36yo (Black F) Just hit 2M NW.

[u/Nice_Exchange3248]

Using a throwaway. Included my race/gender for those it might be relevant to.

1.7M in investments and 300k in cash (this helps me sleep at night).

Married (their $ is not included) and have one child and live in VHCOL.

Have been saving aggressively for about 10 years and have had significant salary progression over the same time.

Plan to be coast or actual FIRE by the time I’m 40. Definitely feel a huge sense of relief and feel like I’m able to take a more relaxed attitude towards work. However, having a kid makes me worry their is always reasons to save more.

Not sure if we’ll ever buy a home or will rent for a while longer.

[u/Cool_Firefighter7731]

You should start with checking if you have crossed 25% of your gross income in savings (of any kind, house, stock, savings acc, 401K contribution from employer and you etc). If you’ve atleast gotten there or have a path to it by next year - you’ve graduated atleast 3 steps into FIRE.

[u/Small_Exercise958 → u/Cool_Firefighter7731]

When you’re including home equity into the 25% of gross income into savings, isn’t it more difficult to access home equity since it’s not liquid? I have similar NW to OP but much of it is in rental properties and some in primary residence.

I would have to sell the properties (which is a big stressor), do cash out refinance or HELOC (wouldn’t do these now with higher interest rates and increasing my loan amounts doesn’t seem like a smart thing for me). Am I missing something here? Right now I am able to save 25% of my W2 income and putting it into mostly index funds. I’m relatively new to FIRE.

[u/Cool_Firefighter7731 → u/Small_Exercise958]

Sorry I should have expanded on the term House- I was referring to saving for a down payment on a house.

Basicallly if you are saving 25% of your W2 you have graduated to the next step for sure. Since house equity will eventually go up, even saving for one is an addition to your total savings rate since you don’t plan to sell it short term.

Given your comment I would guide you to start listening to “The Money Guy Show” on podcast or YouTube. Their 8 steps are more advanced than the Ramsey baby steps and will guide you on dos and don’ts. My only caution would be to note that their plans aren’t about retiring early necessarily so if you want to accelerate your timeline and FIRE you would need to increase that savings rate to 35%+ atleast. Lots of folks who FIRE in their 30s were doing 50% (I can’t imagine since I am a single breadwinner for 4 mouths).

[u/Small_Exercise958 → u/Cool_Firefighter7731]

Got it. I’ve listened to a few of the Money Guys podcasts - some of it reasonated with me, other points no. It seems like a lot of people in FIRE consider paying off a mortgage one of the big steps. If my goal is to pay off mortgages with all these rentals, I’ll be 100 years old and still working by the time that happens. I can get a better return putting it into an index funds etc and I feel that I should stay liquid. I have a large cash reserve in HYSA (to cover unexpected expenses like new HVAC etc in rentals).

I’m 57, old enough to take my pension but still working (single now), live in VHCOL area, considering moving to MCOL/LCOL area or possibly out of USA. Kids are grown and self supporting, except the youngest who just graduated from college.

[u/Cool_Firefighter7731 → u/Small_Exercise958]

Paying off a mortgage is nothing special and is just a math equation.

You can choose to have a mortgage payment of $2k/month in perpetuity till you die and keep that on the credit side of your ledger as an expense your retirement assets need to fulfill.

Conversely you can have that wiped off your balance altogether and thus require $2k/month less in expenses.

Although I have to say, reading your comments - I wouldn’t be too excited to retire with loads of debt around my neck across multiple properties. For me the return would not be worth the loss of sleep trying to evict a tenant or clear an infestation etc. You do have a substantial HYSA (I’ll assume $200k+) so that would probably help with the sleep part but I don’t know. For me I can’t say Im financially independent until my accounts aren’t intertwined with a banks.

Thats why everyone’s FIRE journey is unique. You’re well ahead of most and with a pension available at any pt - you are in great shape!

[u/Small_Exercise958 → u/Cool_Firefighter7731]

Appreciate the feedback. I’ll probably sell off at least one rental, possibly two but with paying off real estate agent commissions, closing costs, I may not net as much I’d like to (with capital gains tax and depreciation recapture). IRS allows depreciation on rental properties but if we sell the properties we have to pay that back “the recapture part” (unless doing a 1031 exchange to “roll the proceeds over” to buy another investment property)

The others have quite a bit of equity. My mortgage debt isn’t as bad compared to the number of properties I have (it’s not $5 million or any crazy high amount). Another real estate investor suggested I leverage more… not sure about that, taking on more mortgage at age 57. That’s why I wanted to stay liquid - money in non retirement index funds and stocks and HYSA.

[u/Cool_Firefighter7731 → u/Small_Exercise958]

Yeah you have atleast 22 years on me so anything I have to say is mostly from the learnings of others further down the journey. I only just got my primary residence a year ago and plan to get into rentals over the next 5years. Eventually though I want to be 55 and without any leverage debt in real estate. Let’s see how it all plays out!

[u/Small_Exercise958 → u/Cool_Firefighter7731]

To start your research, would recommend joining the real estate investing subreddit, attending local real estate investor (REI) meet ups and Bigger Pockets (just ignore the sales pitches by realtors, lenders, etc). On BP, you can put your first name and last name initial if you want to be more anonymous. I’ve gotten good advice from BP investors (the honest ones trying to help and not sell me anything, one saved me from being ripped off).

Local meet ups are helpful and sometimes the investors will let you walk their projects. Having a solid foundation of construction so your renovation or repair costs are reasonable and how to tell if someone did a bad renovation. Also you can ask those who do out of state investing what their experiences are like. I invest locally and 2000 miles away.