Stuck in the grind of working to get to early retirement

[Purple Property]

So my wife and I have our own home now, two daughters under 2 years old and a rental property, kiwisavers ticking along and index funds building up each month we get our paycheck.

Mortgages getting paid down, index funds going up (albeit zig zagging) and working out calaculations we have around 11-12 years based on current savings/spending rates to hit that magic 4% withdrawal/25x expenses figure in order to not have to work ever again.

We are mid 30s and feel like that's a long grind in my corporate and her part time positions to reach this goal.

How have others managed to stay the course for this length of time? Any tips?

[Frezzinghot]

So my wife and I have our own home now, two daughters under 2 years old and a rental property, kiwisavers ticking along and index funds building up each month we get our paycheck.

Mortgages getting paid down, index funds going up (albeit zig zagging) and working out calaculations we have around 11-12 years based on current savings/spending rates to hit that magic 4% withdrawal/25x expenses figure in order to not have to work ever again.

We are mid 30s and feel like that's a long grind in my corporate and her part time positions to reach this goal.

How have others managed to stay the course for this length of time? Any tips?

When you retire, where is you main income coming from, it not that clear from your explanation? You have one rental property, will that be paid off in 12 years?

[Purple Property]

When you retire, where is you main income coming from, it not that clear from your explanation? You have one rental property, will that be paid off in 12 years?

Withdrawals from index funds primarily.

Rental won't be paid off, will likely purchase another 1-2 rentals in that timeframe too.

[artemis]

The great author Charles Handy wrote about portfolio work, and while the concept is no longer new I think he was the first. Basically - work out what annual household income is needed then look at dividing time to meet that income while still being human. Like a small amount of high paid work, some low to medium paid but satisfying work to top up and some 'heart work' - where the heart is, regardless of paid or not.

May not work out but it is a simple way to look at life through a different lens.

[McDuck]

How have others managed to stay the course for this length of time? Any tips?

Sounds like you hate your job.
Maybe talk to your HR and see what they can do to keep you interested.

[Jeffa]

Withdrawals from index funds primarily.

Rental won't be paid off, will likely purchase another 1-2 rentals in that timeframe too.

How I and others have done it is more to do with risk tolerance than anything, your plan is safe steady and will most likely use up the best years of your life...will you have health issues in your 50s? Life is short your best years are behind you time is not on your side.

Build your portfolio as fast as you can to get out of the rat race. Turn the heat up and invest in growth stocks not index funds...low risk low rewards.

Debt is your business partner..why are you paying it off ? Rent services loans..live off equity..1million in equity should give you 5 to 10 years of income, your portfolio would have doubled in that time and rents increased,

Don't be afraid of non banks..interest rates should be the least of your concern if you have access of 500k to 2mill in credit.

You will be able to achieve this by investing in Auckland and Christchurch in the next 5 years, the regions may only have 1 to 2 years of growth before flat lining for 5 to 10yrs.

This information is what property moguls like Gramme Fowler and co would charge thousands to teach you I have given it to you for free.. don't ask me why.

How much worth of cars are in your driveway?

2 cars worth 50k each or 2 cars worth 10k each...I can easily invest that extra 80k and double it in 6 months. RISK IS THE ONLY WAY FORWARD.

[Jeffa]

Sounds like you hate your job.
Maybe talk to your HR and see what they can do to keep you interested.

Purple Property..comments like this are commendable and McDuck is looking out for the greater good which makes him a good man.

But to get ahead in this world you need to be ruthless and fearless...focus on yourself and your family not the team of 5 million.

[wodger]

Rent services loans..live off equity..1million in equity should give you 5 to 10 years of income, your portfolio would have doubled in that time and rents increased,

I'm in a similar situation to the OP, although a bit further ahead with a shorter timeframe to early retirement, but also started a bit later. I'm also using interest only at the moment and see sense in using it long term if the banks let me.

Can you clarify what you mean by living off equity, if all the equity is tied up in the properties? Does it mean debt stays at the same level while equity increases, and you live off future rent increases? Or perhaps buying as much as possible and then selling some later on, and taking the profit to live off. Or is there something I am missing?

[Jeffa]

I'm in a similar situation to the OP, although a bit further ahead with a shorter timeframe to early retirement, but also started a bit later. I'm also using interest only at the moment and see sense in using it long term if the banks let me.

Can you clarify what you mean by living off equity, if all the equity is tied up in the properties? Does it mean debt stays at the same level while equity increases, and you live off future rent increases? Or perhaps buying as much as possible and then selling some later on, and taking the profit to live off. Or is there something I am missing?

This clip should explain,the only difference is I own more than 3 properties .. Some investors can achieve this in a short period.

[wodger]

This clip should explain,the only difference is I own more than 3 properties .. Some investors can achieve this in a short period.

Ok, that makes sense. Wonder what the actual tax implications are of borrowing money against your rentals to spend as if it were income? Are you executing this strategy at the moment?

[Jeffa]

Ok, that makes sense. Wonder what the actual tax implications are of borrowing money against your rentals to spend as if it were income? Are you executing this strategy at the moment?

You can't tax debt. It's more a mindset change. You will find most of the wealthiest people in the world don't have an income. They own assets in Ltc or LLC and trusts etc and live of these.

[Jeffa]

Are you executing this strategy at the moment?

I retired February 2020. I was also the only one on this forum predicting increasing house prices and a wealth transfer was about to happen.

[Wayne]

You can't tax debt. It's more a mindset change. You will find most of the wealthiest people in the world don't have an income. They own assets in Ltc or LLC and trusts etc and live of these.

And the video does cover that - he says instead of paying 30% tax YOU pay 5% interest

[Wayne]

I retired February 2020. I was also the only one on this forum predicting increasing house prices and a wealth transfer was about to happen.

You predicted a few things - still waiting for negative interest rates (and it seems the next OCR change is more likely up than down).

[Jeffa]

You predicted a few things - still waiting for negative interest rates (and it seems the next OCR change is more likely up than down).

Negative interest rates are replaced by the funding for lending program. You will get the same results in lower retail rates. Negative interest rates will be required in the next market correction.

Interest rates should be the least of your concern, they only affect homeowners not established investors.