/FRUGAL/ general

This is a series about spending LESS, saving MORE, and BUYING ASSETS. That's how (((they))) got to where they did and it's how {{{WE}}} are going to do the same.

In this post I'm sharing a classic from Mr Money Mustache - The Shockingly Simple Math behind Early Retirement. On a personal note, I retired at 25 years old and now raise white children. Anybody can do this, it's shockingly easy. Let's begin.

I have a surprise for you. It turns out that when it boils right down to it, your time to reach retirement depends on only one factor:

>Your savings rate, as a percentage of your take-home pay.

If you want to break it down just a bit further, your savings rate is determined entirely by these two things:

>How much you take home each year

>How much you can live on

While the numbers themselves are quite intuitive and easy to figure out, the relationship between these two numbers is a bit surprising.

If you are spending 100% (or more) of your income, you will never be prepared to retire, unless someone else is doing the saving for you (wealthy parents, social security, pension fund, etc.). So your work career will be Infinite.

If you are spending 0% of your income (you live for free somehow), and can maintain this after retirement, you can retire right now. So your working career can be Zero.

In between, there are some very interesting considerations. As soon as you start saving and investing your money, it starts earning money all by itself. Then the earnings on those earnings start earning their own money. It can quickly become a runaway exponential snowball of income.

As soon as this income is enough to pay for your living expenses, while leaving enough of the gains invested each year to keep up with inflation, you are ready to retire.

Other urls found in this thread:

mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/
twitter.com/NSFWRedditImage

If you drew this on a graph, it would not be a straight line, it would be nice curved exponential graph, like pic related.

If you save a reasonable percentage of your take-home pay, like 50%, and live on the remaining 50%, you’ll be Ready to Rock (aka “financially independent”) in a reasonable number of years – about 16 according to this chart and a more detailed spreadsheet* I just made for myself to re-create the equation that generated the graph.

So let’s take the graph above and make it even simpler. I’ll make some conservative assumptions for you, and you can just focus on saving the biggest percentage of your take-home pay that you can. The table below will tell you a nice ballpark figure of how many years it will take you to become financially independent.

Assumptions:

>You can earn 5% investment returns after inflation during your saving years
>You’ll live off of the “4% safe withdrawal rate” after retirement, with some flexibility in your spending during recessions.
>You want your ‘Stash to last forever, you’ll only be touching the gains, since this income may be sustaining you for seventy years or so. Just think of this assumption as a nice generous Safety Margin.

Here’s how many years you will have to work for a range of possible savings rates, starting from a net worth of zero.

It’s quite amazing, especially at the less Mustachian end of the spectrum. A middle-class family with a 50k take-home pay who saves 10% of their income ($5k) is actually better than average these days. But unfortunately, “better than average” is still pretty bad, since they are on track for having to work for 51 years.

But simply cutting cable TV and a few lattes would instantly boost their savings to 15%, allowing them to retire 8 years earlier!! Are cable TV and Starbucks worth having two income earners each work an extra eight years for???

The most important thing to note is that cutting your spending rate is much more powerful than increasing your income. The reason is that every permanent drop in your spending has a double effect:

it increases the amount of money you have left over to save each month
and it permanently decreases the amount you’ll need every month for the rest of your life

So your lifetime passive income goes up due to having a larger investment nest egg, and it more easily meets your needs, because you’ve developed more skill at living efficiently and thus you need less.

If want to retire within 10 years, the formula is right there in front of you – simply live on 35% of your take-home pay**, which is approximately what I did without even realizing it during my own younger years. The only reason Mustachians will remain a rare breed, is because this article will never appear in USA Today. (Or if it does, people will be too busy complaining about how it can’t be done, rather than figuring out how to do it)

**Source: mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

**Great Extreme Frugality websites:
>mrmoneymustache.com
>earlyretirementextreme.com (my favorite)

Buy the 28p Tesco brand spaghetti hoops instead of the leading brand!

nice start, but it's going to take much more than that. I recommend the 21-day makeover (pic related) from early retirement extreme.

As Dave Ramsey says, live like no one else, so you can live like no one else.

MASTER MONEY AND YOU WILL MASTER INFINITY.

Ding ding ding.

You expressed the ideas I've known for years, and they are so important but most people don't understand.

We're on the same wavelength

I'm also planning to do this once I get my first job in 1.5 years.

most people are extremely wasteful with their money. It is possible to live on only 12K per year EASILY. All surplus can be put into dividend paying investments (stocks, rentals, businesses, etc) or you can just retire and take back your TIME (the only asset we all have the same amount of.)

This is my jam, but living in Ireland you get fucking shafted on capital gains.

Was thinking about renting but tax take is massive.


Any Irish on here?

capital gains is the antithesis to this strategy. Go for INCOME not GROWTH. be a rent-seeker.

Unless the economy gets fucked at any point after you retire and then you're fucked

I own 3 properties, they will be paid off about 12 years.. when that happens, its almost pure profit from there. The only thing nice about living in Southern California is that I can charge a SHIT load for rent. I average about 2300 per house a month.

people still have to live somewhere, businesses will still function, crops will still have to be grown, and if you are a VALUE investor, you will still collect your dividends. In fact a market crash will allow you to buy up MORE dividend producing stocks, so long as you have liquid cash available.

Personally, I run an online company that sells survival gadgets, and this hurricane and chimpout season I have made bank. Chaos in the economy can be good for business if you position correctly

Mr money mustache is a fucking fraud. He inherited his money and bought a bunch of properties which he rents out.

He's this fake ass guru who has tips like "Don't use the clothes dryer" because it will cost you $20 over 10 years.

If he started at zero like most of us he would not be able to afford the shit he says.

this guy gets it. and as long as you are a buy-to-hold investor (all of you should be) the price of the houses don't matter. only the income stream.

classic example of a consmerist sheep good goy who will never own anything. Plenty of people started from nothing and were able to retire early or become rich, myself included.

You only need 250,000$ to retire. Save 25k for 10 years, and you're done. Free. No more wageslavery.

Living where I do, IRA means something a little different! No american/roth iras here. Myself & partner manage to live on 10,000 a year though & squirreling away a decent chunk of change every year. Not sure whats best to do with it... Government here doesn't want people having $ or growing their business, it just gives what amounts to state aid to corporations that pay fuck all into the pot.

I love how popular the frugal/living simply movement is getting its so freeing. Good to see someone sharing it.

can you own land? can you own anything? the absolute state of europe actually disgusts me sometimes.... I have a friend in the Netherlands and they send him a balance of every bank account he owns annually, just to remind him YOU HAVE NO PRIVACY GOY!

I didn't know about the inheritance part, but I always found his starting conditions a little too optimal for the average Joe:
>Couple living together working in tech/engineering both earning close to 100k.
>Save an enormous proportion of that because 30% of 200k is still middle class
>Profit
>Retire on dividends
>Ha ha, what's the big deal? Just stop drinking Starbucks, ha ha!

That's not to say he's wrong, just that he makes it look easy. I'm following his advice as best I can (20% to 401k, maxed out Roth IRA, rent out spare rooms in my house which I'm paying off ahead of schedule), but I'll be lucky to achieve financial within 15 years.

Oh yeah, on a 60k/year pre-tax salary

What I'm saying is that he did not start from nothing and he is giving advice like he did very little of it applies to those of us who did.

I did start from nothing and have got a quite a bit for myself and his advice is not helpful for anyone starting with nothing.

Yeah, it really isn't applicable unless you have a solid starting point and have been given money.

Saving money is very important but you will hardly retire that early. I had nothing and worked and finally got a job paying $50,000 a year in an affordable midwest city. Being super frugal I was able to save about 10k a year. 50k after taxes is like 34k. I was living super modestly where rent was less than 500 a month...lived there for 5 years during this time too.

Saved up enough money to put a big down payment on a house. I was basically living the life he was teaching about and it is not possible do what he is talking about without outside help

Who else /matching401k/ here?

>12k per year to make america great again
any regrets?

100% match
come at me goys

>Hey there I'm Mr. Shekel Payot
>I've got super easy advice for how you can retire at age 25 - It's only a two step process!
>(1) Be born wealthy
>(2) Don't get a job
>You too can be retarted..er..I mean retired. Oy Vey

What would be some good reading material?

>On a personal note, I retired at 25 years old and now raise white children.

Shut up retard

Getting lucky with bitcoin doesn’t make you an investment guru

Not to mention your equivalent to USA payroll taxes are way higher (USC and PRSI).

You get taxed 20% up to 34k euros and then 40% after that. All your gains after like 1200-1300 euros are 33%, doesn't matter if it is short term or long term........it's pure ass.

I thought it was $1 million that brings you to retiremrnt. Maybe I'm listening to too much conservative radio who shill reverse mortgages like a Catholic saying money relieves your sins.

100% match plus 500 stock options a year. Sitting on 2,000 options worth about 50k right now plus 80k in 401k.

t. Only been out of college for 5 years

Any good books on getting into rental property?

This thread belongs in /biz/.

Sage.

>26 years old
>only have 82k saved up, 50k of which is invested in stocks

Who /never going 2 retire/ here?

/biz/ is literally nothing but bitcoin threads

Specifically, cryptocurrency threads to pump and dump them

>mrmoneymustache.com
>earlyretirementextreme.com
>"your money or your life" by Vicki Robin
>"rich dad, poor dad" by Robert Kiyosaki
>IF you are in debt: "Total Money Makeover" by Dave Ramsey

You're a fucking sub 80 IQ retard then.

Literally had $0.00 to my fucking name 4 years ago with debtor parents. Followed MMM, jlcollinsnh, and others. Now on track to retire permanently @ 35 in the absolute worst case scenario, including another recession.

>git fucking gud

Ive owned zero bitcoin. i have a web business that makes money from sales and advertising.
1 million if you spend like an average american. 250,000 if you are /FRUGAL/
excellent progress
biz sucks

Dude just start a business and move somewhere else. Not sure about Ireland but I've heard that if you have a UK business and spend less than 90 days per year in the UK, you don't pay any taxes. That's why most people in Monaco are British. There are other ways to evade taxes with a business.

You're way ahead of the majority of the population

Finance guy here, my goal is to retire 20 years from now (I'm 25). I make 68k in total compensation each year and I plan to throw 40k after tax into the stock market each year. I'm able to do this because I live with my parents, when I start making more I can get an apartment. After 20 years I'll have well over a million dollars. If I kept that million in a stock index, I'd average 70k (in today's value of 70k) per year from the capital gains. Meanwhile the majority of millenials will still be flat broke wage slaving into their 70's.

Feels good

What is people's obsession with retirement? This constant working ones testicles off for some distant never-quite-fulfilled dream of doing nothing. What is wrong with working casual, renting, having no debt and living easy with constructive and lucrative hobbies? Jesus Christ. Money is not wealth. Wealth is something that you participate with in reality. Wealth is in experience. You do not have to own everything to enjoy it. What are you waiting for. Retirement can be had now. I've been retired since I was 21. The problem is it took me another nine years to realize it and enjoying it. If I had your 82K I would liquidate, buy a nice small farm in a poor sunny european country near some pleasant village and raise a family. Before my fucking body wears out too much to really get the most of it. What is it you are hoping to achieve with all this money and misery?

good work, but let me suggest: assuming you are white you should help your tribe. invest in pro-white companies or if you start your own business, hire whites. If you buy rentals, charge less rent and rent to whites.

this guy sells hopes and dreams so people keep coming back to the site for a fix.

I'm just focusing on trying to find a blue eyed wife friendo

You can also be a fucking liar like everyone larping as “retired” in this dumb ass thread.

>Why would people want to live independently?
Kill yourself bruh.

id rather have kids and not regret my entire life when its time to die