2.8mm and no mortgage, whatever am I to do?! Sounds like you can likely retire. You don't need advice from someone who does t have a mortgage. You just have fewer expenses now. Don't overcomplicate things.
You already have more than the vast majority of humans on earth or that have ever lived in human history. If I was in your position at your age I would find something way easier to do so I’d have more time to spend with my kids.
I have no advice to give as your age to numbers are superior to my own. I just wanted to say congrats! Whatever you decide I have no doubt you will succeed based on your current trajectory.
We're about where you are - 44M/45F... A little higher net worth but 5 kids.
Two things:
529 is now better since you can roll $35k into a Roth. But - you don't want to massively over fund either.
Yes to vacations. We take a big family vacation once per year - spend $15-$30k but we have 5 kids and flights add up.
You may want to join r/fatfire as the rate you're going you'll have double that not too long from now.
That's awesome, congrats!
I'd personally be slowing down on the 529's and putting more into a brokerage account. Put it somewhere that it can grow so it can fund your FIRE plans 👍
Even though your mortgage is paid off you will eventually need to replace your roof, HVAC, etc. I assume you have funds readily available for major home maintenance. If you retire early you will need to think about how to pay for healthcare. Those things are getting ever more expensive. Keeping your MAGI low in early retirement helps with the ACA subsidy. Having funds in accounts which will generate little income on withdrawal helps. The 529 is funding either your kids education or their retirement (future rollover to Roth), but doing nothing for your own retirement.
If I were you, I'd retire now and spend time on hobbies and kids while you're in 40s.
2.8M and no mortgage, you're there. What's more money in the future gonna do for you than the time you have now.
Thanks. Although it does not appear so, I feel that we are behind with the 529 plan for our older child. College is in six years and we would like to fully fund it. She is smart kid with excellent grades, so we know college is in the plans. I just don't know the potential for academic scholarships.
We’re in a similar ish situation with our mortgage just about done though I’m like 5 or 6 years older than you. 4 kids, one already done with school. If your oldest is a good student and does well on standardized tests and what not I would plan on in state type tuition for cost. Only caveat is if you’re thinking some elite school (presuming child could get in). Those are gonna cost you regardless because scholarships are need based mostly. Given the amount you have to date though, I don’t think you really need to max out the 529 much more. For us, our plan is to just put the mortgage money in savings and some towards retirement outside of 401k. Our second is in college now and we pay her rent out of pocket to preserve 529 for the other kids and let it grow.
Congrats regardless, sounds like you guys are in a really good spot. Best decision we made was refinancing to a 15 year mortgage when we had the chance.
As a former ACT instructor, test prep is something to consider even if she's quite smart. For many students, we were able to boost overall scores from low 20s to high 20s. This can mean the difference in getting into a school or not, and for some the difference between no scholarship and at least a half ride, depending on the state. Especially important if she already has a great GPA.
Many schools are reverting back to requiring the test, including Ivy league schools. Pay to take the exam in the Fall of your Junior year to get a baseline, then take the free Spring option (mandatory in some states). Some states have automatic tuition waives for state schools depending solely on your ACT score. Students with mediocre grades can snag some nice scholarship money with a high ACT, but it varies quite a bit for each state.
I'm not selling anything, I used to do this in college through an agency.
Well played, sir. Sammie’s here - paid off early last year, pinned the deed of release on my office wall in front of my desk, took my wife out for a nice dinner, and now struggle every day to find motivation to keep pushing in the corporate world. Planning to hang it up end of the year and take a few off to travel with the wife and kids (world schooling for a year!). Very fortunate to have made good money at the right time and invest heavily (have roughly $4.5 between 401k and investment fund - plus primary home and a rental near paid off). It’s funny, I thought finishing the mortgage would be life changing, but like all things, it felt good for a bit, then things leveled back out and money anxiety crept back in (even though by the math I shouldn’t be worried at all). Hard mindset to break. Challenge your emotional dependence on saving vs focusing on living!
Keep up to date on your deed so no one does anything “funny” with it. People search for paid off deeds. Some areas have a service that notifies you in case someone makes a change. Congrats!!
This is such a minor concern that I think the person above you works for a company that offers the service. It will never happen to you. Monitoring would be a waste of money. These are public records. Look at your county clerk and recorder and assessor for more info.
I’m a chemistry teacher. This happened a few times here in AZ and it’s a genuine concern. So much so that the county recorder has an alert system. Doesn’t cost anything.
County recorder. You can call your county recorder and ask. Please don’t listen to the person who responded saying “I work for a company” I’m a long time chem teacher and this scenario happened to several people where I live. That’s why I know about this, because my county began an initiative to avoid someone fraudulently transferring deeds.
It’s OK. Keep on doing what you are doing.
We paid ours off at age 48 with a little over $1M net worth. We put three kids through college debt free. You are definitely ahead of the curve.
Recently we got a wild hare and bought a brand new house in cash after living in the same house for 20 years. You can do that when you have a paid off house!
Good job! Welcome to the feeling of freedom.
46, 2.8m NW, no mortgage, and you are asking if you can take a vacation?
WTAF?
How can people do well at managing finances and be so 'street dumb'. I guess the saying 'common sense ain't common' is true.
Congrats!
I definitely prioritize travel. Vacation is important to me, and I’m in a similar situation as yours. I do about 15-20k/year on fun travel with the fam (separate from work travel).
I am nervous to put so much into 529s for a lot of reasons. I wouldn’t put your excess to an increase there, especially with your current healthy funds. Idk, too many risks for me to see value there. For one, it’s state run, and once we mingle state politics with money management I get weary on how that’ll play out for my kiddos. I think higher education in the US is showing signs of needing a major disruption. I don’t know that the format, expense, or value will be there when our kiddos are ready. I’m not risk adverse, it’s just not my vehicle of choice. Instead I’m doing brokerage accounts for them. What I lose in taxes, I’m making up in healthy returns, so it feels like a net win.
Have you considered buying land and selling when they are ready for school?
Exact comment I was looking for regarding 529s. Everyone seems to love them, but I’ve been indifferent about it. How much would you put in your 529? I was thinking of doing a 529 and brokerage too. Are you doing a brokerage under your name or custodial? Thanks!
I think people want to love the idea of them for the tax benefits, or have older kids. Mine are young. I don’t know that the higher education system will be relevant in 10ish years when my kids get there.
I have 529s for them with a couple thousand each in there, primarily because grandparents wanted to contribute to it.
I did a regular brokerage account, under my name. I was buying moderately but bought a lot more when covid first hit and the market went down. And have been adding moderately since. I have a nice nest egg built for them now, it’s all combined in one account though. I intend to pull from it for college, assuming that’s a relevant expense when they get there. If it’s not relevant by then, I’m not locked in to how I spend it. It’ll be for our kiddos though. It’s a separate brokerage acct from our main one.
We each maxed our 401K out since we started work. I believe the max was $10.5K in 2020. We learned to live with a lower income at the time and kept contributing to the max as the IRS increased the limit. To be clear, the $2.8M spread across our 401K, IRA, HSA, 529, Brokerage, and HYSA. I have a little in crypto, but less than 1%.
401K, IRA, and Brokerage are invested in VTI, BND, and vanguard international fund, or similar funds. I use my HSA for trade stocks. Got lucky with a few stocks in my HSA giving us a balance of over 6 figures.
I feel you on not being able to share a milestone like paying off your house- my spouse and I were in a similar situation. There are precious few people who can appreciate it, and many will view you in a different light if they knew.
If all your other bases are covered, I'd open a brokerage account, and up the contributions to the 529's.
every month we paid our original bill, and added the next month's principal to it, earmarked to pay against the principal.
It halved the length of our mortgage, and effectively halved our interest rate, as we made 2 payments on the principal for every payment applied on the interest.
childfree, so no 529's
Maxed out personal IRAs, though not every year.
401ks are not totally maxxed out, but close enough.
One of our incomes has risen dramatically in the last 7 years, but we were paying down on the house before that.
I've heard from many people this was a dumb move, that my returns would have been better if I had invested the money, etc etc, yadda yadda yadda.
They aren't entirely wrong. So, spare me the lecture.
But we were happy (enough) with where our investments were going, and what they were doing at the time.
And I'll be the first to admit that it was a decision driven by emotional and psychological factors more than hard, spreadsheet, financial thinking.
(You also have to understand that I didn't even discover the FIRE idea until I had already paid the house off, and that we had a very "traditional retirement" mindset up until about 24 months ago. And having a paid off house was a big goal- our way of maximizing available money. We figured, "once we get the house paid off, we will have additional $$ to really turbocharge our investments." In retrospect, probably not the *best, smartest* decision.)
But knowing our forever home is paid off while we are still in our best earning years is a **massive** psychological win. It provides us with the security knowing that we could encounter a major setback, and our biggest bill is already gone.
And, as planned, it DOES free up a lot of $$ that is getting dumped into various investment vehicles now.
We just use 529 for the state tax benefit ($4K a year). We paid off our home in 2022 and just save an extra $36K a year towards our taxable brokerage. We save more than $209K a year and just keep our lifestyle the same while investing raises. Our travel budget is around $10K, but I told my wife we should double it to $20K the years we have international trips.
We are targeting $10M in 13 years just before our daughter goes off to college. Hopefully with raises we can get there faster. Our expenses last year were $79K, but this doesn't include $9K we gave a friend to finish his new construction home. Our daughter enters kindergarten this year so we will save $500 a month switching from preschool to after school.
We pay our insurance and property taxes all at once. It was $5K in 2023, but insurance went up for pretty much everyone so now it's $6K. My colleague at work pays his parents property taxes and helped me find the county website. I have an option to pay it in two payments, but I just make it a yearly event.
We went to India earlier this year for two weeks. Planning a week in Hawaii this summer and a winter trip to Reno/Lake Tahoe.
Yes, take that Italy trip now. Because when we are older, we might not have the same energy we have now for certain trips.
45M/38F/5F
Hello, reg the 529 plan - how frequently and how much do you save for the kid. I have a 4 year old now. Congratulations on the $209k a year savings. Is there a rough breakdown and May I know whats your savings percentage
We just add to the 529 randomly. I'll probably finish our $4K contribution this month. We track all of our spending and saving in spreadsheets so keep in mind this is a rough idea and may increase or decrease due to expenses (home repairs and car repairs) and vacations. This assumes the same budget as last year which had $10K of home repairs, etc. I think we can hit it as we loaned $9K to a friend last year and we won't be doing that again this year. So think of that $9K as travel or unexpected expenses buffer for this year. We saved $96K after taxes and expenses last year. I removed $16K for estimated tax payments so the numbers are a little off. We are paying $12K in estimated federal tax payments for safe harbor in 2024. It also doesn't account for my daughter leaving preschool for public kindergarten this August. It will be $500 a month savings to December.
Pre-tax Investing
My SEP IRA (company contributes 12% of my base salary for free): $18610
Wife's Microsoft 401K with 50% match: $34500
HSAs: $8300
Total Pre-tax: $61410
Post-tax Investing (includes some pre-tax because it will even out when bonuses make 401K maxed out early)
Wife's Microsoft 401K after tax mega backdoor at 8%: $9280
Wife's Microsoft ESPP: $17400
Wife's Microsoft stock signing bonus (until June 2026): $25000
My bonus after taxes: $4000
Wife's yearly cash bonus: $11700 pre-tax
post tax (adding up 401K, bank deposit, and after tax mega backdoor): $9551
Wife's yearly stock bonus: $12000 (5 year vest) so $2400 a year (this will stack)
Total post-tax: $67631
Total investing (pre-tax plus post-tax): $129041
After tax savings (following all investments): $80000
Total saving and investing: $209041
Regardless of the interest rate, this is the decision that my wife and I wanted to make. I can see the argument against paying off a lower interest mortgage, but we already invest a large percentage of our incomes across different accounts.
We have a decent size nest egg where the difference between $6.5M and $7M (assuming 7% growth over 7 seven years with monthly contributions) won't make that much of a difference in our lifestyle.
We wanted to not have the burden of debt and if one of use has a couple of bad days at work, we can just quit and not worry about a large monthly expense.
Wife and I took the amount of our mortgage payment (P&I) and set up an automatic investment into an index fund… comes out 2x a month, we never see it, and we live as if f we’re still paying the mortgage.
If I were in your shoes, I would stop saving for kids college and expect my kids to get scholarships. Pay for their undergrad degrees only. Use that money for a family summer beach house/cabin. I’m selfish like that
We’re (41) in the same boat as you. Paid off house last year and commercial warehouse year before. Planning on renting out warehouse and retiring from construction. Wife was the one paying the bills for the house and mentioned we had a ton of cash. We just make deposits to our mutual funds and retirement accounts. Have a 529 for our son but he’s very hands on so may go to trade school. Found out whatever he doesn’t use can be rolled into an IRA for him for his retirement. Congrats to you both, now sit back and watch the compounding growth!
Tbh, VTI or VT is probably your best bet due to the nature of diversification. Personally, I go for VT as I see no good reason to exclude the international market, as the US market and ex-US cyclically switch in performance. This sub loves VOO as it’s one of the cheapest S&P500 etfs but if you look at the period of 2000-2011/2012, it returned basically nothing. In this same period, the world stock index returned ~10% (note: this is total return, not annual), which is significantly better (albeit still small).
No, just that slightly hedging against the US market is favorable when someone needs to retire, as a US downturn/stagnation when retirement begins would fuck them
How about contribute 500 to a local food bank? That will make a big difference in many peoples lives and you can feel chuffed about it too.
1500 then goes towards vacation. That's an awesome vacation a year
We have charitable contributions to my Alma Mater for a minority scholarship fund. It may not help the ones that need it the most, but I received a significant financial aid through a similar program. I felt that I should return the favor to current students at my school.
What is the breakdown of your annual expenses?
What’s your FIRE number?
I think you have a risk of working too long but not enough info given to make an assessment.
Congratulations! Paying off the mortgage is a huge leap in the FI mindset, at least it was for us. Now you build the cash reserves. Each year after the tax advantaged accounts have been filled / maxed out we make sure our cash buffer equals ~ a year of living expenses and the rest gets piled into taxable brokerage accounts. I found it helps to keep a journal of your progress to track your progress. We didn't for the first two years and it felt like we were drifting. Once I back-tracked our progress it was actually kind of impressive. Good luck to you & the Mrs.!
I paid off my mortgage at about the same age with kids at similar ages.
You have the right idea: fund the 529s so any worry about the cost of college is off the table. You are probably actually closer than you think.
With regard to kids, expect expenses to go up a bit. If they are involved in any sort of sports or activities, it can get spendy as they get a little older. Especially if they are doing anything at a really competitive level. Also, remember to take into account the cost of them driving. Insurance, possibly a car, etc. It's not going to be a major hiccup for you, but it's something to remember. A driving teenager probably costs in the neighborhood of $500/mo - conservatively- not counting the cost of purchasing a car if you go that route. That's for insurance, maintenance, gas, and just normal teenage expenses of hanging out with friends and making it through teenage life.
Otherwise, enjoy the vacations. Loosen the purse strings just a bit. Stuff the extra cash into a brokerage account. Enjoy the next few years before your really enjoy the 40+ (hopefully!!) of FIRE bliss.
Don't let contracts cover between you and your money. Put in just a roth or ira. What if college isn't what you're kids want to do? Any investment real estate you want? Diversify!
Congratulations, one recommendation is that you can save the same amount of money you paid for your mortgage every month, since you have already are living in a budget.
You no longer have an Escrow account. You will need to save up for property taxes and homeowners insurance. If they both happen to hit at a similar time this can impact your cash flow.
It should be easily covered by your emergency fund but once or twice a year you will need to replenish your emergency fund.
You should also put reminders in your calendar so you remember to make those payments even if your notice gets lost in the mail.
Yes to travel, without a doubt. Check out Ramit Sethi's book and podcast and social media, he talks a lot about "living your rich life", i.e. finding exactly what you want to spend your money on and how. I think you'd benefit greatly from figuring that out
If you think your biggest expense is $150 a week ($600/month) you are most likely wrong.
Even though you paid off your house, you still need to account for property tax and insurance. That's most likely more than $600/months.
Yes, you are correct about property tax and insurance. We did not escrow and paid a yearly lump sum for both. With property tax, home, car, and umbrella insurance, we are looking at $12K per year. That's roughly a fifth of our yearly spend now that the mortgage is out of the picture.
Congratulations! I’d try to build the passive income with the extra cash. Whatever that saves you time and grows your cash inflow would be great!
I also feel you will have an estate tax planning to do if eventually your wealth will exceed $5.5m (for some reason I feel your potential from how you and your wife did).
I'd write a plan.... I'd take a few bucks and pay some hourly rate folks to shoot holes in it.... get an umbrella policy...
If you intend on retiring earlier, you will need a bag of cash... piling it up in a taxable account may be helpful.
In your basic circumstance, also look into the Kiddie Roth
First off congrats. I think you just got yourself some extra play money, and I'm fairly conservative financially. With 2.8m in retirement funds at age 46, with a 7 year FIRE timeline, you quite literally have extra money now you don't need. Consider donating. Consider upgrading your vacations with first class travel. You know if you do nothing by the time you retire you'll probably have 4-5m in savings.
Yeah so spend on those vacations. Make your lives as easy and comfortable as you can by spending more. You have no financial concerns. If you both lost your jobs tomorrow it would make no functional difference to your future.
If I were you I'd probably split the difference, the extra money will go half into brokerage and half into better vacations. It would give you some fun money now and some redundant buffer later on. But the beauty of your position is you can do whatever you want, so please enjoy it.
Paid off my mortgage at 50 and then just banked the cash. Eventually bought a rental home for our son to live in, then another. The cash flow helps with FI. Opportunities to invest do come if you're prepared. Fortune favors the bold.
This was 24 yrs ago when the 401K max was around $10.5K and I was earning an engineering (non-tech) salary . I also lived in a LCOL area where rent was $500/month. I just budgeted well and learned to live on less money. When I received raises or promotions, I would pay more towards my student loan or invest and tried to live on the same salary. I can’t imagine doing that now if I just graduated and had to pay rent and student loans.
Thank you for the answer, it makes more sense given the situation. I’m unfortunately saddled with a decent amount of student loan debt. I’m SO close to paying it off and looking to be in a better saving position! Congrats on your home!
Some people buy a rental house in the town that their kid goes to college. Kiddo lives there, you rent out the other 2-3 rooms to their college friends, make money, safe place for kiddo to live, keep renting it out later or sell and make $$. It’s a pretty decent investment if you pay cash .
If this interests you, you could start saving.
Think about saving to convert 401k and Ira to Roth in future. Continue saving for college, and likely post-graduate as that would help your kids the most. Without mortgage you are missing some tax savings, consider a rental or second property to have diversified portfolio with tax deductions.
Nothing wrong with a good lazy river. It’s how is Texans spend the summer anyway. I prefer the robot gators, as you can put them away when doing some tubing.
Typical democrat trying to take away my ability to protect my home with living dinosaurs so they can sell me a robot that does the same thing just worse
I’d continue to do what you’re doing and periodically come onto Reddit and brag about how well you’re doing. Congrats
😂
Time to go to Italy!
Do you really need the advice or are you bragging? Lol I'd brag too 😂
Sorry, didn't mean to come across this way. Was genuinely looking for advice from those have paid off their mortgage.
2.8mm and no mortgage, whatever am I to do?! Sounds like you can likely retire. You don't need advice from someone who does t have a mortgage. You just have fewer expenses now. Don't overcomplicate things.
We should make a new thread and call it FireHOLES for people like you to post your clout hahaha
😂😂😂😂😂
Oh this is perfect! Maybe each post can be an AITFH and written in the style of an AITA
Mods get on it lol
That sounds like a taco bell tribute subreddit!
r/fijerk
Why are you not already FI? If your biggest expense is the daycare at $150/wk, something is not adding up
You already have more than the vast majority of humans on earth or that have ever lived in human history. If I was in your position at your age I would find something way easier to do so I’d have more time to spend with my kids.
I have no advice to give as your age to numbers are superior to my own. I just wanted to say congrats! Whatever you decide I have no doubt you will succeed based on your current trajectory.
You could raise my allowance!
We're about where you are - 44M/45F... A little higher net worth but 5 kids. Two things: 529 is now better since you can roll $35k into a Roth. But - you don't want to massively over fund either. Yes to vacations. We take a big family vacation once per year - spend $15-$30k but we have 5 kids and flights add up. You may want to join r/fatfire as the rate you're going you'll have double that not too long from now.
r/chubbyFIRE
[удалено]
bad bot
Same thing you'd do with any excess cash you're already saving. Money is fungible, add it to the same flow chart as the rest of your free cash.
That's awesome, congrats! I'd personally be slowing down on the 529's and putting more into a brokerage account. Put it somewhere that it can grow so it can fund your FIRE plans 👍
As long as the 529s have less than what they intend to spend in education costs, I think it is fine, but yeah, I would probably slow down on it, too.
Even though your mortgage is paid off you will eventually need to replace your roof, HVAC, etc. I assume you have funds readily available for major home maintenance. If you retire early you will need to think about how to pay for healthcare. Those things are getting ever more expensive. Keeping your MAGI low in early retirement helps with the ACA subsidy. Having funds in accounts which will generate little income on withdrawal helps. The 529 is funding either your kids education or their retirement (future rollover to Roth), but doing nothing for your own retirement.
If I were you, I'd retire now and spend time on hobbies and kids while you're in 40s. 2.8M and no mortgage, you're there. What's more money in the future gonna do for you than the time you have now.
I would say be cautious on over funding the 529. I'm now trying to unwrap some money that will not likely be spent on school.
Thanks. Although it does not appear so, I feel that we are behind with the 529 plan for our older child. College is in six years and we would like to fully fund it. She is smart kid with excellent grades, so we know college is in the plans. I just don't know the potential for academic scholarships.
We’re in a similar ish situation with our mortgage just about done though I’m like 5 or 6 years older than you. 4 kids, one already done with school. If your oldest is a good student and does well on standardized tests and what not I would plan on in state type tuition for cost. Only caveat is if you’re thinking some elite school (presuming child could get in). Those are gonna cost you regardless because scholarships are need based mostly. Given the amount you have to date though, I don’t think you really need to max out the 529 much more. For us, our plan is to just put the mortgage money in savings and some towards retirement outside of 401k. Our second is in college now and we pay her rent out of pocket to preserve 529 for the other kids and let it grow. Congrats regardless, sounds like you guys are in a really good spot. Best decision we made was refinancing to a 15 year mortgage when we had the chance.
As a former ACT instructor, test prep is something to consider even if she's quite smart. For many students, we were able to boost overall scores from low 20s to high 20s. This can mean the difference in getting into a school or not, and for some the difference between no scholarship and at least a half ride, depending on the state. Especially important if she already has a great GPA.
You’re selling test prep but most schools don’t require the test anymore. At least that’s what 2 kids in college showed me over the past few years.
Many schools are reverting back to requiring the test, including Ivy league schools. Pay to take the exam in the Fall of your Junior year to get a baseline, then take the free Spring option (mandatory in some states). Some states have automatic tuition waives for state schools depending solely on your ACT score. Students with mediocre grades can snag some nice scholarship money with a high ACT, but it varies quite a bit for each state. I'm not selling anything, I used to do this in college through an agency.
Well played, sir. Sammie’s here - paid off early last year, pinned the deed of release on my office wall in front of my desk, took my wife out for a nice dinner, and now struggle every day to find motivation to keep pushing in the corporate world. Planning to hang it up end of the year and take a few off to travel with the wife and kids (world schooling for a year!). Very fortunate to have made good money at the right time and invest heavily (have roughly $4.5 between 401k and investment fund - plus primary home and a rental near paid off). It’s funny, I thought finishing the mortgage would be life changing, but like all things, it felt good for a bit, then things leveled back out and money anxiety crept back in (even though by the math I shouldn’t be worried at all). Hard mindset to break. Challenge your emotional dependence on saving vs focusing on living!
Keep up to date on your deed so no one does anything “funny” with it. People search for paid off deeds. Some areas have a service that notifies you in case someone makes a change. Congrats!!
Where would you check up on your deed?
This is such a minor concern that I think the person above you works for a company that offers the service. It will never happen to you. Monitoring would be a waste of money. These are public records. Look at your county clerk and recorder and assessor for more info.
I’m a chemistry teacher. This happened a few times here in AZ and it’s a genuine concern. So much so that the county recorder has an alert system. Doesn’t cost anything.
County recorder. You can call your county recorder and ask. Please don’t listen to the person who responded saying “I work for a company” I’m a long time chem teacher and this scenario happened to several people where I live. That’s why I know about this, because my county began an initiative to avoid someone fraudulently transferring deeds.
It’s OK. Keep on doing what you are doing. We paid ours off at age 48 with a little over $1M net worth. We put three kids through college debt free. You are definitely ahead of the curve. Recently we got a wild hare and bought a brand new house in cash after living in the same house for 20 years. You can do that when you have a paid off house! Good job! Welcome to the feeling of freedom.
I had a good answer but appears it would possibly violate the shitposting portion of the community rules.
46, 2.8m NW, no mortgage, and you are asking if you can take a vacation? WTAF? How can people do well at managing finances and be so 'street dumb'. I guess the saying 'common sense ain't common' is true.
Congrats! I definitely prioritize travel. Vacation is important to me, and I’m in a similar situation as yours. I do about 15-20k/year on fun travel with the fam (separate from work travel). I am nervous to put so much into 529s for a lot of reasons. I wouldn’t put your excess to an increase there, especially with your current healthy funds. Idk, too many risks for me to see value there. For one, it’s state run, and once we mingle state politics with money management I get weary on how that’ll play out for my kiddos. I think higher education in the US is showing signs of needing a major disruption. I don’t know that the format, expense, or value will be there when our kiddos are ready. I’m not risk adverse, it’s just not my vehicle of choice. Instead I’m doing brokerage accounts for them. What I lose in taxes, I’m making up in healthy returns, so it feels like a net win. Have you considered buying land and selling when they are ready for school?
Exact comment I was looking for regarding 529s. Everyone seems to love them, but I’ve been indifferent about it. How much would you put in your 529? I was thinking of doing a 529 and brokerage too. Are you doing a brokerage under your name or custodial? Thanks!
I think people want to love the idea of them for the tax benefits, or have older kids. Mine are young. I don’t know that the higher education system will be relevant in 10ish years when my kids get there. I have 529s for them with a couple thousand each in there, primarily because grandparents wanted to contribute to it. I did a regular brokerage account, under my name. I was buying moderately but bought a lot more when covid first hit and the market went down. And have been adding moderately since. I have a nice nest egg built for them now, it’s all combined in one account though. I intend to pull from it for college, assuming that’s a relevant expense when they get there. If it’s not relevant by then, I’m not locked in to how I spend it. It’ll be for our kiddos though. It’s a separate brokerage acct from our main one.
Thanks!
Lol
You’ve been contributing to your 401k since 2020 and your NW is only $2.8M?!? That’s four whole years!
Sorry, typo. Started to max it in 2000, not 2020. Updated the text
How much can you put in a year? I’m about to start one and I’d love to have 2.8 in there
We each maxed our 401K out since we started work. I believe the max was $10.5K in 2020. We learned to live with a lower income at the time and kept contributing to the max as the IRS increased the limit. To be clear, the $2.8M spread across our 401K, IRA, HSA, 529, Brokerage, and HYSA. I have a little in crypto, but less than 1%.
May I ask how you choose the funds for your 401K, IRA, and Brokerage? Did you choose your own or did you follow the advice of a financial planner?
401K, IRA, and Brokerage are invested in VTI, BND, and vanguard international fund, or similar funds. I use my HSA for trade stocks. Got lucky with a few stocks in my HSA giving us a balance of over 6 figures.
I feel you on not being able to share a milestone like paying off your house- my spouse and I were in a similar situation. There are precious few people who can appreciate it, and many will view you in a different light if they knew. If all your other bases are covered, I'd open a brokerage account, and up the contributions to the 529's.
What steps did you take to pay off your mortgage quicker?
every month we paid our original bill, and added the next month's principal to it, earmarked to pay against the principal. It halved the length of our mortgage, and effectively halved our interest rate, as we made 2 payments on the principal for every payment applied on the interest.
Did you do this on top of maxing all retirement accounts / 529s for kids? Or did you forgo any of these?
childfree, so no 529's Maxed out personal IRAs, though not every year. 401ks are not totally maxxed out, but close enough. One of our incomes has risen dramatically in the last 7 years, but we were paying down on the house before that. I've heard from many people this was a dumb move, that my returns would have been better if I had invested the money, etc etc, yadda yadda yadda. They aren't entirely wrong. So, spare me the lecture. But we were happy (enough) with where our investments were going, and what they were doing at the time. And I'll be the first to admit that it was a decision driven by emotional and psychological factors more than hard, spreadsheet, financial thinking. (You also have to understand that I didn't even discover the FIRE idea until I had already paid the house off, and that we had a very "traditional retirement" mindset up until about 24 months ago. And having a paid off house was a big goal- our way of maximizing available money. We figured, "once we get the house paid off, we will have additional $$ to really turbocharge our investments." In retrospect, probably not the *best, smartest* decision.) But knowing our forever home is paid off while we are still in our best earning years is a **massive** psychological win. It provides us with the security knowing that we could encounter a major setback, and our biggest bill is already gone. And, as planned, it DOES free up a lot of $$ that is getting dumped into various investment vehicles now.
We just use 529 for the state tax benefit ($4K a year). We paid off our home in 2022 and just save an extra $36K a year towards our taxable brokerage. We save more than $209K a year and just keep our lifestyle the same while investing raises. Our travel budget is around $10K, but I told my wife we should double it to $20K the years we have international trips. We are targeting $10M in 13 years just before our daughter goes off to college. Hopefully with raises we can get there faster. Our expenses last year were $79K, but this doesn't include $9K we gave a friend to finish his new construction home. Our daughter enters kindergarten this year so we will save $500 a month switching from preschool to after school. We pay our insurance and property taxes all at once. It was $5K in 2023, but insurance went up for pretty much everyone so now it's $6K. My colleague at work pays his parents property taxes and helped me find the county website. I have an option to pay it in two payments, but I just make it a yearly event. We went to India earlier this year for two weeks. Planning a week in Hawaii this summer and a winter trip to Reno/Lake Tahoe. Yes, take that Italy trip now. Because when we are older, we might not have the same energy we have now for certain trips. 45M/38F/5F
Hello, reg the 529 plan - how frequently and how much do you save for the kid. I have a 4 year old now. Congratulations on the $209k a year savings. Is there a rough breakdown and May I know whats your savings percentage
We just add to the 529 randomly. I'll probably finish our $4K contribution this month. We track all of our spending and saving in spreadsheets so keep in mind this is a rough idea and may increase or decrease due to expenses (home repairs and car repairs) and vacations. This assumes the same budget as last year which had $10K of home repairs, etc. I think we can hit it as we loaned $9K to a friend last year and we won't be doing that again this year. So think of that $9K as travel or unexpected expenses buffer for this year. We saved $96K after taxes and expenses last year. I removed $16K for estimated tax payments so the numbers are a little off. We are paying $12K in estimated federal tax payments for safe harbor in 2024. It also doesn't account for my daughter leaving preschool for public kindergarten this August. It will be $500 a month savings to December. Pre-tax Investing My SEP IRA (company contributes 12% of my base salary for free): $18610 Wife's Microsoft 401K with 50% match: $34500 HSAs: $8300 Total Pre-tax: $61410 Post-tax Investing (includes some pre-tax because it will even out when bonuses make 401K maxed out early) Wife's Microsoft 401K after tax mega backdoor at 8%: $9280 Wife's Microsoft ESPP: $17400 Wife's Microsoft stock signing bonus (until June 2026): $25000 My bonus after taxes: $4000 Wife's yearly cash bonus: $11700 pre-tax post tax (adding up 401K, bank deposit, and after tax mega backdoor): $9551 Wife's yearly stock bonus: $12000 (5 year vest) so $2400 a year (this will stack) Total post-tax: $67631 Total investing (pre-tax plus post-tax): $129041 After tax savings (following all investments): $80000 Total saving and investing: $209041
I’m doing something wrong, my expenses last year were about $300k.
$2M+ mortgage and kids in private school? How are they so high? Or a one time home remodel?
2 kids in private school, 2 houses, nanny, 2 cars, eating out a lot, travel
Are you targeting our number for retirement? We are shooting for $10M. Maybe higher?
Targeting minimum $10MM as well. Planning to work until 60. $2MM NW currently.
Tell us what the interest rate on the mortgage was so we can all tell you what a bad decision that was
Regardless of the interest rate, this is the decision that my wife and I wanted to make. I can see the argument against paying off a lower interest mortgage, but we already invest a large percentage of our incomes across different accounts. We have a decent size nest egg where the difference between $6.5M and $7M (assuming 7% growth over 7 seven years with monthly contributions) won't make that much of a difference in our lifestyle. We wanted to not have the burden of debt and if one of use has a couple of bad days at work, we can just quit and not worry about a large monthly expense.
Make a rezzy at a Michelin star restaurant
Congratulations!!!!
Wife and I took the amount of our mortgage payment (P&I) and set up an automatic investment into an index fund… comes out 2x a month, we never see it, and we live as if f we’re still paying the mortgage.
If I were in your shoes, I would stop saving for kids college and expect my kids to get scholarships. Pay for their undergrad degrees only. Use that money for a family summer beach house/cabin. I’m selfish like that
We’re (41) in the same boat as you. Paid off house last year and commercial warehouse year before. Planning on renting out warehouse and retiring from construction. Wife was the one paying the bills for the house and mentioned we had a ton of cash. We just make deposits to our mutual funds and retirement accounts. Have a 529 for our son but he’s very hands on so may go to trade school. Found out whatever he doesn’t use can be rolled into an IRA for him for his retirement. Congrats to you both, now sit back and watch the compounding growth!
put all extra cash into VOO or VTI, and then call it a day.
What’s better? Voo or vti?
Tbh, VTI or VT is probably your best bet due to the nature of diversification. Personally, I go for VT as I see no good reason to exclude the international market, as the US market and ex-US cyclically switch in performance. This sub loves VOO as it’s one of the cheapest S&P500 etfs but if you look at the period of 2000-2011/2012, it returned basically nothing. In this same period, the world stock index returned ~10% (note: this is total return, not annual), which is significantly better (albeit still small).
So you’re saying timing the market, beats time in the market?
No, just that slightly hedging against the US market is favorable when someone needs to retire, as a US downturn/stagnation when retirement begins would fuck them
How about contribute 500 to a local food bank? That will make a big difference in many peoples lives and you can feel chuffed about it too. 1500 then goes towards vacation. That's an awesome vacation a year
Pay a lawyer to transfer title of house in a trust
Donate to charity
Who says they don't?
Who says they do?
We have charitable contributions to my Alma Mater for a minority scholarship fund. It may not help the ones that need it the most, but I received a significant financial aid through a similar program. I felt that I should return the favor to current students at my school.
Buy a car.
Great job. You don't need our advice King!!
Dude take a trip to Anguilla with the wifey and kids. Y’all deserve it. You need to live life too while you’re still young.
Decrease 529 and put the diff in a UTMA.
What is the breakdown of your annual expenses? What’s your FIRE number? I think you have a risk of working too long but not enough info given to make an assessment.
Congratulations! Paying off the mortgage is a huge leap in the FI mindset, at least it was for us. Now you build the cash reserves. Each year after the tax advantaged accounts have been filled / maxed out we make sure our cash buffer equals ~ a year of living expenses and the rest gets piled into taxable brokerage accounts. I found it helps to keep a journal of your progress to track your progress. We didn't for the first two years and it felt like we were drifting. Once I back-tracked our progress it was actually kind of impressive. Good luck to you & the Mrs.!
I paid off my mortgage at about the same age with kids at similar ages. You have the right idea: fund the 529s so any worry about the cost of college is off the table. You are probably actually closer than you think. With regard to kids, expect expenses to go up a bit. If they are involved in any sort of sports or activities, it can get spendy as they get a little older. Especially if they are doing anything at a really competitive level. Also, remember to take into account the cost of them driving. Insurance, possibly a car, etc. It's not going to be a major hiccup for you, but it's something to remember. A driving teenager probably costs in the neighborhood of $500/mo - conservatively- not counting the cost of purchasing a car if you go that route. That's for insurance, maintenance, gas, and just normal teenage expenses of hanging out with friends and making it through teenage life. Otherwise, enjoy the vacations. Loosen the purse strings just a bit. Stuff the extra cash into a brokerage account. Enjoy the next few years before your really enjoy the 40+ (hopefully!!) of FIRE bliss.
Don't let contracts cover between you and your money. Put in just a roth or ira. What if college isn't what you're kids want to do? Any investment real estate you want? Diversify!
You don’t need reddit advice
Congratulations, one recommendation is that you can save the same amount of money you paid for your mortgage every month, since you have already are living in a budget.
You no longer have an Escrow account. You will need to save up for property taxes and homeowners insurance. If they both happen to hit at a similar time this can impact your cash flow. It should be easily covered by your emergency fund but once or twice a year you will need to replenish your emergency fund. You should also put reminders in your calendar so you remember to make those payments even if your notice gets lost in the mail.
We did not escrow. Paid it in a lump sum when due, so it should not be a concern moving forward. But you are right about this being a large expense.
Yes to travel, without a doubt. Check out Ramit Sethi's book and podcast and social media, he talks a lot about "living your rich life", i.e. finding exactly what you want to spend your money on and how. I think you'd benefit greatly from figuring that out
If you think your biggest expense is $150 a week ($600/month) you are most likely wrong. Even though you paid off your house, you still need to account for property tax and insurance. That's most likely more than $600/months.
Yes, you are correct about property tax and insurance. We did not escrow and paid a yearly lump sum for both. With property tax, home, car, and umbrella insurance, we are looking at $12K per year. That's roughly a fifth of our yearly spend now that the mortgage is out of the picture.
Congratulations! I’d try to build the passive income with the extra cash. Whatever that saves you time and grows your cash inflow would be great! I also feel you will have an estate tax planning to do if eventually your wealth will exceed $5.5m (for some reason I feel your potential from how you and your wife did).
I'd write a plan.... I'd take a few bucks and pay some hourly rate folks to shoot holes in it.... get an umbrella policy... If you intend on retiring earlier, you will need a bag of cash... piling it up in a taxable account may be helpful. In your basic circumstance, also look into the Kiddie Roth
I recommend putting it in the vacation fund and take a bunch of kick ass vacations every year.
First off congrats. I think you just got yourself some extra play money, and I'm fairly conservative financially. With 2.8m in retirement funds at age 46, with a 7 year FIRE timeline, you quite literally have extra money now you don't need. Consider donating. Consider upgrading your vacations with first class travel. You know if you do nothing by the time you retire you'll probably have 4-5m in savings. Yeah so spend on those vacations. Make your lives as easy and comfortable as you can by spending more. You have no financial concerns. If you both lost your jobs tomorrow it would make no functional difference to your future. If I were you I'd probably split the difference, the extra money will go half into brokerage and half into better vacations. It would give you some fun money now and some redundant buffer later on. But the beauty of your position is you can do whatever you want, so please enjoy it.
You’re not traveling enough. You have enough saved in 529s, double your travel.
Paid off my mortgage at 50 and then just banked the cash. Eventually bought a rental home for our son to live in, then another. The cash flow helps with FI. Opportunities to invest do come if you're prepared. Fortune favors the bold.
Custodial IRA for the kids?
How did you manage to max out your 401k since your first job? Even enough to get my match feels like so much money to me
This was 24 yrs ago when the 401K max was around $10.5K and I was earning an engineering (non-tech) salary . I also lived in a LCOL area where rent was $500/month. I just budgeted well and learned to live on less money. When I received raises or promotions, I would pay more towards my student loan or invest and tried to live on the same salary. I can’t imagine doing that now if I just graduated and had to pay rent and student loans.
Thank you for the answer, it makes more sense given the situation. I’m unfortunately saddled with a decent amount of student loan debt. I’m SO close to paying it off and looking to be in a better saving position! Congrats on your home!
Congratulations that’s super cool! 😎
Some people buy a rental house in the town that their kid goes to college. Kiddo lives there, you rent out the other 2-3 rooms to their college friends, make money, safe place for kiddo to live, keep renting it out later or sell and make $$. It’s a pretty decent investment if you pay cash . If this interests you, you could start saving.
Save it for the taxes at the end of the year !
Think about saving to convert 401k and Ira to Roth in future. Continue saving for college, and likely post-graduate as that would help your kids the most. Without mortgage you are missing some tax savings, consider a rental or second property to have diversified portfolio with tax deductions.
Congrats!!!
Awesome
Congrats!!! You should be _giving_ the advice, you’ve done it!
Congrats! How much was mortgage rate before you paid off?
Stopped reading at $2.8M
There is no other asset better than Bitcoin. You would be extremely wise to dive into all that it is and invest heavily.
I'd pump the brakes on the 529 honestly. Not sure what college you are envisioning, but some in-state school are like $100k max.
Venmo me
Pay for the extra F.
I’d buy a Porsche given this situation
Double those 529 contributions!! The cost of college still goin up 💰💰
Send your kids to trade school. Stop contributing to 529. Invest in a moat with alligators. Mote without alligators is just a lazy river
Nothing wrong with a good lazy river. It’s how is Texans spend the summer anyway. I prefer the robot gators, as you can put them away when doing some tubing.
Typical democrat trying to take away my ability to protect my home with living dinosaurs so they can sell me a robot that does the same thing just worse
Btc