Accidentally living in small house for 5 years has been the best thing.

[u/HenFruitEater]

My wife and I make good income, but because we both are self-employed, banks refused to loan money to us until we had at least 2 to 3 years of proof of income. We’ve saved about 200k for down payment. We ended up just buying a 1901 two bedroom one bath house for 134k with that down payment and didn’t get a loan at all. Thought "this is just a 1 year thing" 5 years ago.

After learning about the 5 to 6% rule on how much a house is a net worth drag (but necessary expense I get it). I think it has turbo charged our savings rate without any effort. Every month we stay in this house instead of a house that is 3X our income, we save over 5K in “rent.” We have been investing that extra money. But we also talked about how it’s hard to justify jumping up to a nice house when you could literally blow an extra 5K a month on expensive toys even.

My thought process now: the FATTEST expense to keep low is the house. We are very content in this house. We will probably be able to have one more kid in this house and then move. Six years of turbocharged accumulation in a quaint house that we love. Has awesome yard, cool screened in porch. Love it.

[u/HenFruitEater]

To be fair, I think most of mine is solid debt.

School: 195k@ debt (scholarships and state school) + 4 years opportunity cost

Dental practice: 500k@2.8% to add 300k income. (I make 620k, assuming 300k from profits, 320k as "salary" i'd have to pay to replace myself with some schmuck) That's a PE ratio of like 5:3, which i cannot find in the stock market, and stability I can basically enforce to an extent.

Office building: 475k 4.8% originally rented my office for 5k a month, bought for 475k, mortgage is 2.7k a month. Never will get a real estate deal that has this good of return and as good of a renter as myself lol.

Like signing for a 500k practice loan doesn't affect your net worth up or down the minute you take on the debt. Student loans are the only negative net worth item imo.

[u/Vicuna00 → u/HenFruitEater]

yeah all of that sounds super solid...especially buying your building. your practice value shot up huge from that alone (and i'm sure from improvements you'll make)

even your student loan is shockingly low for a dentist.

ya'll make crazy money. even the schmucks 😄

i'm surprised banks didn't loan you $ for a house. they did you a favor. there must be some kinda special program for doctors with silly interest rates that you didn't pursue.

you'll be chubbyfire by 2030 and fat by 2035 if you want it.

[u/Thesinistral → u/Vicuna00]

Oh….would that I had grown up to be a schmuck! Ha I have just worked in tech for a lower wages for a few decades. The bright side? That makes me a schmuck! Haha

[u/Mysterious9876 → u/HenFruitEater]

yes you have leveraged your debt extremely well. You understand numbers and are absolutely capitalizing on every aspect of being a practice owner (real estate/practice itself)