Author Topic: How to calculate time to FI using total net worth (i.e. home equity)  (Read 1706 times)


  • 5 O'Clock Shadow
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  • Posts: 67
  • Location: San Francisco, CA
Hi folks! Wondering if anyone has a quick and dirty suggestion on how to incorporate relatively illiquid assets into a time to FI calculation?

Because I'm relatively "house rich, cash poor" in San Francisco, basically, I calculate that I can reach FI in about 5 years based on existing cashflows and predicted FI annual spending.

However, I've been playing with 'cheating' and adding home equity to the equation. I mean, I know I could just cash out and invest the capital gains in the market (I'm not planning to buy another primary home, other than something in a very inexpensive market), but economically it looks way better to hold on to the house, even though renting it out wouldn't yield enough cash flows to easily reach FI much sooner than 4-5 years. I could always do a cash-out re-fi or get a HELOC to bolster "retirement" spending, but that seems un-mustachian.

Any ideas?


  • Stubble
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  • Posts: 179
  • Location: SF Bay Area
Re: How to calculate time to FI using total net worth (i.e. home equity)
« Reply #1 on: June 03, 2016, 07:13:34 PM »
Don't use home equity as part of your FI calculations, unless you are planning on selling or renting it.

You can goose the numbers if you like, but ultimately you would have to figure out some kind of cash flow from it to factor into your FI calculations.  For example, we don't factor the home equity we have into our calculation, instead it's part of the "what could we do if things don't work out" list.  For us that means selling and moving to cheaper housing if we need to down the road or if we decide to accelerate our timeline to FIRE.