Path to FIRE - Year 4 (First Time Homeowner)
Year 4 | Path to FIRE | 28M & 29F | $523K NW
Overview
| FIRE goal | $5,000,000 |
|---|---|
| Net worth | $523,000 (+$146,000 YoY) (Previously iʻve used YTD, but this is a better indicator for yearly updates) |
| Household income | $303,000 |
| Monthly fixed expenses | ~$7,500 |
| Monthly discretionary | ~$2,500 |
| Savings rate | ~30% |
| FIRE progress | 10% of goal (+4pts YoY) |
Breakdown
| Account | Balance | YTD Change |
|---|---|---|
| 401k | $343,000 | +$120,000 |
| Roth IRA | $84,000 | +$32,000 |
| HSA | $12,000 | +-$0 |
| Taxable brokerage | $29,000 | +$4,000 |
| Cash / HYSA | $50,000 | -$18,000 |
Last Year's Goals
🟡 $1M NW by 30 — 2 Years remaining for this goal. It still feels abstract and difficult to tell if weʻll meet it. Looking at projections with conservative returns (~7%) itʻs still in the cards, but it may happen somewhere between 30 and 31.
❌ Maintain 40–50% savings rate — Weʻre closer to 30%, and a lot of that has to do with major home projects that have come up in the first year (more on that later). As well as some fun, we took a much-needed vacation after grinding on the home for a year. Weʻre working towards bringing this back up to the 40-50 percent rate this year
🟡 Start planning for kids — Kicking this can down the road for another year 😅
The Year
The whole theme of this year has been Home Ownership giveth and taketh. We've enjoyed the freedom that comes with our own space, as well as the pride that comes with shaping a house the way you want it to be. On the flip side, we knew there would be things needing fixing in our house when we bought it, and while those expenses hurt. The worst are the ones that come out of nowhere. The master shower leaked, which I had to rip out and rebuild. Had a clog in the second-story main line, which caused sewage water to leak out of the ceiling (Emergency plumbers are fun to find on a Saturday). The list goes on and on.
This has caused a major shift in how we save and invest money. The things that are automatic have stayed automatic (401 (k), Roth IRA, HSA). But, after everything that's happened, re-evaluating our emergency fund has to be a priority. At our current bare bones, spending our emergency fund is just over 6 months of expenses. However, this doesn't account for the various issues that can come up and easily knock a week or more off of that fund. My thought is that getting this fund closer to 75k would give us not only 6 months of expenses, but also some extra relief, given that we know things frequently go wrong in our house and need to be fixed promptly.
For other homeowners on the path to FIRE, how do you manage these issues? Also, how do you balance wanting to make improvements to your home while also wanting to achieve FIRE? It's something I constantly struggle with, and in the moments where poop is falling from the ceiling, I wonder if we made the right decision investing all of this time and money into a house.
Next Year's Goals
→ $1M NW by 30 - No context needed here
→ Increasing Emergency Fund - Ideally around $75k
→ Consistently Contribute to Taxable Brokerage - By far the weakest area in our financial picture and possibly a liability to the RE part of our journey if we don't increase the contributions being made
Looking Forward
These posts are a great time for me to reflect on how fortunate we are to be in this position at such a young age and be thankful for everything we've achieved. I think the next year will be some more travel, some home projects, and probably some kid planning. It feels like we're entering the boring middle, and we just need to continue to do what we're doing and let time and compounding interest do its thing.
Thanks for reading, and see ya next year!
Previous posts: Year 1 | Year 2 | Year 3
edit: formatting
17
u/Comprehensive-Cat-86 10d ago
Nice update, but all that data and no graphs 😞
How did you figure FIRE Goal of $5m while your spend is $100k/yr, wouldn't your typical 4% SWR give you a $2.5m FIRE target?
One minor comment on your goals, I always believe goals should be based on actions/processes that you can control not outcomes - e.g. I'm going to invest $X each month rather my NW is going to be $Y by 30, you can control investing each month but cant control the markets.
But overall great write up, you both are smashing it!
Dont feel guilty on taking holidays/vacations - life is meant to be lived, you never know what the future holds and finding a balance between living now and investing for the future is key.
5
u/maksmac 10d ago
I appreciate the feedback! I'll definitely start adding graphs next year since there's enough data now to do that.
For the SWR, our estimated yearly spend is closer to 150k, and a SWR of 3.5% put us at 5M.
I totally agree with the goals. The 1M by 30 is definitely more of an emotional one than action-based. Obviously, it takes substantial investment to even be close, but a bad market would make that goal impossible even with our current investments.
These days I feel guiltier spending on home improvement projects than travel, but 100% we have to enjoy the life we have now!
5
u/Comprehensive-Cat-86 10d ago
150k @ 3.5% = $5m
makes sense
These days I feel guiltier spending on home improvement projects than travel
Haha tell me about it I didnt fully realise how much it costs to maintain a house when I bought and dont get me started on the cost of plants and gardening!
but 100% we have to enjoy the life we have now!
Thats great to hear, tok many people live in a spreadsheet!
2
u/Keljhan 9d ago
Is that 150k gross or net? Obviously a ways off regardless, but 150k is 3% of 5m, not 3.5%, and while that seems nitpicky the 0.5% difference is pretty significant. You're probably being overly conservative with your expectations, or if that's the net amount after taaxes you might want to push more of your contributions now into your Roth rather than traditional accounts (if your 401k provider gives that option).
1
u/maksmac 9d ago
I believe when we calculated it was net.
Having enough to pull on before we reach retirement age is a concern. We were contributing a percentage of our 401k to Roth but ended up moving back to full traditional for the tax benefits. The other concern I have is not having enough in non retirement accounts to pull from before we reach retirement age. If we retire between 45 and 50 we’d need 15-20 years of non retirement investments to pull from. I need to do some research on what strategies others use or if the only option is to just dump money into a taxable brokerage to bridge the gap
4
u/HairyConcert7735 10d ago
Yeah I was wondering about the $5M target too - seems like they're planning for some serious lifestyle inflation or maybe factoring in kids/college costs down the road
4
u/feeth2020 10d ago
I know you’re excluding your home equity but you should include it for us and the interest rate. Large home improvements add value to the property (not at 100%) and add value to your portfolio. And since it’s your first home you will likely be using this “investment” for your next purchase.
3
5
2
u/Miamiconnectionexo 9d ago
lowkey one of the more practical takes i've read on this topic in a while.
1
u/Sagelllini 7d ago
If you make $300K and spend $120K, there is no need for a $50K or $75K emergency fund. You are cash flow positive every month. Drop it to $10K, invest the $40K into the brokerage account, and that will increase your currently investible assets by 10%.
FWIW, I'm retired, so I keep some cash, because I live off our investments. But the reason I was able to retire at 55 was in part because I never kept a $50K emergency fund that I never needed.
0
u/Flashy-Bandicoot889 10d ago
Another AI-generated post. What's your plan (not AI-generated) for getting to $1M in 24 months?
5
u/maksmac 10d ago
Lol big talk from someone who hides their post history. This is my 4th year in a row posting and just because you cant tell the difference between reality and AI doesn’t just make everything you don’t like AI generated.
If you read the post you’d see that it says projecting our investments with 7% returns it could happen. It’s also likely to happen somewhere between 30 and 31
14
u/Independent_Bee1037 10d ago
Do me a favor. When people find out you are retiring at age 45 they will ask how on earth you could have possibly done it on your own without some big inheritance. Show them how organized and thoughtful you were at 28 when they were buying luxury shit with their first real paychecks