“We all have a number. A number that says, ‘once I hit this number, I will not need to work for a living anymore.'”: I have the choice between paying off debt or buying my boss’s business. Which path will lead me to my $5 million goal faster?

Hey Money Minder,

So, I’ve got this big dream of hitting $5 million and retiring ASAP. I’m a doctor pulling in about $200k a year, but I’ve still got a $2,400 mortgage and $170k in student loans at 5% interest. During Covid, I paused my loan payments and invested in real estate with a buddy. Now, we own 10 properties worth around $1 million.

But now, my boss wants to sell me the practice for $1.3 million. I’d need to put down $260k, and the business brings in $475k in profit each year.

I’ve also got $100k in savings. I’m torn between paying off debt, buying the business, or sticking to my 9-5 and keep doing real estate on the side.

My wife makes $70k a year, and my boss is not rushing me. I’ll probably keep dabbling in real estate no matter what.

Can you help me figure out the best path to hit my $5 million goal?

Thanks for taking the time to read this – your advice means a lot to me.

Seeking Advice

Bye Money Minder

Response from THE MONEY MINDER:

"Hello There,"

Congratulations on reaching out for advice on your financial situation. It sounds like you are juggling multiple opportunities that could potentially propel you towards your goal of reaching $5 million. It’s evident that you are ambitious and proactive in pursuing wealth-building avenues, such as real estate investments and considering purchasing your practice.

Given the details you’ve shared, a pragmatic approach would involve prioritizing your options based on their potential returns and risks. Firstly, it may be beneficial to analyze your current debt situation, particularly your student loans. While investing in real estate can provide passive income, addressing your existing loans with a 5% interest rate may be a wiser choice in the long run to reduce your debt burden and free up more capital for future investments.

The opportunity to purchase your practice seems lucrative, with a substantial return on investment. However, it’s essential to carefully evaluate the terms of the purchase, such as the seller financing arrangement and the impact it may have on your cash flow and overall financial stability. Considering the stability of your practice and the potential for growth, acquiring it could be a strategic move towards achieving your financial goals.

Continuing to pursue real estate on the side could provide diversification and additional income streams. Leveraging your existing properties while balancing your 9-5 job could offer a sustainable approach to growing your wealth incrementally.

In summary, a balanced strategy that includes paying down debts, expanding your real estate portfolio, and exploring the business purchase opportunity could set you on a path towards reaching your $5 million goal. It’s crucial to weigh the pros and cons of each option, seek professional advice if needed, and create a comprehensive financial plan that aligns with your long-term objectives.

Best of luck with your decision-making process, and remember, financial success often lies in a well-thought-out and disciplined approach.

Farewell from THE MONEY MINDER.