We were watching Brooklyn Nine Nine (great comedy!) last night and the main character (Detective Jake Peralta) had to face his own financial self. He’s 33 years old and doesn’t have a penny to his name - six massage chairs and DJ equipment – but no money. I’d call that the low end of the financial health scale.
Financial Plot Points
Jake’s apartment was going co-op. So all of the tenants had to show that they were approved for loans or have enough cash on hand to buy their $430,000 apartments by a certain date. Well, Detective Peralta spends more than he makes and definitely doesn’t have enough money to buy his apartment. But his coworker and childhood friend, Gina, lived cheap for years and had enough to buy the apartment and even offered to rent it to him.
He realizes in the end that it’s not a good situation when the admin at the police station is doing better than him. In the end, she buys the apartment and lives in it (Jake’s suggestion), and Jake sublets her current, cheaper place. It’s a win-win for everybody.
What Could We Afford?
This episode got me and Mr. BFS talking. If the place we loved had to be bought all of the sudden for $430,000, could we do it?
A quick look at our assets will tell you that we are betting on a long future. A bunch of our net worth is tied up with our two homes. The rental income from the first one is an ongoing “passive” income source (as you may know, rentals aren’t really very passive). Then we have a large percentage of our savings socked away in retirement accounts like Roth IRA’s and my old 401k, so we can access it at 59 1/2 to live off of or use it to buy an annuity like Annuity Buyer Cashinyourannuity.com if we felt like we wanted a monthly allowance instead.
So, what we’d be left with is our cash on hand and what’s invested in individual high dividend yield stocks. If we sold our current home for the equity cash and used all of our cash and stocks on hand, we would be able to put enough down to get approved for the loan for the rest of the $430,000.
That’s a little odd for me to think about. I think we are doing amazing, but we could sell, trade-in, and cash in everything we have and still not have $430,000. $430,000 is a lot of money.
In the big scheme of things, my husband and I are financially healthy and on track for financial independence eventually. This makes me truly feel for anybody that is trying to do the same around $430,000 basic apartments.
What do you think?