True, the world is a bit unpredictable. You would be fighting to eat and survive at that point, and money would be worthless. So, other than the world ending as we know it, you can be FI and have You can reach Blockbuster FI by selling your business and investing the proceeds in passive income generating investments. No more long hours of blogging, and more time to devote to your child and other pursuits? True, he could do that, but then what would he actually do?
Finally, this could serve as a last defense against a great depression. If stocks suddenly go in the negative, people are still going to have some free time to look stuff up online. This blog could then be the difference between him having to go back to work or being able to maintain some semblance of his lifestyle and still feed his family. They are both about the same size as FS.
It gives me something to think about, because I do have a couple other sites I could simply leisurely write on. Could be fun to cash out. The anchor text is in strange place there because I intend to re-write about this at GRS, and would prefer the link juice to got to me, not reddit haha. Each dollar we save grants us greater financial freedom. There are a variety of major milestones. For instance, achieving positive cash flow earning more than you spend brings one type of financial independence. Getting out of debt brings another. Reddit folks might consider this leanFIRE. Lastly, I suggested that abundance was the level at which you can essentially do whatever you want without ever again worrying about money.
Redditors would call this fatFIRE. I think too many people become over-focused on their number, on achieving what you call basic FI and I call independence. I think folks would be happier if they could take the time to appreciate their state, you know? Anyhow, I do intend to write about this concept sometime soon.
Top 5 Reasons I Keep a Half Million Dollars Under My Mattress*
Looking forward to reading the post! I can barely remember 3. I had a really great year in but because I feel so far from my overall goal, it feels insignificant. We would be happy with budget FI. I have a blockbuster dream though. Maybe Joe has the same pact with his wife. Even at Budget FI, without a car finance or mortgage, I consider that to be a very healthy financial position to be in. The vast majority of Ameerica will sadly never get to even the first level.
Their retirement will funded almost entirely by social security. We on this blog are not representative of the country and that is sad. They are now well off. The rest just kept making the same bad decisions over and over again. The thing that always pops into my mind is fi is also psychological. Even if you meet the math definition of fi if your still deeply worried about money has it really mattered? This is an interesting categorization. I have never thought of FI this way. We will end up probably between Baseline and Blockbuster FI.
Hubby and I have been talking about moving to a cheaper state for a while. When you define income in this example is it the total of dividends and other passive income AND investment returns? Seems to be so but I wanted to confirm. My original belief is all non-working INCOME, and not investment returns, nless one is actively drawing down principal to pay for life second definition of FI in the intro.
The same applies when you calculate the net worth required for the yearly withdrawals at each FI level, you are not taking into account inflation, taxes and other costs, which could be misleading. You are suggesting that because the risk free rate of return is 2. However, risk is a real thing and it affects investment returns, and everybody invests with different objectives in mind.
Whereas somebody who is pursuing financial independence would be better served in a balanced portfolio including stocks, bonds and maybe other asset classes. This portfolio is more than likely to return less than 2. These are minimum guidelines and I do talk about inflation. If your investable assets generate at least the year bond yield, you are by definition beating inflation almost all the time.
And the year bond yield is the minimum of the 2. When did you reach FI, how old are you, and what type of risks are you taking with your investable income? Might input your response in an upcoming post! Just recently after the sale of a business. Even if you only invested in T-Bills maturity less than one year , and kept rolling them over, you beat inflation by 0.
What a new way of seeing financial independence. I never thought in this way. However, I see this more like a path…where you start on a budget FI and work yourself out until reaching Blockbuster FI. For me, true FI is where you stop worrying about the expected and the unexpected events that could eventually happen. Can you share your thoughts on your small spending As a percentage of your net worth and whether you struggle to spend more? That asset appreciation could disappear in the blink of an eye.
I have massive gains, so reallocating capital means paying huge tax bills. You may have the same issue if you were to ever sell your business. My hands are somewhat tied due to tax liability. I also have close to 4 million real estate equity, but those are sitting on hefty capital gains as well.
My cost basis is 1. I like this approach, although the numbers are a bit skewed at the top of the pyramid due to the cost of living factor. I think you can stand to drop those numbers by up to half depending on where you live. I also assume you include traditional tax-advantaged retirement accounts when you talk about investable assets. We could reach blockbuster FI but that would require at least an additional 5 years of work, and the associated benefits would not be worth it in my opinion.
Not so much for almost half the population of America that live in expensive coastal cities. Sure, you can live off less, but the whole goal of FI is to be completely financially comfortable. Pretty tough to make that happen without building and selling a business, inheriting a pile of money, or striking gold with a unique patent or crypto or something. Still, when we travel to expensive places, we naturally become more conservative with our money.
- Spellbreaker: Book 3 of the Spellwright Trilogy (The Spellwright Trilogy, Book 3).
- Hamlet (Spanish Edition).
- Why Households Need To Earn $, To Live A Middle Class Lifestyle.
- The Secret To Perfect Happiness Revealed: Make Over $, A Year!
- Baseball in den USA: Religion oder Sinngebung durch Inszenierung und Kommerzialisierung? (German Edition)!
- A History of Egypt from the End of the Neolithic Period to the Death of Cleopatra VII B.C. 30 (Routledge Revivals): Vol. I: Egypt in the Neolithic and Archaic Periods: 1.
- Economía en 365 preguntas (Spanish Edition).
That would be funny if she brought an extra bag for groceries to bring to the American state of Hawaii, where they have groceries too! I forgot whether you mentioned you are still working part-time? I love the Pyramid. I have this discussion with my wife all the time. My goal is to get to baseline FI before losing a regular income and hopefully have hobby income and investments take me to Blockbuster remember them?
We are now somewhere between Baseline and Blockbuster FI. We are financially free. We have enough of investable assets to live the next 58 years but I am NOT psychological free because of my golden handcuffs to reach age 55 to double my pension and to get retiree medical coverage. Since I am less than 21 months away to 55, it is a mental daily struggle to get thru the day, the week and the months.
It is so depressing at work since all of my co-workers have been laidoff. Over IT ppl were laid off from to It can be stressful at times to support the IT systems by myself. I have hobbies to help take my mind a little off the countdown clock. We take vacations so that I can get mentally away. Since I work from home, we try to go out at least once a week for lunch. Our annual expenses were 45K for many years. In , we loosen up and we spent 70K. I went overboard by spending 10K on my hobbies this year. Since we are fearful of losing our financial nut, we play it safe. We are not greedy.
We strive for a min of 3. In , the rate is 4. No more stocks since the dot com bubble in By age 60, we hope that it will generate K combined yearly. Our Passive income at different ages Age 52 to There is another re-org at work. Rumour has it that I am affected it. Since I am so close, Wifey wants me to work until 55 and I agree. Since life always throws a curve ball, I rather be more financially secure. With 21 months left to go and being miserable, how about aggressively asking for a raise or a better project a sabbatical or a relocation for a new adventure?
Not too much left to lose, except for your pension amount at your level of net worth. What is your fear that makes you not want to more aggressively ask for what you want at work to be more happy? Sam, I am not miserable, just less happy. I will be in the same company this summer for 31 years. It is just that I am so antsy since I am so close to retirement. I have been planning my retirement and counting down since age Having no more close friends and a backup at work makes it a struggle to get thru the day.
It is basically no fun at work without my buddies since they were all replaced with Indian consultants. It has been over a year being on my own and I just have to get used to it. Many of my co-worker that were laid off are struggling to find another job. Some had to relocate to another state or commute daily to another state. Some are still unemployed. That is why I am so appreciative to have the same job and I am still able to build up my pension. Losing 31K less pension plus 8K for medical is a total loss of 39K passive income.
Then we can stop buying munis and that 2M of principle can be used to buy a decent place in Hawaii if we choose to. Wife said NO to buying so I have to work on her. More money for my salary will not make me much happier. I just want to support my existing systems until they are rewritten externally or until I reach In fact, I am mentally prepared to not get any more raises or a bonus from this day forward and I am OK with it. I am not the poster boy suckup or the golden boy on the team.
Those guys work on the new stuff and they attend meetings all day to show how busy they are. They do the dog and pony shows to mgmt. I make K a year and I only work hours a week from home. When there are problems or after hours or late weekend work then it can be stressful. I am the ONLY one that knows my systems so if they want to get rid of me than so be it. I just want to gracefully try my best to make it to 55 and just retire. My mgr just told me today that I am not being transferred. The other boss would have been a micro mgr and that could cause me to quit. My boss wants me to stay another years and he also wants me to work on something new so that I stay interested.
I suspect he knows I want to retire at 55 but I am not saying so. Hang in there, Adam. Neither me or wife have pension or medical coverage, but we do have K and some prior HSA savings. Work wise i'm a bit fortunate to still work at a good company and managers, so it's not a big deal to continue working, although the work can be repetitive and lack of challenge, i consider that a blessing.
Still, once you know the date it seems hard to keep still, but the anxiety seems more from the retirement itself what would I do , rather than the current work. I think for people who are fortunate enough to not worry about financials after retirement, our real challenge is the lifestyle choice and psychological change we need to adapt to. We are very lucky to have pensions and retiree medical.
This is why I need to reset my brain to appreciate what we have and to get out of my funk. Our company has gotten rid of many workers before age 55 so that their pension will be much lower. I agree with you about setting a date. I am just so antsy to get out. I have several hobbies to keep me busy so I wont be bored in retirement.
I am OK just chillin in the house doing nothing. I also have many older co-workers and friends that are retired which we can visit. We also plan to travel. In fact, some clarity around before or after tax income levels would be helpful for all the dollar figures in this post. The new tax structure significantly affects people in the Blockbuster FI cayegory, mostly on adverse ways, so. I would suggest adding another dimension to your pyramid that would take into account geography.
This dimension could be a plane stretching out into the distance from your 2-D pyramid. But you could live like a king for half of that or less in many parts of the country. Even lower if you go international to some geographies in Asia or South America. I may have to post a visual graphic on Twitter to explain what I mean with the 3D pyramid analogy….. The question though is: Just light one of the fireplaces! Perhaps its biggest asset is fresh water. Four lakes and close proximity to the Great Lakes is huge.
With other parts of the country drying out, access to fresh water is only going to become more and more valuable in the future. I just want to get rid of the fear and pressure that comes with being dependent on money. The fear of losing a big client, or the pressure of having a competitor undercut me with prices, and always being on edge.
Top 5 Reasons This Physician Holds $, in Cash - Physician on FIRE
Now I just have to keep building it. Always enjoy stopping by. I hold rehab notes for real estate investors. My cash utilization is also very high. My retirement job has a great following now, I rarely have enough capital to meet all the needs. Mostly because not many people pay attention to it. Like FullTimeFinance mentioned, it is not very good is to have the money if you are always worried about it.
I practice gratitude every day and play sports 3X a week. That helps with relieving pressure and staying fit and happy. Also pumped no gray hairs have sprouted out yet at The second half of my life will be all about finding ways to take it easy and increase productivity as well. I want to be solidly in the middle — i. Right now I could hit the frugal FI button likely in the next year or so, but would not be happy there. I like the idea of the continuum. My in-laws are shooting for blockbuster FI, but they both own tech businesses that are doing well…so their reality differs slightly from mine.
You are spot on and a talented writer. Living FI lifestyle is a total mental game. Only works on mobile or iPad for some reasons. I recall an article about this very topic from a long time ago early s? These would be much higher today after adjusting for inflation. Perhaps that article was directed towards mid-level executives looking to escape the grind. Now that living off passive income has gone mainstream these three levels have downscaled a bit.
In silicon valley these days these three ranges inflate on the high end— maybe something like seven, eight, and nine figures blockchain FI? I used the leverage from my financial situation to present my employer with an ultimatum about working conditions i. I control my location, schedule, and work content , and they seem happy to accommodate. I read a lot of blogs and there is this one Blogger who goes on every single other blog and shouts from the top of his lungs that he is a multimillionaire.
But he has no self-confidence because his wife still works. His writing oozes insecurity probably due to the lack of friends, lack of success from his site, and lack of purpose. I have to say I also read a ton of blogs and I am darned if I know for sure who you are talking about. I could guess but that would be rather inappropriate…. I do agree with your general point that screaming form the top of your lungs that you are a millionaire or stable genius….
I guessed right, and mostly agree with your comment. However, I am guessing he has no losing stocks. Who would after an 8 yr bull market? I think I have over 80 positions and they are all up big, no losers. Why are you being so rough on him? With Blockbuster money, thoughts of leaving the cold Midwest for paradise? Well I do when its cold…spent 5 weeks last year visiting Oahu, Kauai, Maui, and the Big Island, 2 weeks sailing in the Bahamas, a week driving the French Riviera, a week hiking the Tetons, and spent Christmas through new years in Costa Rica.
Thanks for the mention! I think the problem is that I still have the budget FI mindset. Fear of a big market crash is a big factor too. Not having to commute to work and deal with knuckleheads is huge! I know you would never go back, and neither would I for less than….. She likes working, but would like to cut back a bit. To me, financial independence is being able to live how I want without worrying too much about money.
Things always come up. A new roof, new septic system, etc. Also, I want my kids to go to whatever college they want and not be burdened with student loans. I want them to follow their dream careers, not be cajoled into a career because of the earnings potential. What do people do all week when they are retired, especially when retiring early?
I retired early and struggled with being preoccupied after 3 months. It turned into boredom and slippery slope of troublesome lifestyle. I finally returned to my career part time after bucket list. I consider myself semi-retired and enjoy working more once I had balanced time off. My partner enjoys working and is seeing how far she can go. I have improved, but have not arrived. I guess this is a good problem to have, but I just wanted you to know retirement is not always paradise, and semi-retirement may help make the transition.
I moved to a remote tropical Island once FI. This idea was not spontaneous, and I had planted seeds for years working off and on as an expat in the medical field. I worked with royalty and even had the life changing experience of using a gold toilet. The toilet was not really life changing at all, and somehow sad. I also had opportunities to work with orphanages literally in the tree tops and cultures who thought their medical issues were caused by spirits.
There were amazing times, but I also suffered through cholera. The remaining time I worked for years in high stress, high salary, with little time off. It made me sick. When I took the plunge it was paradise for about 3 months, but got bored of the lazy days, warm beaches, and amazing sunsets. Kind of like the big island once the nature wears off.
I was drinking more. I know some of you may think I am an alcoholic, but I have never been, but I did not like that I was drinking more. I also got a dangerous reputation for having money. I never showed real wealth, but I tend to give money away especially for education and this caused some jealousy. The ladies started to have more interest in me, and the local men did not always appreciate it.
An analogy could be a celebrity with money and time off. I am no celebrity. I eventually moved to a major city and enrolled in a language school, because I could not adjust to just being alive. Two years later I returned to my career in the bay area after meeting my partner from Japan who is a well-known designer in those circles. You have never heard of her.
Sometimes she designs hands bags for fashion industry and secret startups. I only mentioned her because I think the goal is to find something you enjoy and get paid for it. Why would she not want to work. Semi-retirement has been a better path for me. Your story is fascinating!
- Account Options.
- Stocker and Dehners Pediatric Pathology;
- Out Like A Light: A Darcy Matthews Mystery?
- The Secret To Perfect Happiness Revealed! Make Over $500,000 A Year;
- Top 5 Reasons This Physician Holds $500,000 in Cash.
- The Voyages of the Ranger and Crusader and What Befell Their Passengers and Crews..
- La naturaleza humana.
I often worry that many people are chasing this end goal at the expense of really living their current life, and what you ultimately end up with in FI may not be all that rosy, like your story. Any level of FI used to be a huge and urgent goal of mine, but its funny how finding work you enjoy doing and keeping life balanced and interesting can take away the urgency of FI. Buy a Fitbit and get walking! Not bad for a year-old, if I do say so myself.
A little over miles in My goal was miles in Reached that goal mid-November! The formula-lover in me wonders about doing something like this for defining these levels based on the avg income of cities. I like that idea of planning for options. I guess there is a correlation with cost of living and best places in the world to live e. Therefore, problem solved with Blockbuster FI! I like the pyramid visual of different levels of financial independence.
Hopefully you can replace the K amounts with just regular savings or a pension. Great net worth for your age, and definitely a valid concern getting your MBA. I got my employer to pay for my MBA and did it part-time. Any way you can do the same? The returns for getting an MBA are going down. However, you can still strike it big, and if you work long enough, you will definitely earn things back. I am 72 and retired, female and divorced, with graduate degrees and 45 years an academic in higher education.
Saved throughout my career and lived well but below my means. I have no debts whatsoever, plenty of cash savings, a very healthy retirement portfolio, a nice home all paid for, a good pension plus above average social security payments, so I am able to travel widely and stay in high end hotels. I am grateful I was able to live with financial discipline so I can relax and enjoy the rest of my years. Oh, btw, I am Hispanic of European descent. Sounds like consistent savings and investing paid off nicely! Recently sold my home to relocate for a job. ZERO debt; car is paid off, no credit card debt, no house payment anymore.
The total net worth numbers for me seem right on. I always roll over my k's when I leave a job so it is difficult to know that total. I just recently hit a salary mark that makes tax deferred saving difficult; Roth IRA is out of reach and even putting in the max k has been an issue for me in the past top heavy contributor companies resulting in my contributions being returned. Remember no debt, yes I am proud of that.
I am very surprised at the numbers and that I am just above average. The people I know even college grads with good jobs have nowhere close to this saved up. Most spend too much money and are too far in debt. I asked my financial advisor how I was doing last year compared with people under 50, and he said very well. He is not one to overstate this since he obviously wants me to contribute more. He did say he sees lots of people doing well at my age but most have an inheritance… SO, for us that worked hard to get where we are wherever that is keep up the hard work.
I think if I can stay single and not have kids I will be able to stay on track. So much for me thinking I was saving too much and was well above everyone…. Time to cut back and save more! We were lucky, but many friends who also had great careers and great plans fell by the wayside with job, family and health issues along the path of life, so my advice would be to save as much as you can as soon as you can and try to hold on to it!!
Do you feel you have trouble spending after years of savings? I would also like to add, as others have mentioned, that we also lived the lives of our dreams along the way—by the beach in CA—traveling the world, etc. Your numbers are not grounded in reality — where are they coming from? So what may be possible for a few is beyond the daily functioning of an uneducated materialistic generation s schooled by ignorant libtards who care not about bettering the future of anyone except themselves. Also life just has a way of getting in the way of the best laid plans — I have never seen tables projecting net worths that high as it pertains to the masses.
I would fall above the mean in most of the categories and ultimately above in net worth. Not sure I agree with the aggressive buy a home stance. Essentially when you buy a home you are really renting money. Net I would say buy investment property and rent till you die. I do appreciate owning property but only when you can pay for it up front. This is one of a couple of quick reviews you may find interesting too.
Does above average people NOT help other their parents or siblings or contribute to the charity? By absolute amount, above average people contribute way about average to charity. If you make millions a year, you can donate many fold more. Should we attack rich people for being the most charitable people in our society? We must depend on ourselves. But then you went on, tried to define what an above average person really means. Does it really matter how they got there? Things get a little confusing when someone has most of their net worth in their home.
I live in an area with low home prices and my house is paid for. Well I am sorry I sis this search, we xome no where close to these averages. I started teaching myself everything about making money at the age of I found out trading to be something I easily picked up. I started out with just paper trades and a virtual account. I found out that certain stocks would go up depending upon how much publicity it would get. I carefully selected certain stocks that had the best probability to go up based on a trading formula I devised. I feel once you make a certain amount of money, life changes for the better.
You are free to do more hobbies, activities, and enjoy better meals. I saved up for everything to have a constant capital flow. I could not date, drink soda with my meals, or anything extravagant. Later, my life changed. I was dating 2 girls a day, not looking at the price on menus, and spending time doing the recreational activities that I enjoyed. I decided to no longer take any more gambles I read so many stories of people making large amounts of money, only to lose it all.
I told myself I will be content and be satisfied with what I have. I am selling puts on some stocks which I predict will rise, and I have sold covered calls on safe stocks and collecting dividends, and I have found some good bonds that are paying a good safe dividend. I am living within my means and using the monthly income to do the things I need to enjoy. Any advice on what I should do next? I want to learn how to create a blog that is successful like yours and would love to learn how.
Please contact me by email. My 1 advice is do not think you are invincible. There will be times you lose money. Really enjoy the article. Given the financial direction of this country, rates will likely have to increase at each income threshold. The general assumption supporting pre-tax accounts is that tax rates will be constant. The general assumption is that we will be in a lower tax bracket. I do think retirement accounts are valuable, but mainly for the average person unable or unwilling to save post-tax.
My decision to pay taxes now rather than later has no bearing on federal spending, both now and in the future. I highly suggest doing both. From an overall investment strategy—not just thinking about each individual dollar saved—people should consider tax diversification as an additional benefit of saving pre and post-tax.
I dont fully understand all of this, and this may be a dumb question. So going back to my question, what does the average 23 year old make a year? My current salary is 65K, i rent and own a a shitty pt cruiser and live in New York City. As you know, savings rates of 0. Check out the post. I think the numbers here for the somethings are pretty unrealistic, especially for the tax-deferred number. Where I think the numbers deviate from reality is the tax-deferred savings numbers.
That said, I think the after-tax numbers are pretty spot on. Those numbers are still a stretch but definitely doable. I shared a studio with a roommate. This is an excellent site! I love the article and the tables provided. My suggestion is to refine the tables and make them look more like a curve.
There will be smaller slopes increases when you start out and they get steeper after the third year until the the 10th to 15th year. Then income declines gradually. The reason why I am saying this is because when I first started working I had very little net worth.
They were well below your chart. After the third year, then that was the time that my net worth exponentially increased. Can you give some clarity on that? I also lived in NYC and did investment banking — although I started in Was there a special one time bonus given?
Or did you just put in a lot of money? Another comment is that you the readers can have some variations or adjustments to the table as everyone has a different situation. Some people marry early, graduate late, or go to graduate schools with a high cost of tuition IVY Leagues — business school, med school, others so when they graduate they have accrued a high amounts of debt making their net worth tilt to the negative.
But having a goal written on paper that you can see and remind yourself daily can make the difference I do this. I think you can upgrade your life style to some degree. But it is important that you still be modest even though you can afford it. I have kids now and I want to make sure that they see me as being prudent and set a good example for them. I have a hard time believing that Samuri put 15K into the K in The tax deferred limits were not that high at that time. See the table below,. Being just shy of being 40 years old. It is not easy. Anyway, thanks for the quality post. Also just took out a cash-value whole life policy that I am overfunding so that I can lower my effective rate of taxation in retirement.
The long-term cost benefit to me was greater that way than savings during this period of time. All things considered its better than it could have been… but it was definitely a hit. It did, however, allow me to convince him to let me take over our finances, which he was very happy to do. Sounds like your hubby is on board now and things are going well. Glad to have you. You broke even and learned a lot in the process… more than you can say for most college classes. This is a great website and much needed for the US, more than ever before.
I see massive inflation continuing to rise with all the Quantitative Easing. Markets are more correllated than that. Just happened on your site — quality stuff! BTW, I really hope you got some action on the Dow to 8,! What say you Samurai? Too bad, the least they could have done is bet you lunch — that would have proved to be a good meal for you! I would put my net worth at 1. No doubt about it — great to have the combination of both the db and dc plans, but working 25 years for an oil company will do that for you! Unfortunately, like most companies, mine chose to shift away from the db plan back a few years ago, so they closed the plan to new hires and froze us legacy folks — no additional benefit for service but age still counted in the formula.
Used to be when the plan was still open, that at age 50, your lump sum would basically double… Now, depending on what age you were when the plan was frozen, you see something less than doubling at age The company partially made up for this by introducing a Cash Balance plan. If property values rise, interest rates are generally low since buyers can afford to buy mortgages.
Well, came and went, lots of things changed and lots of things stayed the same. Interest rates were relatively flat compared to historical numbers. Real estate physical real estate posted some decent gains as well…obviously your mileage will vary depending on your location. I certainly wish I had leveraged more. Great approach for those who continue to strive through competitive and comparable methods. Although my pre-tax contributions fall below the average, my post-tax savings exceeds your calculations.
Been working in the energy business like a dog ever since. I plan to increase in for tax purposes and historical fund performance. I would also like to preface this by stating that my approach is not for all ages but can be used to build the strong foundation many people are searching for. Unless luck falls on their side, they will likely see unfavorable results when attempting to invest with limited information as did I. The last thing a person starting their life needs is to lose hard earned money in the ever changing stock market. Every good house is built on a strong foundation.
I believe it is important to begin pre-tax investments early on in life, but leave the market play and real estate projects until you have a firm foundation. This approach also gives you the flexibility to make purchases, take vacations, etc, when you want, and without debt restrictions.
My apologies for the long post, but it is rare to find a group of individuals in one place striving to be above-average. I think it will be very helpful for all! Worked hard to earn promotions and although my salary has more than doubled, my spending has only slightly increased. I set monthly goals and track progress every week to ten days, adjusting each spending category as needed to meet end of month objectives.
The loss of the compounding effect of that conservative rate of return again compared to next to nothing in the bank is a silent killer in this case!!! That said, at 25 there is still time to put a great investment plan in place now and be looking pretty in 25 years! Start letting that money do some of the work for you — it works! As a 27 year old working on wallstreet I make a salary of just a tad over k. Stated otherwise, I was essentially starting from a point of zero savings.
Biggest one day score was 18k. Worst same day loss was 14k. Things get much easier after you get all the spending on stuff out of the system. Finances get easier the older we get if we stick with our savings. We are business partners. We did not get a dime from our parents. My older brother was in the Army and I was in the Navy so we both qualified for a VA loan with no down payment. While my friends were off buying cars and spending their money at the bar, both my brother and I started off with a triplex with no money down.
I lived in the worst of the three apartments while I renovated and the other two tenants pretty much covered the mortgage at the time. I saved my pennies and bought my second triplex when I was 24 years old and 2 years out of college. In , my brother and I bought a total of 11 properties, in , we bought 3 and we are in contract on 2 properties right now. One thing I disagree with the author is on how often he refinanced his properties. I agree that 2. This way, I feel like the cost to close the loan makes sense.
Two each their own I guess. If you get out of NYC, that is a great down payment on rental properties. I just turned 29 this month. I have a stay at home spouse with our first 11 month old boy. Our net worth is around 23k. My salary is 68k, but 10 percent of all income goes to our church.
They are from NM, we live in Richmond for the time being. Wish we had more assets at this point, but it is what it is. I just with the value of the dollar would stay the same. Better late than never. At least you have no debt! My k is about k and an additional 40k in traditional IRA. Post-tax is in combination of mutual funds, stocks and CDs. Overall I feel I have been to risk averse up to this point and could have gone much more heavily in the stock market.
I feel I could have increased my wealth many fold, if I had invested more aggressively. Do you not plan to ever buy? The benefit of homeownership, besides the tax deductions is the fact that once the home is paid off, you have a rent free place to live forever. All you have to pay for is maintenance and property taxes. Yes, I do plan to buy. We are a single income family of 4 2 kids who are in elementary school. The experience left me uninterested in buying again in the event that we have to move again.
I feel a certain degree of freedom renting. However, I realize that we have been here for almost 4 years now and if we were to stick around for another I do realize that I would have made a mistake by not buying. However, we are too unsure if we will for me to take the leap. The low interest rates are very tempting though. Eventually we plan on moving to a metropolitan area that is tier 2 or tier 3 where SFH prices are in the range.
That is when we would make a decision to buy. As you know, buying can be overrated due to the markets and to maintenance and property tax expenses. I only made 28 k in ; 55 in and will likely make 58 this year. I mostly do temp legal work. I am going to inherit at least 2. You started investing in real estate 7 years go when you were 21? So in you started buying real estate and are doing well? How far did your real estate investments pre go into the red and have they fully recovered yet? Wondering if you could offer any advise.
I also got decent returns by getting into the stock market near the bottom of the collapse. Parents also paid for my college where I got my computer science degree, so I started off with zero debt. Nothing fancy, I guess. Thanks for the interesting post. I enjoy reading this type of material as I work to convince myself about taking early retirement. I feel we are in a good position for me to be able to walk away from my job in a few years, but leaving behind the max earning years and options that a regular retirement would provide are proving tough.
I am 45 and married with no kids. My wife does not work. We have no debt, but also no real estate. Foreign service premiums in hardship locations have provided a nice boost to savings. If I retire at 55 regular retirement at my company , I can take a lump sum pension payout, but would be required to take an annuity if I leave early.
We intend to live overseas in a relatively low cost country and travel extensively in the future. I owned two cars over a year period. I owned one home and sold it before going overseas. Choosing a solid field of study, industry, and company has helped our situation out a great deal. I came out of college with a good education and no debt, but no assets or inheritances.
The best advice I can give to others is to start early, set short-term and long-term financial goals, track your spending and progress towards those goals, and adjust your spending and savings habits as necessary to stay on track. Your advice on deferred compensation, tracking your habits and progress, and real estate are all on the mark. Nice to hear from you! Thanks for the post, FS. I worked two jobs after college, slept in living rooms, and bought one meal per day. I learned about investing on my free time, and used that to increase my net worth. For instance, I wrote an article recommending the purchase of common shares in Bank of America when it was trading for far less than it is today.
Young people today have fallen on very hard times. The combination of high rents and low wages makes it very difficult for anyone to save or invest. I recently found a job in Lebanon that pays for my rent and offers a higher wage than I was able to earn in the US, so I have moved; but the civil war in neighboring Syria means I am taking on considerable risk to avoid the plight of my peers. There is a war on young people today and I know that most of my friends and cousins will not have a bright future if it continues. Esquire has some interesting articles on the topic, for instance: Thanks for your thoughts.
Congrats on your net worth. You are a perfect example. It seems like we always know someone who is broke, but never ourselves. I am the chief bread winner and mom , have a great schooling option in my neighborhood for my son, and loathe the idea of a long commute. I would appreciate your advice on my situation. I am proud of my financial turn around and am motivated to take it to the next above average level.
Power to you for being a mom and the chief bread winner! Not easy I can imagine. I am VERY bullish on real estate now, and we will kick ourselves for not buying today, 10 years from now. I am turning 35 in , Graduated in with PhD, worked as post-doc for 3. With single income in the family, i have to be very disciplined to even come close to this value. I do not know how to achieve the high end, so that i can retire by , may be have another kid and move to my home land.
Thank you so much for this! Roth 11K, k 18K, and personal savings 27K, and only 2k in debt thats interest free. Again thank you for the work you put into this and I like your definition of an above average person. I graduated in when I had just turned 22 had about 40k not unusual in student loan debt and 20k for the car I needed to go to work. Im actually glad I was saddled with this debt cause otherwise I might have bought a house in smirk that the study about houses sited prices at the top of the boom. Not that houses arent a good investment its just that many people are convinced its a sure thing no matter what its better than renting which its not.
Im not sure how a roth doesnt get mentioned here in investment vehicles. I would argue that for somebody in there 20s not getting an employer match on their its a way better investment choice. Plus you can pull your initial investment without penalties if something comes up so it can be safer than stocking it in a in the event of you needing emergency funds.
- Recommendations To Build Your Wealth.
- Why Households Need To Earn $300,000 A Year To Live A Middle Class Lifestyle Today?
- Thinking About The Curriculum (Routledge Revivals): The nature and treatment of curriculum problems.
- Escapement (7 Hours).
- What Income Level Is Considered Rich?.
- Who Makes $300,000 A Year?.
- La nave doro: Unavventura di Oswald Breil e Sara Terracini (La Gaja scienza) (Italian Edition).
If you have rich parents, then of course you have a likely chance of being above average if you have above average parents. How does your net worth compare to my charts? I love real estate. Net worth is approx. We plan to retire within the next 10 years. The trade off is that managing 4 properties is pretty tough with a full-time job, and adding more would require some major life changes.
One note to the people just starting out: If you are willing to take some risk at first and get your hands dirty, you can establish a good net worth builder with real estate. It sounds like you guys are doing fine, and since you have a 10 year horizon, there is plenty of time to kick yourself in higher gear.
I strongly recommend you visit this page to better track your finances for free. You are in the perfect scenario to take advantage. Good luck and hope you sign up for my e-mail feed and keep in touch! Thanks for the advice. Wife and I just turned 34 and have 2 children living in the Pittsburgh area. We both started out making around 30k and in 12 years later now make around 65k per year each. We have k in k, 55k in Roth IRA, paid for house worth k, and k in cash — total assets of k. Currently our net worth grows by k per month depending on the stock market about 3k-4k in cash and 4k-6k in retirement accounts.
It just takes time and patience and living on less than you earn, dual income helps. Key is to get out of debt early. We had small student loans 12k and new car loans when we graduated but paid them off quickly and then put everything against the mortgage. I graduated college in May with a degree in accounting.
I work some weekend jobs for a little spending money. I feel like I will never be able to reach those numbers. Thanks and great article! Joe, you JUST started your career. The point is you have a frame of reference and a target. Takes a lot of sacrifice and long hours. But trust me when I tell you that if you keep it up for 10 years, you will feel incredibly free.
Please spend some time to look around my site and subscribe over e-mail. I think you will be able to benefit a lot! If you graduated in you are doing FINE! Actually, I read the 4th link in your about me page. I hear you on the car buying thing. It got me thru high school and college. My commute is roughly 50 miles a day and it is a great peace of mind knowing that my car is not going to fall apart on the way to work and if it does it will be repaired at no cost.
Plus there was nothing due at signing. The includes sep, roth, k and hsa. About half of the retirement is after tax e. I disagree with your negative article about a roth…. I converted some money to the roth for some of the obvious reasons, but also for the less obvious: Saved first, invested conservatively, but consistantly in all markets.
I am now 49 and have a net worth of over 2 million. This chart was quite useful, albeit a little upsetting. One thing you should take into consideration is how cheap it is to rent if you are willing to have roommates. Admirable of you to rent and live with roommates to save and invest. After 3 years of working, I got sick of living with roommates and decided to buy.
Fortunately, it worked out 9. Samurai — just found your website, very informative. But sounds like most of the people here are doing exactly that! But it doubled my comp and I took off from there, all because I bet on myself and knew I would succeed even though the near term financials were a drag.
Be Mobile — in my opinion, if you buy a home when you are under 30 you are nuts. NOT because a house can lose value, but rather because the mentality it creates when propelling your career. This reluctance really limits people. My example — I lived in 4 different states during the first 7 years after undergrad because I kept looking for the next big opportunity and nothing was going to hold me back, which lead to my success today.
So where am I today? Time of your life, huh kid? Once I graduate my income will grow to around K a year, which will afford me more investment opportunities rather than merely holding down living expenses and loan payments. Hi Mate, makes sense. With your future earnings power, you should do great provided you worked enough years. Any thoughts as to how to transition to a more aggressive investment stance and whether it makes sense to buy rather than rent? I also fear renting because it provides no return and leaves nothing to the kids. Really enjoyed reading up on this article and the comments.
Although after reading some of your personal stories and comments I feel slightly inadequate! I am a 24 year old living and working in Shanghai as a design instructor. This is my first full time post graduation and I make only about 30k a year from my full time position and 9k from freelance work at a publishing company. I have a total of 6, in savings and my student loan debt total is about 13k which is reasonable from what I hear compared to other fashion design students. I do plan on going back for a business degree within the next three years.
My parents own property both in the US, paid my first years tuition in full, and I attained scholarships which peeled of the bulk of my tuition costs. Just wondering what else I could do to make make a smarter investment for my future especially since I will be going back to school. Especially since I am clearly on the low end of the savings guide. My wife contributes to employer match in k and has contributed to a Roth IRA for about 6 years.
I am a 58 years old PhD , married with two grown children. No other debt except normal bills. Always felt I could keep pulling rabbits out of my hat but lately have been nervious about a sustainable future for no other reason than that I am starting to own my age. From your perspective, how do we look financially at this point? Are there obvious things we should do to further secure our future?
Thank You in advance for your response. All you got to do is take your expected life expectancy age e. To minimize regret and stay on top of your finances, I recommend you sign up with the free wealth management online tool, Personal Capital. These numbers seem a bit high to me. Im, 21 and make 30k in California been working since 15, dropped out of highschool jr yr. I have 2k in bank, 8k in stocks, no credit card payments, do have car payments.
My plan is to buy property again, but day trade as my daily job. I will quit my job, go to online school, and get federal financial aid to pay for school and my expenses. My smal business will easily keep me at 24k a year. I learned I need a college degree if Im going to make it to that million by My question to you samurai, is what would be a 21 year olds best move, after selling this house, to be the super above average rockstar? My plan in 2 months is take 40k and trade. What do you think Samurai? Thanks Financial Samurai, best Believe Ill be reading every single one of these blogs.
Knowing all of it is helping me to my financial future. I like your enthusiasm. Is there any chance of you going back to school to get your degree? Perhaps go part time to have a backup? Hi, You have a great site with interesting comments! I just wanted to say that accruing a high net worth is definitely doable! While we were being severely undervalued ; we were amassing rental properties duplexes , fixing them up, flipping them and putting the money towards more. We did everything ourselves and one property at a time.
We even rested for about a year before continuing. We never took a honeymoon or vacation but still managed to have a great quality of life. Our family, on both sides who are serious consumers of luxury goods, think we are low income because we still live in a 2bed, 1 ba house but long story short, my husband started a business online from home at the same time I decided to stay at home as a Mom and go to school part-time.
I am actually taking a break packing for our first vacation together since getting married 6 years ago! We are going to about 4 different golf courses and stay at some awesome priceline purchased hotels. Going into college I had saved up around 15k in mutual funds from gifts and summer jobs yard work, retail. School was basically free because of the work-study tax breaks at the time. I graduated in 7 years but was able to save about 30k altogether by the time I finished and bought a duplex through a short sale using an FHA loan once I was hired full-time started at 67k.
I rehabbed it and it has appreciated a lot. I knew nothing about fixing houses before I started but learned as I went. I find it hard to see how someone can have a net worth of 80k after 3 years of working. I save 24k a year and am very frugal. With the help of a rising market, things get even better.
Did you enjoy school hence the 7 years? I wished I did a 5th year, but I was anxious to graduate and start a career. Absolutely right on real estate Sam. US property looks a screaming bargain right now. Rents have been rising strongly in my US describable cities and now prices are following suit. Should I look for rental place or should I go into real estate and buy a house. And for saving and tfsa accounts, and RRSP, what should. Be the percentage of income allocated to those areas.
Luckily, I left the divorce with no debt other than a mortgage on a starter home that I was living in. Four years later, I built a house and rented out the one I was living in. The rent on that house covered the mortgage on my new house, so out of pocket housing costs were essentially the same as it had been.
Three years later, I refinanced my house , pulled out cash and bought another rental property. Four years after that, I refinanced the original house and pulled out cash to purchase another rental property. Currently, the income from the three rentals covers all four mortgages and all are on 15 year notes. So, by age 57, all will be paid off. Sure, it could be less, but it could be substantially higher. Then, will quit work and live solely off of the rental income. It is all about starting early, making wise decisions, and not wasting money on unnecessary items, especially late fees, bounced check fees, high credit-card interest, etc.
Those can really hurt you in the long run. My husband and I make a combine income of about 60k. We just bought a house with nothing down thanks to the VA loan. Because the government sells a pack of lies to the kids in the military, we have 60k in student loans. Anyone who thinks these numbers are unrealistic is simply doing it wrong.
The only thing holding you back… is you. Your attitude has a lot to do with being above or below average. Below average people make excuses for their results, above average people look for solutions. I think cost containment is a biggie, it takes a lot of discipline to not fall into the lifestyle trap when your assets increase especially when your peers are living large , why drive a 10 year old Camry when you can easily afford a new BMW5?
You are crushing it! If so, did you simply hang on and buy more? I started this site then as a way to deal with the economic crisis. I also recommend you sign up with Personal Capital to get a good holistic view on your money with your kind of assets. Check out my overview post here. I did all my financial tracking through an excel spreadsheet as well until I found Personal Capital. Free and easy to use and I met up with several of them here in SF. I just turned I agree that your numbers especially for pre year olds are next to impossible.
My ex husband got the house in the divorce. I must really be behind in saving.
The Three Levels Of Financial Independence: Because Money Is Only Part Of The Equation
Drinking wine at home this nice Friday afternoon, as I work 4 hours on Friday and 9 hours the other 4. Came across your website and it seems like interesting, real world practical number crunching advice. Zero debt and we buy everything in cash, although we use credit card for the gift points. I plan to retire at 62 latest. What a great site, great niche. Nothing like this online. I got , in cash. I own one rental that I owe , that is worth , Got a penalty on back tax that runs out next year of Once thats paid the rent i get will cover the mortage. Always wondering if I should bail or hang on.
I rent with my girlfriend right now. Income bounces from year to year 80, grand to pre tax , small business owner have no debt, own my car out right and have no money invested in any stocks, retirement. This year I will make , pre tax. Have little baby on the way. Any advice would be awesome.
As I have no idea. Did you find my site on Google?
,445,291,400,400,arial,12,4,0,0,5_SCLZZZZZZZ_.jpg)
Great job accumulating a nice chunk of cash. Is it possible for you and the GF to move into our rental instead? I would try and hold on to the rental as long as possible, especially if it no longer bleeds cash. Things are getting better. You can potentially save and shelter up to 50K a year tax free. It is a gift that I vow to return to my future children one day. That being said, I have no debt, which I understand is uncommon at I currently have 6.
It looks like my savings are matching up with your chart, however, I have flip flopped the pre-tax and post-tax savings goals. Regardless, I will have a net worth of 20K in July, a month shy of my 24th birthday. I recommend you read the the following two articles:. While I may not live in this house for more than yrs, I hope to keep it as a rental after I move out, hence the yr fixed.
Living in CA explains the above skew: Your stats look pretty good to me. I recommend signing up with Personal Capital with that kind of money. I signed up in and it has been awesome, and a relief in retirement as I go about doing my own stuff. Be concerned about annual storms our brothers face on the East Coast!
Hi there, I read almost every single entry here! I am happy that many are doing so great here, and those that are just starting you guys have the right tools to get where you need to be in the coming decades. I am 29 years old now with a credit score. No debt always pay credit card in full every month. No car loans, no home loans. I also own a car, motorcycle, several high valued items. That if I sold I would get around 20k to 25k. For me overall, I never started off making tons of money, I have no college degree.
I made do with what I had and focused on saving and not trying to keep up with my peers. I did not start of with a lot of money from parents, at age 19 I had about dollars to my name and then joined the Army as a Enlisted soldier. I left the Army in and now I am currently working a contract overseas. Last year was my highest earning year in my life, about k after taxes. I expect still bring in about k to k.
The reason I have been able to save a lot is, I have always been very frugal. I keep my expenses extremely low. Currently I save most months around 90 percent or more of my income. Since I am overseas, my company provides the housing and 3 meals per day. The only thing I pay for things that I need personally, clothes, personal hygiene items, other food items that I prefer to eat and buy out of pocket for those things. When I was in the Army, only making around 14k my first year, most of my peers would go out every weekend and blow their entire pay checks on partying and alcohol.
Its all about you, your expenses and what you choose to do with it. I am also single so that helps. After 8 years in the Army I had about 90k saved up, most my peers always lived pay check to pay check. After coming back from a year in Iraq most soldiers would go out and buy that new truck they always wanted or something.
Last year I still took two nice vacations. Did a scuba diving trip. Spent at least 5k on each trip, stayed in nice hotels and ate good food on a exotic island. I just choose not too. I am happy with my 13 year honda accord for now: Also I tend to take advantage of credit card offers for the points and airline miles. I have also never paid a dime in interest.
I have gotten 2 iphones from points over the years, gift certificates for clothing stores, airline tickets. I love taking advantage of whats basically free money to me for things that I would buy anyway. I would appreciate any advice. I really have a goal of about 3 million by the time I am 50 to Sounds doable if I play my cards right. I am looking to open another roth or traditional IRA too. When it comes to investing I do not know much, I have my vanguard account, but its pretty much setup in target funds, index funds, mutual funds that sort of thing.
I do not have the skills or knowledge to actively be managing it. You are doing great! The program is free and easy to use. I will definitely get started on that with Personal Capital. Thanks for the quick reply, I see that your very active on your blog replying to most posters. The extra cash flow was a shock to me. I went from making 35k to 45k a year in the Army to mid 6 figures. I definitely need start investing more of my income into my investment accounts and other things.
I will continue to read all your other investment postings as well. Been sticking to mostly index funds, mutual funds and a few stocks of my liking. I just found your site earlier today and my eyes are so sore from reading, I have not read an article I have not enjoyed. The conversations here are so informative. So thank you again Sam, your hard work here is appreciated! Great site and information.
Budget Financial Independence
I appreciate all that have contributed. It has really got me thinking. I would appreciate some advice on my current situtation, and future goals. I am 37 years old, and currently working as an expat overseas. I put myself through school using student loans, of which I have paid off. I do not have any debt right now, but also do not have any investments or real estate. I have worked hard to save around K, in a savings account. I regret not taking advantage of Ks and other investment opportunities over the years, but am hoping that it is not too late.
It seems a waste that my money sits in a savings account, earning little to no interest. What types of investments are avaialble for someone in my position, and what do you recommend? Maybe I need to hire someone to help me invest and diversify. I would diversify into real estate and dividend paying stocks.