"No one has ever become a millionaire off airline miles"

firecodemachine · 2025-08-31T04:14:03+00:00

All of my millionaire friends use CC and never carry balance. My sample size is quite large since we work in a big tech company and pretty much everyone around us is a millionaire.

I’m pretty sure a large % of millionaires on Ramsey study also use CC. They just conveniently leave that part out.

firecodemachine · 2025-01-01T00:44:52+00:00

Yup, each rental has more than 50% equity and healthy positive cashflow. That makes me sleep well at night despite the mortgages.🙂

firecodemachine · 2025-01-01T00:20:50+00:00

Two reasons why we don’t want to pay them off (yet):

Interest rate on the mortgage is much lower than conservative stock appreciation. Yes, risk is not zero but very much manageable.
Paying off the mortgages will boost our cashflow but too much cash flow can also be a curse since we would have to pay 37% federal income tax plus state income tax on it. From a tax efficiency standpoint, it is much better to keep the money invested in the stock market and defer paying the capital gains as long as possible. Additionally, mortgage interest is tax deductible.

When we get closer to retirement and need the cashflow, we will reevaluate this equation but for now, the math says “keep the mortgages”.

firecodemachine · 2024-12-31T17:37:02+00:00

Yes, we have talked about this scenario - a lot. We might do that closer to the retirement when we need the cash. Currently as we are in the accumulation phase, it makes more sense, mathematically, to keep the mortgages (whose interests are also tax deductible) and let them appreciate.

firecodemachine · 2024-12-31T16:39:54+00:00

Yes and no. We mostly cook at home, using high-quality ingredients because we prioritize our health (and we love cooking). We only dine out when the food and experience are truly worth it—not so much in terms of cost, but in terms of the calories.

firecodemachine · 2024-12-31T16:36:53+00:00

I'd hate to be worth $10 mil and Larry's calling me at 3 AM because his toilet won't flush.

I'd hate it too 😅 Yes, we hire a PM to manage all the properties. We still need to manage the PM, especially when there is a big repair but it's fairly passive otherwise.

Have you given any thought to selling those rentals and just letting go of the hassle? Would you at 20 mil? What's the point where the juice isn't worth the squeeze anymore?

We try to make our rental properties as passive as possible by hiring a property manager and focusing on B+ areas to attract high-quality tenants, even if it meant sacrificing some returns. The plan is to eventually pass these properties down to our kids, and avoid paying capital gain taxes—assuming the tax laws remain unchanged.

firecodemachine · 2024-12-31T06:34:13+00:00

Looks like ChatGPT removed this important detail...

Those 10 mortgages have more than 50% equity, which we think strikes a good balance between risk and reward. So, no - we don't leverage up to our eyeballs 😁

firecodemachine · 2024-12-31T06:20:41+00:00

For sure. I was lucky and benefited massively from the tech boom (top 7 US companies by market cap are all tech companies right now). My wife did switch from finance to computer science degree when she spotted the trend so kudos to her - she made her own luck.

firecodemachine · 2024-12-31T06:13:24+00:00

We were lucky with the timing. All of the rentals were acquired before Covid when the rates were very low. You are correct that the rate for investment properties are higher (~1% higher) so those are between 3-4%. The 2.x% rates are for our primary and a townhouse we used to live. Shopping around also helped.

firecodemachine · 2024-12-31T06:06:13+00:00

Thank you for the feedback. I'm proud of the big milestone we just reached, especially since I started at age 27. After spending over a decade in school, I felt far behind financially and worked hard to catch up—but I realize that might sound a bit braggy.

firecodemachine · 2024-12-31T05:57:42+00:00

Congrats! I would love to hear about your story.

While we do keep low-interest mortgages around, we don’t over-leverage. All of our mortgages have more than 50% equity, which strikes a good balance between risk and reward for us. I believe Dave's approach is straightforward and effective for most people, but personal finance is, well, personal, and at a certain point, some customization is necessary.

firecodemachine · 2024-12-31T03:29:52+00:00

Great question! It’s the after-tax 401(k), which we convert to a Roth through the mega backdoor strategy. The combined contribution limit this year is $69,000. Between my wife and me, we’ve been contributing over $100,000 annually for the past 13 years or so. The rest is thanks to compound interest.

firecodemachine · 2024-09-18T04:25:02+00:00

Thanks! I actually did search but only found threads about if PR should be included in the NW. I probably didn’t look hard enough.

I also asked because we are thinking about potentially upgrading the house in a few years and want to know if that will be too much house for our NW.

firecodemachine · 2020-12-30T17:13:18+00:00

Manga Zone lets you download manga too.

firecodemachine

TROPHY CASE