THE FINANCIAL EYE THE MONEY MINDER ‘We are very cash heavy right now’: Not sure what to do with money. How can I effectively allocate my resources for early retirement and real estate investments?
THE MONEY MINDER

‘We are very cash heavy right now’: Not sure what to do with money. How can I effectively allocate my resources for early retirement and real estate investments?

‘We are very cash heavy right now’: Not sure what to do with money. How can I effectively allocate my resources for early retirement and real estate investments?

“Hi Money Minder,

So, here’s the deal – I’m 32 (let’s call me Rick) and my wife is 26 (let’s call her Sarah). Together, we bring in around 240-245k (USD) a year. I rake in about 130-135k and Sarah brings home 110-115k. After taxes, we’re looking at around 13,700ish each month. On top of that, we get $1100 a month from renting out our basement to the same couple that lived in our old house.

I’m rocking a Roth 401k that I contribute 5% to. The company matches some of it and puts it into a traditional Roth – it’s like a split kinda thing. Sarah puts 3% into her 403b.

We’ve got two car payments totaling $1200, a mortgage of $2074 on a 374k house (2.7% interest) where we owe 335k, and we pay $290 for life insurance policies. Our car insurance hits around $300. No credit card debt here, we just have ’em for emergency situations. And no kids to worry about.

We’ve got our sights set on investing in multifamily real estate but right now we’re sitting on a pile of cash. Not sure if we’re on the right track – maybe we should be pumping more into retirement accounts? I’m kinda lost on this one. Btw, we’re in Missouri, a pretty low-cost area.

If you need more info, just shout. Our goal? Early retirement. Shooting for 500-600 units by the time I hit 40, plus a tidy sum in our retirement accounts. Way to go, right?

Farewell, Sally”

Response from THE MONEY MINDER:

Hello There,

Congratulations on your solid household income and your commitment to financial planning! It’s great to hear that you are looking to invest in multifamily real estate and are cash heavy at the moment. Given your goal of retiring early and acquiring 500-600 units by the time you’re 40, here are some practical steps you could consider:

Firstly, it’s fantastic that you are maximizing your retirement contributions by matching your Roth 401k and your wife contributing to her 403b. Since you are already in a good position with retirement savings, you may want to continue investing in these accounts while also focusing on building your real estate portfolio.

Given that you are cash heavy, you could consider exploring different investment options such as real estate crowdfunding platforms or investing in real estate investment trusts (REITs) to diversify your portfolio and maximize your returns. Additionally, you may want to consult with a financial advisor who can help you create a comprehensive investment strategy that aligns with your goals.

Furthermore, with your current expenses like mortgage, car payments, insurance, and life insurance covered, you could consider paying down your mortgage faster to reduce interest costs in the long run. This will free up additional cash flow that you can use for investments or savings towards your early retirement goal.

Overall, it sounds like you are on the right track with your financial planning. By continuing to focus on both retirement savings and real estate investments, you are setting yourself up for a solid financial future. Keep up the great work!

Best wishes on your journey to financial success,
THE MONEY MINDER

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