, and use it as a short-term rental. Income from this property could be saved for another down payment towards a second investment property, or put the proceeds into my retirement accounts.
Is focusing on index fund investing or real estate investing better, or is a mix of the two ideal?
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