Synospsis: My spouse keeps pushing to invest in more real estate. I think we should focus on increasing our actual retirement accounts and brokerage accounts.
The hopefully-not-to-long-but-probably-too-long-explanation:
My spouse (36M) and I (33F) are what I consider to be FI-adjacent. We've never say down to figure out what our FI number would be. We have mostly focused on keeping spending down while increasing our salaries. Thus far, we have kept up a decent savings rate for most of our marriage (9 yrs, 50-70%/yr, depending on the year).
We're also very flexible in regards to our overall timeline and goals. Best case scenario is that my spouse would retire early and I would keep working, mostly because he hates working for someone else and I tend to find have a job fulfilling.
However, over these years, we've developed a misalignment when it comes to how to reach FI. My spouse has a strong preference for investing in real estate. I would like to invest more in traditional investing (especially Roth IRA and a regular brokerage account). We've tried to compromise on this and have a somewhat hybrid approach, prioritizing each of our personal risk tolerances and what we are/are not comfortable with.
This has entailed
- always getting entire company match for retirement contributions (was actually mandatory for most of our careers for a long time)
- paying off primary mortgage
- I max my Roth IRA every year. Spouse contributes to theirs as they see fit.
Originally, when discussing real estate investment (like 7 yrs ago), we both agreed that we wanted to pay off our primary mortgage, just to feel a bit more secure. This was 100% about our own risk tolerance rather than investment optimization.
About a year and a half ago, we both agreed we wanted to buy another rental property. However, we had a friend we were helping get back on their feet and who we needed to move out of our house. We decided to co-buy a second home that they could live in while paying most of the mortgage. We have the agreement written up legally. We originally hadnt planned on making additional payments on a rental's mortgage. However, with it being friend's home & interest rates at the time at 8.5% for our area, we decided to again work to pay the mortgage off early (once again, we made more of a security choice rather than pure optimization).
This year had several big changes: we moved to a different state for my husband's job, had our first child, and I'm currently a SAHM. We're renting at the new location and transitioning our previous home into a rental.
We plan on evaluating how long we'll stay in this area once my husband hits the 1-yr mark at the new job. If it looks like there's good long term potential, then we'd like to buy a house to get out of renting (and we both loved being home owners in our previous fixer-upper). We're currently saving up for a down payment, but at the expense of Roth IRA contributions and starting a college fund for the newborn. Based on the numbers I've run, we'll be hard pressed to come up with a 20% down payment on a year's notice. Two years would be much more feasible. Here's where we've really started to disagree:
- My spouse has suggested borrowing from our 401ks to make up the difference.
- He's also mentioned wanting to *again* pay a huge chunk extra on the mortgage those first few years.
I think we're already over-invested in real estate equity and want us to diversify by investing more into a basic ETFs, even if it means renting for an additional year (it would seriously only be a single additional year). We've both talked it over several times but haven't come to a consensus.
Here's our basic financial breakdown (rounded out) for reference:
Pre-tax HHI: 120k
Our rent: $2,200/month
Net worth: 550k
- Equity between the 2 properties owned: ~320k
- 70k mortgage
- 12k loan (home repair, deferred interest, have $ to pay it off rn but instead are making payments to pay it off before the interest kicks in).
- HYSA: 40k
- Retirement accounts: 170k
- Brokerage: 10k
Just started contributing to a health savings plan (didn't have the option previously).
Since we're at a type of standstill, I figured I'd fish for some outside perspective. Is he crazy, am I crazy, are we both crazy? Does any of this make actual sense or is our overall strategy too far from a traditional FIRE to really apply here? I'm open to all of this or more.
Edit: accidentally hit post while trying to scroll down on mobile before finishing, sorry!