All Forum Posts by: Account Closed

@Mark Robert 

I do have a strategy but it is a little complicated.  My goal over the next few years is to get a $1,200 per month passive income which is enough to live in Thailand, Bali, Medellin, or other similar areas quite comfortably.  This would greatly reduce my stress level at work knowing I have an "out" option that I could use anytime.

To get to that goal, I'm prioritizing maxing out the match in my 401k plan and my Roth IRA first because it is tax efficient. I will be able to access most of this money penalty free with the backdoor Roth method but ideally I won't need to touch this until old age.

Other than that I have $1,600/month to invest in whatever.  This money had been going toward paying off my used car, but now that that's recently done I'm saving up for a 6 month emergency fund.  

I'm due for a raise before the year is over that will bring the $1,600/month savings maybe to $3,000/month and I will use that to save for a downpayment on a multifamily home with a 3.5% down FHA loan, maybe in Jersey City or the Ironbound of Newark. I'm only going to invest in real estate if I think it will make more than the stock market and be worth the hassle. If the returns on real estate look bad then I'm still capable of hitting my goal with stocks and using the 4% rule for a safe withdrawal rate, but even though a lot of the deals I'm analyzing are bad I'm sure I will find a good one eventually. Stocks make a 10% return in general so I would need to see something better than that in a property between the cash flow, mortgage paydown, and appreciation (which doesn't matter much because I plan to hold for life).

Above are actual numbers that I tracked on Personal Capital and graphed using http://sankeymatic.com/build/.

I just hit a 50% savings rate of my after tax income!  A high savings rate is stressed in Scott Trench's book Set for Life, Mr. Money Mustache posts, and the Reddit forum FIRE (Financial Independence Retire Early) which are all good reads.  Everyone agrees (because it is mathematically correct) that to retire young the most important first step is a high savings rate. 

To me the 50% savings rate seemed impossible at first, but I focused on increasing income and reducing expenses step by step.  On the increasing income side of the equation, I changed jobs when I realized I was underpaid for my field by using salary.com and glassdoor.com to compare my salary to the market.  In my new job I work very hard and got a raise and bonuses.  I am paid right around the what the market dictates for a construction project engineer with 3 years experience in NYC, maybe a little higher given all the perks and bonuses.

On the expense side, I bought a used economy car instead of new.  I live in the smallest studio apartment in my town in New Jersey, which is much cheaper than living in the city.  I also chose to buy the tiny studio because the cost to own was significantly less than renting.  I can rent it out for a decent return in the future which I calculated before I bought the unit.  Another major factor that helps keep expenses low is I avoided student loans by getting a full ride from merit based scholarships by being a nerd in high school.

A lot of my friends (with what I assume are similar paying jobs) are renting nice apartments in trendy areas, buying large houses in the suburbs, getting nice cars and shiny objects, going on what I consider to be lavish vacations, or the biggest financial killer of them all - moving into Manhattan.  This is all well and good if you want to retire by 65.  I must admit I am a little bit jealous of their lifestyles at the moment.  Living on half my income is a sacrifice especially in the NYC metro area.  However, having this savings rate I finally feel that there is a light at the end of the tunnel.  I will be able to retire in my early to mid 30's and be able to live life on my terms!  

I hope others can draw on inspiration from this and feel free to ask me any questions!

The FHA loan requires 3.5% down. But how much money should you have in the bank for all other closing costs associated with buying a house. For example, on a $100/$200/$300,000 house, you would need $3,500/$7,000/$10,500 down but with closing costs how much should you have in the bank? Is there a rule of thumb for this?

I have an autoimmune disease in my colon that is triggered by stress.  When it is active it makes my life miserable.  The biggest cause of stress is working as a construction project manager in NYC with a lot of pressures coming from all sides.  The biggest stress relief for me would be to know I could walk away from work at any time without having to worry about money.  I don't know if I would quit a job that I do well at, am appreciated, work with a great team, and enjoy most days.  But having a safety net, a plan B would go a long way for peace of mind and physical health even if I never quit what I'm doing.

So I am trying to reach a basic level of FI as soon as possible.  Through research and travel, what I realized is there are many areas in the world that I would be open to living that are much cheaper than NYC or much of America.  On even $1,200/month I could live very comfortably in areas such as Bali, Thailand, Vietnam, and the Philippines.  For stocks using the 4% rule in low cost index funds, I would need $360,000 invested to make that $1,200/month expat plan happen.  I'm 26 and at my current income and savings rate I'll have that money by age 35.  If I get raises in line with what my coworkers have gotten while maintaining the same expenses, I can expect to have the money by age 32, just 6 years away.  

My question for the Bigger Pockets community is to lay out a scenario with real estate of how I could get there faster.  I am saving $30,000/year and don't want to invest anything I already have in real estate because that is my emergency fund.  How many doors and how much invested in down-payments and up front costs is a reasonable middle of the road assumption to make a $1,200/month profit on real estate?  

The market is cyclical.  While we can never be sure where we are in that cycle, we can be certain that it will dip or crash again at some point.  What strategies do you use to protect against financial downturns and is there anything to look for or negotiate when taking out a loan that can protect you?

I wish I had known about this!!!  Just settled on my studio apartment a few months ago and I believe I would have qualified.  This is the kind of house hack I would have invested in with this kind of advantage.  
https://www.zillow.com/homes/for_sale/house,condo,...

https://www.zillow.com/homes/for_sale/house,condo,...

Hey Mike, I'm looking to do a house hack in about 2-3 years (saving up for a down payment) and I also live in NJ.  If you don't mind sharing I am curious what town did you buy your duplex in and what are the numbers?  Thanks.

@Rich Vogel  I'm curious to know how many properties and the total market value of those properties allowed you to reach that goal.  Awesome job man!

@Scott Trench Hey Scott I got your book in the mail today and started reading it.  Really good stuff so far.  I think this might be interesting to you in the way a Snapple fact might be.  I took a class in transportation design learning how the NY and NJ transit systems are designed and where it makes sense to expand the current system.  Buses and trains are slower than driving, so people naturally want to drive, but the cost of building new roads and bridges is high per person compared to mass transit.  So the government wanted to find a way to attract people to the mass transit system based on how people value their time outside of work.  They found in their studies that people on average psychologically value their commute time at only 25% of their hourly wage, and use this percentage as well as known transportation times as part of their model for setting ticket prices for mass transit and choosing which areas would use the transit based on the incomes of people who live in those areas and how many people live in that area.  Obviously if they are going to spend billions on a new train line they want to know people are going to use it before they spend the money.  To do this, they try to make mass transit psychologically and actually slightly more affordable compared to driving for the middle class, and place the mass transit in highly populated areas that people can easily walk to or take a short drive to.

@Chris Breezy  I don't want to say who I work for but it is a big construction company.  The three you listed are some of the major players in the city.  You can look any of them up by googling "glassdoor" if you want to know what they pay and if people like working there.  I would say for you try to get a Bachelors of Science in Civil Engineering from an ABET accredited school because that is usually what I see for construction managers and that is the major I know.  I don't much about the school or major you listed but I can see it is not ABET accredited which means that it does not meet the educational standards to become an licensed engineer.  Where I work most people have degrees from NJIT, Penn State, and Stevens but I know there are a few good ones in NYC as well.