Mid life and beyond

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Stormfloatter
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Joined: Sat May 29, 2021 7:19 am

Mid life and beyond

Post by Stormfloatter »

I found this forum recently and I realize little I have in common with some of you. I’ve made money, but I’ve spent more money so now I am net zero net worth considering all assets and debts.

The only thing that has kept me afloat is my house when it comes to networth, but that is only due to the crazy prices.

Last year I basically cut my expenses to a minimum and I paid down about 70k in cc debt with 70k left to go. My credit scores were low due to high credit utilization, but i have been able to refinance at a low rate.

Although things are not ideal, it is starting to stabilize with a good positive cashflow coming in from 2 w2 incomes.

Nevertheless, I missed out on all the action in stocks, etc since I was using all cash to pay down and service debt.

If we keep going leaving everything as is, I would be able to pay down all my non mortgage debt including cars in 24 months while maxing out both 401ks. This would still leave me with about 2k free cashflow per month for the 24 months period.

Having said that I do not like where I live, and this is affecting my health and mental approach to handle things. I’ve been thinking about selling my house or renting it out, and buying a new place. The new place is a relatively good deal in this market, but would set me back financially. But as I come to the realization that I am already in the third half of the game, I have less and less chances of making such a move.

The new property is a relatively good deal in this market, and there could be a potential 15% appreciation with minor fixes, but I would plan to live there till I retire. I can only put 5% down now after selling mu current home and would keep the remaining cash as a buffer(about 7%)

The other option would be to convert my current home to a rental and come up with 5% downpayment by selling some other assets.


Do I just give up any grandiose dreams and accept reality or keep living on the edge. Did you have to go to that transition or were you born “smart”
Point
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Re: Mid life and beyond

Post by Point »

To get specific advice it would be best to be more specific about your current situation. Following the guidelines referenced below will provide more insight about your incomes, cash flow, debt, tax rates, timelines, etc

There are no quick fixes, but paying down debt and living well below your means are a good start.

viewtopic.php?f=1&t=6212
KlangFool
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Re: Mid life and beyond

Post by KlangFool »

OP,

1) When you are in a deep hole, you need to stop digging. Buying a new property will dig you into a deeper hole.

2) Pay off your current credit card debt. Then, you can think of everything else.

3) Can you refinance the mortgage of your current house again and pay off the credit card debt faster?

KlangFool
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Aaand...it'sgone
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Re: Mid life and beyond

Post by Aaand...it'sgone »

It sounds like you know what you should do: differentiate between needs and wants, pay off the debt, and keep maxing your 401K. A new property is just more debt, not strong strategy for dealing with your current problems.

It sounds like you are also doubting whether you can stick to the plan, and that maybe you think it's not in your nature to do so given your past spending habits?

Consider: there's a lot of middle ground between a grueling 60% savings rate and -10%. Find a savings rate that gets your debt gone in a reasonable amount of time, but that also allows you to have some fun, blow off steam, and enjoy life a bit.

It is easier said than done, but I would also suggest analyzing how you used to spend money and identify free/cheap ways to get a similar sense of satisfaction and enjoyment. For example, are there cheaper hobbies and ways of celebrating/rewarding yourself? Maybe you don't take an international vacation, but find a cheap cabin getaway?
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wander
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Re: Mid life and beyond

Post by wander »

Sorry Op, you don't have $2,000 free cashflow. That amount should be zero, and all should go to paying off debt.
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JoeRetire
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Re: Mid life and beyond

Post by JoeRetire »

Stormfloatter wrote: Sat May 29, 2021 8:20 am Although things are not ideal, it is starting to stabilize with a good positive cashflow coming in from 2 w2 incomes.
Terrific!
If we keep going leaving everything as is, I would be able to pay down all my non mortgage debt including cars in 24 months while maxing out both 401ks.
Depending on the interest you are paying, it might be wise to skip the 401ks for now in order to get rid of the debt as fast as possible.
I can only put 5% down now after selling mu current home
IMHO, if you can't afford to put 20% down, you can't afford it.
Just remember: it's not a lie if you believe it.
delamer
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Re: Mid life and beyond

Post by delamer »

To answer your last question first, my parents were frugal and taught me good savings and spending habits. And I got interested in investing in my early 30’s (my parents owned some stocks but weren’t particularly knowledgeable about investing).

But I have friends/colleagues who had non-frugal parents who are doing fine. And just following the investing suggestions in this 16-page artcile is all you really need to have a solid long-term investing plan, regardless of your age: https://www.etf.com/docs/IfYouCan.pdf

As to your other questions:

Don’t consider moving until you’ve paid off your consumer debt.*

You talk about “other assets.” Do you have any taxable savings or retirement accounts? Are you currently contributing enough to at least get the match for any workplace retirement plans?

Have you gone through your spending category-by-category to see where you can cut back?

Are the 2 W-2s from two jobs that you have or do you have a working spouse? If a spouse, is s/he onboard with making changes to become financially secure? That makes it a lot easier.

Good luck. You’ve already made a lot of progress.

=====

* The exception is if you fear for your physical safety. If you just don’t like the busy road or your neighbor’s dog barks too much, then tough it out.

Don’t hold on to your current house if you eventually move. Your net worth will be overly concentrated in residential real estae in one area. Not to mentionthe potential hassles of collecting rental and maintaining the property.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
LittleMaggieMae
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Re: Mid life and beyond

Post by LittleMaggieMae »

I was born "just smart enough" to not get into deep financial trouble - which means I wasn't so smart in my 20's and early 30's but not so bad that I got into a hole I couldn't get out of fairly quickly.

Without more information about our finances and situation:

My limited hindsight with having to dig out of debt suggests that the adage "When you are in a hole, stop digging" applies to your situation with a buying a new house.

My limited hindsight with having to dig out of debt suggest that perhaps you getting tired of your belt tightening? Are you falling into old behavours that got you into debt in the first place? Buy/moving to a new house is starting to dig the debt hole again. Are you looking for 'drama' or 'excitement' that spending money brings?

You have a 2 year horizon on getting out of debt. You have 2 years to continue your journey of making financial decisions based on the goals and plans you have put in place. 24 months is not that long and moves you to a much better place. I think you should re-apply myself to your decision and plan to get out of debt. I would start looking at what your life will look like and what you will do when the 24 months is up. I would try to generate some "excitement" about getting out of debt - not adding more. I would start thinking about what you will do when you are out of debt.

Selling and buying a house is fraught with expenses. I would NOT go down that path at this point. That doesn't mean you can't generate some excitement or interest in your debt pay off plan: Maybe now is the time to start "downsizing" your stuff... can you sell some of the stuff you no longer use or want? Can you apply that money to lowering your debt? The added benefit of doing this is you may not have to pay to store or move this later. Another added benefit is you might get more for the stuff now rather than later when it becomes "junk". Sometimes it's better to sell it while it's still useful and someone wants it. The longer you wait the more out of date/out of fashion/starts to entropy it becomes. I imagine with 70K in CC debt - you've got a lot of "stuff".
Topic Author
Stormfloatter
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Joined: Sat May 29, 2021 7:19 am

Re: Mid life and beyond

Post by Stormfloatter »

Thank you all for your very valuable responses. I hope this is another step in the right direction in changing my ways. I have decided to pursue a refinance of my current home and stay here until it makes sense to look at other alternatives.
anoop
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Re: Mid life and beyond

Post by anoop »

Stormfloatter wrote: Sat May 29, 2021 8:20 am Having said that I do not like where I live, and this is affecting my health and mental approach to handle things.
If something is affecting your health then I think addressing that is the most important thing. I'm not sure how I would go about it given your finances (I'm way too conservative), but you definitely don't want to be living in a place that results in you ending up with chronic health issues.
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leeks
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Re: Mid life and beyond

Post by leeks »

anoop wrote: Thu Jun 10, 2021 9:31 pm
Stormfloatter wrote: Sat May 29, 2021 8:20 am Having said that I do not like where I live, and this is affecting my health and mental approach to handle things.
If something is affecting your health then I think addressing that is the most important thing. I'm not sure how I would go about it given your finances (I'm way too conservative), but you definitely don't want to be living in a place that results in you ending up with chronic health issues.
Is there not some other housing option that might be less expensive AND address some of what you don't like in your current home?

Could you sell the current place and rent until your debt is paid off and you have enough saved for the next down payment?

Or could you reconsider what you need in the next house and get one that would have a lower mortgage than what you have now? That could allow you to pay off debt faster and, after you knock that out, build up savings faster.

If it is affecting your health, I would prioritize finding some kind of solution to mitigate that, even if that solution is not an immediate move. Maybe there are other ways to address the negatives?
hi_there
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Re: Mid life and beyond

Post by hi_there »

What is bad about your current house that your health is affected? Would your mental health be better if you further complicated your finances by trading up to a different house?
protagonist
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Re: Mid life and beyond

Post by protagonist »

KlangFool wrote: Sat May 29, 2021 9:40 am OP,

1) When you are in a deep hole, you need to stop digging. Buying a new property will dig you into a deeper hole.

2) Pay off your current credit card debt. Then, you can think of everything else.

3) Can you refinance the mortgage of your current house again and pay off the credit card debt faster?

KlangFool
I agree with all of this.
Topic Author
Stormfloatter
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Re: Mid life and beyond

Post by Stormfloatter »

anoop wrote: Thu Jun 10, 2021 9:31 pm If something is affecting your health then I think addressing that is the most important thing. I'm not sure how I would go about it given your finances (I'm way too conservative), but you definitely don't want to be living in a place that results in you ending up with chronic health issues.
Health issues are due to forced air in the winter a not balance duct system. Then there is the fact that although the sqft of the house should be sufficient, the noise when we are all at home is unbearable after having been mostly in the home for the past year. It is an “I can’t take it anymore” moment which is affecting my work decision making etc. So I could address this by spending more money on the house, but this is how most of my debt issues happen. I used cards to pay to renovate the house and never caught up to paying them down. Then kids happened and I basically ran my budget like congress for about 3 years.

On the other hand all the pressure for having this debt and and my will to fix things benefited me at work because I needed to increase my salary. In the last year alone I was able to increase it by 45% by getting back to back promotions.


This is what I am trying to do.
protagonist wrote: Thu Jun 10, 2021 10:14 pm [quote=KlangFool post_id=6035720 time=<a href="tel:1622299250">1622299250</a> user_id=10499]
OP,

1) When you are in a deep hole, you need to stop digging. Buying a new property will dig you into a deeper hole.

2) Pay off your current credit card debt. Then, you can think of everything else.

3) Can you refinance the mortgage of your current house again and pay off the credit card debt faster?

Income: 150 + 72 both w2
With current budget cashflow is about 6000. The remainder is to service debt(3000) mortage, and living expenses.
Tax rate 22% effective 11% but with the raises 2021 will be different.

I want to get rid of CC debt within 2-3 years

I only have about 20 years left of work and I may not want to get into a new mortgage after 3 years from now.

This year I was planning to max out both 401k which will drastically reduce cashflow after September( i had been contributing only 1%, but I will get murder with taxes if I keep it like this)


Point wrote: Sat May 29, 2021 9:35 am To get specific advice it would be best to be more specific about your current situation. Following the guidelines referenced below will provide more insight about your incomes, cash flow, debt, tax rates, timelines, etc

There are no quick fixes, but paying down debt and living well below your means are a good start.

viewtopic.php?f=1&t=6212

Thank you
JoeRetire wrote: Sat May 29, 2021 9:59 am [quote=Stormfloatter post_id=6035599 time=<a href="tel:1622294440">1622294440</a> user_id=175611]
Although things are not ideal, it is starting to stabilize with a good positive cashflow coming in from 2 w2 incomes.
Terrific!
If we keep going leaving everything as is, I would be able to pay down all my non mortgage debt including cars in 24 months while maxing out both 401ks.
Depending on the interest you are paying, it might be wise to skip the 401ks for now in order to get rid of the debt as fast as possible.
I can only put 5% down now after selling mu current home
[/quote]


Thank you this was very valuable
delamer wrote: Sat May 29, 2021 10:07 am To answer your last question first, my parents were frugal and taught me good savings and spending habits. And I got interested in investing in my early 30’s (my parents owned some stocks but weren’t particularly knowledgeable about investing).

But I have friends/colleagues who had non-frugal parents who are doing fine. And just following the investing suggestions in this 16-page artcile is all you really need to have a solid long-term investing plan, regardless of your age: https://www.etf.com/docs/IfYouCan.pdf

As to your other questions:

Don’t consider moving until you’ve paid off your consumer debt.*

You talk about “other assets.” Do you have any taxable savings or retirement accounts? Are you currently contributing enough to at least get the match for any workplace retirement plans?

Have you gone through your spending category-by-category to see where you can cut back?

Are the 2 W-2s from two jobs that you have or do you have a working spouse? If a spouse, is s/he onboard with making changes to become financially secure? That makes it a lot easier.

Good luck. You’ve already made a lot of progress.

=====

* The exception is if you fear for your physical safety. If you just don’t like the busy road or your neighbor’s dog barks too much, then tough it out.

Don’t hold on to your current house if you eventually move. Your net worth will be overly concentrated in residential real estae in one area. Not to mentionthe potential hassles of collecting rental and maintaining the property.

Not much to show for even with debt…
LittleMaggieMae wrote: Sat May 29, 2021 10:16 am I was born "just smart enough" to not get into deep financial trouble - which means I wasn't so smart in my 20's and early 30's but not so bad that I got into a hole I couldn't get out of fairly quickly.

Without more information about our finances and situation:

My limited hindsight with having to dig out of debt suggests that the adage "When you are in a hole, stop digging" applies to your situation with a buying a new house.

My limited hindsight with having to dig out of debt suggest that perhaps you getting tired of your belt tightening? Are you falling into old behavours that got you into debt in the first place? Buy/moving to a new house is starting to dig the debt hole again. Are you looking for 'drama' or 'excitement' that spending money brings?

You have a 2 year horizon on getting out of debt. You have 2 years to continue your journey of making financial decisions based on the goals and plans you have put in place. 24 months is not that long and moves you to a much better place. I think you should re-apply myself to your decision and plan to get out of debt. I would start looking at what your life will look like and what you will do when the 24 months is up. I would try to generate some "excitement" about getting out of debt - not adding more. I would start thinking about what you will do when you are out of debt.

Selling and buying a house is fraught with expenses. I would NOT go down that path at this point. That doesn't mean you can't generate some excitement or interest in your debt pay off plan: Maybe now is the time to start "downsizing" your stuff... can you sell some of the stuff you no longer use or want? Can you apply that money to lowering your debt? The added benefit of doing this is you may not have to pay to store or move this later. Another added benefit is you might get more for the stuff now rather than later when it becomes "junk". Sometimes it's better to sell it while it's still useful and someone wants it. The longer you wait the more out of date/out of fashion/starts to entropy it becomes. I imagine with 70K in CC debt - you've got a lot of "stuff".
aristotelian
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Re: Mid life and beyond

Post by aristotelian »

Yes, give up your grandiose dreams. You've made it this far, this is not the time to go backward.
Tingting1013
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Re: Mid life and beyond

Post by Tingting1013 »

What exactly were you spending all of your money on
a
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Re: Mid life and beyond

Post by a »

I'd sell the house, find a quiet rental to live in, use the money from the house to pay off all debt and hire a nanny so that all stress in my life is removed, then focus on fixing my health back to 100%. It's easy to make money when healthy. How old are you?

There is always a way to get what you want in life as long as you are really determined. And have enough time.
helloeveryone
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Re: Mid life and beyond

Post by helloeveryone »

Tingting1013 wrote: Fri Jun 11, 2021 10:57 am What exactly were you spending all of your money on
This is a really good question in addition to all the advice above.

Take a look at all your assets and if there are some you could sell off to help you "balance the books" that may help. ie - is there a boat, extra car, bunch of toys etc... that are just cluttering your life and you are making payments on or perhaps having to pay for insurance...get rid of those things and use that money to pay off debt as well.
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leeks
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Re: Mid life and beyond

Post by leeks »

You don't have to spend more than your current house value to have less noise and healthy indoor air quality (which does matter). You don't need a more expensive home, you just need a different one.

There may be another tradeoff to make - location, size, townhouse instead of single family, etc. But health is more important than some of those things.

Current house or grandiose house are not the only two options. I think you have set up a false choice here to convince yourself that a fancier house is a health need.

Sell while market seems hot and then rent something affordable or buy something for the same or lower price.

Now does seem like a good time to unload a house in a poor (noisy) location. If the housing market slows down, it will be harder to sell.
humblecoder
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Re: Mid life and beyond

Post by humblecoder »

Sounds like you have done a good job of digging out of your current hole. If I were you, I wouldn't dig another, potentially bigger hole by purchasing a more expensive house.

Obviously, I don't know the details, but it feels like the issues that you described can be rectified in your current house.

If there is an air quality issue, that can be fixed through adding a filtration system or humidifier (if dry air is causing the issue) or de-humidifier (if moist air is causing the issue). That seems like a less expensive fix.

Regarding the family noise issue, hopefully with the vaccine rolling out, schools and workplaces opening up, the worst is over. By the time you locate a house, put in an offer, close on the house, things may be back to normal where you don't have to worry about working from home in a house full of people.

Besides, there are cheaper options to deal with that if it is specifically a noise issue: a good pair of noise cancelling headphones, sound proofing of walls/ceilings, etc. Or you can go to a library or other public place with Wifi. Even if there is still background noise, sometimes just having a different set of surroundings might do the trick.

My point is that there are other options that aren't as costly as buying a new house. I would explore those options first for committing to the additional debt.
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leeks
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Re: Mid life and beyond

Post by leeks »

humblecoder wrote: Fri Jun 11, 2021 11:56 am Sounds like you have done a good job of digging out of your current hole. If I were you, I wouldn't dig another, potentially bigger hole by purchasing a more expensive house.

Obviously, I don't know the details, but it feels like the issues that you described can be rectified in your current house.

If there is an air quality issue, that can be fixed through adding a filtration system or humidifier (if dry air is causing the issue) or de-humidifier (if moist air is causing the issue). That seems like a less expensive fix.

Regarding the family noise issue, hopefully with the vaccine rolling out, schools and workplaces opening up, the worst is over. By the time you locate a house, put in an offer, close on the house, things may be back to normal where you don't have to worry about working from home in a house full of people.

Besides, there are cheaper options to deal with that if it is specifically a noise issue: a good pair of noise cancelling headphones, sound proofing of walls/ceilings, etc. Or you can go to a library or other public place with Wifi. Even if there is still background noise, sometimes just having a different set of surroundings might do the trick.

My point is that there are other options that aren't as costly as buying a new house. I would explore those options first for committing to the additional debt.
I assumed it was noise from outside the apartment like a busy road or train or being next to a recycling center or something.

Does the OP have to work remotely? If the OP is just complaining about noise from the family making it hard to work at home, yes shouldn't that resolve in fall when schools and offices should be open? In most areas there are plenty of in-person summer programs for kids. If it is babies or toddlers cared for at home by a nanny (spouse works so I assume OP uses child care), look into renting a spot at a coworking space (or use daycare/preschool, or a nanny-share hosted at someone else's house). Or invest in soundproofing for whatever room you work in.
Katietsu
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Re: Mid life and beyond

Post by Katietsu »

I do think that you might be falling into your old pattern of using money you do not have for what seems like an easier fix to your problem. And if you make this change, how sure would you be that there will not be a new problem looking for cash to solve.

It sounds like you may have been home working remotely with young kids in the house for the last year. Maybe it would help to know that there are literally millions of people who have been at wits end in this situation alongside with you. Will this situation be changing for you soon as people go back to offices and schools? Maybe it would be useful to spend some time getting ideas of the inexpensive ways others have found to cope with your situation. Most of us have had to use aluminum foil and chewing gum to make the last year “work”.

Congratulations on turning things around with still a couple of decades in the workforce to go. You have a terrific income. Find forums, friends or podcasts that support your get out of debt/live below your means approach. Listen to Dave Ramsey or Rachel Cruze, google frugal living, whatever it is that you can relate to and gives you motivation. Otherwise, it can be hard to stick to your plan when your social media feed is full of your friends’ new toys and trips and not their stress when they struggle to pay the bill.
Last edited by Katietsu on Fri Jun 11, 2021 1:14 pm, edited 1 time in total.
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LilyFleur
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Re: Mid life and beyond

Post by LilyFleur »

Bose noise-cancelling headphones!

Most of us that live within our means have learned to be content with situations that aren't completely comfortable so that we aren't without resources when we get old, including paying our credit cards off every month.

Moving right now is a bad financial move. You'll pay too much, and you cannot afford that.

It seems like the credit card problem ballooned with children. I shopped--and sold--regularly at the local consignment shop. I took my children to the library a lot. We went to the park a lot. Children don't have to be hugely expensive.
humblecoder
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Re: Mid life and beyond

Post by humblecoder »

leeks wrote: Fri Jun 11, 2021 12:16 pm I assumed it was noise from outside the apartment like a busy road or train or being next to a recycling center or something.
The OP said:

Then there is the fact that although the sqft of the house should be sufficient, the noise when we are all at home is unbearable after having been mostly in the home for the past year.

I interpreted this to mean the the noise issue was because everybody was at home and in close quarters and not due to noise from outside the house. Obviously I am not the OP, so I freely admit that I could be wrong in my interpretation!
jharkin
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Re: Mid life and beyond

Post by jharkin »

I'm going to take a contrary stance:

You are NOT in as bad shape as you think. Seeing the positives is the first step in making the changes you want.

#1 - This board is a bubble. 99% of people dont live like the folks here and most board members are NOT millionaires or come from wealthy families. A lot of us struggle or have struggled in the past just like you.

#2 - Most Americans have zero to negative net worth, so if you are even $1 positive you are actually doing better than average.

#3. Most Americans in fact go into retirement with little net worth and get by on nothing but social security. Being mid-career you actually have a lot of time left to correct and end up far better than average.

#4 a plan that gets you debt free other than mortgage in 2 years while also saving the max in 401k is great! You will probably go from zero to a 6 figure net worth in that time. That is something to be proud of.


My advice: Keep doing what you are doing, just dont dig the hole any deeper. I would actually NOT go full on austerity and give up that last 2k of free cash flow - the result will probably be it stresses you out so much you burnout and regress to prior bad habits.

re: the health issues. Consider hiring an HVAC contractor to fix and re-balance your heating ducts before giving up and selling the house. It might be a relatively inexpensive fix.
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leeks
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Re: Mid life and beyond

Post by leeks »

humblecoder wrote: Fri Jun 11, 2021 1:00 pm
leeks wrote: Fri Jun 11, 2021 12:16 pm I assumed it was noise from outside the apartment like a busy road or train or being next to a recycling center or something.
The OP said:

Then there is the fact that although the sqft of the house should be sufficient, the noise when we are all at home is unbearable after having been mostly in the home for the past year.

I interpreted this to mean the the noise issue was because everybody was at home and in close quarters and not due to noise from outside the house. Obviously I am not the OP, so I freely admit that I could be wrong in my interpretation!
Yes you may be right. There is indeed a big difference between a permanent problem with the home's location vs feeling cramped when everyone is doing work/school at home.

If both parents have been working from home, have young children, and no child care arrangement, that is an impossible situation that should be remedied by getting child care in one form or another.
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bligh
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Re: Mid life and beyond

Post by bligh »

Stormfloatter wrote: Sat May 29, 2021 8:20 am I found this forum recently and I realize little I have in common with some of you. I’ve made money, but I’ve spent more money so now I am net zero net worth considering all assets and debts.

...

Having said that I do not like where I live, and this is affecting my health and mental approach to handle things. I’ve been thinking about selling my house or renting it out, and buying a new place.

...

Do I just give up any grandiose dreams and accept reality or keep living on the edge. Did you have to go to that transition or were you born “smart”

1) It sounds to me like the new house purchase is a lifestyle upgrade. If I were you, I would stay where I was and get my financial and retirement situation in order before even considering (let alone making) any lifestyle improvements.

2) I wasn't born smart but I learned my lessons early enough in life (mid 20s), and was good enough (and fortunate enough) in my profession to not go too far off the rails.

You do not mention your age but from the sounds of it you are getting close to being of the age where employment becomes harder and harder to find even if you choose not to retire. My advice to you would be to make sure you have a cushion to fall back on incase health or career issues leave you in a bad situation. Only once that cushion is big enough, should you consider upgrading your lifestyle.

Think of it this way. The size of the average home in the US in 1950 was 950 sq ft. (it is about 2500 sq ft today) and the average household size was about 35% larger (~3.5 in 1950 vs ~2.5 today). How much have humans changed that they need almost 3 times the space for about 2/3rds the people per household? Were people in the 1950s really that miserable?
protagonist
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Joined: Sun Dec 26, 2010 12:47 pm

Re: Mid life and beyond

Post by protagonist »

LittleMaggieMae wrote: Sat May 29, 2021 10:16 am I was born "just smart enough" to not get into deep financial trouble - which means I wasn't so smart in my 20's and early 30's but not so bad that I got into a hole I couldn't get out of fairly quickly.

Without more information about our finances and situation:

My limited hindsight with having to dig out of debt suggests that the adage "When you are in a hole, stop digging" applies to your situation with a buying a new house.

My limited hindsight with having to dig out of debt suggest that perhaps you getting tired of your belt tightening? Are you falling into old behavours that got you into debt in the first place? Buy/moving to a new house is starting to dig the debt hole again. Are you looking for 'drama' or 'excitement' that spending money brings?

You have a 2 year horizon on getting out of debt. You have 2 years to continue your journey of making financial decisions based on the goals and plans you have put in place. 24 months is not that long and moves you to a much better place. I think you should re-apply myself to your decision and plan to get out of debt. I would start looking at what your life will look like and what you will do when the 24 months is up. I would try to generate some "excitement" about getting out of debt - not adding more. I would start thinking about what you will do when you are out of debt.

Selling and buying a house is fraught with expenses. I would NOT go down that path at this point.
Exactly. Well said.

The OP has credit card debt (I would guess at 21% interest?) and is thinking of buying a house before paying that off?
That will change a hole into a deep well.

OP, pay your credit card debt off tomorrow if you have the money! If you don't, live like a pauper if necessary until you pay that off, using every penny you can possibly save to do so. That is the only way you will dig yourself out.

And once you do you will feel an enormous sense of satisfaction and accomplishment that will likely bring you even more pleasure than moving into a new home with the stress of even more debt to pay off.
Outer Marker
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Re: Mid life and beyond

Post by Outer Marker »

I would suggest you read "The Millionaire Next Door." I did so in my 30s after I has stressed myself out by buying too much house. It dramatically changed the way I think about money. It all worked out well after I got myself disciplined and on track. Please don't buy more house. It will only increase your stress level and detract from your health. I'd look into fixing your current identified housing problems on a limited budget with a new air filtration system and humidifier, and perhaps some interior sound insulation with foam injection in the walls for your office and bedroom.
LuckBeALady
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Re: Mid life and beyond

Post by LuckBeALady »

Stormfloatter wrote: Sat May 29, 2021 8:20 am
Did you have to go to that transition or were you born “smart”
I was definitely not born smart. I woke up in my late 30’s in a lot of debt: cars, credit card, student loan, mortgage.

I followed Dave Ramsey’s “baby steps” to get out of debt, and simultaneously found the fine folks here at Bogleheads to help guide my investment decisions.

I’m 56 now and on good financial shape, despite cutting my work back to 1 day a week due to health issues.

Change is possible. You have to keep your mind flexible and your options open.
TheDDC
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Re: Mid life and beyond

Post by TheDDC »

Dave Ramsey’s “baby steps” is where I would start. Enroll in a Financial Peace University class near you.

You have to be scared of all this debt. I know I would be. It sounds like you are. Pay off all non-mortgage debts FIRST. Don’t dig a deeper hole. DR advocates paying off smallest to largest. The most important thing is that you throw all remaining money at the non-mortgage debt and tackle it first. Even before that you need to swear off debt. If you aren’t in that mindset of “never again” then it won’t work. You will just get back the the old way of doing things unless you swear it all off.

I’m proud of hearing that you want to take the first step.

-TheDDC
Rules to wealth building: 75-80% VTSAX piled high and deep, 20-25% VTIAX, 0% given away to banks, minimize amount given to medical-industrial complex
Topic Author
Stormfloatter
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Joined: Sat May 29, 2021 7:19 am

Re: Mid life and beyond

Post by Stormfloatter »

LuckBeALady wrote: Sun Jun 13, 2021 2:49 pm [quote=Stormfloatter post_id=6035599 time=<a href="tel:1622294440">1622294440</a> user_id=175611]

Did you have to go to that transition or were you born “smart”
I was definitely not born smart. I woke up in my late 30’s in a lot of debt: cars, credit card, student loan, mortgage.

I followed Dave Ramsey’s “baby steps” to get out of debt, and simultaneously found the fine folks here at Bogleheads to help guide my investment decisions.

I’m 56 now and on good financial shape, despite cutting my work back to 1 day a week due to health issues.

Change is possible. You have to keep your mind flexible and your options open.
[/quote]

I am sorry to hear about the health issues.

TheDDC wrote: Sun Jun 13, 2021 4:20 pm Dave Ramsey’s “baby steps” is where I would start. Enroll in a Financial Peace University class near you.

You have to be scared of all this debt. I know I would be. It sounds like you are. Pay off all non-mortgage debts FIRST. Don’t dig a deeper hole. DR advocates paying off smallest to largest. The most important thing is that you throw all remaining money at the non-mortgage debt and tackle it first. Even before that you need to swear off debt. If you aren’t in that mindset of “never again” then it won’t work. You will just get back the the old way of doing things unless you swear it all off.

I’m proud of hearing that you want to take the first step.

-TheDDC
I turned this thing around by reading the total money makeover. We sold most of what we could sell, cars, toys etc. We did the envelope thing up until march last year due to covid. So this initially helped me, but I missed a lot of capital appreciation that happens only once in a lifetime.(the 70k I paid would have easily turned into 140k last year…but Again this is an issue only because I was irresponsible before and I did not prepare for this).

In addition, I calculated the difference between snowball and avalanche and it was about 30k in interest more based on my timeline and scenario. Also I feel better having more than 1000 in emergency fund, even if I am not done paying all the debt.


At this point the other house is not an option so I will just go all in in paying of the debt, with the exception of contributing to the 401k, which I feel I need to do for tax and and to fund my retirement. I also refinanced the mortgage to get rid of MI and lower rate which is saving an additional 320$ per month.

There was an easy way out a couple of years ago, but I decided not to take it. I feel better about it, but it would have saved me a lot of money…
LuckBeALady
Posts: 83
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Re: Mid life and beyond

Post by LuckBeALady »

Stormfloatter wrote: Sun Jun 13, 2021 5:19 pm

At this point the other house is not an option so I will just go all in in paying of the debt, with the exception of contributing to the 401k, which I feel I need to do for tax and and to fund my retirement.
There was an easy way out a couple of years ago, but I decided not to take it. I feel better about it, but it would have saved me a lot of money…
I did the same- ignored Dave’s (IMHO) bone-headed advice to discontinue 401k contributions but otherwise I went all-in on paying off non-mortgage debt.

Hindsight is 20/20- don’t waste time regretting the past; everyone makes mistakes. Just make better decisions in the future.

Best of luck to you. Sounds like you’re on the path to a comfortable future. And it seems like spending more money on a different house is not a great option at this time.

Thanks for the well wishes- as long as I can still ride my mountain bike, I’m doing ok. 8-)
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