As I mentioned in my story I never thought about retiring because I grew up in a country where a pension is simply worthless if you need to cover basic expenses with it. And buying or renting a place to live is beyond impossible.
After coming to the U.S. I realized the dream of homeownership. I bought a house with my wife in 2003 in the Chicago west suburbs. As 2008 unfolded we saw our house lose almost half of what we paid for it. We stayed put, and thankfully we were not affected financially, but we lived from paycheck to paycheck.
In 2015 we decided it was time to move, but the market in our area had not improved enough to get much of a profit after selling. With a lot of fears we decided to become landlords. We took the chance and made the move happen.
We continue holding this rental property and we love it. Finally, it has appreciated above the price we paid originally and we have also reaped the benefits of building our equity and depreciation. This ha sprobably been the best financial decision we ever made.
At the same time our new home has earned a hefty 21% appreciation in the 3 years we have been living in it.
After taking control of our money, freeing ourselves of $10,000 in credit card debt, we are determined to tackle the next money pit: a $20,000 student loan. We were paying 6.75% interest on this loan and it seems like we have been paying it for ages to make a very minimal difference. In 2018 we decided to take a home equity line of credit at 4.75 %. This would allow us to pay off the student loan at a lower interest rate.
Our goal is to pay this loan by 2020. This will unlock our financial potential. In order to make this happen, we have stopped funding my 403B plan. I was contributing $7,200 yearly, now I will be contributing only $1,200; freeing up $6,000 a year that will go straight to the loan. With the help of our tax returns, we should be able to pay it off by 2020 with no problems.
After paying this student loan, we are planning on snowball the funds to pay our rental mortgage off. If my calculations are correct we should be able to pay this property off within 5 years. By doing so, our income will increase by $20,000 yearly which we are planning on using to invest in 2 more rental properties.
We are conservative investors. We are not into the idea of leveraging ourselves into properties with no money down to make things happen faster. We are thankful for what we have and for what we have accomplished with a family of six on one salary; a teacher’s salary.
As all this unfolds, we will continuously use my salary increases to keep funding my 403B plan. This year I was able to push my salary up 7% by taking 8 credit hours in university courses.
In 2019 I will also take 8 more credits to max out my teacher salary and increase it again by 7%. In two years I should be breaking into the six-figure salary; Ok, low six figures!
As a teacher, I can’t collect my pension until I turn 55; 10 years away. However, this would be with a hefty penalty of 30%.
I am not sure what my situation will be at that point but I continue to explore options that can place my family and I in a better situation to make those kinds of decisions.
I am highly motivated to retire as a teacher in 2029.
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