Author Topic: They really should have a class in this stuff in high school...  (Read 2834 times)

sparrow13

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Hello!

This is my first post.  After reading the latest blog post my MMM I realized that after a month of reading this amazing blog, I had no idea how to apply it to my life.  Of course, saving most of my paycheck is a definite, as well as biking, cooking my own meals, etc.  All that stuff is self explanatory and makes perfect sense.  However, I then realized, how will my life differing from the Mustachian family change my FIRE?  I apologize for the long length in advance.

Major change number one.  The tiny home movement.  http://thetinylife.com/what-is-the-tiny-house-movement/

Background: People are building tiny houses, such as this http://assets.inhabitat.com/wp-content/blogs.dir/1/files/2012/06/tiny-tumbleweed-house-537x358.jpg for a small sum of money.  The cheapest I've heard about is 7,000 for materials found via craigslist and other cheap places.  Built on wheels to escape typical building restrictions and such this is an amazing (and definitely Mustachian) way of living.  After all who wouldn't want to be able to take their house with them while traveling (think RV but it's your primary residence).  Living frugally in such a limited amount of space is necessary.  But as evidenced by pictures found online, can still look and be amazing.  Money wise, little rent since I would be living on various RV lots that would cost roughly a third of what my place, which is about the size of a tiny home anyway, currently is.  Which is 1,395 per month btw.  Also no mortgage.  Built by myself and friends so I plan on spending 10,000 or so on the whole thing.  That said, a truck is a necessity in order to haul building supplies for the initial stages, as well as moving it around.  A good used truck from my findings would be about 15,000 or so though I have not looked into that extensively yet.  Now many of you are probably thinking, well that's all well and good for when you are young and don't have a family, which brings me to major change 2.

Major change number two:  I am childfree.  For those of you that don't know, a childfree (CF) person is someone who does not have children and will not have children for various reasons and is ok with it.  Not to be confused with childless, which is someone who wants children but does not currently have one for one reason or another.  Money wise this will leave me with far fewer expenses in the future, and since my SO and I be a family of two (plus a pet or two) there will be no reason to eventually buy a house or rent a bigger place. 

Less major change number three:  Unlike the mustachian family, during my working career I will be a journalist.  Meaning I'll make about 30,000 to 60,000 a year depending on a number of factors.  After looking through some other threads I realize this won't really be a problem in terms of how long it will take me to become financially independent but I suppose it's still relevant for calculations.

Now, you may be wondering why I am listing all of these.  It is simply due to the fact that I am horrible at math and cannot for the life of me figure out how much things will cost for someone who will effectively be financing herself and building her own mobile home compared to the Mustachians. (my SO and I will probably end up keeping our finances separate, so that is not a factor.)  What is a factor is the differences in taxes for single vs. married and childed vs. childfree among other things.

I am also still living off my parents until college is finished (though I am looking for a part time job to at least try and take control of my day to day finances) and student debt is not an issue since they are giving me the greatest gift a college student can receive, which is no student debt.  I still have two years, however i have been trying to figure out all the life expenses that come with being an adult.  Health care, taxes, food budgets, doctors appointments, etc etc etc.  And all I can think is, why the hell didn't my school even offer an economics class?  Or anything related to finances really.  So here I am trying to make sense of things before my time as a dependent is over and I'm thrust into the deep end.  I'd ask my parents, but they do not really live a Mustachian lifestyle (though after sending my mom a link to the blog she seems to like it and may be thinking about it).  So for all you veteran Mustachian's out there, I suppose my question is this, what is the best way for figuring out how to calculate my FIRE when my lifestyle will differ so differently from MMM?     

parsimonious

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Re: They really should have a class in this stuff in high school...
« Reply #1 on: July 20, 2014, 04:10:15 AM »
Just focus on getting a job / income stream. The most important thing at your age is to avoid lifestyle inflation and debt which it sounds like you are on track.

To calculate your FIRE date easily you divide your savings by your income. But you are a college student...so that's not going to give you are meaningful answer. Salary projections are hard since who knows what kind of career you be in. Major does not predict career all the time.

Not having kids is a great way to save money. I think my life is amazing and I don't regret my lack of kids, but I'm kinda lazy.
« Last Edit: July 20, 2014, 04:13:30 AM by parsimonious »

Rezdent

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Re: They really should have a class in this stuff in high school...
« Reply #2 on: July 20, 2014, 01:17:09 PM »
The 3 differences you listed will change your projected FI and FIRE dates in a positive direction.
Meaning, you will spend less, save more on the way there.  You will also spend less once you are there, so you will need less savings to cover your expenses.  You'll get a feel for the math as you go along plus there are calculators and apps you can use.

My DD did attend an economics class in High School.   However, it was geared to the 90% mentality and not much help to her.

Bottom line: the less you spend and the more you save the faster to FIRE.

arebelspy

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Re: They really should have a class in this stuff in high school...
« Reply #3 on: August 12, 2014, 05:25:58 PM »
what is the best way for figuring out how to calculate my FIRE when my lifestyle will differ so differently from MMM?   

How to calculate your FIRE date is the same for everyone.

Figure out your expected FIRE annual expenses.  Multiply by 25 or 33 (for a 4% or 3% WR, respectively).  That's the amount you need to save.

Subtract what you have saved now.  Divide by the annual amount you're saving.   That ignores compounding, but gives you a rough timeframe.

To get more fine, you can use calculators like Networthify - http://networthify.com/calculator/earlyretirement

Your FIRE date may be sooner than some (because no kid means less expenses in FIRE, probably), but later than others (some people make lots of money).  It's not too relevant to you, though, and you'll all have the same basic approach: save 25-33x your annual expenditures.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
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