As I mentioned in my story I never thought about retiring because I grew up in a country where a pension is worthless if you need to cover basic expenses with it. Buying a home or condo is reserved for just a few.
After coming to the U.S. I realized the dream of home ownership. I bought a house with my wife in 2003 in the Chicago west suburbs. As 2008 unfolded we saw our house lose almost half of what we paid for. We stayed put, and thankfully we were not affected financially but we lived from paycheck to paycheck.
In 2015 we decided it was time to move, but the market in our area had not lifted up enough to get much of a profit after selling. We decided to become landlords, take a chance and make the move happen.
We are currently still renting our old house, and finally, it has appreciated above the price we paid originally.
Our current home where we lived has appreciated 21% in the 3 years we have living in it. Whereas with our first home we have been able to built an equity of about 50% of its value.
After taking control of our money, freeing ourselves of $10,000 in credit card debt, we are determined to tackle the next money pit: a $20,000 student loan. We were paying 6.75% interest on this loan and it seems like we have been paying it for ages to make a very minimal difference. This year 2018 we decided to take a home equity line of credit at 4.75 % to pay off the student loan and lower the payment, although we are planning on paying this in two years.
In order to make this happen, I have stopped funding my 403B plan. I was contributing $7,200 yearly, now I will be contributing only $1,200. That should free up $6,000 a year and with the help of our tax returns, we should be able to knock that loan down in 2 years or even less.
After paying this student loan, we are planning on paying off the mortgage of our rental property. If my calculations are correct we should be able to pay this property off within 5 years. By doing so, my income will increase by $20,000 yearly which we are planning on using to invest in other rental properties.
We are conservative investors. We are not into the idea of leveraging ourselves into properties with no money down to make things happen faster. We are thankful for what we have and for what we have accomplished with a family of six on one salary; a teacher’s salary.
As all this unfolds, we will continuously use my salary increases to keep funding my 403B plan. This year I was able to push my salary up 7% by taking 8 credit hours in university courses.
In 2019 I will also take 8 more credits to max out my teacher salary and increase it again by 7%. In two years I should be breaking into the six-figure salary; Ok, low six figures!
As a teacher, I can’t collect my pension until I turn 55; 10 years away. However, this would be with a hefty penalty of 30%.
I am not sure what my situation will be at that point but I continue to explore options that can place me and my family in a better situation to make those kinds of decisions.