Blew Up My Passive Income, No Longer Financially Independent

My family and I could have been set for life. Instead, due to my inability to beat back real estate FOMO, I blew up our passive income. And because our passive income is now much lower, we are no longer financially independent.

Desire is the cause of all suffering. Due to my desire to own a nicer home, I sold stocks and bonds. By doing so, I lost about $150,000 a year in passive income for the foreseeable future.

In 2023, my passive income was tracking to generate about $380,000. However, by buying a real forever home this time, my passive income is estimated to decline to about $230,000 in 2024. Sadly, $230,000 is not enough to cover my family's living expenses.

Due to purchasing a new house, I lost about five years of progress while taking on more financial responsibilities. Ugh, writing this hurts.

Alas, since starting Financial Samurai in 2009, I've always shared the ups and downs. Whatever you expect to happen in the future will likely be different. So stay on your toes!

This post is especially interesting for future or current parents thinking about how to juggle growing a career, raising a family, enjoy your hard work, and retiring comfortably in the future. As a father, it also highlights the pressure of being a provider and the sacrifices one must make for his family.

I’m not asking for sympathy or empathy, as I know they are hard to come by in this competitive world. All I’m asking is for you to read with an open mind to better prepare yourself for an unpredictable journey. I could just write about how life is always great. But that’s unrealistic, and frankly, annoying to read.

At the end of the day, you must do what’s best for your family.

Thought Long And Hard Before Losing My Financial Independence

If you subscribe to the Financial Samurai podcast (Apple or Spotify episode discussing the dilemma), you know I've thought long and hard about whether it was the right move to buy this house. At first, my wife was against it since we were happy in our old house. But over time, she came around to the idea.

Ultimately, I decided to blow up my passive income due to the following reasons:

  • The house rocks partly because it is on a triple-wide lot with a view and is 100% recently remodeled
  • I believe the best time to own the nicest house you can afford is when there are the most number of heartbeats at home
  • As a father, I want to give my family the best life possible
  • I'm bullish on artificial intelligence driving San Francisco real estate prices higher
  • We're past the bottom of the latest real estate downturn according to Fundrise CEO, Ben Miller
  • I have a plan to return to work and want motivation to fulfill the plan
  • I believe I'll be able to regain financial independence over time

Actions have consequences. We must own up to the results, deal with the repercussions, and continue forward.

Household Expenses Going Up

Starting in September 2024, when our daughter attends preschool full-time, I estimate our monthly expenses will grow to $24,033 a month, or $288,396 a year. Until then, our expenses are closer to $22,000 a month, or $264,000 a year.

To generate $288,396 a year after tax requires a gross household W2 income of about $400,000 using a 28% effective tax rate. Or if we want to stay unemployed, we need to earn about $379,000 in gross investment income using a 24% effective tax rate given investment income is taxed lower.

If we hadn't bought a new house, we were all set to have our $380,000 passive income pay for all our expenses this year and next. But now we've got a gaping hole.

No Longer Financially Independent

Our once $380,000 in passive income at a 24% effective tax rate would have generated $288,800 in net income. That was enough to cover our $264,000 – $288,000 in annual expenses and save.

However, now that our passive income has been reduced to about $230,000, using a 24% effective tax rate, I'm left with only $174,800 in net passive income. $174,800 is $90,200 short of my existing annual expenses and $113,200 short of my Fall 2024 future expenses.

As a result, after twelve years of financial independence, I'm sad to say I am no longer financially independent. And you know what? It’s a little depressing living paycheck-to-paycheck now.

Definition Of Financial Independence

My strict definition of financial independence is when your passive income covers your basic living expenses. The more you desire, the more you will need and vice versa.

Being financially independent doesn't include having a working spouse, making side income, or running a business to pay your bills. That’s all active income activity. Contrary to what some people believe, my articles don’t write themselves, not even with AI. No writing, no online income.

I'm unwilling to break the most important rule of FIRE just to win the game. Instead, I want to adhere to the rule I established in July 2009 by earning enough passive income to cover my basic living expenses.

Below is my estimated 2024 passive income streams by investment type. Every line item should be pretty accurate +/- 10% except for my venture debt and private real estate funds. Hopefully, there is upside as I’ve tried to be conservative with the distribution estimates. I also haven’t included my venture capital investments because they are still too early in the 10-year fund lifecycle.

Financial Samurai 2024 passive income streams - No longer FIRE after blowing up my passive income to buy a forever home

If I had just invested the money in Fundrise or another private real estate fund instead of a forever home, I'd have kept my financial independence and potentially earn more money in the future. Now my real estate is highly concentrated in San Francisco, which can be both good or bad depending on how well the local economy performs.

I want to continue diversifying into Sunbelt residential and industrial real estate due to demographic trends. Thanks to technology, more people are relocating to lower-cost areas of the country because they can. I’ve invested $954,000 in private real estate since 2016.

Paying The Price With More Stress and Anxiety

Given the difficulty of finding a job after being retired for years, I've felt more anxiety about my new lower level of passive investment income.

The first month after my home purchase was particularly stressful as I second-guessed whether I had made the right financial move. My kids had been happy in the old house.

Interestingly, the first month after the house purchase felt eerily similar to the first month after I had negotiated my severance. I was full of uncertainty and trepidation about blowing up my career for freedom. When the final paycheck arrived, I felt like I was floating in the middle of an ocean with a defective life vest.

What have I done?! I thought to myself.

Eventually, after three months, I got accustomed to no longer having a steady paycheck. Thankfully, after four months in our new home, I have also gotten used to no longer getting a nice monthly or quarterly credit from my Treasury bond income and dividend-paying stocks.

Household Budget For A $420,000 Household Income

Now that we're no longer financially independent, one thought process is for one or both of us get day jobs or consult again. Thanks to inflation and greed, our family is facing ever-higher expenses.

To cover $288,396 a year in household expenses, if we had no passive investment income, I calculate my wife and I would actually need to earn roughly $420,000 a year from W2 income. Because if we go back to work, we're also going to want to contribute to two 401(k) plans at $20,000 each or more. I treat all my investments as expenses, which is one of my tricks for investing more money.

Making $420,000 a year from one job is unlikely for us since we've been out of the work force for so long. But both of us making $210,000 each is feasible, but also unlikely.

Below is how I'd think we'd spend our $420,000 gross W2 income. The budget is based off my ideal lifestyle for a family of four in a big city. Of course, there are areas to cut. But overall, it is a realistic and comfortable lifestyle if we choose to remain in San Francisco.

Yes, I know, $80,400 a year in private grade school tuition for two is a ridiculous amount. However, we highly value speaking a second language. As a result, we've decided to send our kids to private Mandarin immersion school. Not only does a second language help with career opportunities, it also helps with thinking, making friends, and appreciating the world more.

If the school isn't working, we can always homeschool, or send our kids to public school.

Time To Go Back To Work Or Consult

Given the self-inflicted $90,200 – $113,200 shortfall, I've now got to find a way to make up to $113,200 in after-tax income. Using an effective 20% tax rate, I would need to earn $141,500 in gross income from a day job or consulting.

Now you understand more clearly why I'm giving up on early retirement. I can no longer afford not to work.

Once my daughter begins school full-time in Fall 2024, I will have two more days of free time. As a result, I feel it is prudent to do some consulting then to fill the void and earn.

Finding a job or consulting work that pays $141,500+ in gross income is more feasible than earning $210,000, let alone $420,000. As a result, I'm hopeful I will find the right fit.

Three Ways To Feel More Financially Independent

Although I'm technically no longer financially independent after 12 years, there are three ways to feel better about my regression. The first two ways take action. The second way takes a mental shift.

1) Sell my previous home or rent it out for cash flow.

If I rent out the previous home, I might be able to generate between $90,000 – $100,000 in gross rental income a year. If I sell instead, I might be able to net $1,300,000 after taxes, commissions, and transfer fees. The entire $1,300,000 could be reinvested in a 5% Treasury bond yielding $65,000 a year gross, or $52,000 net for one year.

The problem with selling now is that I would be selling in a still soft market with still high commission rates. It will take several years after the real estate collusion lawsuit for commission rates to come down meaningfully.

Due to a bull market in tech stocks, the emergence of artificial intelligence, and a gradual decline in mortgage rates, it's only a matter of time before the SF real estate market recovers. The amount of wealth creation in the area is as high as it's ever been. It’s exciting to live in a big city with so many financial opportunities.

Hence, I'm inclined to rent out the property for a couple of years despite earning a low yield. If I rent out the property, I'll be able to save a majority of my consulting income.

2) Do a cash-out refinance

If and when mortgage rates decline further, I could do a cash-out refinance to feel more secure. However, taking on debt after paying cash for a home feels like financial regression. I also don't want to pay refinance fees. Hence, I'd rather rebuild my liquidity by working and saving over time.

3) Realize my net worth doesn't change much

Despite no longer being financially independent, my net worth is roughly the same. Paying cash for a property by selling stocks and bonds is simply a net worth asset rebalance. My net worth doesn't change much, except for any capital gains taxes and fees involved with the rebalance.

Instead, I have a cash flow problem where it's like living paycheck-to-paycheck, but with enough assets on my balance sheet to still survive. If I need to earn more passive income, I can sell more growth stocks for higher-yielding bonds.

Or I could sell my lowest-yielding rental property if my tenants ever move out and reinvest the proceeds. However, again, I'd rather work to make more money and regrow my depleted stock and bond portfolios.

New Target For Re-Achieving Financial Independence!

I estimate it will take at least three years, but more likely five years to achieve financial independence again. As a result, the next three-to-five years will be spent earning and saving more aggressively.

In a positive way, I feel invigorated! It's as if I've gone back in time as a 32-year-old who realizes there's no way I can last in banking until age 40. I started writing about FIRE in 2009, and three years later in 2012, I left my finance job for good.

Ideally, with the help of a bull market or some unexpected opportunity, I'd like to reach FIRE again in three years because I'll turn 50 in mid-2027. By then my children will be 9.5 and 7.

My biggest challenge will be making sure I allocate enough time and energy to them during this journey. The last thing I want is to spend so much time making money that I miss my kids growing up.

Let the new financial independence journey commence!

Reader Questions

What type of sacrifices have you made for your family? Have you ever given up your financial independence for your loved ones? Do you think your children and partner will ever fully appreciate your efforts to take care of them and provide the best life possible?

Here's a short video clip where I talk to News Nation about my decision.

Diversify Your Investments Into Real Estate

If you want to invest in real estate more strategically, check out Fundrise. Fundrise manages private real estate funds that predominantly invests in the Sunbelt region where valuations are lower and yields are higher. It focuses on residential and industrial commercial real estate. 

Fundrise currently manages over $3.5 billion for over 500,000 investors. I've invested $954,000 in private real estate funds since 2016 to diversify my investments and make more money passively. After I had children, I no longer wanted to manage as many rental properties. 

Sadly, I will probably have to manage one more rental because I don't want to sell my old home now. Instead, I want to hold on and benefit from the potential upswing in real estate as the Fed begins cutting rates in 2024.

Invest In Private Growth Companies

Also consider diversifying into private growth companies through an open venture capital fund. Companies are staying private for longer, as a result, more gains are accruing to private company investors. Finding the next Google or Apple before going public can be a life-changing investment. 

Check out the Innovation Fund, which invests in the following five sectors:

  • Artificial Intelligence & Machine Learning
  • Modern Data Infrastructure
  • Development Operations (DevOps)
  • Financial Technology (FinTech)
  • Real Estate & Property Technology (PropTech)

Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. In 20 years, I don't want my kids wondering why I didn't invest in AI or work in AI! I'm allocating $500,000 to funds that invest in AI or specific AI companies over the next five years.

To achieve financial independence sooner, join 60,000+ others and sign up for the free Financial Samurai newsletter. Fundrise is a sponsor of Financial Samurai and Financial Samurai is an investor in Fundrise.

383 thoughts on “Blew Up My Passive Income, No Longer Financially Independent”

  1. Clearly you are a very thoughtful and talented individual who enjoys a measure of mastery of the variable (financial and career) choices that you can make.

    In my experience most people do not have these talents, and operate with short term and linear thought processes.

    Also called “ tunnel vision “ thay are without the ability to foresee a range of possible results, rather than the linear “idealized” path they envision.

    So when life delivers a curveball, thay are not prepared.

    My position stands… I find FIRE to be a risky life/financial strategy that depends LESS on excellent planning…rather than the “bet” that life won’t deliver any curveballs…that one cannot deal with.

    While FIRE may offer a measure of freedom (free-time) it relies on a large dose of LUCK, which is not commonly understood or acknowledged.

    Simply put… staying in the workplace provides OPTIONALLY AND FLEXIBILITY to deal with life’s curveballs.

    Jeff H

  2. I think the “fatal flaw” with F.I.R.E. is it makes the rather bold assumption that people can KNOW what they want, WHAT will happen, and what their GOALS and DESIRES will be…over the next 50 years.

    The idea of “retiring” at age 35-50 based on (then) current assumptions, means largely cutting off working income, career advancement, and important employment connections and skill development. It also cuts short the most important stage of compounding wealth…the last stage…55-65…when sums begin to really be meaningful.

    Retiring even at 60-70, is a “leap of faith” hoping that conditions (personal, economic, and other) factors don’t change outside the range that is assumed for the 20-30 years… one is retired. When you DOUBLE that “assumption time” you introduce much higher standard deviations and errors in assumptions.

    I can only imagine the stress for folks who “retired” in the low inflation rate, high return era of “cheap money”…now confronting (likely) more normal periods of higher inflation and lower stock market return cycles ahead.

    We are even seeing a wave or older “retirees” trying to “plug back” into the job market with diminished skills and connections, after miscalculating their readiness to retire.

    I’ve tried to find a satisfying career, save as much as possible, and slowly pull back as I transition to retirement. Success for me…is retiring ONCE…and not being forced to QUIT retirement…to go back to work.

    1. I agree. But I wouldn’t be so strict as to say success is only retiring once. To evolve with time and desires, I think it’s fun to retire multiple times. It means you’re trying new things. When you are no longer learning or earning you retire, take a break, then try something new again.

      Since 2017, I’ve given it my best to be a stay at home father. Now I plan to retire from being a stay at home father by September 2024, when my four-year-old begin school full-time. Then I plan to do some part-time consulting and start up land because I think it’s pretty interesting. After that time and need is over, then I will retire again, and try something else.

      The irony about a higher interest-rate environment is actually that it’s easier to stay retired and retire earlier because everyone can get a higher risk free rate of return on their cash. Also, to stay, competitive, companies are raising their dividends.

  3. What ultimately made you decide to bite the bullet and go for the new house? Since you clearly are someone that calculates costs ahead of time, enjoys spreadsheets, and plans for the future, you must have realized this decision was going to put you in the situation you’re in?

    What made you ignore the data, and move forward anyway? I think there’s a real lesson to learn there. What made the right brain or heart beat the left brain?

    1. Thanks for asking. Mainly it was the desire to provide the best possible life for my family outweighed the cost of needing to go back to work. I believe the ideal time to own the nicest house one can afford is when there are the most number of heartbeats at home.

      After the kids leave for college or wherever, it’s not like parents will want to upgrade to a bigger or fancier house. Parents will want to downsize or just keep their existing house.

      My daughter will begin attending school full-time in September 2024. As a result, both kids will be in school full-time, and we will have a 40-hour-a-week void to fill. I can’t write and play pickleball all day. As a result, I think taking a part-time consulting job at a startup in San Francisco and injecting myself back in society could be the ideal solution.

      Having this new house to pay for will motivate me to work and interact. Otherwise, I know myself and will probably just be too lazy to change. The window of opportunity is getting smaller at my age. Hence, this could be one last hurrah.

      How about you? What’s your background and work/financial situation? How do you figure out the right balance to take care of your kids, work, and make money? I’m looking to learn from people who’ve been able to find balance. Thanks.

  4. You have some blind spots, sir. Real estate is not passive income. Tenants are hands on, arranging maintenance is hands on, tax bills and bookkeeping is hands on.

    Alternative: REITs

    You are underinsured with your umbrella policy. It should be higher than your net worth, and I suspect your balance sheet is higher than 2m. You are also grossly overpaying for it.

    Better rethink private school. They can learn language other ways. Your housing costs are crazy for having no mortgage – do you have some lavish landscaping contract?

    Chop that food budget in half. You don’t need expensive weekly date night. Grow up, you are living beyond your means. That vacation budget is immense too…didn’t you just buy some posh house? That’s your vacation now.

  5. Paul Robinson

    No judgment here at all, yet I’m wondering if you’ve truly made the middle class mind-set shift?

    The bulk of your postings really boil down to retraining people how to think about where sources of income are generated.

    Wanting a bigger home is fantastic and sure why the heck not!?

    The real question here based on you providing “financial education” is, why didn’t you grow the investable networth (consulting, business, w2, whatever) re-invest for additional passive income for a downpaymemt and carrying costs of the dream home?

    Applaud your honesty in posting, that’s commendable :)

    It’s just an observation

    1. I think I’m always going to embrace the middle-class mindset because that’s how I grew up.

      I decided to pay cash to simplify, outcompete, and get a better deal. Now, the goal is to rebuild my passive income by living paycheck-to-paycheck while saving and investing aggressively.

      Saving and investing is much easier once there’s a significant reason to do so.

      1. Yup this reminds me of life immediately following the Great Recession of 2008-9.
        – poor.ass.multimillionaire (my old handle back then ;)

      2. Hi,
        While I applaud your honesty, I still can not believe what I read.

        I live in Sweden, 52 years old, and currently in a financial distress due to a work related injury in construction.

        Most likely, I will never fully recover. Ripped tendont in lower arm, upper biceps tendonts, long biceps muscle, and chest muscle.
        Rotator cuff injured.
        This happened in november -2o.

        Coming from an – at best – middle class working family, I learned quickly to stand on my own to feet.

        My mother suffered breast cancer in -89.
        My father – a stroke victim in October -87.
        So a lot of time invested caring for my parents.
        Trust me – the Swedish public health care system leaves a lot to be desired.

        I needed and education of course. A fancy degree from a college?
        Nope, not going to happen.

        I write this for one reason only – to give you a perspective on your life situation.

        Start working early was a given. Being forced to an 18 month stint in the army left ‘a dent’ in my financials, that a part of my financial losses are still struggling with to date (do the math).

        But enough about me. That is not why I write this.

        I mean – sorry for saying it, despite your professional approach – but talk about living beyond your means!

        I respect the commitment you must have made on your education, but is ‘this’ what the ‘American dream ‘ has come down to – living beyond your means, and raise privileged children?

        $80K in schooling? $16K in trips?
        A big house with large costs?
        I mean, this is unbelievable to any regular working man.

        Sorry dude, but that list was repulsive.
        I speak fluingly in Swedish, Danish, English, German, and some Estonian.
        That doesnt come from school to a waste majority.
        That comes from working in different countries, and studying on my spare time.

        Do you want your kids to learn Mandarin?
        Educate them outside of a cheaper school!

        I respect you for your honesty, as well as for your commitments to your family. Beautiful!

        Obviously, you got a great deal from a company I would never go near ( it represents everything I load) and deciding NOT to work? Un-imaginable in my world.
        But impressive!

        You made – based on my life experience, some weird choices, but it is impressive starting with two empty hands.

        You are an accomplished man, having accomplished more than I can get a handle on.

        An interesting question – I am convinced that there will be a ‘financial crises’ before the end of 2025.
        My belief is that it will be the worst crisis of my lifetime.
        That belief is entirely based on over-consumption, bad loans, over-prised US stock market, BRICS, and a world pretty much going down the drain.

        How do you take a stand on that, considering a portfolio that is heavy on estate and 5oo- investments, while you life a high-expense life style?

        At the same time, neither you or your wife are apparently working.

        Best regards, Fredrik

          1. Wow, thanks for that fast reply!
            Don’t know about a positive attitude though.
            Just trying to be a realist about everything.

            My wife works as a nurse, at the General Hospital in Malmö, southern Sweden.
            She pulls in about $32.000 a year. Net….

            I used to pull in about $42.000s year in construction. Net….

            Right now – $17oo. Per month ….

            So yes. She carries a BIG load.
            Doesn’t make me feel like a man to be honest .
            Have been carriyng my own load all my life.
            What I am doing right now?
            I don’t know.

            We have a small house in a small village. With heating, electricity, wi-fi, food, etc, we are all in at about $16oo a month.
            The house is paid for.

            The medical bills are bad. Medication cost is ok.

            Its cheaper to live here, and living in Malmö?
            No way, that is a hell hole.

            Your deal working at an invest firm is just..
            Let’s not go there.

            I’ve met about 15 different doctors, specialists and physical specialists.
            No surgery. They just can’t find a way forward.

            Well – about raising children in Sweden – Yes it is, and especially if your looking for private schooling.

            Those costs vary a lot.
            I have two grown up ‘bonus kids’ from her previous marriage.

            I have no children of my own, my daughter died at an early age.

  6. There is nothing wrong with your choices. You are upgrading your lifestyle. That’s the American Dream! Sometimes, you have to roll up your sleeve to make that kind of lifestyle jump.

    FIRE is a great concept to get people motivated to save aggressively by providing them with a positive future end game of early retirement and 4% perpetual withdrawal until death. But there is a flaw. And that flaw is that it curbs lifestyle creep and taking big risks to achieve FIRE. Yeah, they account for that with labeling it FatFIRE or whatever they are selling. But you are basically in this conundrum, your whole blog is based on FIRE…yet you realize that you want to upgrade your lifestyle and taking big risks which may jeopardize your carefully laid plans of FIRE. I’ve always believed that in my prime years, I want to work and make as much as I can while I can. What is the point of sitting on the beach at 40 years old? Any bum can sit at the beach if their lifestyle is small enough. And at the end of the day, if it doesn’t work out, you are sitting on 4-5 real estate properties…own a $5M home in prime SF location. I think you’ll be fine, and your blog should really reflect that attitude instead of the “woe is me” vibe it is giving off. First, no one can relate. Second, it doesn’t fit with FIRE any more.

    You have graduated beyond FIRE. You have a new mindset of getting into a much nicer lifestyle (even if means you have to get back into the workforce). You have decided that the RE in FIRE is optional. That’s your choice, and don’t apologize for it. Good luck.

  7. Jonathan Hoover

    TLDR Refinance into All-in-one loan and reinvest into cash flowing assets. Redirect all cash flow and expenses into all in one and have it paid off in 7 years.

    Perhaps you could get creative and instead of refinancing your home with a traditional 30 year mortgage, you could refinance into an All-in-one loan. This is a first lien heloc product which is combined with a sweep checking account that automatically credits or debits your deposits or expenses against the property. If you are aggressively saving and have positive cash flow, you could completely pay it off in 5-7 years, paying far less interest than you would on a 30 year mortgage and retaining access to all the capital in your home which you can then use for additional investments if you choose. It might not work with how high your current expenses are, as you do need to be saving 10% to 20% of your income though for the sweep feature to make sense and actually offset enough interest vs a traditional mortgage. Your budget does not seem set up to save and invest so you might need to address that.

    But the nifty part of an all in one loan is there are no minimum payments so long as you continue deposits to the sweep checking. So if you set up all your dividends and interest earned to automatically be deposited to the sweep account, you would not even have to factor in a mortgage payment and as your expenses come up, you set them up to come out of the sweep account and it would automatically borrow from the available credit on your home. This might solve the issue of not wanting to carry debt for an extended time and retaining most of your cash flow from before you purchased the house. Hopefully that helps.

  8. Hi – I just came across this article while browsing online and found the thought process very interesting.
    Is there a separate article where you are listing details of how you were making 380k in passive income in 2023 ? What is the portfolio distribution looks like – mostly rental, stocks etc ?

  9. I am also curious, is there a language immersion option for Manderin through the public schools near you? Our youngest is in Manderin immersion (4th grade now) and we love it — though not sure if our older two would have taken to it quite as well.

  10. Your budget of expenses needs to be reduced. The what is needed vs the what I likes. I found The what I like really can go and now my income is manageable for my expenses. Living within my means not trying to show off or living like the Joneses. Kids learn from parents if you live higher than what you can really afford your kids are wound to be in the same mess as you when they grow up.

  11. This is all B.S. in my opinion.

    – What 401k contributions for people that don’t work?
    – FICA taxes? When you don’t work you don’t pay FICA taxes.

    – 68K housing expenses when you don’t have a mortgage? How’s this even possible?

    – when you live on passive income there’s no need for life insurance. If something happens to you, the passive income will remain for your family.
    Life insurance is necessary only to replace the income that you would have earned.

    The average family has nothing to learn from this “budget for a family of four”.
    Three weeks of vacation?
    What is a “forever home”?

    1. You might have missed the part where the $420,000 income was the PROPOSED household income we’d shoot for if we went back to work and the subsequent spending projection the budget.

      I’ll make that more clear in the post. 68K would be property taxes and maintenance for a forever home, which is the realistic dream home for my family.

      1. “Realistic dream home”? Of course, for you. Excuse me, but this shows only arrogance and very little sound financial or behavioral advice, especially together with everything else on the site. I get it, the property taxes and maintenance on a home around $ 5 M would be in the neighborhood of 68K.

        There is nothing wrong in being successful and enjoying it. I think you are doing this site only to show off and feel good. That is not what I want to see. Maybe others feel differently.
        My income profile doesn’t matter. My total annual income is more than $1M and less than that after taxes (it can also fluctuate), including passive income. The taxes and maintenance on my house (far from SF) are about a tenth of yours and our living expenses are less than a quarter of yours. I am just too busy to calculate them.

  12. Your forever home purchase and how you manage the consequences can only add value to your brand. I will greatly look forward on how you take corrective action to retire again.

    Good luck!

  13. Love the blog, great content for financial knowledge and entertainment.

    I may have missed it, but doesn’t this blog generate pretty good amount of revenue / income? It doesn’t look to be listed under passiv but would have assumed that might help bridge gap in reference?

    1. Hi Dan,

      Thanks for stopping by. Blog income is active income, so that’s work. It takes hours to write, edit, and prepare posts. The pay is not that great anymore (my wife pays me less than minimum wage hah, as she is the boss).

      The definition of financial independence is when your passive income can cover your living expenses. If I have to work for the income, there’s no difference to working person who is not financially indepent.

      See: I’m Unwilling To Change The Rules Of FIRE To Win The Game

      1. Got it, makes sense. It sounds like it isn’t what it once was and now am seeing that had already been addressed way down in comments. :)

        If you were to go back to work, would you still anticipate posting content regularly?

        1. Yeah, just check out all the layoffs in the media business over the years. And goodness knows being an author doesn’t pay very well.

          To provide for my family, I very well I throttle the amount of pulse I write a week. My goal in 2024 is the only published three times a week, which consists of two posts and one newsletter. But so far, I’ve been publishing three post a week and a newsletter until I find a part-time consulting job.

          I’ve enjoyed writing for free and helping people solve their financial problems and helping people gain financial courage to live their lives. But now, I need to be more selfish for myself make my name to provide for my family.

  14. jonney g seeme

    How does anyone figure rental properties are passive income. I owned rental properties for 40 years there is zero things passive about it. I could make way more money then my 5.5% I get now, by renting homes. But wow between losers tenants bottom feeders, new regulations/laws passed yearly, and don’t get me started when covid hit you weren’t allowed to evict non paying tenants. Government basically took my rentals away from me. So for me rental properties is a non starter. $230k is quite good you just need to cut out bogus expenses which you have alot.

    1. Rental property is not passive income. It’s semi-passive income. As a result, in my passive income rankings, it loses points due to the activity required.

      But if you can get owning physical rental properties right, the yield tends to grow and can become one of the biggest drivers of passive income for retirement.

  15. “Annual income twenty pounds, annual expenditure nineteen nineteen and six , result happiness.
    Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery”
    ― Charles Dickens, David Copperfield

  16. Hi, perhaps you missed my recent comment below, so thought I’d repost it:

    I’m curious what percentage your new home is of your overall net worth? Many people struggle with determining how much home they should own relative to their net worth. I know that there are many guidelines, maxims and common wisdoms out there, but nothing speaks like real data.

      1. Hi, living in San Francisco like you, I’m also maxed out at 30%. It’s hard in HCOL cities to keep it low, unless of course you’re über wealthy. In my case I should actually call it 38%, as we’re now dividing our time living half here and half abroad. I was originally planning on monetizing the second home as a rental, but it’s our country of origin and means a lot to to us. We both felt that we didn’t want random people renting it, so it really goes in the personal home category as an expense.

        At least we’re fully debt free, so that helps! We just now have to watch extraneous expenses, which we’re pretty good at. I own and manage a few rental properties in the city, which is our primary income. Although the rental market here isn’t great, at least it’s stabilized. It’s like survive until 2025 and hopefully things will turn around in SF. These upcoming city elections, with a swell of moderate candidates will hopefully make a tangible difference.

        Besides the AI industry, what do you think the city needs to get back on track to where it was pre pandemic? This of course will have great impact on the future of home prices here.

        Cheers.

  17. I’m curious what percentage your new home is of your overall net worth? Many people struggle with determining how much home they should own relative to their net worth. I know that there are many guidelines, maxims and common wisdoms out there, but nothing speaks like real data.

  18. If I may provide some advice… I’m on my 10th year of FIRE (fatFire for the reddit fans). I spend my time on travel, competitive pro-am sports, family time and small hobby projects. No job, no business income, no real estate aside from a couple private use only homes. Based on previous comments and posts, I’d say you are on ChubbyFIRE but with a fatFIRE budget. At any level of NW and income, there can be spending that drains the portfolio too soon. Perpetual withdrawal if invested 70%+ in global equity markets has been historically ~3% before fees/taxes. Doesn’t matter what the Fed Fund rate or savings account APY is now or at any time in the future.

    You have too much house. 68400 + 5400 + 3000 = 76,800/288,792 = 0.2659
    27% of your net income is spent on personal housing maintenance and operation, without a mortgage. That’s quite high from a personal finance point of view. Private school $80k ? Maybe with an income of $1-2M that would make sense. Trim the house, the housing costs and school costs and you just found yourself an additional $4M (37500 + 80000 = 117500 3% of 4M = 120000).

    If you want to continue FIRE with your current sources of side income, forget this ‘passive income’ SEO way of thinking about your portfolio. You need total returns, total real returns. Since you are in the personal finance blogsphere, I’m sure you know who ERN is. If I was in your shoes, I’d get rid of any ‘exotics and alternative investments’. Figure out a withdrawal rate from the liquid part of the portfolio (ex- real estate), say if you had $5M in stocks/bonds/cash/alternatives, I’d use that as the liquid part and take you 2.5-3%, add that up to your ‘passive’ income from real estate and hobby work like the blog/book/courses etc., pay taxes and make sure spending is under that. If you are spending more, then you need to make more money or spend less.

    You seem to be biased in your post only about the positive. What about the negative? -30-50% in equities, AI craze fades, SF area gets hit with major job losses, property prices drop, vacancies shoot up. Can you handle your fixed costs then?

    You talk about not wanting to move from SF (yet) as Hawaii is your final goal. The ‘jobs, tech, AI craze’ doesn’t really line up with a FIRE mind set. Running or working for a startup is anything but the “I” or “R” in FIRE. Sounds like you subconsciously want to work? Maybe you miss it? I miss it sometimes too, there’s no shame in it but I do a quick analysis and picture myself buying a job and it makes me ‘miss the action’ FOMO go away.

    I would echo the previous commenter and say consider giving your children the experience of living in another world. They will thank you for it later, rather than bringing them up in the SF bubble. Go live in Portugal or Canaries or Azores for ex. for 5Y. Amazing weather, lower taxes, lower COL, lower housing, cheaper health expats and so on. You could probably have the same quality of live with less than half the cost. If you don’t like it, just go back. As long as you do all that before kids hit HS, you shouldn’t disturb their long term friendships. Do y’all still have a lot in common with your friends from grade 3? Keep death in mind as well… few friends/family tragically passed last year in various accidents and situations. Do things (besides ‘work’ and making more money when you have 7 figures) while you still can.

    1. Thanks for the advice! How old are you and your kids now? It’s been a tricky balance trying to spend as much time with them before growing up, sacrificing income, and wanting to stay intellectually stimulated.

      I’d like to start slow traveling once they are old enough to both fully remember their experiences. I traveled for 13 years growing up, moving to new countries every 2-4 years, and it was amazing. So I agree. Related: The Excitement Of Big City Living and Inflation And Greed: The Greatest Wealth Destroyers Of Wealth For Families

      I also believe learning a second language well is important, which fits in with living abroad and immersing oneself in the language and culture. See: The Value Of A Second Language. The post also explains why I’m willing to pay for private language immersion grade school tuition.

      Great point about the potential negatives too. Anything can happen as we know. I’ll give it a think on the downside risks more besides getting a consulting job, full-time job, or geoarbitraging to a lower-cost area of the country.

      Is Chubby FIRE more or less expensive than FAT FIRE? I can’t keep up, despite introducing the first rule of FIRE in 2009. Thanks!

    2. Late 40s. Few dogs, no kids.
      As a child & teen I also was moved around many countries around the world. Definitely an interesting experience and don’t regret it at all. Having a stable home during high school was the most important personally. Agree with the reasoning of all your choices, however the biggest leaks are house/education. At the end of the day there are only two dials… make money & spend money. I’m sure you will find the right balance. Personally I’d never trade the freedom for more money.

    1. Hope so. An investment thesis of mine is that panoramic ocean view single family homes on the west side of San Francisco will be growing in demand. So my goal is to accumulate as many as possible before my kids become adults. Do you have a strong feeling that 20 years from now, they are going to look back and ask why I didn’t buy more or how they can’t believe prices were so cheap today.

  19. I hear you, and thanks for your honesty in this .. i think the first step of FIRE was intended to ensure you have enough discretionary passive income to cover your basic desired level of living onwards … so that you can have freedom .. freedom to say No or freedom to do something else instead … and be able to stay and remain free forever … (in your case spend precious time with your kids while they were young or to gear down from the stressful career = at that time or part of your life)

    … but like you say but is surviving enough? Or do we wish to thrive ? Surviving yes .. Thriving ? will require more resources … or maybe continuing to work part time to bring that “vacation playcheque”, yeah everyone is different … especially now that your kids are returning to school full time so maybe a change of pace .. yup I hear you …

    FYI one of your 2019 blogs about creating passive discretionary income so i can remain and stay free was a keeper for me, so thanks for that. Good luck on your new FIRE.

  20. Personally I believe that children benefit from parents that work. It helps with their self esteem and provides a good example of a purpose driven life. I see people who have retired early and plenty who could have, but chose to pursue meaningful occupations. It is better for everyone if the parents keep working. Otherwise kids get the idea that life is about going to the park and sleeping in everyday. Imagine what kind of future they will have. Parents who choose to retire early had better plan for their children’s FIRE as well.

  21. Hi, great read. Thank you for amazing content over the years. I am from Great White north(Canada), FIRE is about being agile and flexible. You have made choices that you believe are best for your family and am sure you will continue to do so and adjust as you move forward.

  22. What factors did you consider when choosing between paying cash and taking out a mortgage? Was your rate of return in ur portfolio lower than the interest rate you would’ve paid?

    1. Offering cash enabled me to pay a lower price. I didn’t want to pay $10,000 in Mortgage fees and go through the 1-2-month mortgage process. At the time, I also felt stocks were fairly valued, and they did correct about 10% after I sold. But then stocks zoomed higher.

      Purchase as a mix of stocks and bonds. So it’s more like an asset allocation shift.

      After a certain amount invested stocks, I feel uncomfortable with the swings.

  23. Three things –
    1) If either of you gets a W-2 job, that should come with health insurance and you can remove that $24,000 line item expense.
    2) There is such a thing as too much house.
    3) Your $264,000 of “basic living expenses” is NOT because you live in an expensive city. It’s due to lifestyle creep. I can understand you wanting private school for your kids if you live in an urban area and can afford it. But so many of those line items are overly inflated. $16K for vacations, $8K for entertainment, $3K for phones, $1800 for personal care? $16K is how much you should be spending for a once-per child bar mitzva or quinceanera family vacation–not an annual expense–especially since you already own a holiday home. My mobile phone plan for our family of 4 with worldwide coverage is $225 a month, but that’s because all 4 of us travel internationally regularly, and I imagine your 2 preschoolers don’t yet have mobile phones with international plans? How much can shampoo and conditioner bars from a zero waste store cost? $8 a bar, and each lasts 2 months per person.

  24. Sam, regarding your post: Inflation And Greed: The Two Greatest Destroyers Of Wealth For Families

    Hard for me to see how you are greedy. You left the world of finance probably at the start of an exponential year on year income/net worth increase. If you had stayed at it you could have been worth a considerable amount over where you are today.

    The only commodity we all have in common is time. Some get more some get less. We spend our time for income, experiences and things that matter. You left the workforce early and traded wealth for health, quality time with your wife, kids and parents. That is far from greedy.

    In fact I would say you are for more aware of the value of time then most in their forties. It usually occurs later in life when you realize your time horizon is finite and getting closer LOL.

    I consider life a journey where you need to be constantly adjusting due to a number of factors. Why is wanting nice things greedy? I find some people confuse envy with greed.

    If you were truly greedy wouldn’t you be looking for a higher paying job? Anyway thanks for FIRE. Our generational think was work to social security. I left the workforce at 55 eight years ago and fake retired consulting got back a lot of free time with no stress best thing I have ever done.

    FIRE helped me realize I did not need a full time job. Good luck on the next phase of the journey. I hope you keep writing and sharing it!

    1. Thanks Craig! But oh don’t remind me how much wealthier I could have been if I just stuck things out in finance from 2012 until now. I’d be rich, rich, rich!

      Alas, my health couldn’t take it anymore and I felt like I had enough money to live a simple life.

      Consulting, especially part-time consulting is a great solution. I did so from 2013-2015 and I plan to do so again to fill the void once both kiddos are in school full-time this fall.

  25. Thanks for sharing the hard choices and downsides of life rather than only the upsides. That makes it a truly great read and ability to follow your path.
    Mine has similarities with kids and retiring and making those income choices that are in constant negotiation. And it helps to see the details you lay out in financials to come to these decisions.
    I don’t have to agree with your choices, but the logic process you use is what is the greatest insights!
    Keep being vulnerable and sharing, it is very much appreciated!!!

    1. Financial Samurai

      You’re welcome Lucy. I’d love to meet those who’ve got it all figured out and have attained enlightenment. Alas, I have not found that person yet.

      We do the best with the information we have at hand. Tough decisions require more perspectives so we can uncover blindspots.

      Fight on!

  26. You need to read up on biases, and fallacies. I read 2 or 3 of your articles and you are plagued by them. Clearly you became financially independent through real estate, and the equities market left you a bad taste in your mouth due to your job (recency bias). For some reason (likely biases)you thought it was wise to sell stocks rather then sell part of your your real estate holdings… To buy this new house. Real estate accelerates wealth creation through leverage. The longer you own a rental property, the less leverage you are using. A full paid off rental property is akin to an illiquid bond.

    You spent 12 yrs letting your best asset decay, your capacity to generate income. Not sure where you come off thinking you will make twice the median American income. I suspect you are transferring high sfo wages from people who have been building their skills these past 12 yrs to you.

    You are bullish about SFO real estate and AI, again, recency bias. People are leaving California. U are bullish about AI but your most sensible way to get in that bandwagon would be a broad index fund in the USA stock market. If we are developing AI…surely the best elements from everywhere in the country can participate in this using remote work. Meanwhile, you didn’t take advantage of the huge media company boom and monetize your website…the thing that you have been increasing your skill set in. That 91k shortfall is much more likely going to get solved by the working asset you have been building this past few decade.

    Now for the case of “principles, and wanting to be pure on following FIRE”… Fire is essentially learning how to spend less to invest more to give yourself options. The rest is semantics. Honestly who cares. At this point, I would instead look into traditional retirement blogs/content and understand the principles of time segmentation, and how they manage their finances as this is closer to your current situation… Having to bridge a few years. You need to set aside enough conservative liquid funds aside (bonds) to bridge you across this shortfall, while ensuring your net worth is increasing more then inflation in the long term. I struggle to see how you can achieve that if you are 60-70 in bonds and 30% in equities. Your time horizon until death is 40 yrs. You will learn that the 4% rule doesn’t apply to these time horizons, especially not if you are overall in something more conservative then the hypothesis of the 4% rules. I’m considering rentals you own for over a decade as being closer to a bond, and rentals that are leveraged closer to equities. The most productive thing you can do right now is check the return on equity of your rental properties, sell the dogs, and re allocate that to something more agressive in equities. If you suspend saving for college, your liquid portfolio will catch up in a few years to where it needs to be. Just send the kids to top schools in canada.

    1. Financial Samurai

      Thank you for your advice Chloe. Much appreciated! Yes, I need to do a better job optimizing my assets for cash flow and returns. I should also try to better monetize this site and my podcast (no advertisers). It’s just that spending too much time monetizing bums me out b/c then I lose my joy for writing.

      If you could share your background and where you are on your FI journey, I’d appreciate it.

      Here’s more of my FIRE journey in this post: I’m Unwilling To Change The Rules Of FIRE To Win The Game

    2. Mary Ann Driver

      I don’t understand one word of this post. How about simplifying what you are telling the Samurai so some of the lesser mortals can understand your point.

      Would help to know what your portfolio looks like. How much do you have? What have you proven is your risk tolerance? What is your equity Worth? How many kids and dogs?

      As for me, I am about as conservative as I you get. 60 year old teacher for 35 years. Retiring in June at about 7,000 a month. Will not touch 403B (about 350,000) for five years at least. I live 90 miles from Samurai but a world apart in terms of cost of living. I have a house in Truckee with 138,000 on the mortgage. Primary home paid for as is car. Son is graduating from University of Michigan this year. Hubby and I are easily living on 150,000 a year – not including college tuition. Now Hubby’s business is farming – talk about risk. Our finances are separate. Here is where I think everybody’s theories go out the window. Three years of NO PROFIT on crops yet still paying on a 400,000 tractor, land payment, and renovating a 100 year old house we inherited and didn’t have the heart to burn. ( Unoccupiede houses become squtters den in agr. You either fix it or burn it.) Everybody says he can always sell the land but it is a multi generational farm with family trying to preserve it. Hubbby is out there scrounging for deals. He sold water one year. He is going to put thirty acres in solar. He might portion off a bit for Cal Trans. Anything he can drum up to tied us over until the commodity prices turn.

      My point – make your best choices, don’t be greedy, live sustainably, be generous, be honorable, work hard verve while remaining teachable. I am heading off this morning for marketing at four different stores to get the best deal I can for monthly food shopping. I listed two items to sell on Poshmark and am making my own yogurt in an instapot. That is what this multi millionaire is doing this morning.

  27. One question for Sara the Solder: How do you know what Sam’s pre-school children think now, or what they will feel or think in the future?

  28. In the new house decision why wouldn’t you entertain a small amount of leverage on the new home. Couldn’t you make better returns in equities than sitting 100% in real property on the new house?

    Thanks,
    Dan from FL

    1. Financial Samurai

      I probably could have. I didn’t want to go through the mortgage process, pay the $10,000 fee, and have one more loan. I also thought stocks were fairly valued at the time, which was a mistake as stocks have continued to rise. But I also sold bonds to buy the house.. so that helps make up for missing some upside.

      I’m older now, so my desire to make maximum returns has declined. I’m more about capital preservation.

      You can check out this post: How I’d Invest $250,000 Today

  29. It is ridiculous that people are criticizing you! You and your wife are grown-ass adults who get to decide what works for you and your family. You have both made very intentional choices for your family, your lifestyle and profession and I trust you’ll continue to do so. You have generously shared your perspective on so many topics – financial, kindness, bias, socio- political and some people choose to go low. Cheers to you and best of luck and you travel this next phase of life…mindfully.

    1. Financial Samurai

      Thanks Jackie! The criticism comes with the territory of putting yourself out there and trying to help others with potentially similar problems. Sometimes it stings, but I’ve grown a thicker skin since 2009.

      Thanks for reading and sharing my work!

  30. Good read.
    The trends may say the economy is better, but we still all feel these past 3 years of near double essential commodities costs, so I don’t believe the “soft landing” talk.

    As for the feedback from Sara, she fails to consider that your hard work, provides an asset for your children that can take a lifetime for some to achieve. A great head start, and something they will be grateful for, as they work to pay the taxes on it.

    Her feedback is a fitting example of how out of touch and opinionated people can become, when all they pursue is social media points, aka fame chasing. She seems unhappy..

    Keep doing you, and I appreciate your invaluable input. I have to report, my car side enterprise has afforded me the ability to build a beach house (my wife’s dream) in FY2022. I’m building more and have my sights set on buying our next door neighbors house in a year or two.

    Thanks for helping a dream become a reality.

    Take care!
    Noah

  31. Bob from Ohio

    I am a 62 year old former union guy in Cleveland Ohio. I work 20 hours in the same factory and my 60 year old wife works in an office. Neither one of us went to college. We are too old to FIRE but I enjoy handling the money and reading your stuff .

    We paid %75 of our 3 kids college degrees and helped out on all their weddings. We have a good life and never made more than $140K combined. We have $650K in assets . That’s the background .

    The thing that shocks me is how close our budget numbers were. The only 2 things that were really different was the real estate taxes and what preschool costs(!!!!!). I thought San Fran would be way higher on everything .

    What I learned when our kids were little was be there for them at their games or recitals or whatever !!!!! That will impact them for life. I saw kids where their parents never went to their soccer games and the negative impact it made on their young lives. So make sure your job doesn’t interfere with T-Ball .

    Also watch that FOMO ,in the end there will always be someone who has more than you.
    I wish you well
    Bob

  32. Please do not internalize this comment from Sara and let it overly impact your perception of yourself. It is one opinion. I mean no disrespect to this individual and can understand where they are coming from. However, I also understand how impactful words can be especially when they illicit guilt or shame which are often very damaging.

    You are human, and we are complex. Others do not live your life nor do they have your family. You made decisions that you felt were right at the time and now you are making adjustments. That is life.

    I’m not going to comment in detail on how going back to work is going to impact your children because it is all speculative at the end of the day.

    I will say that my parents made decision that at the time may have been perceived as negative but as I look back they contributed to who I am today in a positive way, and I respect them for their own journey.

  33. If you had asked your kids, they would have said that they valued all the time they had with you, and didn’t give a crap about the house. Now they have to lose that time to you working to pay for the house. This was selfish and the wrong move.

  34. Joseph Ruiz

    Sam,
    You are too young and smart to not work. I love your blog and really loved your book. But seriously, how much pickleball can one play? I’m not saying work 60-80 hours a week, but what’s wrong with working 25-40 hours a week and still spending tons of time with your kids? I used to think I wanted FIRE, but I now realize that I would die of boredom and lack of fulfillment/purpose.

    Unless you have a crew of at least 3-4 friends in the same boat, I don’t see how it would even be fun.

    If you really wanted to go back to FIRE, you could simply downsize your home and send your kids to, gasp, public schools. Or just move to Texas.

    At any rate, I wish you well and implore you to not be a miserable multi-millionaire! Be grateful for the tremendous life you’ve built and for the opportunity to positively impact lots of people.

    1. Hi Joseph,

      I appreciate your kind words and support. I agree, I can’t play pickleball and tennis everyday, especially at my age. My knees and shoulders would fall off!

      Check out my post: How parents can fill the void once the kids go to school. I think part-time consulting for 20 hours a week or so would be an ideal plan.

      All that’s next is trying to find that right fit and opportunity.

      Let’s see what the future holds.

      Thanks for reading and sharing my work. And if you don’t mind leaving a review of BTNT on Amazon, I’d appreciate it. Every review counts. Thanks!

    2. Paper Tiger

      Sam, you’d be a great partner in an AI startup. You are resourceful and have a lot of financial connections, which are two major attributes in a startup. I left Corporate America when I was 57 (2015) and was approached to help start up a healthcare technology company. I was part of the initial 7 member founding team, and we collectively put up the seed money to get the company off the ground. I told them I would do it until they started generating steady revenue which I thought would be 2-3 years. It turned out to be closer to 5 years. The company merged with 2 other startups and pivoted into healthcare delivery, with our technology as a foundation for using and electronically disseminating patient data to improve outcomes and lower costs. In 3 years they have seen tremendous growth and in 2023, did $450M in revenue, with over 500,000 covered lives and more than 750 employees.

      With all of your VC and PE contacts, you should put the word out to some of them and let them know you’d entertain the idea of joining a good team if it was the right situation. Since these guys invest in these companies, they are always looking for good people to help the companies become successful and I’d think they would have a lot of interest in someone like you.

  35. I believe Sam is one of the smartest, personal finance writers out there. With a decade of experience living FI and building and managing multiple income streams, I don’t buy for a moment that he didn’t know exactly what he was getting into buying a house and selling investments that supported the level of passive income he required. I refuse to believe that he would buy a house knowing that he was about to force himself back onto the job market and giving up the FI lifestyle he’s carved for himself. Buying a big house going back to work and giving up his freedom to play tennis, spend days with his young kids, and concentrate on writing is simply an antithesis of everything he’s espoused over the time I’ve been reading his blog. The Sam I know would have figured out another passive income stream, another book idea, a Youtube channel or another way to leverage his investments to avoid going back to 2013 and spending more of his prime years working for the man?

    1. I thought about almost every single angle before making the move. But even then, you won’t really know how you feel until you actually make the move. It’s kind of why there is this one more year syndrome that people suffer from and then 20 years go by, and nothing has changed in their lives.

      But life is an adventure, and I am anticipating a big void once both my kids are in school time this fall. So I’m trying to get ahead of this void by fairy out what to do and having extra purposes to do it.

  36. Wheeeeeew.
    I’m so sorry you’re going through this.

    But where is your income from your book, Buy This, Not That ?
    Also, is there any reason you don’t want to sell your home FSBO? Just curious.
    Do you and your wife’s families both live in California? If not, why are you so attached to staying there?

    It’s absolutely astounding to me that you make that much in passive income and you’re worried.
    I’m embarrassed to share that I make 24,000 per year. Total. Including my ‘job’.
    I know with my income, I am not your average reader and that’s okay. I get that. But holy smokes!
    If people making 200,000 per year are struggling… (imagine the things I’ve sacrificed… haha).
    Anyway, hang in there.
    You probably think my opinion doesn’t matter (because of my low income). But I’d suggest selling the house you recently purchased and if possible, moving to a different state where the schools are good and you don’t need to pay private school tuition. That expense is wild!
    (don’t fall prey to the sunk-cost fallacy. Even if you lose a little money after selling the house, you can make up for it elsewhere!)
    Also, remember; you’re still financially quite well off! You’re in anxiety mode and it will pass.

    I haven’t had time to read through the comments so I apologize if I’m repeating/missing what has already been said. I plan to read more later this evening.

    1. $24,000 a year is great if it’s enough to take care of you and your family. It’s not enough for me, which is why I choose to find some part-time consulting work.

      No royalties from BTNT yet. Plan to rent out my old house. It’s just taking time finding good renters.

      Do you have kids? The responsibility of kids is what has increased financial pressure.

      1. Yes, definitely make sure you vet your renters. I hope you make some royalties soon!

        ha- 24,000/ year is definitely not enough to make much headway, but I try!

        But yes, I have two young children so I choose to work part time (from home) so that I can be with them. It’s been a really difficult choice. I’ve completely given up a career for my kids and I’m fairly ambitious. Not easy. Now that they’re both in elementary, I’ve applied to other jobs here and there but nothing yet. I suspect my choice to stay home with my kids had way more impact than I imagined it ever would. Now I’m thinking I should just do my own thing…

        Luckily, my husband makes more than me but it varies because he’s a contractor. Additionally we have one multi-plex rental property. Since we have a mortgage on the property, it doesn’t make much cash flow- but it will eventually. Also, we’ve house-hopped (bought a shitty house, lived in it for two years and fixed it up nicely, sold- repeat. Now we are finally in a long-term house and I am very grateful.)

        I hope I didn’t sound judgemental. Didn’t mean to. Just sharing a perspective from someone in a way smaller income bracket. Anyway, you’ll feel better once your house is rented. Thanks for sharing your journey. We all learn through each other.

        1. I’m glad you left on your husbands income! If it was a family of four, that would really be tough to live off$24,000 a year.

          I don’t mind being judged. It’s fun to see what other people think and what are some things I can do to improve. I hope more people share their stories as well in addition o just judging though.

  37. Why did you leave out the tax treatment for the future sale of your old home, rental depreciation, and the primary residence exclusion?

    It seems like you must’ve predicted your new balance sheet well before making your purchase. What was your original plan for your old home?

    1. Financial Samurai

      What sort of tax treatment do you think I should assume for passive income purposes? My passive income in my chart is net of expenses.

      There is this excellent $250,000/$500,000 tax-free profit rule for primary home sales. Sadly, I don’t think we’ll make more than $500,000 if we sell the house since it’s only been 3 years and there are commissions and fees.

  38. “Being financially independent doesn’t include having a working spouse, making side income, or running a business to pay your bills.”

    How does that characterization fit when more than half of the “passive income” shown is from real estate rentals? That’s my source of income and I’d hardly consider it passive, even with third-party management.

    Anyway, I’d suggest financial independence is really about peace-of-mind more than semantic subtleties about the taxonomy of “work.” It’s not uncommon for a financial advisor to have a decamillionaire retired client who calls them weekly fretting about the markets. I’d hardly call that “financial independence.”

    1. Financial Samurai

      Sounds fair to me.

      Owning rental properties is considered semi-passive income. But for me, it’s mostly a passive income because I don’t own that many. If I start owning dozens of properties, then that is definitely a full-time job. I want to limit my ownership to no more than four.

      The rest of my real estate investments go into real estate ETFs or private real estate funds, which I really started investing heavily in in 2016.

      My Investing thesis was investing in the heartland of America, due to demographic shifts and technology. I think this is going to be a 20-year positive trend.

      1. I’d say that’s a decent distinction. I have over a hundred units and the larger the portfolio grows, the more it resembles any other business and becomes more about performance measurement, risk management, strategy, etc. I think almost everyone has the capacity to handle at least one rental property and it’s a powerful tool in building wealth, as you’ve illustrated.

        I don’t know your particular DTI or risk tolerance, but I might advise calculating the yield of all your various assets to assess how efficiently they are performing. I do this every year to understand the actual real-time yield on equity, which is always changing. For real estate in particular, the high yield return comes from leverage. It is always highest when purchased/financed and then decays geometrically over time as market value rises and loan balance declines, eventually converging with the cap rate. Without leverage, rental real estate is basically just a bond you have to paint.

        It is logically possible that simply by leveraging equity in your existing assets to acquire more income-producing assets, you could generate more income with a smaller percentage of a larger pie. Doesn’t have to be more real estate per se. Anything that produces more income than the new interest expense is, by definition, additive.

        1. May I ask, with over 100 rental units, what is your estimated net worth? That is pretty massive!

          In San Francisco, that would be property worth between $50 – $150 million.

          As a small-time landlord, I’m not acting rational for maximum returns. But I should.

          1. One great thing about FI (or whatever) is the affordance of privacy, which I highly value. So, I’m not going to share even vague details about my finances. If that makes it seem like I’m BSing, so be it. I’ve appreciated your stuff in the past, especially the humility, that’s why I chose to offer some message board thoughts.
            If I was writing a “prescription” for you, it would be roughly as follows:
            Assuming the new primary dwelling cost ~$2.5M, do a cash-out refinance for 50% LTV. At 6.75% 30-year, that creates a new annual liability of ($15k/principal + $85k/interest) to obtain $1.25M working capital.
            Through a VERY competent broker, use that to purchase a single $5M NNN commercial property with a cap rate of at least 9.0% (not common, but they exist). Borrow the other $3.75M at ~7.5%*** 25-year (float the rate), which is a new annual liability of ($55k/principal + $280k/interest).
            So, you’ve created new liabilities of $435,000 against new income of $450,000. $15k net positive cash flow. Big whoop – right? But hidden in there is principal paydown of $70k and you can cost segregate the asset depreciation.
            If you qualify as a real estate professional, the bonus depreciation will erase your entire federal income tax on all sources of income, saving $45k in year one for a total positive impact to cash of $60k and to net worth of $130k. If you don’t qualify, you’ll at least erase all your Schedule E income over several years, which appears to be the greatest share. Also, because you floated the rate on $3.75M, every 25bps cut in rates reduces your interest expense by $10k/year.
            More risk? Absolutely. Some people would find the idea of having $36k in monthly loan payments sickening because you can’t just pick up an extra shift at work to cover it. But that’s just what it is at this scale. No shame in the debt free approach but it takes decades to accrue significant assets passively. More work? A little in the short run but a NNN property placed with a management company will be very little continuing effort.
            By re-leveraging what you already have, you can replace a significant portion of the lost income in year one, perhaps all years (depending on rates), and amplify wealth accumulation with more assets – all without drastically changing your lifestyle and continuing to enjoy its benefits.
            ***These are conservative numbers due to terrible rates right now. 1-month LIBOR/SOFR has hung around 0.25% for most of the last 15 years. If (big IF) it returns there, your giant interest expense goes with it, putting $175,000+ back in your pocket for doing nothing other than tax-efficient macroeconomic speculation with an investment that still breaks even (and accrues wealth) at the highest rates in 30 years.

            1. Good detail though what’s the playbook if that tenant closes the purpose built location (like a RiteAid)? How much reserves or other contingency do you recommend to weather the risks of NNN that drive the high yield?

  39. I feel your pain. My wife and I sold our paid-off house and bought a more expensive house in a different area about ten years ago, and I estimate that it set back our journey to financial independence by at least 5 years, and probably more like 10 years. And that knowledge really hurts. But my wife is very happy with our current house, and it has been a good house for our kids for the past 10 years, with several amenities that the old house didn’t have.

  40. All behavior has a purpose. As long as the purpose makes sense to you, that’s all that really matters. You eat and breath finance, so there’s no doubt you have this figured out. Even if an obstacle comes in your way, you’ll figure it out and make the necessary pivot.

    Even if you aren’t financially independent for now, you still FINANCIAL FLEXIBILITY and with that comes loads of flexibility to choose where you want to work. That makes a huge difference.

    My wife and I FI’d 3 years ago, thanks to real estate and b/c we no longer pay for housing. However, we both work in jobs we really enjoy (I quit 3 part time jobs to find the right fit cause of our financial flexibility). I believe we enjoy our work cause we aren’t doing it full time and we both are choosing to do it. Plus, we are left with lots of time to enjoy time as a family, hike, grab coffee with friends, or do whatever we want etc. Our spending has increased, not to keep up with the joneses but to ensure we enjoy the things we want to enjoy, we only spend 60% of our passive income. Plus, didn’t you say 40-65 is the best time to spend, so we doubled our vacation allocation, which is a ton of fun.

    Don’t see any regrets in you buying the more expensive home. Sure, losing FI is a loss, and any loss brings grief with it, but, it also brings opportunity and growth. Hope you enjoy your new journey, looking forward to reading about it.

  41. Hi Sam –
    Bummer on your decrease in passive income but I do agree with a lot of other comments that it is easily fixable by controlling and lowering your expenses. That said, I am truly surprised you went against your own rule of buying utility and renting luxury that you describe in your book. Having RE investments to generate passive income is understandable but to be so highly concentrated in SF/California makes no sense. I am ultra-bearish on this city and state sadly because of the failed policy making, tax rates and law & order situation. Definitely don’t expect RE prices to creep up as quickly as before anytime soon despite the coming boom in AI and looming rate cuts.

    Similar to you, I hail from a Finance background so why don’t you consider getting a CFP certification and pick up a contract job at one of these personal finance start-ups (Northstar, Wealthfront, Betterment), or better yet start your own personal finance practice for a nominal fee? If you start your own practice, you don’t have to work with high net worth clients but there are plenty of people who are thirsty for savvy financial advice that are unaware of your current endeavors and unable to spend the time reading blogs/books. Just my two cents.

    1. Thanks for sharing. How long have you lived in San Francisco?

      I’m bullish because everybody’s tech portfolios went up 50% in 2023, artificial intelligence, new schools and remodeling of the Ucsf parnassus campus on the west side, and then elections which will kick out underperforming supervisors.

      See: Why San Francisco’s West Side Will Keep Booming

      But, of course, I could be wrong, and that’s the way it goes with investing. The thing is, I plan to be here for the next 10 years given my children the schools. So are the 10 your time horizon, I feel more comfortable.

      I got a relative deal, but prices could go lower. With a forever home, the price almost doesn’t even matter because you just plan to live in it forever.

      How long have you been renting? And how has it been for your wife and children if you have any? I do have seven figures worth of investments in higher yielding, lower-cost cities through private real estate funds. The plan is to invest a lot more this year and next year as real estate is looking to catch up with mortgage rates fading

      1. Just a little over 2 years. Moved here from Texas so my opinion is somewhat biased. Naturally, I cannot fathom purchasing property due to exorbitant prices and older quality of homes (built in 1960s-1980s). Most new builds are 40+ miles from the city and still expensive. I really do hope this city changes for the better because this city is pretty and the people are nice. Unless I hit the lottery, I prefer renting for now since my partner and I have no kids and are not tied down as yet.

        Personally, I remain an ardent fan of Jeremy Siegel and Buffet both who are venerable veterans of stock market investing. I know the stock market is not for everyone and individual risk tolerances drives investors to look for other asset classes but I do think it can generate substantial wealth over the long-term as proven by plenty of academic research.

        Have you ever thought of holding an informal meet up for your readers in the SF area? It would be great to bring a group together and meet you in person.

        1. Financial Samurai

          Yeah, if you are coming to San Francisco from Texas, the pricing shock must be immense.

          Hopefully you found good work opportunity that pays well. The main reason why the cost of living is so high is because the jobs are plentiful and pay well. If they didn’t, the cost of living would be lower.

          The thing is, the wealth-building upside is MASSIVE compared to the cost of living. The longer you are here, the hopefully the more you’ll realize it.

          Yes, maybe I’ll do a FS meetup one day. Could be fun! Maybe when I publish my new book in Spring 2025.

          1. Thanks Sam and yes I am still working towards that MASSIVE wealth building, I do think there is a fair amount of luck involved to hit that level. Look forward to your FS meet up when it is planned!

  42. Since you have bought a new forever home, couldn’t you rent out the house that you just moved out of? That new rental should increase your passive income more than $60K to $80K depending on the size and location.

      1. I wouldn’t reply with what might be considered a criticism, but reading between the lines on this one, it looks like you’re looking for feedback. So I’ll be honest.

        Okay, so I have friends who are/have been in tech, live in HCOL areas and another whole financial category from myself. I get the milieu. I’m FIRE/coast FIRE, whatever you call it, but in a much lower comparative COL area.

        I have to say this, though. Dude- you have to get out a bit. You’re spending about the median U.S. household income on private education for two kids in primary school. Yes, being multi-lingual is great, but you live in California of all places. Your kids could be immersed in Spanish at any point, essentially for free! And I’d say Spanish is arguably a more relevant language both currently and in the future.

        The fact that you’re paying college-level expenses for primary school while imagining that they will be going to community college in the future is some very odd thinking. Send them to public school, which in your neighborhood is probably better resourced than 99% of those in the country. They’ll be fine, and maybe even better off for it. If they need money for college in the future, the growth on that 80k a year (or half that, considering your other savings for their future) will more than provide for anything they could reasonably want to start them on their way as adults.

        Spend time with your kids now. Have some memorable and enriching experiences *with* them. And hopefully some of them will be outside of the HCOL/striving bubble. There’s a much bigger world out there.

        1. Thanks for your feedback! I am embracing it as someone who grew up in five countries and seeing a lot of poverty growing up. Where are some places you’ve lived or visited that made a deep impression?

          Check out the post: Inflation And Greed: The Two Biggest Wealth Destroyers For Families.

          I also hear you on the ease of learning Spanish in San Francisco. My hope is my kids will learn Mandarin fluently by the 8th grade as I highly value being able to speak a second language.

          I’m looking into public schools as well and will try to lockdown my expenses and boost my income. Here’s my plan to do so.

  43. Hi Sam, I’ve been an avid reader of your blog for many years and this is the first time I’m commenting on a post.

    Thanks for sharing your situation so openly. Although I don’t see myself doing the same, I understand and respect your bold decision. Life is like the weather — both share dynamic and unpredictable qualities. When circumstances change, plans change, we change. It happens. I’m sure you only bought your new home after careful deliberation and meticulous calculations. So trust your judgement and focus on what needs to be done next. :)

    My hubby and I achieved FIRE in Feb 2020 in our mid and early 40s. Our 6-figure passive income is more than double our annual expenses, but our lifestyle is less expensive than yours. :) As we don’t have kids, we actually downsized our home in 2018 to release equity locked in our home and to free up time. Tending to a big place is a lot of work and we enjoy simple living. :)

    Early retirement life is fun and fulfilling, and we wake up every day with gratitude in our hearts. Your blog has played an influential role in our FIRE journey, so thank you for being such an inspiration.

    1. I’m glad this post has spurred you to comment and share your story after many years! Always happy to hear from readers.

      Congratulations for retiring early and enjoying the good life. What are some of the things U2 are doing to keep busy?

      Life is definitely like the weather, we must prepare accordingly, and sometimes even bring a back up umbrella.. But in a way, the change is exciting and can be fun if we embrace change for what it is.

      1. Yes, change is a certainty in life. Since we can’t avoid it, we might as well embrace it. Love your attitude!

        Post retirement life: We spend a lot more time with our elderly parents these days, which is great. We also have a cooking list, a long reading list, a travel list and an ambitious learning list, so there’s never been a dull moment. About a year ago, we started a personal finance blog (our pet project), so that’s keeping us happy-busy too. Do check us out if you have the time!

        We’re from Singapore, btw. I’ve been reading Financial Samurai since 2013 and I’m a HUGE fan. There were times when I wanted to comment on your articles, but when I saw the number of comments you’d already received, I decided to spare you the trouble of having to read/reply to one more, LOL! I’m so glad went ahead with it this time. Your reply made my day! :)

  44. Friend, I followed you. You overreached. Good times last forever is the Achilles heel. Since I last posted I 10Xed my portfolio, but I will stay in my 3000:SF house, I paid for in cash (2011 short sale). $400k a year to live is alien world to me.

  45. Congratulations on this bold move! I have been reading your blog for years and I appreciate all the education you disseminate. How were you able to generate 380K in passive income on average?

    1. Check out this post: Ranking The Best Passive Income Figures

      I’ve been building passive income / investing since 1996, and more so since 1999 when I got my day job. I knew I couldn’t last in finance for 20 years plus, so I made it a goal in 1999 to retire by 40, which was by 2017.

      Have to be intentional on this journey. Eventually, the investments start compounding.

  46. Sam,

    Your living large with a baller house… it costs more, so now you might have to start another income generating project. This is likely overall good as the motivation and need to produce can be stimulating, as the saying goes: “Necessity is the Mother of Invention.”

    So use your amazing financial mind and put it to good use to help others and help yourself. Forget consulting or a being someone else’s employee. Honestly you should start your own private equity firm and give personalized advice, make investments, and manage portfolios. You have a great reputation and alot of followers. I am sure there are a ton of people who would deposit capital for you to manage and invest. A lot of doctors for example are simply too busy or not skilled enough to manage their money. I for one have a bunch of money sitting in large bank checking/savings account earning very little because I am a horrible stock market investor. I also don’t trust most financial advisors.

    You’ve said before you don’t want the worry of managing other people’s money, but if you set up the firm properly as long as you are honest, operate in good faith, and follow industry norms and regulations then you are protected. You would get the benefit of helping others and also help yourself, while making sound investment choices. If you charged a discounted rate of 0.75% of managed funds, you wouldn’t need that large of a fund to makeup your shortfall, and its what you do and think about every day anyway… just take what you do for your own capital and apply it to others. I’ll start off your firm with an investment… seriously email me if your interested..

    1. Great quote reminder! “ Necessity is the Mother of Invention.”

      I once lost my brother-in-law $300 or was it $500 in a stock, and I felt terrible for the rest of the year.

      But you’re right, if you can set out the investment strategy, and then Invest accordingly, those clients who believe in your investment strategy should be OK with the ups and downs. And if they are not, they will withdraw funds.

  47. Keep pushing forward !! You are a smart guy and you will figure it out. Who knows you might find a new job you like.

  48. This is absolutely the best summary of spoiled 1%er idiots ruining America.
    Casino capitalism where greed and hoarding are the norm.
    I went from making 300k a year to 84k a year. Huge adjustment but I’m not suffering like most Americans living paycheck to paycheck, working 3 jobs, etc.
    Get a grip, dude. Really. Lower your expenses. The answer isn’t make more, it’s spend less. Duh. You missed that glaringly obvious solution in your whining.

    1. Sorry your income took such a massive hit, actually more than mine. So thank you for sharing that because it does make me feel better, especially since you’re doing great.

      Never whine. Take action because all actions have consequences.

    2. We live in Sacramento area so cheaper housing but apart from housing and private school expenses are totally reasonable!! I may add even a little tight :)

  49. My wife and I made a similar move a few years back when we upgraded to a much nicer ‘forever home’ for our family. There was uncertainty at the time, but 7 years later I can confidently say it has been one of the great decision’s of my life.

    I guarantee you’ll be happy with your decision a few years down the road…although maybe you’ll have a little regret of not relocating to Hawaii ;)

    Nate

    1. Great to hear! I’m hoping so as well. In fact, I have written a post about it that will be published later.

      I already regret not going to lie before the pandemic. So no worries there! But we plan to visit a lot starting next year once my daughter turns five.

  50. Charles Dart

    Tks for sharing. I get the desire for a premium forever house. My wife and I bought well under our means, and we kinda regret it (although the extra capital we didn’t spend making a return and lower property tax are not so bad).

    I’d like to hear more about the returns on the Fundrise RE funds. You mention you’ve invested $954k. Your table shows $30k passive income. That implies a return of 3.1% per year which is not exciting. Is there a balloon at the end? Or just dividends (or whatever they call it)?

    Another is tax. What matters is what you keep after tax, not what you make top line. You are getting crushed by fed and CA state and SF tax with that income. Does it make sense to focus more on non-dividend stocks where you can decide when to tax cap gains and manage your income better for tax purposes? What are your tax strategies?

    Having your own business opens up many tax deductions (totally legal!) that help. I’m sure you’re taking those. A doctor friend of mine left his W2, now doing tele-medicine full time as an independent contractor with his own legal entity. He was pleasantly surprised that this tax rate is WAY lower as a business owner, plus lots of deductions he can take now that weren’t available before as a wage earner.

    I don’t make much distinction between interest/dividend income and unrealized stock appreciation. Both could be considered “income” but only one is taxed each year. I can control how much stock cap gains I recognize each year and thereby have more control over my tax bill.

    1. My Fundrise fund investment is only one fund of my $954,000 investments so far since 2016. Things were great until the end of 2021, then has faded with the rise in mortgage rates. But I think we’re past the bottom of the real estate downturn in 2023, and I expect prices to go up in 2024 and beyond. No guarantees of course.

      One of the best strategies is to start an S-Corp and pay yourself a reasonable salary.

      Dividend-paying stocks are ranked #1 in my passive income investment rankings.

  51. I believe the oversight in your financial strategy, and please understand this is a neutral observation as I might have done the same, is that you weren’t fully committed to the stock market. Let’s assume you retired with $2 million in investable assets. Had you invested that in the S&P 500 index fund 11 years ago, its value today would be around $8-9 million. Considering your San Francisco background, if you had diversified into the Nasdaq or included a couple of tech stocks, your portfolio could have potentially grown to $14 million. At such levels, you could have taken advantage of low-interest loans and used 4% of your capital gains to finance your dream home. I feel you might be overly focused on passive income, overlooking the substantial wealth that can be amassed through broader U.S. market investments. My estimation is that your current investment in stocks, a little over a million dollars, represents a relatively small fraction of your total net worth. While my own assets might be considerably less than yours, I have 50-60% of my portfolio invested in stocks, with the remainder in real estate. In any event, all first world problems :)

      1. Agree that property brings joy and i also own more than a few. I disagree on the joy side for stocks. I have considerable ownership of the stocks of the company i work for and the broader market. Brings me a lot of joy to see my work and efforts generate wealth both for me and humanity especially when that is due to a new innovation such as AI etc. Perhaps your views will change when you get a job and become more productive.

        1. That is wonderful. Do you have joy in the ownership of stocks. How have you used the stocks to take care of your family?

          Lack of productivity is definitely one of my biggest problems, so I hope to be more productive once I can get a day job.

          Do you have any tips on how I can be more productive? How are you balancing work and childcare and how do you decide how much is enough to invest in stocks? All tips and perspectives are welcome. Thank you.

          1. Thanks for your note Sam that’s a lot of questions :) My approach has been 50/50 stock/real estate, without rebalancing so this has pushed me to higher stock % given the appreciation – which is fine and i don’t intend to rebalance which could automatically be done if i buy something i like but don’t want to fall below 50/50, however i don’t mind holding a much larger portfolio in stock. Sure, I have used stock to cover for my family’s living expenses, purchase of real estate and unexpected shortfalls like tax payments but i still like to see a heathy growth of 6-12% per year so time my withdrawals to when market is doing well. Also helps that i can add to it each year new funds since i am working. Productivity i mentioned is in the context of contributing more to the economy (economic productivity). Passive investment in my mind is lazy (although i also like it and have 70-80K$ passive income). I personally like to be very actively engaged in the growth of industries and the economy as a whole by being in the forefront which for me is working in a company that does good, with very smart and impressive people that i can learn from and help generate jobs and innovation which brings me a lot of pride. For others it could also be your own business . or volunteering (or better all of the above). I am sure you are doing and will do well.

            1. Btw i think i figured out your NW from the data you provided. You say here that passive from S&P500 is mainly 15,600K per year assuming 1.44% yield that would put investments in stock to approx. 1.083M$. You state in the post “How i would invest 250K$” that your stock investments are approx. 15% of your NW. That would make your net worth to be around 7M$ give our take.

                1. I think we are similar financially, give our take (I am stock heavy as discussed). We are living in East Coast which is also very expensive. Bought brand new house in CT in 2019 and a ski place in VT so have been happy. i am 49 with twins going to college next year. I plan to work till 55-56. Looking at you, i know i can retire, but actually enjoy working with smart people. My spouse, who also works does not want to retire given kids drive themselves and she enjoys working. If i may comment, one thing which i think you missed out as you tried to escape a job you did not like was the feeling to work for a good company with people you like knowing you are financially ok especially with the post covid flexibility. As i climbed the financial and career ladder working became much more pleasurable knowing that i am with smart people whom i talk with everyday either from an office or from my home. My target is perhaps double what i have but again not sure the reason i work is building my wealth anymore. I think it is that i don’t think the alternative is attractive given the flexibility and all the positive challenges i have currently. Hope this helps. Feel free to email me directly if you would like to discuss further.

                2. What is it that you and your wife do that has you working in your careers for 30 years?

                  I burned out after 13 years, same with my wife. And we both don’t have a desire to go back to the corporate grind. Part-time consulting for 20 hours a week is what we think is ideal if we were to go back.

                  My struggle is once you’ve achieved a certain net worth, unless the work is amazing and stimulating, and the people are awesome, choosing to spend 40 or more hours a week to work is a sub optimal situation.

                  Even though I could’ve made more money working, I wouldn’t trade my 12 years of Freedom for even $100 million.

                  So I’d love to know about what you and your wife do. Thanks!

  52. To be able to NOT work in some dead end job like Janice and 95% of Americans our age is awesome. It’s liberating. The bad thing is that our kids will see us not working and they may want to be like us. They may not be ambitious enough. Our kids may be spoiled.

    We have always been international travelers. We eat out often. We drive to King of Prussia Mall often as well as NYC and DC. My son knows we have money. My neighbor’s (their dad also working disabled vet) kids are also spoiled because they also own a timeshare, in addition to their other 2 houses. These kids could have rich kids’ syndrome.

  53. I don’t think you should beat yourself up too much here-you’re definitely working to maintain a very high standard of living that’s difficult to be completely passive with (and most people want like you want to be stimulated and challenged). You and your family are safe and able to care for each other-you have a lot to be grateful for. I know it’s your job to focus on money but I think you should zoom out a bit and realize you’re going to be okay/you have a lot to be proud of.

    1. Zooming out is great advice. Thank you.

      I keep life on hard mode partly because I’m afraid of living the easy life, which tends to bring hardship down the road.

      But always living life on hard mode is unhealthy.

  54. Man, I am sorry. I know you are not sleeping. You are lost. What was is no longer. You will never be the same. I know this. In 2000 and 2001 I lost millions of dollars. When the dust cleared, I had $82,000 left. I got drunk and almost killed myself. Almost made it. Instead I ended up in jail.

  55. As the rightful creator of the FIRE movement, I respect you for sticking with the strict definition of FI and not changing.

    Coast FIRE is a joke. So is Slow FIRE. They were basically created by people with not enough passive income to cover their living expenses, and to make them feel better about their progress. There is no difference between Coast/Slow FIRE and being a worker on the path to financial independence.

    1. Sam, it sounds like you desired a more expensive lifestyle than you initially set out for. You are very well off and have opted for your situation. Nothing wrong with that, and I doubt this caught you by surprise. As long as you knew what you were getting yourself into, you’ll be fine.

      Plus, you still have so many options to downsize or otherwise adjust if needed. Sometimes the risk or the extra work is worth it. I respect your values and judgment.

      1. Sam started the FIRE movement in 2009. Then a lot of white bloggers began writing about it, like MMM in 2011. I even remember reading a guest post on Financial Samurai by MMM in 2012 talking about early retirement.

        Then you had more white bloggers and podcasters talk about FIRE, and they formed their own clique. When you’re part of the majority, it’s easy to just take over everything. You just end up sharing stuff that people who look like you talk about, and then you takeover, like the pilgrims did with America in 1620 and began wiping out the natives.

        The good thing there’s the internet and it’s all recorded.

        1. Appreciate the support! Yeah, it’s tougher to gain traction and recognition as a minority. And it’s natural to just support people who look and talk like you.

          But I’m thankful Google and the other search engines are unbiased, or at least, less biased. So it feels great to come this far! Being able to have this reach despite only being a part of 6.8% of the population is cool.

          You’ve got good memory! Thanks for reading all these years.

  56. Wow Sam you hit quite the nerve!!! LOLLLL

    So let’s boil this down to what it seems to me has people most annoyed at you. From what you shared in previous posts your NW, if we include home equity, almost certainly exceeds 10 million. So right there, let’s be clear that you never “need” to go back to work – maybe even with no lifestyle changes. I think you know this but people don’t seem to want to hear it.

    However, you have created this creed that “all expenses must come from passive income.” Through a recent home purchase you feel that you are now “house poor” since passive income doesn’t equate to living expenses. Of course, you are not house poor.

    As we know, there is no requirement to live by this “creed”. Certainly you have liquid investments like stocks that have appreciated well with capital gains. Capital gains is passive income; however, we don’t think of it that way. But really you had just elected to defer it by leaving it in your account over the years and letting it “grow”. Lets say you have a Vanguard account with 3 million balance in stocks and your actual deposits are 2 million. So you now have long term capital gains are 1 million. The 1 million in capital gains is passive income….the same as dividends, rent, etc. You just didn’t choose to take/use it. So there is an easy solution where you can also stick to your creed – tap into your capital gains.

    It seems like you have also created this double challenge in that not only must strict passive income cover expenses but NW must also stay same or grow. That is quite the challenge. But so what. I hate to see my NW contract. However, isn’t that the bonus of all the hard work you put in that even if you tap capital gains on stocks it is likely real estate appreciation and your other assets will make up the difference. That is why diversification right?

    All this being said, this post does feel somewhat like a “cover” cause you want to get back in the action – go back to the workplace….perhaps a bit bored? You mostly hung around kids and mostly solitary writing for 3-5 years? I think you are a successful, personal, confident person who maybe is ready to get back into a stimulating environment and see what this vast network that has been created around FS has done? And that is laudable! You are in the enviable position of being able to be choosey and step back out at any time if you dont’ like it.

    Finally, I think it will also provide you with new material for FS, which is great for all of us!! Good luck!

    1. Financial Samurai

      Hi Ash, I’m actually not house poor. I’m house rich, cash poor. It’s a tough situation to be in, but fixable with some hard work and ingenuity.

      Yes, after 7 years of being a stay at home father after April 2024, I want to take a vacation from parenthood and go back to work. The challenge will be finding the ideal part-time consulting job that lets me work on a good mission, with good people, in a fun environment that pays enough to fill that gap.

      I’m unwilling to change the rules of FIRE to win the game. Remember, I’m the one who popularized FIRE starting in July 2009 when I began writing about retiring early. Going the Barista FIRE or WIFE FIRE route as some of my peers is not the way.

      But enough about me. How about you? What’s the latest with your FI journey and college savings. And how are you planning to spend your time if your kids are in school full-time?

      1. kids are 22 and 25, both graduated from college. They went to JMU in VA and Depaul in Chicago. Total cost of 4 years was about $100k each. Both graduated with good jobs. I know I can’t convince you that it isn’t either community college or 750k per college to give your kids a good education, but there is a huge middle ground I think you will find exists.

        We are in VA. Look up UVA tuition history. That’ a really good school. In 2012 its was 22k in state, ten years later it was 32k a year. I remember about 2010 when my kids were 10ish and we were starting to think more of college as a reality “everyone” was saying it would be 300k to send a kid to a great school like UVA. Nah. And even Depaul, which was out of state for us, was listed as 52k but they were interested in my daughter so they basically matched what UVA would have cost us with various “scholarships”. And not like you don’t have a ton of CA schools to pick from to stay in state. There is so much money and politics going on with college applications it is incredible. One thing I learned is most badly want out of state attendance so often the listed out of state price is bogus. Hardly anyone actually pays it.

        I have been FI for several years but continue to work because well, I like the stimulation, and I can work when I want to (I part-own the business). Just paid cash for college educations – never got into the 529 thing.

        1. Gotcha. Why not consider the best state school there, the College of William and Mary?

          Unfortunately, I don’t think my kids will be smart enough to get free grant money for college. But maybe! I just don’t want to count on it.

          $100,000 each is pretty good. I expected to more than double in 18 years.

  57. I see your problem.
    You want to live well above your means.
    Move somewhere cheaper, and nicer, so that your children can get a public school education. Stop going out on “date nights”, and wasting stupid amounts of money on frivolous vacations.

    1. No date nights or vacations? What the heck is the point of saving? I think the point is to live with some enjoyment? Not everyone can dig in their garden all day or be completely satisfied taking walks.

  58. I disagree about having the nicest house you can when the kids are young. That sets unrealistic expectations. Your kids will be pressured to spend this level of money when they start working. That’s fine if they are in the top 1% like you, but is it realistic? It’s a lot of pressure. Maybe that’s what differentiates the 1% from the rest of us.

    1. You and I are very different and that’s great. I don’t think my kids will be pressured to spend more money just because of their house. I wasn’t. It’s all about instilling in your kids a strong work ethic and good financial habits while younger.

      But I see your point on owning to nice of a house, car, etc, and how it may impact a kid’s perception of reality. Hence, we need to explain to our kids about the ways of the world, go on trips, volunteer, make them work hard, etc.

      You retired in 2012 like me but have a working wife. More impressively, you’ve been able to keep her working for these 12 years since you retire, even though you said she wants to take things down since the pandemic. Kudos to you. I have been unable to convince my wife to go back to work after leaving in 2015. She’s busy enough with being a stay at home parent.

      I commend you for living in your two bedroom, one bathroom apartment and keeping costs low, even though you state you are worth over $3.5 million. But it’s also easier to live in a smaller space with one child compared to two.

      Just imagine for a moment what your spending would be like if your wife didn’t work. How much tighter your budget would be. I understand the fear of running out of money in retirement. But I would say give your wife a break and let her experience early retirement for a while as well. If you keep on making her working while you’re retired, she might be incredibly resentful once she finally does retire.

      With both of you without a steady income, that’s where the real challenge and fun begins! And to die will millions would be a shame. Unless, you plan to leave your son millions, which would contradict the way you live. A conundrum!

      Related: Early Retirement And Minimalism Go Together Like PB&J

  59. If financial independence is when your passive income covers your DESIRED living expenses, then FIRE is a load of crock and 99.9% will never retire. My DESIRED living expenses include international travel at least 6 times a year, only in first class, staying in only 5-star hotels, with $5,000 a day to cover extravegent living. While at home my minimum requirement is a $5m home, and a rolls-royce for my daily driver. It goes without saying that anything other than a michelen-star restaurant is certainly not what I desire. Sadly, I am never going to be able to retire.

    The above sounds ridiculous, right? Yep, pretty much as ridiculous as your current situation really. To be honest I find your posts these days have “lost-it”. Out of touch with the average person’s reality, and certainly out-of-touch with what FIRE is all about.

    The reality, is that in life we must make sacrifices. We either sacrifice our time, to be able to build more wealth, or we sacrifice some wealth to be able to enjoy more time and hopefully have a more fulfilling life than being on the work treadmill. There is no right or wrong about which path you take, and everyone is different. But to be saying that you can only FIRE when you reach your desired living expenses, is not what I think FIRE was about, and alienates 99% of the population, because realistically FIRE with your desired living expenses can only be achieved by a tiny percentage of the world’s most wealthy – that is people like yourself.

    Most dissappointed. I am beginning to doubt that value of the weekly reads, which is sad, as in years gone by the thoughts and perspectives really were worth reading.

    1. I think it’s important to set realistic desires. The more you desire, the more you need. So if you can set more realistic standards for your lifestyle expenses, you’ll have an easier time reaching financial independence.

      FIRE is really about having enough investments and passive income to cover your basic living expenses so you can survive. But most people I know want to do more than just survive. They want to have freedom and live it up with her one and only lives.

      So this is the tricky part as we humans deal with responsibility to our family and desires. It’s not an easy balance and everybody has their own standards.

      Here is a relevant post you may enjoy:

      How much to retire early and live in poverty

      I hope everybody can find their balance. That’s the challenge and fun part of the FI journey.

      1. You are right, it is about balance. I would think an appropriate balance is the life style you lived prior to retirement. If prior to retirement, you afforded a certain house, a certain car, and a certain type of holiday, and you can continue that standard in retirement, then (to me at least) this is the definition of FIRE. That is, I remove my earned income, and my life continues unchanged in terms of what I can (and can’t) afford to do. I am certainly of the view that a significant downgrade in lifestyle to achieve FIRE is not desirable (or at least not to me). But equally, saying that you cannot FIRE, because you have decided to significantly upgrade your lifestyle instead, is also not what FIRE is about. So it is balance. And surely the most sensible balance is to be able to continue the lifesyle that your salary afforded while working, without working.

        Btw, I apologise if I came across as judgemental. It is just that reading that someone at, or near, the top 0.1%, not being able to FIRE, because they have just decided to buy a multi-million dollar home, really just seems to have lost context somewhat. If we keep upgrading our lifestyles we will never FIRE. In fact this was one of the core principles of the FIRE movement in the early days – that is every time you get a bonus or salary increase don’t keep upgrading your lifestyle. Instead maintain you current lifestyle and save – and later you can FIRE. Now we are reading from the “master-of-fire” about upgrades to lifestyle and postponing FIRE ! A complete contradiction to most of the earlier teaching that was designed to help the AVERAGE person reach financial independence.

        1. No worries. I get judged all the time. It comes with the territory of putting yourself and some of your numbers out there for public consumption. I’m used to it.

          One of the goals of this post is to demonstrate how life can CHANGE over time. You might be comfortable with FIREing with a certain passive income and net worth. Then that might change because you move, have kids, what to provide more, have an accident etc.

          Life is dynamic so should the mind be. It’s like my dynamic safe withdrawal rate to change with the times.

          There is no contradiction, only change. It’s not the end of the world to go back to work or consult part-time once the kids are in school. Having purpose feels great.

          Related: The Negatives Of Early Retirement Nobody Likes Talking About

    2. You write “There is no right or wrong about which path you take, and everyone is different.” – so why the heck are you being so judgmental? Imagine if a totally random person came up to you and said they were disappointed in you.” How about you share some of your weaknesses and mistakes you’ve made publicly and see how it feels when strangers judge you.

  60. But what is your blog income? You conveniently left that out of your analysis. I assume this post just ended up generating a bunch of SEO for you and that was your goal…..your readers deserve better. Your post was just shared in an accredited investor group I belong to of over 2000 accredited members and the ones who are familiar with affiliate income, advertising etc on their own sites were pretty “perplexed” that you left blog revenue out of the income equation.

    1. Good to hear the discussion has spread to your group. The goal of this post is to make people talk about their finances, their desires, and to plan ahead. The FI journey will be full of twists and turns.

      Blog income is active income. Responding to this comment and spending 10+ hours writing and editing this post is anything but passive income. If blogging was so lucrative, everybody would be doing it.

      From my article:

      “Being financially independent doesn’t include having a working spouse, making side income, or running a business to pay your bills. That’s all active income activity. Contrary to what some people believe, my articles don’t write themselves, not even with AI.”

      But I did include my severance negotiation book income, which is pretty much passive. Except I like to update the book every two years to keep it fresh.

      1. But why are you talking about a job filling the passive vs expense gap and not including the blog income to fill that gap?

        Me thinks you make as much or more working on the blog than a job would pay and write these without including that to make it more dramatic for clicks on Yahoo, etc.

  61. I retired at age 42 back in 2012. My wife and I have one child. We bought a small 500k apartment in Lisbon in 2015 with zero mortgage, sold our very large and comfortable Washington DC house and decided to keep 90% of our assets in cash and stock. Our monthly costs in Lisbon are a tiny fraction of what we used to spend in DC. Years later, I cannot emphasize how beneficial it was for us, financially and otherwise, to curtail spending on material stuff and to keep the bulk of our wealth (now quite a bit more than 90%) in cash and a passive “DIY index” of stocks. I used to question whether it was good parenting to live in a one bedroom apartment when I could have easily afforded something larger. In retrospect, our daughter is super happy with our choice. We set an example for her. She is thrifty, independently wealthy at age 18, and will be able to pursue a worthy (but very low paying) career after college. Ditching the big house was the best lifestyle choice we ever made.
    Everyone needs to go their own way but you are at a juncture now where a “hard pivot” maybe could be something on the table. Consider all your options – especially those you wouldn’t imagine in your comfort zone.
    I agree that AI is a good theme – reason enough to allocate to some of the top AI players such as Alphabet, NVDA and MSFT.

    1. Congrats on your retirement and your daughters frugality. I think it’s great to live simply. Unfortunately for me, I don’t think I’d be happy, living in a one bedroom apartment with one or two children. I left in a one bedroom apartment with my wife over 20 years ago.

      But I am looking forward to living abroad when the kids get older to immerse them in Mandarin language and maybe Spanish as well. It’s such a wonderful in magical experience to live abroad.

  62. Hi Sam,

    First time writing you and my hubby and i have been following you for years. We love reading you on Sunday mornings with our coffee in bed, and our financial scenarios are oddly similar. I’m almost positive you ran the numbers every which way from Sunday before pushing then buy button on your new dream house, so you are not surprised at your current predicament, if you can call it a predicament.

    The obvious and most immediate solution is to rent out your previous house and hire a property management company if you don’t want to be bothered with the landlord hassles. Also, if you haven’t already, perhaps you could monetize these annoying pop-up ads that are invading your posts at an alarming rate.

    I’d like to be considered as your property manager as my husband and have a small business running our own properties. Both our backgrounds are in commercial real estate. Let me know your thoughts. We’re here to help. Thank you for all your insight!

  63. Adrian Krulewecki

    Oh, dear!!! Where to start? There is no price in the World to lose your freedom in the name of a larger home!!!! You are talking about getting back for 3 to 5 years to get back into retirement. This is a long time, our lifespan is very short. you will suffer the pain of the loss of so many things! You saw it coming, you did the math, your spouse advised you against it, and still, you chose to become a slave again!! You are a smart guy and need to figure this out to get back to your freedom. Back into the system is extremely stressful, and not good for your health and your future. I’m a retired dentist from California, sold a large dental practice in the San Luis Obispo area at the age of 55, and consolidated my net worth into stocks with high dividends paying yields and some bonds. Can never look back on my working days. I wish you the best, do not get fooled by going back, try other ways, even if you need to sell some properties. The time you will be wasting trying to patch up your mistake is not worth the priceless moments you will waste being around your kids. Time passes by too fast my friend and the clock can not be turned back. Dr Adrian Krulewecki

    1. Hi Adrian – Check out the post: How Parents Can Fill The Void Once Kids Go To School Full-Time. I’ve been a stay-at-home dad since 2017 but my youngest will be going to school full-time this Sept 2024.

      I had a good run between age 34 to 46 of freedom. It truly was a wonderful time that I wouldn’t give up for making more money at work.

      But actions have consequences. Now I must pay the price for buying a nicer home by working for 3-5 years perhaps. My hope is to do part-time consulting and do something enjoyable with good people.

      I’ll still be 50-52 when I head back into retirement. From the post, “My biggest challenge will be making sure I allocate enough time and energy to them during this journey. The last thing I want is to spend so much time making money that I miss my kids growing up.”

      Hope you’re enjoying your retirement!

  64. The wisest thought that is in everyone’s minds today is to invest in different income flows that do not depend on the government, especially with the current economic crisis around the world. This is still a good time to invest in gold, silver and digital currencies (BTC, ETH…. stock,silver and gold)

    1. Hello , I am very interested. As you know, there are tons of investments out there and without solid knowledge, I can’t decide what is best. Can you explain further how you invest and earn?

      1. I guess a few know about integrating into the micro economy to help substitute FIAT or usdt for a more tangible exchange Experience, it more like capitalization with about 43.307% profits/ ROI weekly though.. ps.. Angela Mae McClain ,got me covered thanks

  65. I’m confused. You are $90k short a year from your portfolio to cover expenses. But your expenses include saving $34k for college. So if you cut that you are $56k/year short. Now tapping your portfolio for an extra $56k for 12 years = $672k. Why can’t you tap the portfolio principal for the next 12 years instead of going back to work?

    You are in the “spending down phase” you mentioned not being able to spend it all. Why not spend it more? Will that money be replaced by SS? You are 45ish so the likelyhood of there being some sort of SS is likely and with your FIRE you likely will have hit your bend points and your wife as well. Have you calculated your SS in for both of you? Or calculated what your medicare premiums will be at age 65? That will dramatically decrease the annual health insurance expenses.

    Also in 12 years, you will not have $80k in tuition only $40k for 1 kid and then you will be tapping the 529 and you will have that cash flow to help cover the difference between what you have saved in 529 and college expenses. Why do you have to keep saving for $750k if you a standard budget of $80k for more years why not just carry it for anther 18 instead? That $40k per kid tuition and annual current budget of $288k, then why not just assume you are paying that much?

    I really want to understand why if you are cash flowing tuition now it can’t continue and why you need to save $33k year for college if you are cash flowing that now?

    1. For a second I got excited because there was a change passed in 2017 at the federal level that allows for $10,000 a year to be used from a 529 plan to pay for private school grades K-12. But when I read further, California doesn’t consider private school a qualified expense (UGH, CA is so annoying with stuff like this). It sounds like CA will ding you with “state income taxes on the amount withdrawn and an additional 2.5% tax.” But perhaps check with your 529 administrator to be sure.

  66. You making your life complicated. Can you forget San Francisco and move somewhere cheaper? I made nothing close to what you made or make. I got to retire at age 44 after I was fired from CVS. We live off my husband’s SS & VA disability. House is paid off and son goes to public school. We did move to boring cheaper central PA from Alexandria, VA. Seems like you still are competing with the Joneses and are stressed out.

    1. Congrats on retiring at 44. That’s wonderful. Sounds like you’re doing everything right for your family. That’s the most important thing.

      There’s just so much excitement here in San Francisco to leave now. 49ers going to the Super Bowl, artificial intelligence boom, tech stocks rebounding, Lake Tahoe, so much good food, and lots of money-making opportunities.

      I think finding a part-time consulting job 20 hours a week to make up for the shortfall is a reasonable solution once our youngest goes to school full time. If not, maybe I’ll join you in Central PA!

      1. LOL, the woman got fired from CVS and lives off disability and had to move to Central PA to live out her remaining days.

        No thank you. Life is too short to work that job as a career and live there. I’d be depressed.

        1. Janice, I got fired so that I could be replaced by a cheaper 20 yo. I hope you never get fired when you get old. You can laugh all you want, but unlike you, Sam and I are not in the rat race. We don’t have to wake up at 5 am and sit in traffic round trip or work remotely in our jammies. I am net worth 7 figures and I do not intend on going back to work despite getting numerous head hunters, emails to return to pharmacy job, including CVS. Janice laugh all you want. I don’t even want to imagine what you look like and what kind of debts you have. I have 0 debts. Have not and will not touch my. IRA until I’m 70. You won’t believe the kind of benefits my husband gets,includes free healthcare, and 0 property taxes, so yeah, I’m doing quite well for not working for the past 7 years and never planning on being a corporate slave like you and 95% of America. Unlike most of America, I saved 6 figures in the last 3 years, laying around my rear end watching Netflix all day. I’m not running around like a corporate fool like you, worrying about bills.

        2. Janice,
          Lol. What you doing? Being a slave at work ? Haranguing your kids about their homework?
          I can go at it all day with you because we go to gym an hour each day and then shop.

          If my husband didn’t get the VA disability then I’d be in the rat race making 6 figures like a corp b**** like you, but I choose not to because I’m not going to be anyone’s slave the way you are! I can move back to northern VA but I’m not paying $2 million for the same size house with land that I have now. From this point out, I am a cash customer. My houses will be paid for in cash as well as vehicles and my son’s college. There is no depression here. We are the youngest retired couple in my neighborhood.

          Life is too short to be working in the rat race and staring at your stock portfolios or 529. I feel like a big recession is coming so what will you do when eventually you or your husband get laid off /fired or you have a loss in your investments, 529?

          You can gloat or insult me but one day your condescending self or family could experience a catastrophic event. It’s called karma.

        3. LOL, LOL, Janice,
          we live off “Veterans’ disability,” Social security, AND interest from our bank accounts and CDs. I do not have to touch our IRAs til age 70 or 72 or whenever the required mandatory withdrawals are. This money is UNTAXED per year. I moved to central PA to get the big 3500 sq feet house with land for cheaper than northern VA that I paid in CASH with the rest of profits going to the bank. Stop being a jealous hater. My next door neighbor is also from DC with a disabled vet hubby who chooses to work. Oh, she owns 3 houses. She too has not worked for the last 13 years. Both of us together are worth $4 million.

          When you and your husband are laid off or fired in the next 10-15 years then you’ll get nothing. Maybe you’ll have to touch your 401ks, if you have them to survive. You’ll have to do side hustles or drive Ubers. We make big money doing absolutely nada in our huge houses while you have to work at your DEAD END JOB. I’m not working. I have not worked in 7 years. My banks accounts just keep GROWING.

  67. Hi Sam, I don’t think that you have blown up since your net asset is about the same. What you have done is just to move some more liquidity assets into illiquid assets and now you are uncomfortable with the new liquidity profile of your portfolio. Maybe it will be helpful for you to assign a liquidity score to the different asset classes in your portfolio and rethink about what is the most ideal portfolio after factoring liquidity needs.

    1. Well, the passive income has taken a big hit. The net worth hasn’t changed much. So yes, it will take 3-5 years to build back up the liquidity and investments I once had. Probably 5 years if we don’t go into a bad recession.

  68. Sam , Why don’t you and your wife home school your kids and save 80k a year. You and your wife are probably smarter than their teachers.

        1. Financial Samurai

          Can you explain how I’m lying?

          Are you confusing what my passive income is now versus what my current expenses are?

          There’s a difference between being able to live off $280,000 and generating enough net passive income to pay for $280,000 in annual household expenses.

  69. Sam,

    Thank you for sharing this with all of us in such a honest and open way.

    I have been thinking on buying a new property that could compromise my FIRE, and certainly your post serves as a cautionary tale.

    I wish you and family the best for this new stage in your lives.

    Please keep it up with FS.

    From Penang, MY

    1. Financial Samurai

      Love Penang. Best food in the world! Thanks for stopping by.

      Yes, think long and hard before buying a nicer house. Run the numbers and make sure you have enough liquidity after purchase. I’m talking 10% of the value of the house in cash or short-term investments.

  70. Geoarbitrage. Your cost of living is inversely proportional to your distance from Nancy Pelosi. Mark the map at Washington DC and San Francisco and maximize your distance from both!

  71. I’ll be curious to hear followups on this. I think I would regret this choice but I’m not you and we all have different values. Kids are happy anywhere that has loving parents!

    1. Financial Samurai

      Sure! Life is a journey. You can subscribe to my free newsletter here to hear follow ups.

      My wife and I have been stay at home parents since both are kids were born. Although we’ve sacrificed income, we’ve gained valuable time with them.

  72. Hello, I’m writing from Seattle. I’ve never followed your other posts but somehow stumbled upon this article. My husband and I do quite well with our multiple income streams, which allows me to work less than 4 days per month. Our 2022 tax return showed a gross income of almost $700,000. We live in a modest house, drive one modest car, send our toddler to a private preschool, take several vacations per year, and have Seahawks season tickets. Life is wonderful and we don’t flaunt our money. Even our closest friends and family don’t know about the millions of liquid cash we’re sitting on and it’s pretty amazing to stay under the radar.

    1. Which types of passive income streams generated the majority of the annual revenue in your situation?

  73. Hi Sam, In 1967 I graduated from St Bernadette in Orchard Park, NY. The school was free. Chief Justice John Roberts attended in the 1960s before moving. Our class size K-8 was 20 to 25 students. Our teachers were all Irish Catholic Mercy Nuns. Four boys in my class became doctors. All students did well in HS and many completed college and/or started businesses. I retired chief chemist electric system of Potomac Electric Power. I know ancient history. Our parents were employed in local manufacturing or owned businesses. My Dad taught me plumbing from age 10 to 18. I passed the Town of Hamburg master plumber exam at 21. I completed AAS chemical technology, BA chemistry and MA chemistry, all at SUNY. I worked PT/FT as plumber to fund expenses and college. I lived at home to enjoy the family and contribute to the family team. I remember asking my Dad if he could provide support for room & board at out of area college. Dad said you have always paid all your own expenses. Dad said I would never steal your manhood by not trusting you to fund the completion of your goals.

    1. Financial Samurai

      Ah, the good ol days when things were much cheaper.

      “ Dad said I would never steal your manhood by not trusting you to fund the completion of your goals.”

      I like it! Let’s not rob our children’s plans to make something of themselves. At the same time, let’s not drown them in debt starting adulthood.

  74. Good luck in your search! Please keep us posted on where you end up. My spouse has been unemployed (not by choice) for almost a year and says it’s one of the toughest markets out there right now.

    1. Financial Samurai

      Thanks. I’ll keep folks posted. I hope your spouse finds work soon. Hope she got a severance and collected UB.

  75. Have you considered selling or renting out your current house and moving back into your old house?

    1. Financial Samurai

      No. That would be a shame since we just moved in. Better to sell or rent out the old house instead to improve cash flow or boost liquidity.

      What you say is an option though.

  76. Sam, a very enjoyable post! You and I have engaged on posts and comments a number of times in the past so I’ll take a moment to comment on this one.

    As a number of astute readers have commented below, the more worldly of those amongst us know that you are a multi-decamillionaire. Given your tremendous portfolio of diversified financial and real estate assets PLUS your very substantial company called Financial Samurai this is a fact. And, of course, Financial Samurai spins off substantial incomes you do not report to the Internet (rightly!).

    Obviously, you are entirely financially independent and very wealthy, by any standard, and will continue to be. House or no house. “Job” or no job.

    But, you provoke yourself and your readers in excellent ways. Both for effect, and in substance, since it creates the kind of dialog here in the comments, and it gets people to think about what they might really want.

    No one needs to take your “choices” too seriously and I hope they don’t. You are taking these decisions (assuming they are real, and they needn’t be) from an incredible and hard-earned position of strength.

    You deserve it and it if helps stimulate your thinking, gets you off the couch in a way you desire, and most importantly adds fuel to the FS machine, hats off to you. Well done.

  77. I’m confused. You say you “ blew up” which implies a mistake to me. But then you tend to justify it. You clearly moved the goal post. Was it a conscious decision to give up freedom for a bigger house or did you succumbe? You have often said money is a tool to be used. So do you regret your decision to buy the bigger house ( money is a tool )? Or not?

    1. Financial Samurai

      I thought long and hard about it before blowing it up. Listen to my podcast episode linked in the post.

      I’ll have a better idea of whether it was the right decision or not with each passing week. My hope is that as I rebuild my liquidity, I won’t feel as much financial stress.

  78. jeffrey luna

    why dont you offer a service where you look over a persons financial data and give them informal coaching? i would hire you.

  79. David Russell

    Sam,
    I love your posts and advice. I’m kicking myself for not following your post from last October when you said the S&P500 at less than 4200 was a buy. I missed out on a 15% bump over the following few months.

    But, I think you should be easier on yourself with your recent decision to buy a dream house and loose your FI status. I think you will be loving your decision in four to five years time, for the following reasons:
    1. that $150K shortfall in income seems to be covered at least 60-70% by simply renting out your old house.
    2. That still means that you need a job to cover the shortfall, but your salary requirement is low enough that you can choose a really good job without needing to compromise a good job for that higher income.
    3. You seem to be targeting an AI company, and with a bit of luck and good choice (see point 2), in 4-5 years your stock options will be fully vested and hopefully you’re getting a windfall.

    But above all I love you are making the longterm choice to buy a dream house when your family is young and can enjoy it, and investing in your kids with great education.

    Good luck you you….and I assume you will keep writing the FS newsletter weekly, as I want to keep reading it.

    David

    1. Financial Samurai

      Hi David,

      Nice to hear from you. Hopefully your existing stock investments are doing well even though you didn’t buy last October.

      Thanks for your words of encouragement. The kids are growing up quickly, and I really needed to make a decision because the house reappeared like destiny, and if I didn’t make the move in October last year, the house might never have returned.

      I could see a situation where the house is listed this year, and because of the bull market in stocks and artificial intelligence, it could’ve gotten bidded up in the public market.

      My hope is that time will help boost liquidity and get things back to me feeling financially independent again. I really think it’s gonna take 3 to 5 years.

  80. Great article as usual.
    How did generate 150000$ in passive income from stocks and bonds? Just wondering what was the total amount invested.
    Also, I joined fundrise 3 years ago and I have minus 5.8% annual return. I’m wondering how come my fund ( flagship real estate ) did not do well and why should I invest more in Fundrise.
    Thank you

    1. Zach, I invested in Fundrise 5 years ago and added a little over the years. Total gain including dividends was 4.1% annualized in their diversified portfolio. Not thrilled with it and have done better with all my other investments. I plan to liquidate when I can. They don’t make it easy.

  81. Hi Sam,

    Love the article! I think those who have a meaningful level of FI should always be prepared to go back to work, because our circumstances can always change, as yours has. So thank you for shining a light on this issue. With that said, how do you and your wife plan to “find a job” after being out of the traditional work force for so long? What’s the minimum level of income you would want to consider it worth it for you? Would you ACTUALLY be ok with having a boss for the first time in many years? What field(s) are you considering? Your thought process is always so comprehensive so I’m really looking forward to what you think! Thank you!

  82. I’m calling bs on this one a little bit. You have zero passive income coming from this site of your newer book?

    1. Financial Samurai

      Correct. Zero passive income from this site and no royalties from my latest traditional published book, Buy This Not That yet. Maybe one day, but not today. If the book advance is covered, it’ll be $1.5/book maybe.

      1. If you could take yourself back in time. Would you still take the cash advance for the book or the higher royalties and no advance from the jump? How is this site not creating income? I can’t imagine the foot traffic you have and the related ad revenue. Last question if you don’t mind and apologies if you already mentioned, but with the kind of consumer spend you are expressing, what credit card do you use? I imagine you can probably generate a healthy amount of cashback. Thank you.

      2. Sam, you are a wordsmith! Of course you have no passive income from this site. It is active income. The articles don’t write themselves!

  83. Sam,

    Two things come to mind regarding your real estate:

    1) I think you should admit that objectively you have too many eggs in the SF Real Estate basket. I suggest that you diversify your real estate holdings by choosing one of your properties to sell and 1031 exchange it into a DST in the location of your choosing. You could choose the one property to sell that is the most troublesome, or the least financially productive, it doesn’t matter. Beyond geographic diversification, you can also enjoy additional benefits of DSTs such as the ability to choose from different property types, no property management required, and perhaps most importantly the continuous lifetime (and beyond) tax-deferral due to step-up basis upon property turnovers.

    2) That 5% T-Bond growth could instead be 6% guaranteed for 10-years right now if you purchased a MYG annuity. Your $1.3M net from sale of the prior residence could earn $78K in year 1 (up to $132K in year 10, compounding tax-deferred) versus your $65K gross / $52K net. In 10 years you will have amassed $2.3M+ contractually guaranteed.

  84. Dude…. You have so much you could cut back on….. I get wanting to save to pay for your kids future tuition. But atop saying that you aren’t financially independent. You’ve forgotten the basics of budgeting while trying to give advice to others.

    The irony of your words is deafening:
    “What type of sacrifices have you made for your family? Have you ever given up your financial independence for your loved ones? Do you think your children and partner will ever fully appreciate your efforts to take care of them and provide the best life possible?”

    Listen to your own words, sacrifice your vacations, a year or two of not saving for your kids tuition. You spend $2400 a year on clothes…. That’s crazy… The better part of $10K on “Entertainment”, $2000 a month on food…… You’ve forgotten how to cut back and live within your means. I get chronicling your life and everything, but your blog sounds tone deaf to others.

    I’m not writing to belittle you in any way, just a voice to give additional perspective from your readers.

    1. Thanks Grant. I will do my best to cut back on expenses.

      $2,400 a year for clothes for four people is $600 a year. We’ll take a look at the thrift store and we are actively trading/selling our old kid’s clothes and buying second-hand ones at this cool place called Chloe’s Closet on Irving Street.

      I’m finding my kids are growing up quick and their shoe treads get worn way faster than mine. In addition, their feet are growing more quickly so we need to buy new shoes. My fear is that with so much running around, flat treads will be too slippery and they could fall as a result.

      How much are you spending on your kids a year for clothes? And what does your budget look like?

      thanks

  85. Sam,

    Read the NY Post article which says you are dropping 80k on tuition??? Not sure if you want your children mingling with a certain crowd (or the post is wrong!),but a quick google search shows plenty of private schools with less than 20k tuition for two kids. That’s half your deficit right there

    1. Not yet. If my daughter goes to the language immersion private school in September 2024, that will be the cost for two kids.

      How much are you willing to spend to be fluent in a language? This is something I’ve thought a lot about.

      1. We spend about 5k a year with Italki as that allows you to play the currency difference, similar to your Canadian college suggestion. Also, take a look at the 5 minute video below, the Dutch say they simply watched English cartoons to become fluent. We are doing that as well with our children, free on youtube

        https://www.youtube.com/watch?v=i6X9XjvQcsQ

          1. Spanish. Everyone we know does Spanish or Chinese
            It can be more than just monitors
            In the car, play music in in Chinese, whats Mandarin for “Cutie Baby”

  86. Love the honesty here – it sounds like you know what you want and what you’re giving up for it. A little trepidation about that seems reasonable and necessary.

    We’re not FIREd yet, but could be leanFI in our current situation. We’re about to close on a nicer, more expensive home on acreage in an area we’ve been eyeing for years. It will push back our FIRE timeline.

    It gave us some pause to spend so much, even though we can afford it. We’re planning for kids ASAP and our current house is already a bit cramped. Ultimately, it was about a 200k difference between a comfortable upgrade and a dream house/property and we decided to go for the latter, knowing that we’ll have to work a little longer to FI. I hope your family enjoys new place and that the work provides some variety and flexibility.

    1. Congrats Lauren! Buying a nice house BEFORE having kids is smart. Because once you’re pregnant or have little ones, there is this INTENSE nesting instinct that comes out that might cause you to overbid on a home. And that could be dangerous.

      Nothing will be harder and more gratifying than having little ones. I hope you have them and things go smoothly. I also hope my posts over the years have given you some perspective so you will be less surprised on our new parenthood journey.

      All the best!

  87. Wow. You sure are a site to behold.

    Why don’t you do what most of the other people in the United States making it much lower income due and, and that is not living above your means. With just your lower passive income most people would have a very good life.

  88. isn’t there a 4th option? revise your “strict” fire definition from only passive income to mostly passive income….adopt the up to 4% withdrawal from investments like stocks and bonds.

      1. LOL…sorry didn’t mean to suggest change the definition of FIRE, but to change the definition of passive income. So you make up your shortfall by withdrawal. Most people would call withdrawing money from investments as passive income. Is that considered a failure or cheating. I know you strive to have 0% withdrawal but I think you evolved to that over time, no? When I retire at 60 I will use a combo including direct withdrawal, interest and dividends. That still qualifies me as FIRE I think.

  89. Private school in NYC is 55k per year for grade school and up, not including after school programs or summer camps at $500/week per child. Thanks for the interesting article as always!

  90. The budget shown here is not out of line with what other Bay Area families have to aspire to if they want an ‘upper middle-class lifestyle’. Sam has written about this before. It has been adjusted for recent inflation. The Bay Area – especially because of housing – can be that expensive. Life is about making trade-offs and purpose.

    Good for you, Sam, that the love and care you have for your family compels you to put your perceived needs for them above your own. Another thought, taking into account the new risks you’ve taken on. What is truth? What is the meaning of Life and have you found it?

  91. Been following and applying your ideas on my own FIRE journey here in Malaysia, I also have your book BTNT and really value the insights. Negotiated a severance 2 years ago at 49, and now my day-to-day is managing my 2 high school kids, whilst keeping my expenses as low as possible. Disappointed to hear about your FI situation, which ironically, is what I have now, moving to a new house. But after drilling down my expenses, looks like I can manage until age 55 when I can withdraw my EPF funds which is around MYR1 mil. Was thinking, since you have a connection to Malaysia, how about relocating here? Cost of living is wayy better given your USD holdings, and there are terrific international schools here. KL is also a travel hub for the SE Asia region.

  92. Ever since your April fools joke about going back to work (but as a video coach for the Golden State Warriors), I have a hard time getting over my natural skepticism about the downside posts, but, I appreciate your vulnerability/honesty(?).

    I’m sure you heard that your post got picked up and reported as fact/news by a national syndicate. I can’t remember which one (CNBC’s make it?) and I wish.i saved the article. Instead I just rolled my eyes and laughed and laughed.

  93. Whoa! SF with kids is expensive. Best of luck to you.

    The fact that you know you can always liquidate your assets and downsize to me means you are still FI. It is great to hear you are thinking of going back to work though. It feels like FIRE has come full circle and people are realizing there is more to life than just “retiring.”

  94. If you’re out ~100k annual income from stocks, am I assuming correctly you’re basing this on a 4% SWR and you bought a $2.5m house? That’s…a lot of money.

    1. But Sam probably did not receive $2.5M in the end. Gross up for taxes, this level of withdrawal I assume pushes his income tax bracket to 39% which means he will have a capital gain tax of 20% to pay on the stocks. Then there is the 3.8% NIIT tacked on for Obamacare, then there is the 12.3% income tax bracket for California (California does not have a separate tax for capital gains) then there is the 1% Mental Health Services tax. And the tax bill can linger into 2026 if Sam pushes out the Q4 estimated tax until the following year. Still a tidy sum but it will not result in $2.5M

    2. I don’t think one can get a dream house in SF with 2.5M. It takes at least 4-5 M, which is in line with the 68K expense on property tax , insurance. and maintenance. Property tax is about 50K for a 5 M home.

      1. Financial Samurai

        You can get a really nice one for $3-$3.5 million with ocean views on the west side.

  95. Sam,
    I can’t help but wonder if subliminally you are wanting to “go back to work” and that purchasing this property now is your way of “forcing” yourself to do it.

    1. Yes, I’m a way. I want to have the motivation to work again after my daughter goes to school full time starting in September 2024. There will be a void to fill as both kids will be in school FT. I have spoken to many parents who feel a little empty once their kids go to school. So I am anticipating the same thing and want to get ahead of it because I like to keep busy.

      So this house kills two birds with one stone: 1) live in a forever house, 2) gain motivation to actually do some consulting and not just talk about it.

      The house might actually encourage my wife to go back to work too and reset her resume after being away since 2015. I think it’s important for long-term insurance and survival purposes. You just never know.

  96. Thanks for being transparent Sam, it definitely makes me reexamine my own thoughts about life and investing.
    I wonder if your purchasing decision this time is really about life style or is it reflecting your bet on SF real estate. Would you have still purchased it for your family this time if you felt SF’s RE were going to go down?

    1. If I was bearish on SF real estate, I probably wouldn’t buy. I do see upside after the huge NASDAQ rally in 2023 and now with all the MASSIVE amount of artificial intelligence funding going on e.g. $15 billion valuation for Anthropic. I was able to get the home for a discount to 2022 asking price, but of course, it could still depreciate in value.

      I’ve seen this story before in the 2000s with the IPO of Facebook, Google, etc that moved SF real estate prices higher. So I expect a similar level of impact. Owning real estate / picks and shovels in a boom is a good hedge.

      But I also DON’T expect to make any money on this house I bought. I have bucketed it as a consumption item, not as an investment. It’s our forever home.

      See: Past The Bottom Of The Real Estate Market

  97. I’m envious of you Sam. I do realize you still have Financial Samurai money coming in every month so your family is not going to go hungry. You took a big swing buying the new house. You went against some of the rules you created and put it out there for everyone to critique. You had the guts to do and not just talk about doing. I hope the new house and the adjustments you and the family have to make financially bring you joy!! If they don’t you can always make a change. Congratulations on trying.

    1. Hi Bill,

      I appreciate your words of encouragement. I always try to follow through and do what I plan to do. If I don’t take action, then what’s the point, right? It’s all just jibber-jabber otherwise.

      The exciting and sometimes daunting thing is that you never really know how you will feel until you make that move. I want to share both the ups and downs and worries, especially for fathers out there who are responsible for their family’s finances.

      Sam

  98. How can you not live in $230k/yr in passive income. That is sooooo much money. Maybe dial back the lifestyle a little (or a lot).

    1. Zero so far. Still in the process of earning out the book advance. Even if it did, the royalties will only be maybe $1.5-$2/book. It’s a possibility the book could take on a second life and explode again.

      Maybe you can pick up a copy of BTNT and kickstart it again! A review would be appreciated.

      If I want to make recurring passive income, I should write another self-published book.

  99. This is a sad article, cut back your expenses.

    If you can’t live off of that you have problems. Rent or sell the previous home is the obvious solution. The fact that you didn’t do this is insane.

    1. Thank you for the suggestion of selling my house or renting it out. It’s taking some time, but ideally, I’d like to rent it out and ride the real estate upswing as the Fed cut rates. Getting good tenants can be tricky.

      Cheer up! If there is a plan there is always hope.

  100. Chris sporck

    You should rent your old house for 2 years, then do a 1031 exchange to higher yielding multifamily real estate in a higher cap rate location. Would that be enough income to retire again?

    1. Renting out + 2 years of saving, investing, and working has probably a 50% chance of getting me back to FI. But I think I’d need at minimum 3 years.

      A lot depends on whether a bull market continues or not.

    2. I’m appalled by how little do rich folks actually know about how to make do when they don’t have the funds they used to have. I mean how is it possible that a quarter million dollars is not enough for a family of four? I understand if there’s a medical condition that needs a special fund or something but if you have sons or daughters that are healthy and abled then they need to get a life lesson on how to work and get a job or make your own money perhaps with their own business? But yeah, I hope one day I get blessed with the money that you make one day. Anyway just my thoughts. God bless you!

  101. Imagine having to withdraw $150k-$200k pretax to pay for a long term care event. You’re screwed unless you have a strategy to finance the cost of care without leaving your spouse or children the legacy you planned.

    1. For sure. Hopefully people understand long term care insurance and/or have life insurance coverage.

      It felt so good after we both got matching 20-year term life insurance policies through PolicyGenius during the pandemic. Every parent with debt needs to get matching affordable term life insurance policies.

  102. Dear Sam: I am commenting on your article dated Jan. 27, 2024, Blowing Up Passive Income. Part of my job is to figure out what things cost. It is possible to estimate what it costs you to live in your forever home in CA. Per paragraph three, you state that before your bough your new home, your estimated passive income would be about $380,000 in 2023. After purchasing your new home, your estimated 2024 passive income will be about $230,000. That is a decrease of about $150,000 per year. Also, you mention various plans to earn additional income in the future. I do Not count my chickens before they hatch. This is how I estimate the cost of you living in a luxury home with luxury increasing expenses in CA. There is a website that estimates the future value of money placed in a company dividend reinvestment plan. Go to: Marketbeat.com/dividends calculator. I own a few shares of T.Rowe Price in dividend reinvestmment in my funded trust account. On the top left, type in TROW. Add yearly payments of $150,000, which is your decrease in passive income. Based on A.I. different estimates of dividend yield, share price and other items, the amount of money you are giving up, which is the cost of living in your new home, over a Ten-Year Period of time, is a Major, Major amount of money. Most estimates indicate that you are giving up over, ten years, more than $100,000 per year in dividend income. You are also giving up a multi-million financial amount of stock value. You could say to me, that you must live somewhere. I would say to you, then live in your cheaper old house so that you could earn an additional $150,000 per year in passive income. It is possible that you could pick on some of my figures, but A.I. is very accurate. Also, there are other variables that could happen in life, some good and some bad. This entire subject could be discussed in a three-hundred-page book with many examples. Best regards, Richard.

    1. Agree 100% with you Richard and even to the point of trying to buy back into a bull market is very difficult as well! The older one gets, the more important message is always monthly income as opposed to just net wealth. Look, plain and simple, if you have 4 million in dividend type funds in the market, you are making basically 3.5% “at least” on those funds. That is 150K a year or 12,500 a month. Take if you are an average Social Security couple another 5K per month and …17,500 a month to live on goes very far! No one by the way needs a 3, 4, 5 K square foot home either and if the old man wants a Rivian for 80K he can afford it now.

  103. I got halfway to financial independence. Family needs changed, bought a bigger house and ended up with a similar scenario. Faith in the dream!

  104. Financial Samurai,

    I have appreciated your transparency and insights over the years. In many ways, I wanted to strive for success at your level during my lifetime, with goal of becoming at least partially financially independent (maybe not choosing to not work, but being able to do whatever, whenever, without risking my future or financial security).

    This recent post makes me feel different. As an outsider looking in, I am mostly concerned for and curious with your decision making, which seems to me like insanity. I could not imagine having the income you have that is passively generated, and choosing to desperately live in such a backwards city/state, while simultaneously have to forfeit everything you have worked to achieve. I personally would be long gone and living somewhere (basically anywhere) for cheaper, without having to forfeit much if anything in terms of lifestyle.

    On the other hand, I understand life is not all about money, and maybe this was to stay near family/friends, which may be forcing you to make a decision against your best interests, which nobody can blame you for. Perhaps there is a middle ground, where you/them leave, and you can use some of that great passive income as an incentive to get some to join you, where you’d still net positive economically. Just a thought.

    Ironically, while I’d like to see you get everything you want and point to the fact that you could live a similar life elsewhere for a lot cheaper, I also appreciate the fact that you are helping continue to prop up the housing bubble in that region and not bringing (more) overvaluations to other parts of the country that cannot handle these incomes from people moving from bubble cities.

    All the best,
    J

    1. Family, friends, and community are important. It’s hard to uproot away, especially if your kid’s enjoy the school they are in. There is also just so much excitement and income opportunity in San Francisco with technology (+50% in 2023) and artificial intelligence.

      To be able to just take a bus or drive and meet up with all these folks at meetups is pretty cool. I get bored easily, so I enjoy change.

      But I have been longing to go to Hawaii for a while now. I feel like this is the last window of opportunity to participate in innovation. Then in my 50s, Hawaii sounds perfect!

      I love challenges. They keep me motivated. I’m probably also a little insane. How about you? Where are you on your FI journey? And how have you been able to keep your sanity to live the life that you want?

      Thanks

      1. Hey Sam,

        Love the transparency here. I think you should always trust your gut. Make decisions and don’t look back.

        This is your time with your family. You can’t make more time. But you can make more memories. If a home is what you want, then have it. Life is for living.

        I, myself, am currently still on my FIRE journey. I reached Coast FIRE but am still working toward my $1M mark. I am closing in on my current target goal of $500,000 on my way to a million.

        I have started investing more in AI stocks as I see an upside swing coming if/when the feds cut interest rates. My goal is to have $100k+ invested in these stocks and eventually have passive income of the same amount.

        I have learned to start small, set SMART goals, and keep moving the goalpost to keep things interesting. It’s like Nike says, “there is no finish line.”

        All the best,
        Greenbacks Magnet

    2. Dear J: Your comment dated 1-27-2024 is very excellent. I agree will you 100%. By way of interest, I live in a small town about 25 miles northwest of Chicago. The schools and infrastructure are great. The standard of living is cheap, compared to California. You would be surprised at the number of millionaires living in my town. Best regards, Richard.

  105. Great post! You should consider buying a laundry mat. You can buy one for $800,000 and it can generate $150,000 – $200,000 in cash flow a year with 15 hours of work a week. The business has helped my wife and I retire early.

    1. Micky mantle

      Yeah, the pro tip on this is get your kids a academic scholarship because of their academic ability, not because of any kind of sport. They have a brain they’re gonna have to learn how to use it. You might as well train them now.

  106. I’m so tired of hearing that people are spending hundreds of thousands of dollars yearly to support their lifestyle. I make less than $12000 a year and I don’t lack for anything. You should be ashamed for promoting the idea that you aren’t independent when you are making over $200000 a year.

    If other people don’t make as much as me or live on my level of budget, it’s not fair. We should all have the same desires, incomes, family sizes, budgets, and opportunities.

    1. Howdy Jerry – I think I’d feel ashamed if I sugarcoated my financial independence journey and didn’t share the trials and tribulations of making money, providing for a family, battling desire, and more. But I don’t feel ashamed for being authentic.

      One of my favorite sayings is, “It’s easier to wear slippers than carpet the world.” It’s way harder to get everybody else to conform to your lifestyle than for you to focus on improving your own lifestyle. Try not let my situation get you down.

      Best of luck to you.

  107. Well, by buying a forever home at this time you certainly were at odds with many experts suggesting this is the worst time to buy a home nytimes.com/2024/01/19/realestate/housing-market-buying-renting.html?smid=nytcore-ios-share&referringSource=articleShare

    1. Definitely could be a bad time to buy for some people in some areas. There are no guarantees when buying risk assets like real estate or stocks. This home has come down in price by 14% from its original asking in May 2022. So I figured why not.

      Interestingly, most housing forecasts for 2024 are calling for upside and I just spoke to the CEO of Fundrise who believes October 2023 was the bottom.

      Another interesting thing is, when you buy your forever home with cash, it kind of really doesn’t matter what the price does.. Because if you truly plan on it forever, your house becomes a consumption item and you’re just enjoying it.

      But just in case, all the more reason to work again.

      Are you a renter? If so, enjoy the savings and simplicity!

  108. I appreciate this post because it shows the downs of trying to live a financially independent life. I don’t like when blogs paint only pretty pictures and make it seem like life doesn’t happen and adjustments are needed.

    Also, is there no scholarship opportunities at your private school? That’s how a lot of people at my old high school used to be able to attend more easily.

    Pro-tip I learned: Have kids specialize in a sport or something that will get them scholarships in school and/or university. One of my regrets as a kid

    1. Hi Sam – There are need-based scholarships for the Mandarin immersion private school, however, we don’t qualify due to our assets.

      It’s not that easy to specialize in a sport and get a scholarship unfortunately. Only 1% of HS kids do.

  109. dunning freaking kruger

    Ok. I am trying to determine if you are actually going to look for W2 income. I suspect not. Why? You own and operate a cash cow called Financial Samurai. While your passive income has taken a precipitous drop I suspect your income from FS is increasing YOY.

    Gross income from FS I estimate between $500,000 and $1,000,000 yearly from Internet traffic alone. Let’s split the difference and identify it as $750,000 yearly. $750,000 x 5 would value FS at roughly $3,750,000. That is conservative.

    Let’s add the intellectual property of your written word – all the articles. I’ll assign a value of $2,500,000 to $3,500,000. Let’s split the difference and identify the IP at $3,000,000.

    So, conservatively, the value of FS is roughly $6,750,000. I’ll get crazy and speculate that you have been offered $10,000,000+ for FS in the past. But you realize you have complete control and an income machine. Plus two small ones and a wife to think about. Your financial legacy and security for your family is FS. Why give up a minimum of $750,000 in yearly income that is on top of your now $230,00 yearly gross passive income. FS is the gift that keeps giving. It’s growing yearly. It’s a machine of goodness. Why give up a machine of goodness?

    So while you have a slight decrease in passive income the value of FS and the yearly income stream of $750,000+ continues to grow. It more than covers your passive income shortage.

    This, combined with at minimum a net worth of $10,000,000, means you are in complete control and will never ever, double dog dare, really look for W2 income. Nor should you. It would be a disservice to your readers. How the heck can you write 3 times a week, put out your weekly newsletter and respond to posts if you’re working for some jackass and eating rubber chicken at lunch. You won’t.

    Keep on trucking! Hopefully you buy something kick butt in Hawaii soon. No time like the present.

    Keep up the great work. What you do makes a difference.

    1. Exactly this. Sam does a great job turning himself into a reality blog star. He writes the scripts. He creates the plot. He steps into the conflict. And devises his own way out (with a little help from his friends—his readers). This post is one of the most highly engaged with posts in awhile. Ya’ll take the bait and participate in the fun whether you realize it or not. Don’t get me wrong. Sam is legit giving loads of good advice and entertainment to boot. But FS is the job. It is the key to his and his family’s wealth and continued prosperity. Keep on ballin Sam. The dream indeed.

      1. You give me too much credit. That would take a creative genius with tremendous dedication and perseverance.

        See W3’s comment above as proof you’re thinking is off. But I appreciate it though.

  110. Mark Atwood

    Your problem is expenses, not income.
    We make similar income in Texas and our expenses are ~ 230K less than you. Public schools, biking to work, basic pre-paid phone plans, cooking at home, corporate health care, vacations with points/miles, not keeping up with the Joes’ goes a long way.

    1. This was my thought as well. It’s a very different FIRE approach from most people – I would consider this something like XXXL FIRE and not just Fat FIRE. Bay area is more expensive, but some of the line items are very high (like $40k per kid for school).

      My guess is that a banking career in the Bay Area allowed for an increased lifestyle and the goal was to somewhat match that in retirement. I have read FS a bit here and there, so maybe there are some previous articles talking about the high spending.

  111. I’d like to know how many job offers you’ve received since writing this post! You thrive on change and challenge. I think this is just what you needed. :-)

  112. Maybe find a private school that doesn’t cost $40k per year per student. That’s ridiculous. That school isn’t going to be 4x better than one that charges $10k a year.

  113. Housing dictates so much. I almost moved from Peoria, IL to Charlotte, NC last year but didn’t do it because of the steep housing costs. I bought my house here for $250k a decade ago. A comparable house in Charlotte was around $900k. Although my salary would have gone up $75k, I would have ended up making less than $100 more per month. The 2.25%, 15-year mortgage on my current house radically factored into the equation.

  114. My biggest asset is that I crave very few material things. And living in a large house makes me almost nauseous. I understand that I am different. But I’ve always seeked the least materialistic life. I have been able to work only 2 days a week and still maintain my standard of living. My net worth is a bit north of 500k. I own my condo and all my bills including food and health insurance for my daughter are less than 1,000/month. I stay working because I am an adrenaline junkie and working at a level 1 trauma hospital feeds that need on occasion. But I know that if I ever get tired of it, I can pick up and leave.

  115. Christine Minasian

    LOVE this! So honest is right. Well, you went ahead and bought a big expensive butt house for 4 people in CA. My vote…one of you needs to make more money. Your kids aren’t even in high school/college! Your bills get even MORE expensive as your kids get older. You think you’re going to tell your sweet daughter she can’t have that beautiful prom dress or go study in London for a year in college?!?! THINK again! Liquidate something, work part-time or start collecting rent somewhere. You like to save…you are the FINANCIAL SAMURAI!
    Also…you should have an in-person get-together for all your beloved followers.

    1. Sounds good. Part-time consulting is the plan to make $141,500+ a year to cover the shortfall.

      Hopefully, my cash flow will usually be able to afford a prom dress or a trip to London in the future.

  116. Your asset allocation seems to strongly skew towards real estate in SF. But i guess generally real estate’s rate or return is less than that of S&P 500(although past 2 decades in sf real estate might be an anomaly). Wouldn’t you have an easier time/get better return if you reallocate the property investments to stocks?

    Also kids private school seems a lot, is public school really that bad in SF? Maybe SF/ Manhattan is better suited for individuals wanting to climb the corporate ladder, and less for families with school age children?

      1. But….you *don’t* have to have the renters vacate first. You can sell with the rental lease in place for the next owner to assume, so giving that as the reason is extremely flimsy.

      2. Didn’t you buy a retirement home in Hawaii – how does it fit into the picture?

        Also, shouldn’t you look at the whole picture which includes income from your blog? I understand it’s not passive but it’s immediate, real and a part of your total cash flow picture. Your spending time on it already. When it’s included do you actually have to cover that $140k by consulting?

  117. This is a bold and brave post. Appreciate the honesty, and sorry to hear that things haven’t worked out the way you planned. As you’ve pointed out, there’s always a way forward, and it’s a great takeaway from what you’ve shared.

    1. Thanks for reading Niles. Just have to roll with the punches and make the most out of a situation.

      Hope the post highlights the challenges of figuring out family, work, and retirement.

  118. I am working my way through the same issue. We had buyer’s remorse after our house purchase last year. At the same time, we also think about what else we could have done with the money. The trips and creature comforts the money would have purchased.

    A beautiful, safe and spacious home is a luxury worth splurging on. I am more of a “relaxer” than a traveler and it is nice to have a home base to retreat to and improve. We have finally started settling into the property and working our way through the problems. There is light at the end of this dark, expensive tunnel. Like you said, some beautiful and unique properties trade hands only once in a generation.

    Every time I have purchased a home in the last 30 years I wonder if I am making the biggest mistake of my life. When I then sell the home, I say that I wish that I had bought two homes at the time. I sense that you will solve your income problem.

    1. “ Every time I have purchased a home in the last 30 years I wonder if I am making the biggest mistake of my life. When I then sell the home, I say that I wish that I had bought two homes at the time. I sense that you will solve your income problem.”

      Love this! And it also points out how little time we actually have. In 30 years, I will be 76 and I don’t think I’ll regret living in a nicer home. But I need to get through the first 3 years post ownership first.

  119. Vaughn McGuire

    Sam,
    I read almost all of your posts. I find many of them helpful, but this one really stands out. Thank you for writing it. I’m in a similar place. I’m taking a long pause before acting. Reading this post was helpful

  120. Canadian Reader

    FIRE was great before we had children. Now, even though we’re still independent, we are both working because there are too many variables with 3 young children. Doesn’t feel right to not be giving our all for the sake of the kids. My husband was home for 5 years and then was still able to find a decent job, so that is reassuring! I’m working on weekends.
    I think the bigger house was a good move! Congratulations and I’m sure it will feel less burdensome over time.

    1. Nice to hear about your husband finding work after 5 years of SAH parenthood.

      I also feel it is irresponsible to not work when you have young kids at home and they are in school all day. So hopefully, the new house warm keep me focused and find meaningful work.

  121. Sam, I admire your sheer conviction on real estate – and specifically directly owned real estate in your locality (as opposed to passive syndications, REITs etc.). I see 3 “SF rentals” in your passive income chart, and a 4th one (your former primary residence that you haven’t yet figured out what to do with), and a 5th one (your new primary residence). All (presumably) of increasing size and investment.

    That’s 5 properties in SF! As bullish as you are on SF, do you feel it’s a bit *too* much exposure? I know you have a big real estate crowdfunding investment but seems like you’ve drawn down upon it to buy the new place. Did you consider an option to sell an older property instead (maybe that Tahoe one or the condo) to raise the capital for the new place?

  122. Gigi-Gangster Grandma

    Actually Sam you may be sitting in the catbird seat again.
    What about renting the house for three years, earning income, then sell it?

    You will have less shortfall, while allowing the property to increase in value, while you consider your options and opportunities.
    Maybe you could trim a few expenses?
    I find, I really don’t need much STUFF.
    There are NO mistakes, just learning opportunities.
    Cheers,
    Gigi-Gangster Grandma

    1. Financial Samurai

      That is the plan!

      “1) Sell my previous home or rent it out for cash flow.

      If I rent out the previous home, I might be able to generate between $90,000 – $100,000 in gross rental income a year. If I sell instead, I might be able to net $1,300,000 after taxes, commissions, and transfer fees. The entire $1,300,000 could be reinvested in a 5% Treasury bond yielding $65,000 a year gross, or $52,000 net for one year.

      The problem with selling now is that I would be selling in a still weak market with still high commission rates. It will take several years after the real estate collusion lawsuit for commission rates to come down meaningfully.

      Due to a bull market in tech stocks, the emergence of artificial intelligence, and a gradual decline in mortgage rates, it’s only a matter of time before the SF real estate market recovers. The amount of wealth creation in the area is as high as it’s ever been.

      Hence, I’m inclined to rent out the property for a couple of years despite earning a low yield. If I rent out the property, I’ll be able to save a majority of my consulting income, if I get one.”

      I enjoy this type of thinking “There are NO mistakes, just learning opportunities.” We do the best we can with the information given. I hope this post provides some color on those who desire to FIRE with kids. It puts reaching financial independence on HARD MODE!

  123. I feel the pain. We went from “zero debt” to “all the debt” in the past year. We traveled the USA in an RV on what we planned as a sabbatical into a Coast FIRE lifestyle where work was less of a dependency to meet our needs.

    Then the economic chaos of the past few years set in. We always planned on settling on a forever home, but it was based on 2018-2020 prices, not 2023. The compromise came down to sacrificing the home we wanted to have for the next 30+ years or going back to work full-time for the next 6 to 8 years. Like you, the balance sheet has not changed, but the cash flow has changed.

    We chose the latter. After purchasing land and stressing over a year and a half to get the build complete, we are happy with the choice. I know psychologically, we justify our emotional signals to buy with logical reasons. But then, being in a happy place is not logical.

    At least the view outside the new home office has a wonderful valley view and sunrise, the commute from the other side of the house has no traffic, and a fortified beverage in the afternoon as I work is not frowned upon.

    I hope yours is the same.

    1. Financial Samurai

      Hi John!

      Sounds like we are in a very similar boat. Thank you for sharing your perspective! Over time, with more savings and investing, we should feel more financial secure. But for the first three years, it’s going to feel a little dicey.

      Let’s do our best to enjoy our homes. Although there is increased stress, we should also feel proud to be providers for our family.

      Fight on!

      Sam

    2. Thank you so much for sharing this!

      Its great you’re taking ownership of this mistake, but you’re missing a lot.

      0) A home is never “forever”. Alodial lands aren’t available anymore, and you’ll get tired of it soon enough.
      1)Your wife probably didn’t “come around” to the new house, she probably got tired of hearing you obsess about it.
      2) Your new house is a prison. You could have spent 8 hours a day somewhere with a view, doing anything or nothing at all with your family. And now?
      3) You didn’t once mention reducing your lifestyle. Have you looked around the world? You don’t need a 5th of that passive income to happily raise a family with successfull, well adjusted and most importantly… passionate and MOTIVATED chilren.

      Clearly, you’ve not truly accepted that time as your most valuable resource. Unless you bought a home that generates it’s own food, water, and electricity… you’ve made a bad investment.

      I feel so much richer after reading about your money affliction. My financial levels are a fraction of yours, but hearing how ridiculous it is at your scale is helping to cure me, helping me avoid the next trap.

      If you want to create true multigenerational wealth, or change the world, or just be happy… well spent time is the answer. Not money.

      1. “ I feel so much richer after reading about your money affliction. ”

        This is one of the reasons why I write and share my personal situation sometimes, even if it’s tough. If my difficult can bring joy in others, that makes me happy.

        Living in abroad in five different countries growing up and working in international equities for 13 years has given me perspective. Yet this is the world we live in.

        How about you? Have you also been a stay at home parent for a while? It’ll be 7 years this April for me and my plan is to go until December 2024 when my daughter turns five.

        Time is definitely the most precious asset, which is one of the reasons why I retired in 2012 at 34 and decided to be a SAHD.

        I’d love to hear more about your story and how you’ve been able to live your ideal life. Thanks

  124. Sam,

    Have you and your wife thought about relocating to a lower cost of living area? In most parts of the country (Outside of the coastal metro areas) $230,000 goes along way and you can continue to be financially independent.

  125. Sam you bought an expensive house, it must be in a good school district. Why are you not sending them to public School ? Are public schools so bad in San Francisco ? Also do you have plans to sell this house in few years and downsize again. The stress of Annual Property Tax of a super big house might be a lot especially when you are not even using the Public Schools.

    1. Financial Samurai

      True.

      We decided to send him to a private language immersion school. He’s only in the first grade, and things could change.

      Looking back, one of my greatest appreciation for education was learning Mandarin. I wish I learned it better and I would pay $500,000+ to be fluent.

  126. Curious why you only have $2 million umbrella coverage? Given your level of assets, have you considered increasing coverage? Seems like that would be prudent to reduce overall risk.

    1. Financial Samurai

      Great question. I will have to double check and update.

      It’s kind of like home insurance coverage. After 5-10 years, homeowners probably don’t have enough due to price appreciation. It kind of sneaks up on you.

      Thanks for the reminder! I actually have more than $2M and reached my insurance provider’s max.

      1. Change providers. I used Chubb.

        Btw I think you left off CA state taxes in the text where you analyzed income needed to generate enough passive income, but you did include state taxes in your chart…

  127. Well, I don’t know if you’ve reached the age where you truly consider what your time vs money equation is, but I think you have taken a nice chunk out of it. How long before you can truly make it back up, I mean the money portion, the time is lost forever. You remind me of some developers I know, who make the classic mistake of falling in love with their project, in this case your new house. How much of that money long spent could have added to your children’s security, and education. Thank you for reminding me of what not to do.

    1. Financial Samurai

      You’re welcome.

      I’ve been a stay at home day since 2017, so seven years come April 2024. I made a promise to be a stay at home dad for the first five years of both children’s lives for developmental reasons.

      But I feel it’s prudent to go back to work once both are in school full-time the September 2024. There will be a void to fill and now a need due to the desire to grind back the passive income.

      How long have you been a stay at home parent? And what are some of the things that keeps you busy while the kids are in school? If you do not have a day job? Thanks.

  128. You could probably regain financial indepence by reallocating from S&P to some higher yielding investments s/a closed end funds, preferred stocks, Reits, BDCs and MLPs. These sorts of investments allowed me to leave work. I live in NJ.

  129. Those living expenses are crazy. I mean, I’m just a single dude and have no idea how costly it is to raise two kids in SF.

    But that seems to have also led to this situation.

    1. Financial Samurai

      You’re probably right.

      Where do you live and do you plan to partner up and have kids? If so, these are realistic expenses you could have to contend with.

  130. Do your monthly expenses include the mortgage you pay on your rental properties? Or are those paid off?
    Thanks

    1. Financial Samurai

      No, but feel free to elaborate. I’ve been out of the loop since my last consulting gig ended circa 2015.

  131. I like these types of posts. A lot. I’m tired of all of the self-congratulatory malarkey from so many FI blogs. The reality is, we all make plenty of mistakes and/or suboptimal decisions along the way. Let’s talk about them!

  132. Sam, i think many of your readers benefit from your sttraightgowardness; lifestyle creep is hard to avoid for most of us even when knowing keeping things simple is often the best path to achieving contenment and happiness. If you had the choice again as a “do over” would you make the same decision knowing what you are now experiencing i.e., was it worth the stress or too soon to tell? Thanks!

    1. Financial Samurai

      No problem. Yeah, just want to keep it real and not just say things are always rainbows and chocolates.

      I’ve been thinking a lot about your question, and I don’t know yet for sure. Too early to tell. But I’ve got a post in the works about it that I’ll publish eventually.

  133. You had mentioned wanting to be able to pass on FS to your children. Have you thought about growing it as a business and adding employees?

  134. This is the dumbest thing I’ve read.

    You didn’t need that house and now you put yourself in a position where you have to find a job making at least 6 figures just to cover basic expenses! This is the opposite of FIRE. You’ve failed. Game over.

    1. Financial Samurai

      For sure. I have failed and I admit to it. After kickstarting the FIRE movement in 2009, I’ve come full circle and now must work, save, and invest to hopefully get back to the promised land.

      I hope you are doing better than me. Thank you for reading and sharing my work. Life is a journey full of ups and downs.

      1. I don’t always agree with Sam’s choices or priorities but I have a deep respect for the way he handles negative comments like this. He doesn’t have to share his mistakes for the world to see, but he chooses to do so and it allows the rest of us to learn. I’ve taken a different path than Sam, but I owe much of my own path’s success to Sam’s honesty.

        1. Mike,
          Double that whole comment.Its a grownup world, and we have to roll with it.
          You get knocked back or down, you step forward/get back up.
          Nothing but respect..

          1. Thanks Mike and ak4195. I’ve been getting all sorts of feedback since I started in 2009. Unless the comment is extremely offensive I accept it. I’ve learned that those who are the most angry often need the most compassion.

    2. If he rents out his old house as stated then there is little reduction in passive income…. And the whole thing is ignoring the business income he’s getting from Financial Samurai. So, if Sam wants to do consulting that’s great, but I don’t think he has to.

  135. I would sell the spare house and buy treasuries. That’s just me. Not that there is a way to time the market or anything, but treasuries are paying a decent amount, and if you know how to do it (which you do) you can have quick access to that money should things change, like in the event that some crazy geopolitical event turns inflation around, fed rates spike again and the stock market enters a “entry-opportunity” style correction – same if we enter a recession. Again, that’s just me.

    1. I would go the opposite way. I would get the job and keep the house.

      There is far too much skin in the game by now, and a lot of emotional attchment, which is atypical from Sam, yes, but it can happen to anyone. So if he sells the house he will regret it even more than that (temporarily) lost income.

      1. So, after 3 or 4 years of good ol work, specially for someone with his abilities, he will be back to the starting point PLUS the house.

          1. Five years it is. There is also a high probability youll finally land that coveted Warriors video editing job and wouldnt want to leave anyway! best of lucks!

  136. Thanks for the post. You have earned the right to make this upgrade. Ultimately, that’s what the resources are for and I agree that this would be the ideal time to do it with the decade plus runway of the kids in the house.

    Additionally, like you said in the post, it’s not like your net worth changed, and you can always extract income with the previous home/sell it as the market recovers.

    I am in a similar position, albeit much more “irresponsible.“ Like you, I have two young kids…I am building a home and spending around $3.6M all in… While my net worth (on paper) will go up as I believe the value of the house will be closer to $4.4ish once it is complete… My expenses are going vertical…

    Even after putting $1 million down, my housing nut will be around $250K annually and with my other non-housing expenses, I will basically be at wash with my after tax-income…

    I have been grinding for 15 years, I have saved 4.5Mish (1M of which will go towards house downpayment)… it seems completely irresponsible to basically spend this much on a home, where, my after taxes cash flow will essentially offset my expenses, and I will not save a penny for the foreseeable future…

    However, I can always flip the house down the road, if it becomes too much to handle, refinance if/when rates come in, I am bullish on my income and I suppose there will be a modest inheritance 20+ years from now…

    I’m just essentially living in the moment even though I am spending a very inappropriate amount on the home relative to my income and breaking your house buying principal rules.

    I hope I can enjoy the house once it is built and not be stressing about literally living paycheck to paycheck…

    1. Financial Samurai

      Spending $1 mil out of $4.5 mil saved is not bad. And since you’re bullish on your income, the stress of owning a more expensive home should fade over time. Look out for a future post about this topic.

      I, on the other hand, am not bullish on my income b/c I don’t have a career and we lost passive income buying this home. So I’ve got to find a way to get back in a seat that pays.

      That paycheck-to-paycheck feeling is real. It’s very uncomfortable. But will get better if you can keep saving and investing. GL!

  137. Such an interesting move! I’d point out that by buying your house all-cash, you’re saving on thousands of dollars monthly in mortgage expenses. So yes, your passive income went down because you took so much capital out for your purchase, but your living expenses *would also have gone down* (vs. doing the “normal” thing of 20% cash, 80% mortgage). And given that mortgage rates are so high right now, it still feels like the right move to do all-cash

    1. Financial Samurai

      Yes, that is a positive way to look at things. It’s funny that I don’t think about not having to pay a mortgage as savings.

      I would need to neutralize the cost of my old house by renting it out to feel like you say.

  138. Great article! The fear of having to return to works keeps my operating expenses at 33% of passive income. I’ve been retired 10 years. Good luck! Will enjoy reading about your progress.

    1. Financial Samurai

      Sounds smart to me! We we logically do things to prevent us from feeling worse pain and discomfort.

      I had to carefully weigh the potential of going back to work with the satisfaction and joy of buying a nicer house to provide for my family.

  139. What you leave out of the equation, rightfully so, is the active income you generate from Financial Samurai, which really means you don’t need to go back to work.

    I understand, and appreciate, you would do so to illustrate the point that financial decisions have an implication on your lifestyle, 100% and you need to look at all the angles.

    This is a great post, Sam, and I’m happy for you and your family to find your forever home.

  140. Couldn’t you just reframe this instead as doing a portfolio reallocation?
    Sure, you sold some cash-flowing stocks and bonds in exchange for a nicer home.
    But that’s fundamentally not that different from switching from dividend paying utilities to growth stocks.

    Ok, im glossing over the liquidity, ongoing maintenance costs, and the fact that it’s a tangible asset you can actually enjoy. But it seems to me like you’re just choosing to have a higher percentage of your total capital deployed towards appreciation rather than cash flow.

  141. Will from Buffalo

    An interesting gamble. The ideal way to go about it all would be to find a job first, then make a home upgrade.

    In no way are you gambling your whole nest egg or anything, it should be too painful to walk away and sell the new home if it doesn’t work out and eat a bunch of fees or transfers costs.

    And why not roll the dice in life for a little more…keeps it fun.

    The only part I do not like here is the timing. Your kids are still starry eyed and you are still a default rock start for a few more years. You’ll have less of that to enjoy for the tail end of that phase. In a perfect world this move would have been done in a few more years at least.

    While you say the best time to upgrade is when you have the most heartbeats under the roof…but, it is also the worst time to work more or take on unneeded stressors in life. Also, I call to question who would actually appreciate the upgrade. How much marginal happiness will the kids get from a view and a nicer house in their childhood?

    I wish you the best good friend, my only advice is to have a well laid out and SPEEDY exit strategy if this doesn’t go to plan. The real risk of this proposition is NOT the money, it is the stress and reduction of life enjoyment while your children are small, and how that will affect their early memories.

    1. ^This.
      Sam, I think you let the provider in you win for the moment, and that’s okay. I have a six year old and 9 year old. I also feel responsible to provide for my family and give them the best I can. At the end of the day, I find it’s a real struggle to be my best self at home while keeping up with a demanding job.

      The big question now becomes the job. If it’s consulting- perhaps you can maintain your independence and autonomy to some degree?

      If you go the traditional job route, I used to live and work in SF and see the number of jobs that are now hybrid or not considering remote only workers. That gives you an advantage to get yourself one of those AI jobs in SF and perhaps maintain some flexibility with a hybrid work schedule.

      The most important part is you are motivated and have a positive attitude. No matter what, I feel you will land on your feet. After all you are a FINANCIAL SAMURAI!
      Wishing you the best of luck!

      1. Yaso, thanks for your kind words. And good job being a dad and juggling your career.

        I really don’t think there is enough discussion online for men to talk about the pressure of being a father and a primary provider.

        Yes, we got to keep the positive attitude up! I’m no time, our children will be out of the house. Let’s hope we don’t regret not spending enough time with them.

  142. Why don’t you home school your kids? That would knock at least $75k off your annual budget right there. Seems silly to talk about wanting to spend time with your kids but then send them to a school and go to work.

    1. Financial Samurai

      I enjoy homeschooling. It was great for 18 months. So far, we enjoy the community of our son’s school. But things can definitely change.

      Do you homeschool your children? If so, for how long and what online resources do you use?

      1. I don’t homeschool, but I know a lot of families who do, and my fiance has a lot of experience with the homeschooling community where she lives. So, we plan to dive in if we get the chance to have kids (there are no guarantees of that in life). I think private schools are way overrated (I attended private K-12). Public are mostly mediocre, and I’m not talking about the ratings. I refer to the socialization. It’s very high risk, because their biggest influence is likely to be the worst, because those are the kids who stand out. In a substantial home schooling community, parents exchange duties and kids get plenty of exposure to other kids. It’s just not the same kind of kids. It’s more the kids whose parents aren’t the kind to outsource child-raising to people who couldn’t possibly care about their kids more than 1% the amount that you do.

        1. Financial Samurai

          Ok, good luck homeschooling! It’s a lot of work, but it’s also very rewarding.

          As someone who went to private grade school kid through 12, your feedback is eye-opening. Could it be that part of the disappointment that you didn’t go to a top university? Or maybe the work you do does not require a private school education?

          I wrestle with this a lot and wrote a post called, What if you go to Harvard and end up and nobody.

          So perhaps, if you were ecstatic about your wealth and career at this point, you might have a different view on private grade school?

          As a public high school and public college graduate, I am very pro public school. Alas, we make enough to send our kids to private school and it’s a two person decision.

  143. Thanks for sharing – it’s an interesting challenge. My outside perspective:
    1. Your new home is a luxury, use that to justify reducing spending in other luxury areas (you know the ones)
    2. Can you adjust your market investments to produce more passive income?
    3. I agree – it would be a shame to shed any real estate right now, especially if it’s paid for on a low-cost mortgage

  144. Chris Phillippi

    In fall of 2022 my wife and I decided to live in the home we had until the kids were raised and moved out. We decided not to make any improvement, and not to install a pool. Instead we decided to buy a boat to use at our family lake home and in the Puget Sound. I loved spending time on boat as a kid, and I wanted to give my kids this same upbringing. We bought a pretty nice boat, and we decided to sell our first home which we’d been using as a rental. We were going to pay off the boat and put the remaining proceeds into the college funds.

    Two months after we bought the boat, in January 2023, we suddenly had the opportunity to buy our forever home. It was one I had been in, and was in a great location, with a pool, an enormous lot, great outdoor living, cool mid-century architecture, and I knew I had to have it. We threw all those plans out the window, and used the cash as a down payment on this new home. Why not? Interest rates were low, and the market was hot for selling the house we were living in at the time. By the time we moved into the new house six months later and were ready to sell our old house, the market had totally changed. Yikes.

    In the end we got a family member to take out the underlying mortgage (40% of value) which allowed us to offer seller financing of 5% with a five year balloon. This was a great solution for us, as we found an eager buyer in a couple weeks. The buyer put down 10% ($80,000). Selling guaranteed that we preserved the primary residence exemption from capital gains, I didn’t have to manage a rental house (I prefer trailer parks), and we have interest income on our 50% equity in the home. We should still have access to the money for college based on when the note is due and the age of our kids. I did not pay off the boat loan. Also, we used Clever to find an agent who would list the home for 1%. Combined with the 2.5% buyer’s agent fee will felt like that was a pretty good discount over the standard 6%. So maybe you could utilize those strategies depending on your position in the home.

    Nice boats, nice houses, they are not necessary but quality of life is something I am able to focus on. Making these moves did strain us a bit, but I think it’s all going to work out. Every day I wake up in this house makes me happy, and so does spending time on the boat. I would’ve had a little less stress if we’d foregone one of the purchases or did things in the right order (sell, then buy), but I’m providing my kids with the type of life I want them to experience. If it puts my liquidity plans back five years, I’m still young enough to absorb that.

    1. Financial Samurai

      “ Every day I wake up in this house makes me happy, and so does spending time on the boat.”

      This could be reason enough! What’s better than feeling great and happy?

  145. Oh Sam! Good luck brother! I know you guys are alright, but it is hard to be done forever at such a young age in this materialistic society. Hope to continue to hear your progress.

  146. Hello, as someone who lives and plans to buy a home in San Francisco I have thought on the issue of the housing market and how AI would affect the houses here too. But I believe that remote work is here to stay and will grow, especially since we are only in the first decade of it happening and because companies are already struggling to get people to come in. Do you think they will succeed or will remote be the reason great employees leave the greatest companies and will settle for just plain great companies because of remote? I appreciate your insight, Samurai.

  147. I agree with a previous comment. Unless you absolutely love the west coast and Cali, move out of there and have a better house with a cheaper price tag and lower cost of living. It’s a no brainer. Come to Texas and you will continue your retirement life.

  148. As you said, life definitely doesn’t go in a straight line and change is hard, sometimes it’s very hard, even if it’s good change. It sounds like your new home is a wonderful change for you and the fam it’s just created more or different change than you expected. So it’ll take time and some adjustments to get used to that. And yes I hear you on wanting to earn and work more while also spending enough time with your kids while they’re young and still want to. A lot will change as they approach their teens. It’s a challenge so many of us all struggle with.

    Perhaps try to think about yourself at age 70 looking back on your life now and imagine what advice you’d give yourself today after ~25 more years of wisdom and experience. I know my future self would tell me to zoom out and stop feeling so stressed and overwhelmed and to embrace the business of juggling parenting, work, and adulting. I’m sure I’d also tell myself to waste less time worrying so much about how much I still need to do and instead put that wasted “anxiety time” toward actually doing something even if it’s as small as reading one extra book to my kids, taking out the overflowing trash, reading 3 pages in a book, or making a grocery list.

    Little changes like saying “I get to do this” instead of “I have to do this” can help a lot but I often have trouble following my own advice haha.

  149. Thanks for posting this enlightening view on your intentional decision to blow up your financial independence for the benefits that your new home provides. Sharing how you identified these tradeoffs and how you evaluated the pros and cons to reach the best decision for your family was helpful.

    I had a question about why you choose to list your real estate passi