Nearing FIRE w/ $2.6M NW at age 33 – My journey & thoughts : financialindependence

Nearing FIRE w/ $2.6M NW at age 33 – My journey & thoughts : financialindependence

TLDR: Here’s goes my first ever post on Reddit: Just hit $2.6M net worth at age 33 after discovering I was working towards FIRE without knowing what it was until stumbling across it online last year. Wife doesn’t care, but wanted to tell someone. My story, lessons learned, & how FIRE changed my strategy.

Reasons for FIRE: I’ve worked from home for a tech company for 13 years (Support Delivery) Unlike many people on this sub, I actually love my job, and would do it forever, but know I got incredible lucky and don’t know how I’ve lasted this long already with the BS corporate performance cycle, quotas, etc. My skillset is not transferrable, so if/when they fire me, I’d likely be starting at the ground-level at another company making little $, and probably not working from home, so I decided that when that days comes, I want to be ready. In a way I see it as being a “good steward” so to speak of the hand and luck that I was dealt, and I want to make sure I’m not squandering that by pissing it away on things that don’t matter. Curious if anyone else is in the same boat with why they’re pursuing FIRE?

I’m a bit of a lone wolf with how I live life, so when I stumbled across the FIRE movement online last year, I was excited to find the formal framework for what I had been pursuing on my own for years. I had never heard of the 4% rule, and didn’t even think about stocks as a viable option for early retirement, so my focus had been on buy-&-hold rentals, which after managing 7 myself, although almost no work when counted in hours, started becoming more stressful than I liked.

This sub, along with the blogs like MMM, changed my approach and for the past year, I’ve been slowly changing my focus on simplifying my investments, stopped buying homes and started dumping excess income into VTI instead, and even sold my first rental this year.

Income: Started at $48k in 2007, now $160k + $70k profit from 7 rentals mostly owned with cash.

Spending: My current savings rate is 87%. I spend only $26k / year somehow but feel I live luxuriously. I own 2 cars, dirt bikes, ATVs (all Hondas), and spend plenty of time each year vacationing overseas. My #1 expense is travel, and some trips I figure out a way to get the owner of our side-gig (performing arts) to pay for as long as we perform or teach while there (while also making the trip partially tax deductible too). Link to my current spending / income / savings rate chart

Read about:   Your 2020 Guide to Tax Deductions

Investments: Link to my mint.com entire NW summary

  • $1.35M – paid off real estate (now 7 total homes, $1.6M minus $367k in mortgages), includes my personal $300k house. Average ROI for my rentals is 14% w/ just rents, 39% if capital appreciation is factored in. It’s lower because most of them are paid off, so less leverage. (Screenshot of Rental ROI Details) I used my HELOC to pay “cash” for homes, then aggressively paid it down and repeated. Was probably risky, but it’s paid off now, and is my “E-fund” now.

  • $500k – Taxable (VTI / VXUS) – M1Finance (Screenshot) Their automation is awesome btw

  • $220k – Taxable in my company’s stock, acquired through ESPP. Yes I want to move this to VTI, but $130k is gains, so don’t know how to without a huge tax bill. Any ideas?

  • $345k – 401k maxed out (Screenshot) (Russel 3000, the best options I could find)

  • $96k – Other (HSA maxed out, joint SoFi account w/ wife, Prosper.com, 24k cash, etc)

Taxes: Federal taxes paid is $16k / year. Real estate helps a lot here, plus our side gig which turns many expenses, hobbies, & travel I’d pay anyway into deductions.

Marriage: I’m married, but we keep our finances separate, so all these numbers are my own. We both contribute an equal amount into a small joint checking for things like groceries & utilities. She makes $30k / year “doing what she loves”, but doesn’t seem to care about money. We have a prenup (it was her idea). She found out I was a millionaire in the lawyer’s office as we signed a prenup (disclosing my NW was required). I feel bad I make so much more and keep it separate, but tell myself 1) I live on about the same amount as her, so we have the same standard of living, and 2) assuming we stay together, hopefully I could support her quitting her job one day so we can travel together or do whatever we want. I’ve shared with her my net worth when I crossed $2.0 M, but she didn’t seem to care much. I know she was listening though, cause every now and then I get a sassy comment like “so you’re a multi-millionaire but X is too much for guacamole?” lol

Family Life: No help from family, at all… I actually ran away from home as a minor and never went back. I learned to hitchhike at age 16 when my parents kicked me out of the car on my way to college classes. I took the GED and started college at age 15, graduated at 19. I think pushing the “youngest to graduate blah blah” narrative hard with the college recruiters definitely helped me land the tech job, not because I was particularly skilled. I’ve been working full time since age 16.

Read about:   What Is Foreclosures | NextAdvisor with TIME

Current Plan:

  • Ride this job out as long as I can without getting fired in spite waning motivation and struggling with work performance. Enjoy the freedom of working from “home”, wherever home is that day.

  • Continue simplifying finances. Sell 220k of company stock somehow. Want to also sell a few more homes eventually and put that $ in the stock market. I wouldn’t mind keeping a few long term if I don’t have another job to give me something to do. Dreading the capital gains bill from all this.

Thoughts & Reflections:

  • My philosophy in life (family, taxes, politics, money) has been “tell me what the rules of the game are, and I’ll figure out how to win”. I see so many people whining how they can never succeed in the current “system” (thankfully not so much on this thread), when in reality, no one is going to come along and change the rules for you personally so you can succeed. It’s your job to win given the current system the best we can.

  • Overall I don’t think I have any big financial regrets. Most of them are more social, having lost friends for being too cheap, etc.

  • I bought my houses in 2013–2018, when prices were still near the bottom after the recession. I realize this was just luck, and don’t intend to keep pushing that luck or think that is a repeatable format. No regrets, I just got very lucky.

  • Keep maxing out tax-advantaged accounts, something I didn’t start doing until discovering FIRE.

  • I had dumped a bunch of money in cryptos over the last couple years. Finally pulled the plug and got out with big losses. They’re right, the pain of seeing losses is way worse than gains. Oh well.

  • This year I finally sold all my hard gold and silver that I’ve owned since 1999. Yes, it was in preparation for Y2K. Also yes, I was just a 13 year old child (but a very prepared child!)

  • Focus on choosing a career path that maximizes income first in any way possible. That’s far more important than cutting $20 off your cell phone bill. This should be the 1st step to FIRE.

  • IMO, doing “something you love” isn’t as glamorous as it sounds. I went to college for art, and realized that although it seemed “fun”, it doesn’t pay, and there’s no quicker way to kill a fun hobby than having to do it for a living. Also, I’d rather work a fraction my life at a desk job than my whole life doing something I thought sounded cool at age 20. If the 8-5 desk job doesn’t sound fun, focus on what makes decent money that you COULD still find enjoyable. There’s more options you could enjoy than you realize. Instead of just focusing on “what sounds fun to ME”, focus on “what does the world need more of”, or “what’s in high demand in my community that I’d enjoy somewhat at least”. The money often follows that.

  • In the beginning I was focused on maximizing returns, which is why I chose rentals. Average work is only a 1-2 hours / week, BUT, I’ve realized I hate the stress. E.g. recent text from tenant: “Sent my brother to check on house, he got stabbed by squatters, is in hospital”. …talk about a way to ruin a weekend (well, more like 4 months, squatters are no joke). Now that I have higher net worth & more money “working for me”, I don’t mind sacrificing return % for peace of mind.

  • Don’t turn down living your best life today. There are tons of opportunities, trips, etc that seemed like they cost a lot of money at the time, but turned out to some of my best memories that I would never give up, even if I missed out on compounding gains as a result. Say yes to the parts of life that come along that excite you, and don’t put if off until retirement, since these are what make life worth living, not your net worth $. I often think “if I died today, would I have regrets having focused on savings so much”? Find that balance & slash the stuff that doesn’t matter. For us, that’s kids, big house, alcohol, nice hotels, wedding, any status symbols, etc).

Read about:   Ally Home Mortgage Review 2020

As you can see, I’m an open book, so I’m open to any thoughts, questions, or advice on anything I may be overlooking or doing wrong.

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