The Money Mustache Community
General Discussion => Share Your Badassity => Topic started by: Goldielocks on February 04, 2015, 08:33:57 AM
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Well, I recalculated my savings percentage using MMM latest post formulae.
Turns out we are actually at 50% instead of 34%
I was not including mtg principal payments as savings, or company match as income. Feels good, I was wondering how others were managing to do it , and chalked it up to single income, family, high COL. Now I feel motivated even more.
This means 3 yrs or less to ERE for me is still a go, without downsizing. DH says that he was looking forward to being able to spend more in future, instead of ERE. Still some discussions to go.
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Congrats! That's a great savings percentage! Glad it is keeping you motivated. Keep chipping away at your hubby, keep the dream of ER alive and he will gradually see the light.
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I have looked but can't find the formula you are referring to. Do you mind pointing me in the right direction?
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I have looked but can't find the formula you are referring to. Do you mind pointing me in the right direction?
http://www.mrmoneymustache.com/2015/01/26/calculating-net-worth/ (http://www.mrmoneymustache.com/2015/01/26/calculating-net-worth/)
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so the savings percentage vs years to retirement really only works if you are starting at 0. so any year after that you have no clue b/c thats just a standard based on avg market returns.
What you really need to do is use a spreadsheet to calculate all your savings for retirement. (dont count mortgage principal) Then do a market avg return calc on it ... i refresh mine biannually with current account values. and i assume 3% inflation.
you can use this to project how much wealth you will accumulate.
then you can put a multiplier on it i use 3.5% SWR to figure out what that accumulated total gets me in annual spending
then all you have to worry about is how much do i spend. once the SWR column is greater than what you spend annually you can retire.
calculating savings rates is way way over played IMO.
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Good work! How are you coming up with 3 years? I've found savings percentage/years to retirement chart is good getting in the ballpark, but once you get closer to ER, 25 times your annual expenses in your portfolio (including your principal payments) helps one hone in on a timeline a little better.
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Good work! How are you coming up with 3 years? I've found savings percentage/years to retirement chart is good getting in the ballpark, but once you get closer to ER, 25 times your annual expenses in your portfolio (including your principal payments) helps one hone in on a timeline a little better.
Thanks for the questions about 3years. You are right that I was unclear. I will try to share more:
I did not use the shockingly simple math graph, but had to recreate the simple spreadsheet, ( link in that post) so I could start with a base amount. Eg midway on the chart.
Then I calculated the income the stash would generate, added it to my DH expected salary ($40k for conservative low salary, that is his part time hourly wage now), to see when the amount created matches our current level of spending including our full mortgage payment for near term.
I ran it including our home equity and excluding it
I then compared to the FIRESIM calc a I did a few month ago.
Conservative estimates from all are 3years,
normal risk tolerance aka pull $300k out of home equity and downsize, would allow FIRE now. (Or get a boarder or make $10k more per year).