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Hello all. I am a 33 year old vet tech. No kids, single. I sold a product in 2015 which cleared almost exactly 2.1 M after taxes. One time lump, total sale.
I'll try to be brief, avoid too much lifestyle commentary etc., and get to the numbers.
I made 45k at my job last year but that was with 50+ hr work weeks. I will continue my job albeit in a different part of the country with a higher COL. Same salary, as little OT as possible. My new job has medical insurance and a 401k match @ 4%. After 4% into 401k, health insurance and all income taxes, I plan to net apprx 35k from my employer (I'm separating investment income into a diff category for convenience sake).
tax rate:
feds: TBD based on portfolio performance state: 4.63, flat.
I have no assets beyond said cash + 11,000 in a 401k. None. Car is worth nothing. I rent. etc.
I have no debts.
My plan in brief:
90k house- 20% down, 450k home. standard 30 year mortgage. APR approved @ 3.45, no closing costs.
50k home improvements- stuff I want to add to the house I'm likely buying. It'll probably be closer to 40, but always round up, etc.
50k combination of "stuff I want" and "stuff I forgot that I'll prob need"- snowmobile, stuff for my (new) truck, fee-based adviser, accountant, a few guns, and stuff that will invariably pop up bc it always does!
100k- parents and siblings gift @ 14k a year, maximum allowable by law w/o a gift tax tally
60k savings acct emergency fund
700K- undecided national index fund (prb Vanguard)
400k- undecided US bond index
300K- undecided intl index fund
350k- small business I have brewing
lifestyle upgrades/major monthly bottom line expenses: mortgage @ 1600, homeowners ins $150 (inc. liability), prop tax 250$, 750$ truck payment (1.79 @ 84 mnths, no sense in paying cash), umbrella ins + car insurance 250$.
That means my salary will cover those expenses in full. Fund dividends will be to live on. This is all assuming the 350k into my business fails.
(I'm not including 401k into this because i have 10+ funds, it would take up a full page and the dollar amnts don't make it particularly relevant.)
If it's not obvious, I have yet to see a fee-based adviser.
Roughly...sound about right? Too much house? Thanks for your time.
Last edited by gassyyoungman; 02-02-2016 at 10:53 PM..
I don't think anyone is giving 360k loans for someone with 45k in income unless you are securing the mortgage with assets meaning you'd have limited control of them. I know we wouldnt write that mortgage
550k of your allocation is high risk 100k in improvements/wants 100k to family and friend and 350k for a business startup. Don't give away or blow 200k
My advice is go look at Mr Money Mustache's website.
With 2.1 mil you could withdraw 3% forever and generate 63k/yr in income.
Look up the Trinity study as well. It models a first withdrawal at 4% and adjusts upward for inflation from there on out, but it models based on 30 years, you need closer to 45-50 years, so that is why most early retirees go conservative with a 3% draw down rate. Use the 63k/yr you generate to live and start up your business.
Hello all. I am a 33 year old vet tech. No kids, single. I sold a product in 2015 which cleared almost exactly 2.1 M after taxes. One time lump, total sale.
I'll try to be brief, avoid too much lifestyle commentary etc., and get to the numbers.
I made 45k at my job last year but that was with 50+ hr work weeks. I will continue my job albeit in a different part of the country with a higher COL. Same salary, as little OT as possible. My new job has medical insurance and a 401k match @ 4%. After 4% into 401k, health insurance and all income taxes, I plan to net apprx 35k from my employer (I'm separating investment income into a diff category for convenience sake).
tax rate:
feds: TBD based on portfolio performance state: 4.63, flat.
I have no assets beyond said cash + 11,000 in a 401k. None. Car is worth nothing. I rent. etc.
I have no debts.
My plan in brief:
90k house- 20% down, 450k home. standard 30 year mortgage. APR approved @ 3.45, no closing costs.
50k home improvements- stuff I want to add to the house I'm likely buying. It'll probably be closer to 40, but always round up, etc.
50k combination of "stuff I want" and "stuff I forgot that I'll prob need"- snowmobile, stuff for my (new) truck, fee-based adviser, accountant, a few guns, and stuff that will invariably pop up bc it always does!
100k- parents and siblings gift @ 14k a year, maximum allowable by law w/o a gift tax tally
60k savings acct emergency fund
700K- undecided national index fund (prb Vanguard)
400k- undecided US bond index
300K- undecided intl index fund
350k- small business I have brewing
lifestyle upgrades/major monthly bottom line expenses: mortgage @ 1600, homeowners ins $150 (inc. liability), prop tax 250$, 750$ truck payment (1.79 @ 84 mnths, no sense in paying cash), umbrella ins + car insurance 250$.
That means my salary will cover those expenses in full. Fund dividends will be to live on. This is all assuming the 350k into my business fails.
(I'm not including 401k into this because i have 10+ funds, it would take up a full page and the dollar amnts don't make it particularly relevant.)
If it's not obvious, I have yet to see a fee-based adviser.
Roughly...sound about right? Too much house? Thanks for your time.
-What kind of house does $450k buy you in your area, and what are your family circumstances and plans (Kids? Spouse?)
-Is this small business something you have experience in, or are you a total newbie? I suggest starting small. If you go into something you have no experience in, you need to hire someone who has been in that field for several years, otherwise you'll likely screw it up.
-You can gift more than 14k each year, you simply have to apply the excess to your lifetime exemption
-No need to decide what you are going to buy yet. You might, for example, give yourself a 20k/year "blow money" allowance, to be spent on any combination of automobiles, recreational motorized vehicles, hunting gear, land, etc.
-Word to the wise: Don't go overboard with buying stuff in the first few years. I would say go ahead and buy one home (principal residence) and maybe also a second property. Beyond that, limit yourself to 20k/year in discretionary purchases. You will be surprised how quickly you can deplete a large sum if you get yourself into a lifestyle that ties up $200k in depreciating assets like boats, vehicles, and firearms. Celebrities do it all the time (and go broke!!!) and also the maintenance costs WILL add up. If you have $200k in depreciating consumer goods like boats and cars, your maintenance costs and insurance costs alone will probably gobble up much of your take-home pay, forcing you to dip more into the windfall to pay those bills. Slow down and don't blow it all!!!
-Word to the wise: Don't go overboard with buying stuff in the first few years. I would say go ahead and buy one home (principal residence) and maybe also a second property. Beyond that, limit yourself to 20k/year in discretionary purchases. You will be surprised how quickly you can deplete a large sum if you get yourself into a lifestyle that ties up $200k in depreciating assets like boats, vehicles, and firearms. Celebrities do it all the time (and go broke!!!) and also the maintenance costs WILL add up. If you have $200k in depreciating consumer goods like boats and cars, your maintenance costs and insurance costs alone will probably gobble up much of your take-home pay, forcing you to dip more into the windfall to pay those bills. Slow down and don't blow it all!!!
This
With that kind of income, $2.1 million will vaporize very quickly. The more you crank up your lifestyle expenses and fling it away, the faster it will vaporize. This is more like lottery winner behavior. Even with that nest egg, you probably can't afford a $450K home. It will eat that nest egg alive with all the ownership costs.
I sold a small company where I was on the founding team. I paid off my mortgage and bought a new set of golf clubs. I have 5%er income, not $45k income. My ex-wife drained half of it a few years later but that's another story.
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