Future Anxiety - How’m I doing?

[jesusreigns4ever]

Only 10,000 ‘how am I doing posts’, why not one more right? Have an almost daily low level anxiety feeling like I’m falling behind and ‘time is running out.’ Like it’ll take forever to retire, like SO many people are doing SO much better (despite stats saying otherwise). Guess I’m just looking for feedback, reassurance from strangers. Thanks for reading.

46, went through expensive divorce, 2 school-age kids, joint custody, live in sort of pricey suburb of LA, concert producer, $140k, live w/gf so I guess ‘household’ is $210k. Rent is below market on nice 2+2 craftsmen, decent area. Ex and I have move-away provision which makes it unrealistic to move away from area so no, I can’t “just move to a cheap area”.

I was a late bloomer w/starting on investing (mid 30’s) but quick stats are:

Net Worth approx: $537k
401k: $275k
Roth: $60k
529 plans (2): $22k
Cash: $180k
No debt
$1000 p/mo child support

I’d like to buy a house but starters are like $750-800k in area and getting an affordable mortgage would require completely cleaning me out on cash, so I’d have no reserves, no E-fund. Housing nut would also almost double if I did this. Def a cash poor scenario if I even could buy. Broker did pre-qual and max I could qualify for is $560k loan. So that’s a lot of cash to come up w to find something doable.

The divorce (2018) hit hard (she makes relatively little) and I paid 4yrs of alimony, Covid wiiiiped out my industry for 15 mos so it’s been a rebuilding period this past 4 yrs.

Am I screwed? I feel screwed. If I stay in my current gig I can expect 5% increases p/yr, could maybe hit $1.5-2mil in retirement accts by 60? But thats not a lot in the scheme of things. Guess I could keep stacking funds and move to LCOL area when kids go to college?

TLDR: middle class single dad, Feel like I’m spinning my wheels. Thank you all

 

[faithscribe]

@jesusreigns4ever You're fine. For now forget about the house and get the money in the markets and make sure you're all in stocks in all your accounts.

 

[jesusreigns4ever]

@faithscribe Thank you. Yeah I have veeery little bond exposure. There’s one balanced fund w/ a % of said fund being in bonds but that’s it.

 

[randomallocation1]

@jesusreigns4ever I would be moving cash beyond 3-6 mos of expenses into back door Roth IRA or 401k over the next couple of years.

Sp 500 did 20% this year. What do you think it’ll do over the next 20-30 years?? Double? More? You get the idea.

 

[jesusreigns4ever]

@randomallocation1 Yeas for sure. I’ve tracked my nw since 2016 and then it was $68k, haha. It increased $400k in 7 years.

I have a 12-mo 5% Cd that matures in spring and I plan to then max my roth and move the rest to an index fund. And I’m keeping it 6 months reserves.. covid scarred me

 

[christianwife1]

@jesusreigns4ever Guy, you're better off than 90% of the US population. Not sure if this is one of those show off post but yeah you're good.

 

[brian77]

@jesusreigns4ever I’m a bit slow….how the heck did you save 180k in cash? With two kids and a divorce. Living in LA!

 

[jesusreigns4ever]

@brian77 Leftover inheritance + just saving what I could here and there

 

[summerbell]

@jesusreigns4ever Seems like the house is a priority? I wouldn't buy combo with your girlfriend unless you get married. If that happens, the house should be even more achievable.

It seems do-able to me. $180k cash + the contribution portion of the Roth if you need a bit more. Maybe pause your 401k (beyond the match) for a while to beef up your cash supply.

Don't take that $560k number as written in stone. Different lenders will give you different numbers, the market will fluctuate, and your credit and income may change too.

Could be worth considering a condo or different neighborhoods just to get "on board" the housing market train.

 

[jesusreigns4ever]

@summerbell Somewhat yes. Has to be the right spot though. I conceptualize the gotta get in there idea but I’m not 29 and single (which would have been the time to buy a condo, if I were actually making real money @ 29 and having my act together), and don’t to fully sacrifice to have a $4800 mortgage on what is essentially an apartment bldg with a view of another peach colored apartment bldg. the townhouses ive seen that would feel worth being stretched really thin for hover around $800k.

Prob is location and being sort of trapped in this area. I love the area but inventory is low which keeps prices absurdly high. If I could live in Valencia or something there are just hundreds of Mc’homes for sale at any given time.

You’re spot on about only getting house together if married. And to be married would need to use my lawyers for a solid prenup beforehand. So much to do.

 

[joshua14]

@jesusreigns4ever I think you need to start doing some serious planning based on the life you've made for yourself instead of the life you were born into or the life you almost had.

Getting into a house is just the start of the expenses. You also need to maintain it, repair stuff and likely want to do occasional updates. In addition, turning 375k into 1.5 million in 14 years will take around 10% compounded annually.

That's stock market returns. Along the way the market will have 10% corrections about every 14 months and 20% corrections every 5 years. You will need nerves of steel to withstand those the closer you get to 60. Then you need to figure out how to make it last for the rest of your life.

 

[jesusreigns4ever]

@joshua14 Yeah, think about these things all the time. Thank you for the feedback

 

[jackier293]

@jesusreigns4ever Forget about buying a house and get tied down to a 30-year mortgage. Pile as much money in investment accounts as possible and retire elsewhere cheaper. You will be more than fine.
Btw, why are you having so much cash laying around if you don't plan on buying a house? Make that cash work.

 

[jesusreigns4ever]

@jackier293 Well yeah cuz up until recently, I was going to try and buy a house but plans are changing. Nice to hear so many responses that are echoing my own thoughts, that it’s a much better move to do as you have just said - stack $$ and retire somewhere cheaper. Doesn’t even mean leaving socal. I know a fee retirees who bought condos in Oceanside that were very reasonable, just as an example. So most of that cash is in 5% CDs and when they mature in the Spring I’m gonna move about 1/2 to a taxable brokerage acct, max out my roth and leave about 4-6 months cash in a money market acct.

 

[jackier293]

@jesusreigns4ever The cost of owning a house is wayyy more than people usually budget for. I just replaced my roof for $29k, new HVAC for over 5k (we installed our own HVAC. It would have cost us over 20k if we had someone doing it). We cut our own lawn but spent on $5K lawnmower, etc. A house to me is not an investment, more like a lifestyle expense. My rental properties are investments, not my primary home. I would live in a condo or apartment if I were single.

 

[jesusreigns4ever]

@jackier293 I love to hear realistic, sensible input and advice from people such as yourself; thank you. It affirms what I have already gathered, observing friends who have taken the plunge only to always seem cash strapped but going on and on about “how much more there house is worth now”; forgetting that all they talk about it how much money they are hemorrhaging $ on repairs/maint, property taxes, insurance, interest etc. Also from a lifetime of watching my parents put all their spare $ and time into their house w/seemingly endless projects. Never felt like that was the life for me so instead I’ve focused on investing in securities and piling cash, focusing on staying out of debt. Worth mentioning that I’m an only child and sole executor on parent’s estate and will inherit the house and property. Not sure what I’ll do w/it; would never want to live in rural northern CA again, so prob sell it and use that to put 50% on something here?

 

[jackier293]

@jesusreigns4ever I assume the inheritance can cover the cost of a house somewhere you want to live. I recommend selling it and buying something you like. Just make sure your parents' house is in your name or in a trust that you are the trustee. Asset can evaporate due to healthcare costs. So, protect it.
If I were you, I would move the cash (after account for emergency fund) to an indexed fund and let it compound the next 10-15 years. Max out all 401k and Roth IRa, you will have over $2M by the time you hit 60. That is a very nice amount to retire on without any debt.

 

[jesusreigns4ever]

@jackier293 Great advice. My parents have a living trust. I am also just about finished setting up my own living trust.

 

[megz088]

@jesusreigns4ever Considering what you’ve come back from you’re in great shape. By 45 the goal is 3x your annual income in retirement savings so you’re a little light there but nothing terrible.

I know this sounds crazy to some who would be in great shape with 140k, but for a family of 3 in LA that’s going to be tough to be in a position to buy without being house poor as you’ve called out. Putting yourself in a position to have to retire out of the area also isn’t ideal, when you’re older there is a lot of upside to being in a place you have a network of friends/family.

Can you increase your income? I’m not familiar with your industry or how the skill set translates to other areas. Can you change companies for more pay? Is there a possibility of promotions to senior roles? If not can you consult or do ad hoc work on the side?

 

[jesusreigns4ever]

@megz088 Thanks for the feedback and understanding. I could eventually move into a senior and then director role. Think of any massive concert or large event you’ve ever seen. I deal with the logistics and budget for all the things behind-the-scenes, that end up on stage. Things like Audio, Video, Lighting, union labor, artisti settlement, everything like that. All of the major arenas and amphitheaters in the southern California area. I work for the largest global concert promoter in the world, so I’m not going to make more money going with someone else. I just kind of have to keep doing my time. Again, Covid really hit us hard and it’s kind of amazing I even still have a job coming back because a lot of people disappeared. I used to have a few decent side hustles before Covid, but again, that was sort of slow to come back. And honestly between work, and navigating being a single father 50% of the time and trying to ask a kind of life, there is not a lot of time for a side hustle.

And I agree, I do not want to move to some low cost-of-living area or throw a dart at a map and move to some random place so that I can retire. I also don’t want to work past 60 ideally. I know that is a lofty goal considering my situation, but yeah. Or I would at least like to get into more of some sort of consulting role at that point.

I feel like I have more time, to be more aggressive, and I have been sort of putting the idea of buying a house on the back burner because I just don’t think it’s realistic. So I would likely move a lot of that cash to taxable, brokerage account, and just stick with a low cost S&P 500 index fund.

Girlfriend is younger than me, and a lot earlier along in her career than I, But we are in the same industry, and she helps with rent and things, so that is huge. The divorce was just brutal though, and I can’t really imagine getting in bed with somebody financially again, so I don’t really think us buying a house together is in the cards, at least not in the near near future, which is why I’m not really factoring in her income.