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Topics - channant

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Early Retirement / Slightly Overwhelmed
« on: July 29, 2018, 11:51:13 PM »
Hello Jeremy, family, and fellow forum followers!

I'm hoping I can present an interesting case study for you all and get some advice on my (maybe) unique situation. So here it is:

I'm 30 years old and began saving for retirement a few years ago with a Roth IRA through Vanguard thinking I'd work hard until becoming a happy millionaire at age 59.5. I'm self employed and make about $75k/year before taxes and have since been maxing out the Roth where I currently have about $27k 100% in VTSAX. I've also been stashing some away in a high-yield online savings account. Right now I have about $40k in there. I owe $209,000 on my home with a $1400/month mortgage with no other debt.

I have one other source of income: this year I started to Airbnb my house and projected earnings at this time are in total $15k. Next year I should be able to get around $30k in rental income alone.

Just last week I discovered the exotic and exciting world of early retirement/financial independence and I've been obsessing over the concept and scanning the blogs of Go Curry Cracker, Mr. Money Mustache, Mad Fientist, and the like. Holy crap, this is all so for me. I'm willing and able to limit my spending and cram as much money into investments as I can.

At first I thought this would be as simple as continuing to max out my Roth and moving over my $40k savings into a taxable Vanguard account, and then just throwing as much as possible into that. It's going to be so easy! Not...

As I read through these blogs, I realized how much more complicated and nuanced this world actually is. For one, being I'm currently in the 25% tax bracket, maybe even 28% next year, it would actually be far more wise for me to be using a Traditional IRA instead of the Roth. And then come the (rhetorical) questions: Should I open a Traditional and relocate those funds? Or should I keep the Roth and let that $27k cook and open a Traditional to fund instead? Wait...what's this Solo 401k for the self employed?? Should I have that too?? How much should I be putting into each? What about the taxable account?

Not sure if I should even open the can of worms on how confused I am at the best effort to minimize taxes...input is welcome on that too.

But what it really boils down to here is this:

I've got $27k in a Roth
I've got $40k to invest (I'm totally down with 100% VTSAX)
I am unsure on how to now allocate between Roth, Traditional, Solo 401k, Taxable.
I'm hoping to be putting away $20-$30k ever year after this.
Would love to be financially independent by 45, long enough to get me to 59.5.

And, finally, should I even be thinking about it that way? I sort of see it in two stages. Stage 1: Save for 15 years and then live off those investments until Stage 2: begin withdrawing from IRAs/401k. But I also have been reading about ways to withdrawal from an IRA early. What the heck is the best move here?

If you can't tell, I'm slightly overwhelmed!

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