“Should we sell investments to buy a home?”

I’m really excited to share today’s Conscious Spending Plan because it’s so unique. [Podcast Newsletter Header](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0h-3qn9gW7lCdLW6lZ3pSN37FGHXZcS8wW4dCj6D4GlmyvW4cvPsm5B8hvtW278bYs7kQRrGW6HnXsp3_b6nNW6yKT7s6k3RcsW8VmrB67gLG56W8dKX8K5PTVxDW20DKr-1hb_GDW6c1jDy6RXqMXW60pj8c3rmcc6N8PKLZ89p-8hW7y4VqR7Kjl2KVjrvYp3MnbpMW25w-5v3wk77YW4Y70fQ6LHRgtW6z8Pvk5wHnt3W4cb1nj90wzr4W5z-0PV4drz01W2QGwC77Kq3-4W6G-tfh3VfdltW1gf17B8GxWHmVV7J1g1QD8F1W1N27p87djD17f5FH1_g04) {NAME}, I’m really excited to share today’s Conscious Spending Plan because it’s so unique. Today we have a couple in their mid-30’s who reached out and asked “Can we sell $100,000-$200,000 in investments to buy a home in our high cost of living area?” Well let’s find out… Make money off your unique expertise and experience If you have a side hustle or have always dreamed about making money off your unique expertise, check out this newsletter’s sponsor, Thinkific. [Thinkific Courses](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0hH3qn9gW6N1vHY6lZ3n4W85Tqcs6FB7K5W4DDJlH4-HTbRW47lDBD15xKfMVjStRz90mJTlW7hlVNZ2J9dq_W37-Cw23cQSjqW2yjvJt4PqXvdW6VWY6y13lmCBN7Qk1-ClQDL8W8QQkMY7gYppCW8_1LgF1k5f2XW68JDrn5LVX5dW5gPY8m6Cx7hJW3s_qM87d40mVW7Z0z3963Cg3cW9jFZml8GYkLYW1WWcx13j3_tjW3Wpxgh8ct9FyN4jvqcwl6r21W8t0VMC7NnFkzW34XT9t9bKj7GW5pDGCd1J29B9f23l6-j04) Thinkific makes it easy to create, market, and sell online learning products. I’m happy to recommend them because I use them myself for all my 20+ online courses! [Learn how to easily build courses, communities, and memberships, and more here](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0hH3qn9gW6N1vHY6lZ3n4W85Tqcs6FB7K5W4DDJlH4-HTbRW47lDBD15xKfMVjStRz90mJTlW7hlVNZ2J9dq_W37-Cw23cQSjqW2yjvJt4PqXvdW6VWY6y13lmCBN7Qk1-ClQDL8W8QQkMY7gYppCW8_1LgF1k5f2XW68JDrn5LVX5dW5gPY8m6Cx7hJW3s_qM87d40mVW7Z0z3963Cg3cW9jFZml8GYkLYW1WWcx13j3_tjW3Wpxgh8ct9FyN4jvqcwl6r21W8t0VMC7NnFkzW34XT9t9bKj7GW5pDGCd1J29B9f23l6-j04) “Can we sell investments to buy a house?” Here are a few details about the couple who sent me their [Conscious Spending Plan](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0hH3qn9gW6N1vHY6lZ3lXW1jb3gP3bcQQ-W7V0sWK1YtwjBW1-C3G72xPj4_W3PDl-T1d-fBFN6Q_rL5N2pgVN8pCsgmwqGHBVT92Mm9dZ__zW1c9JSh82FbPyW36ZrQk1SlDNRW6xf_HT6-xxNZW8MGRDP1jQ19SW46fBQ48XrYxcW20Xb7Q8ZhxF2W1ghbmM1VS7KHW3j108441RG1SW78gJ5n24SvmDW35WHZD7wdMwYW7dcY7m4wmMgmW7vdxR15MdFy5W6Mkvzh6VTpMJW3_9wZm8hYHBPW1zbRcB2xznSXf2PXb5l04) this week: - We’re in our mid 30's with two young kids. - In our 20's, we worked jobs where room and board was provided. We had few fixed costs, the privilege of some generational wealth, and we maxed out our retirement savings by living frugally, even on unimpressive salaries. - However, we moved, and now our fixed costs are incredibly high. I sometimes stress out about small purchases and our monthly expenses exceeding our monthly income. - When I consider the amount we have in investments and savings, I feel like I should not be too stressed, because I know it provides us a measure of security. - We currently rent a 2 bedroom apartment, but we may buy a house in the next 5-10 years in our HCOL area. - Would partially funding a home purchase by selling $100,000 to $200,000 in investments be a terrible idea? We would also take out a mortgage. Let’s take a look… NET WORTH $ Assets (2017 car, no other physical assets of note) $9,000 Investments (2 403b accounts, 2 Roth IRA accounts, other non tax advantaged stocks) $1,400,000 Savings (cash) $88,000 Debt (student loans, credit card debt, mortgage) $0 TOTAL NET WORTH $1,497,000 INCOME Gross monthly income (gross income only from two full time jobs) $13,330 Net monthly income (paychecks; gift money; dividend money ) $10,450 FIXED COSTS (50-60% of take home) 88% Rent / Mortgage $2,910 Utilities (gas, water, electric, internet, cable, etc.) $160 Insurance (just auto, home, renters; medical is taken out of paycheck) $100 Car Payment / Transportation (gas + metro) $200 Debt Payments $0 Groceries $800 Donations $950 Clothes (for older child considered fixed costs, for parents, put in guilt free spending) $50 Daycare (2 kids in full time daycare, 4 and 1 yr old - costs will change after June 2024, unsure of before/after school care costs) $3,328 Phone $80 Subscriptions (Netflix, Disney+, Amazon) $50 Miscellaneous (diapers, medications, household purchases) $600 FIXED COSTS TOTAL $9,228 INVESTMENTS (10% of take home) 10% Post-Tax Retirement Savings (max out ROTH IRAs, dipping into cash savings to do it if needed) $1,000 INVESTMENTS TOTAL $1,000 SAVINGS GOALS (5-10% of take home) SAVINGS TOTAL $0 GUILT-FREE SPENDING (20-35% of take home) 2% GUILT-FREE SPENDING TOTAL (Dining out) $200 My thoughts This is an extremely unusual situation that I was excited to get to share. Net worth - Look at this. Highly unusual and very fascinating. This mid-30s couple has $1.4mm in investments (!!) plus $88,000 in savings. - Assuming their investments are in simple, low-cost investments like I cover in [my book](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0hH3qn9gW6N1vHY6lZ3nvW5PPtlD5_VYXFW8XhLpL3qq0zzW83VXRb3mxWlQV41zBc5GbB43W4LtKrQ2dhdWRW8CM0Ky5WZSvHW2MfpR85X3_cWW1z-d-D6-Xnw4W90W6TQ13VtZZW3rW0Kn2NtrlZW5dQ3fq3v-wXnW51PpyP74tmB4N80093q_YwF1VM29hw2Ww3xZW3H7JJW3FJHdFW525vbD2P6tP9W39qwtL46zGdRW2_lN2k84kMDnW5g2GL51G7nkdW1RP0tJ3HzXMnW7Ms37b4fPZS0W1mmNL28JgSscf6fZ1wl04), they could invest $0 more for the rest of their lives...and they’d have over $10.6 million when they turn 65. This is the power of compound interest. - Now, not many of us had generational wealth (including me), nor did we have jobs where we had room/board covered. But I hope you take away how powerful it can be to invest early, consistently, and let it grow for decades. That is how true wealth is created. Income and Fixed Costs - About $160K. Also fascinating. They’re spending 88% on Fixed Costs, which is too high. - But when you dig into the numbers, the bulk of that expense comes from daycare, which is a temporary expense. Take that childcare expense away — even partially away — and their Fixed Costs drop dramatically. Investments - They’re still investing $1,000/month. Honestly, if I were in their situation, I would reconsider this. If you already have $1.4mm invested in your mid 30s, which is going to turn into TEN MILLION DOLLARS by you simply breathing oxygen, do you really need to keep putting $1,000/month in? - The math is quite funny: If they invest $0 for the rest of their lives, they’ll have $10.6 million at age 65. If they invest $1,000/month, they’ll have....$11.8. LOL - Personally, I’d take that $1,000/month and put it towards daycare right now. Fixed Costs would still be high, but you’d get some relief. And although I talk about keeping the factory running with investments and savings, the investment piece is so overweighted in this case, I might make an exception. (Or I might just keep $50/month being invested, but not $1,000). Savings - They’re saving $0 and have $88,000 saved, or 9 months of Fixed Costs. - This is fine. It’s up to them. I’m a little confused why they’re not saving for things like an annual vacation, but that’s a minor point. Financially speaking, they don’t really need to save a lot more now. Guilt-free spending - Only 2%? WTF? - I have a problem with this. First, I don’t believe it. Second, why make $160K and have $1.4mm invested...and you’re only spending $200/month on guilt-free spending? Is this some sort of self flagellation? Which brings me to their original question - Can you sell some of your investments for a house? YES! You absolutely can. (Definitely consult an accountant for advice on tax implications.) - Right now, you’re on track to have $10+ million in retirement. The vast majority of people will have NO IDEA how to spend that much money. You definitely won’t — you can’t even spend $500/month on guilt-free spending! - So it would make a lot of sense to take some of those investments and sell them to get a house. - I would be running a few calculations: I would want to know how much money I’d want to put down in order to have a monthly payment that fits my CSP. I’d want to, of course, add a buffer for one-time expenses like transaction costs, furniture, moving expenses, etc. I’d want to model out how much my reduction in investments would cost me by retirement (though a difference of $8mm vs. $10mm is basically pointless for the vast majority of people at 65). In short, I’d want to run a more sophisticated analysis. - But as a summary, if I were in this situation, would I sell some of my investments to get a house? SURE! - But your question also mentioned being stressed. You can do things right now to use money to reduce your stress level. You could redirect your investment to temporarily split between fixed costs and guilt-free spending. You could focus on making your life easier by buying your time back. Those decisions would go a long way to making you feel more comfortable right now. What was your biggest takeaway from this CSP? [Ramit Sethi Signature] P.S. New podcast: “Our gas is about to get shut off but I refuse to sell any of my 7 vehicles” This was one of the most surprising conversations I’ve ever had on the podcast. Check it out [here](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0jg3qn9gW7Y8-PT6lZ3ptVvxDWh70_196N8c-1lBNZCGqW1Bt-Ch26hqvpV1pzYv8NM4bqW1yx4KY7ZkhxFW4Gg2tX2d16_2W29Yr8S1PH2J3N1cDQN8Cq8FNW42BjdW726zGNW85CDXK42WY36W4Qg0cl2PkTxNW120mCg11hfj0W8QyNDM20bprKW7rMzVK1MQsvbW53XqS-6ZW0smVzXKlG6DLhJtW8yFN9k1_ZSv2N5bcXJFJwgJCVwRwyT4Vs0YsW6W96913MQsjlW644K9g9bTdcHN5C3xK4qP2qSVgy4z_1WyVtvW4xY1K35802DlN5kSS4zHFv02VsLp4S13p9pYf3XMGXg04). [Podcast - I refuse to sell any of my 7 cars](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0jg3qn9gW7Y8-PT6lZ3nhW4fG54w3gVKpJW1NmpLY1s2mCBN8Vv4WjP65vpVFzPrS4mBmn2W5tLv3910dHq5W88bYNT7hF5YmW10Hd0-2BWlCMW1fmBg44SkVXqW4y5y9N5-7y2gW8r7kSm5QzWMYW3k0YfP658M5rW3nrCT56c1F53W93JXff1-0jyVW4t6nhj79KBZQVXZ8Jn2ync_KN8kHmXN7skHzW3tz8VW19FtsRW4rcYr94jf_9GW2T2WfM5Vj8bjN2K6wRWvtpjVW5k5S931tnwZyW4gsf166XQjw8W4wJVny7flLYTW35ZGy05zyjQ4W8mvn_W1QZDLZW7Wz82Q4ptRSYf2L-hKj04) [Programs →](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0jg3qn9gW7Y8-PT6lZ3kYW1kSjkZ7y4JK8W5LQN1C8kMZ8zW84HbkR2V0sR-W84ymSV49lYRsN4k4kHXRyCSyW2JK5bt6M3sK_W2F-Tqy4Rd4vTW8LJH8z5g4NNdW6fYGFZ8Yb-cTVC_HpC8W--vCW2h_-S-3n73LzW2GRgGB2lMGCGW5yBndd39KF5mW7MX4Ts98kwJCW9197r42MQZ3RW5kZnV22K-lCDW9kWWq_4sVzBVVx8jBc36dhG0W9fls3X4lGp6cN2SMHsFRcx7RW4dhKRW7kpr2SW2vz1dn8wrfdtW91jBPL2m5w7KW3266lB7zB-3MW8rBKJM63XmpMW2LhlK043P8P6f6F-W0004) [Podcast →](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0jg3qn9gW7Y8-PT6lZ3pKN1m8cmc952zKW2hKd2P13cfG-N2DjxV_-HMMRW6YSgDP5YSTf2N7_ZV5ttk2H9W3ghHB08qVCC5W4X5Bl_6QlPnlW2JjRbQ8CJXVmW7RBx0S4szykLW1RZN5Q6mRlb2VJRkQl4p5x_wW6CyLkl1fZ4hrW90mksD5Ry0g2V9gpJm2z4bHnW3JCq8H6xk2NnW792yNb2_HdlDW5lGDl45mdWKJW4lm_gV1mwH-jW4PKYMX2HKw-4W8Jr-V32_M9m7N8_lspFgNr4XMTG6B0m2bzcW90_gLB19wykKW447Kxc2WtdK8W8NPWrt4Cc4xvW8gTqhp22Y5Zkf1Df2Y404) [Netflix Show →](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0jg3qn9gW7Y8-PT6lZ3nsW2wn4bh7bS3ggW4hvYcB4XcJVPW5XRkFY8NRcjzW88vWV61vtLWdMzsnm-8vG4SW1NhxF_7pzRs6W7Cx4l24KdbnSW62f0y35t1syqW5771wS2L6Fc2W6Ws-yF3N1RCSW89H9Xg1-btL2W4WvVqX99KqmkW3LR1xm5k5F9zN2x9pBs4h6Y0W1bnm572LQ-RfW6WRjyq1_ZrbQN64Tdk4pBz_HVJ3mcT6HQmGqW1ChCS180kHVfW1jmZN16y5G8DN79D-FvNHpBVN1_YBcJfl5M4W5HyDtz37x8GKW42sVKN4hhGNXW68_WN81wYZrwVrt0NT1h3Fl3f4ZPQMH04) [Books →](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0jg3qn9gW7Y8-PT6lZ3mDW2tgggY8xpNBxW4X8N6y5BRhZ9W6ymBfT8N7ngrW4hHs6t2GLmFcW52jW_k18j2VDW1kjgWn41gC2vMR_pVdz5RPhW1KHjf74Bhd04W4fnT7Y8rHjT6W6Z9GB_54J22_W62tb721xnRmHV70gv37mB9sZW8BqhSq4GkQysW797j8g5mxTQQN3F_SVBhwtKHMNSp9Bw8-3TW1vzltk6LWSMYW4vyYNq3s7GwkW7s9clt7MxGwWW43FZTG8_4Wj_W1HsLSF3NlH4wW4ShR871phrW3W8nL9rq7SnbPfW1KNK_b2MHK-ZW2VVfqx8mTZnZN2kKdK8Ldxljf78f3jx04) [Website →](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0h-3qn9gW7lCdLW6lZ3pbW3vg5Fq3WGlJTW4-RnwH9gXn8vW6rQr5X4DQ7BrW1rYdqQ3bZ9mkV-csRs5mwb-ZW96Gjth60WrpBW4lv_jY5cL5mZW98C4Ds6DW_ZMW2QjT7D6CXrZQW8k4t-31fl6z6W3S42nT5Q1_h_W2PzHk81dDGmBN8Ckgg3hRY-HW4Ll4H543HHxvW5GWCbj7mR6wSVC8C9f8qfSXTW7Pq5_Y5FhP1lW6g4Lgg1nTCygW1X18TY3N_wYVN3gW255bkQbwW22XKLQ3SRqdNW2SK2rc3HS3xDW9kdXZ02zpz88W64_PGH4fgxVWf6wd8wz04) [Instagram](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0h-3qn9gW7lCdLW6lZ3lgN7Yr2LWp7HzmVBDYGK61v84JVk_tN414hjFYW6v9Vbz3gN62LW3YvF9S1ly6ryW2X4skV36nx7_W34XPJ-5znlp-W7rTYC-9d9wvdN50M0yStSK-6W8Ky2Mh7HpCFfN3GKZtFVd5BgW19KpxB93Hdk1W1zT9YS3P7yy3W6cqgZV7drFyfW2sZvdS3HrRFKW7wdf4M3h4gXJW3wQzS26_J4PhW3bp_5R5gFwg1W2gSnn44y0z0zW356WPw8n1C-fVbWTg925P2xSW6KSMfH408c1vW8zz9269b4rWgN6MJSnyMwDbRf5rgWkb04) [LinkedIn](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0h-3qn9gW7lCdLW6lZ3lDW58FMPP89M7jXW9hz7PT1CFkNmW11pxX43bl_kzW8JrKqG4wg_ggN3kVbnjjHcjDN2KYCbzL_gn0N7pLv6pg1SjmVBmC411d92pqW4FMBcj352yWcW9cxQPg6gRpL1W4xT_B67CQ3RHW2LqntF6Kkh5xW3fjh7796Vd_gW89jD6J3fvkzHW99P_397Z0hbwW2_q8pM5_bmLXW6k85nr6rVG22W8XL9w18hHqYfVbnM0b4127cdVy1FCK8LyMFCW17jMtf8GDD8yW7Kmw851sGSW4W5HTx6J67Vkp9W1BVX8n6Xsx1tf3fHxTd04) [Twitter](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0h-3qn9gW7lCdLW6lZ3p-W1yzs8j6Wq9ykN3Xwn1tcR9QdW4r2y_h6yF8LPW3TDQC_4lkGMfW7KQLfx7T42WYN783Pk0Cgm6fW1Frx0X2WDZ7CW3vK9cF7s3mtfW3TLC2V7jbTzDW109PqB1Kt3TvW7sp9qx8J4Kk7W1ffXyn7HcGfPW3dzKtg1dGLSDW4fXf9814hQtzW79X9CB4Sk4cBW8shDMn693j7NVC9b_18CDWhtW5WzTLH90GYLPW2pfwDM7HLFThW2rvChq5RKP69VqZtc95k0y5hVvsTvx6j38BWW5zkXzC5wnh-QW4nmJ8l7kbb2Yf7Pf_qW04) [YouTube](113/d586LZ04/MVTl9rZBv9wMYyw5r_5q66W3S9mTt5cSzgfN5bb0h-3qn9gW7lCdLW6lZ3lFW8cM4r28JfddNW2njgk371_7c6W68lVKT7CJ8RlW6lFxg88xjkpBW1czcdb1V6r4BW5H05Q53bh_ltW325RJ26XygZdW7byRxv5T4W7yW2PMMGh8hNMnQW6JNJ1543QCKhW1FDpty4k1PDwW7zpYT71YL1k5W4pN3312mLsCvW3dh9kg6T4L_5W6Y2_x152vmyPW35320c2CQ-8nW7zxM-p1ZTnRCW7dMF_281zw_sN2SGDcJHTm1bW64tLbz3j3hF9W1GlqrM6hmN3BW6djn-k5lZcZ9W8vSwHq2wbzm6W99FPxt3DPRzBf7TRs4M04) Was this forwarded to you? 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