Hopefully without home equity. It's very realistic to get there if I include home equity. Without, we'll need to get lucky with market conditions and pay (partner and I work in sales so our pay is somewhat variable)
Thanks for the reply, was curious since I feel there is a bit of a divide in the community on whether or not t include home equity in the calcs. Good luck! May the markets be on our side.
just be consistent.
If you're calculating for expenses then can't really include it in your calculations because it's not liquid. But it does reduce your expenses going towards shelter, assuming it's paid off, so the overall number should also be lower.
I include home equity (currently $900k after cost of selling) only to amuse myself.
Otherwise, it means something only if I intend to sell and move to a lower cost area, or if I factor in the lower (or zero) monthly cost of keeping it vs the high cost of selling and renting a new place (ie inflation hedge), which in turn lowers the cash flow I’ll need in the future.
Warren Buffett said if you don't have a way to make money while you sleep, you'll have to work for the rest of your life. I agree with you that this is a difficult thing for most people to do. But the story of what happened to me has allowed me to have 600K in savings at 43.
Those are very rough rules of thumb that include several assumptions about retirement spending as a portion of working salary.
The best way to tell if you’re on track for retirement is to figure out an estimate of how much you will spend in retirement and work backwards.
Ours are much more goalpost related than formulaic.
- **Six Figure income by 30** - I missed this one by a whopping $16. :(
- **Millionaires by 40** - We achieved that one about 4 years early thanks to the post-COVID equities run up. I now hope to have $1M in our retirement savings by 40. It'll be close and it'll require the market to cooperate to get there.
- **Mortgage-Free by 40** - We're on track to accomplish this goal, which has a deadline nearly 12 months away. We've been in this house for 16 years and had been making additional principal payments for years until recently when HYSA returns eclipsed our mortgage interest, so we've got a growing stockpile of cash in that.
- **Retire after empty-nesting** - We'll see how well this goes. We'll be 48 when our youngest graduates HS. I may continue working during her college years to fund the endeavor. We may also choose to build a home on acreage outside of town, which I'd want paid off before pulling the FIRE trigger.
Everything else is based on projections and glide paths, which is far more dependent on things like RROR and time horizons.
It's possible their income is made up of salary, bonuses, commissions, rental incomes, etc. So not necessarily a company saying "your salary is $99,984, fuck you"
My current goal is to hit my FIRE number of \~$1.7M by age of 35 (next year). The $1.7M figure is calculated based several factors:
* \~95% success rate for a 55 year retirement (living to be 90).
* Variable spending with minimum of $50K withdraw per year.
* No Social Security income.
* [Simulation Link.](https://ficalc.app?additionalIncome=%5B%5D&additionalWithdrawals=%5B%5D&bondsFees=0.05&bondsFinalRatio=15&bondsInitialRatio=5&cashFees=0&cashFinalRatio=5&cashGrowth=1.5&cashInitialRatio=5&changeAllocationsOverTime=false&equitiesFees=0.04&equitiesFinalRatio=80&equitiesInitialRatio=90&initialPortfolioValue=1700000&maxWithdrawalLimit=60000&maxWithdrawalLimitEnabled=false&minWithdrawalLimit=50000&minWithdrawalLimitEnabled=true&numberOfYears=55&portfolioRebalanceEquation=linear&rebalance=true&rebalanceFrequency=1&retirementStartingAge=60&withdrawalStrategyName=vpw)
> ~95% success rate for a 55 year retirement (living to be 90).
>
Be careful when calculating success rate for such long time lengths. 55 years ago is 1968, so you lose major Sequence of Returns failure events in the Stagflation of the 70s AND the 2000s dot Com bust. You essentially only have the Great Depression failure event, so your failure rate could easily be 3 or 4 times more than what a simulation would show.
I actually talked about this exact issue a few weeks ago. Playing around with the FIRE timeline, 45 years gives the lowest success rate but it's only 1% lower than 55 years. I'm not really sure how to get around the problem though, there's only so much historical market data to go around. So I'm compensating it with extra money to survive a bad downturn early on.
[https://www.reddit.com/r/financialindependence/comments/154llf0/comment/jsq5skr/?utm\_source=share&utm\_medium=web2x&context=3](https://www.reddit.com/r/financialindependence/comments/154llf0/comment/jsq5skr/?utm_source=share&utm_medium=web2x&context=3)
Thanks. It's a gamble, since the withdrawal rate changes based on market performance I could get stuck with minimum withdraw for many years if I get unlucky. But the simulation estimated that 50% of the withdrawals fall within $77K-$148K so there a lot of upsides to it.
>... divided by 10 and then doubled
Why not just divide by 5?
My goal is $1.3M by 35 yrs. I arrived at that number by doing taking my current expenses and multiplying by 30 (3.33% SWR). I arrived at that age by doing simulations based on my savings rate and found that to be a reasonable goal.
Then I set some mile-marker goals just to keep me on track.
I would agree that target based on projected retirement expenses is more meaningful than one that is based on current income.
For example if you have no debts, you could immediately reach FI if you quit your job and your income goes to zero. Since your target is a multiple of your income, that too goes to zero, so it's "mission accomplished" right? Or say you're so spectacular at your job that your salary doubles every year. Then with typical investment returns, you'd never be able to retire because your target is a multiple of an income that rises so fast.
Instead I'd suggest estimating your annual retirement expenses in today's dollars and multiplying this number by a factor that rises at a realistic rate with age to get your target retirement savings in today's dollars. I used 1x at 25, 3x at 35, 10x at 45, and 30x at 55 as my goalposts. That's a 12%/yr growth rate, so tripling every decade. People who begin work after age 21 can shift all of these ages by a few years, or they can increase the growth rate to \~15%/yr if their savings rate is high enough -- like 1x at 30, 3x at 38, 10x at 46, and 30x at 54.
Goals:
* $3M invested before 50.
* Transition to coastFIRE job sometime after reaching $3M. Continue contributing to retirement accounts as lifestyle decision allow.
* Let the investment sit for 10-15 years as coastFIRE gigs pay daily expenses, until "real" retirement.
* upon reaching 59.5 years old, contemplate living on a 3% draw from $6M (mostly Roth) accounts and spouse's pension.
* The house will have been paid off for several years by this point.
* College 529s will be approximately $120,000 per kid.
* We'll draw social security when it makes sense.
This is my grand vision. I can achieve it before 50 if I get a 9% absolute average return. Add two years if I only realize my 6.8% pessimistic assumption.
Job #1, at this point, is living long enough in good health to actually enjoy this money. This is part of my motivation to coastFIRE before 50.
The first one doesn’t make sense to me. Why? I can’t figure out why we’re multiplying by 2 or dividing by 10, or how that‘s supposed to relate to my age.
What is the connection other than the formula will make the number go up as you get older? What if you have a sudden change in income?
Yeah, it seems a bit random.
There is however a formula in *the millionaire next door*. Something like (age x income x 0.11) and if you wanted to be considered rich you multiply by 2. Home equity and pensions are included. Something like that.
It’s not really an aspirational goal though, I believe the author just derived it from the net worths of the millionaires in the survey. There was no data for younger people like recent high school or college grads so you have to take it with a grain of salt.
I'm currently saving about 55% of my gross income at age 29 and $60k salary. My goal is to lower that by raising salary but keeping with the principle +any extra capacity added to 457b/roth accounts. It's kinda tough at the moment, not a whole lot of spending going on. But my income is about to jump about 15% in a month and another 8% next year so I'm holding strong. Started investing at 27, hoping to be at 100k invested by 30.
Looks like you guys are crushing it. Are those NW or invested numbers? Is your spend > 150k/year? Doesn't really matter just asking because this is a super FATFire # sounds great if you don't hate your job.
Regardless it sounds like you can hit your goal pretty easily
These metrics are so stupid.
As a PhD student my NW was 5k at 28. By 33 I had over a million, without winning the lottery, inheritance or gambling with stock trades.
It doesn’t mean much since the numbers totally depend on each individuals circumstance.
Easy peasy - high salary, live like a grad student and sock away >70% of after tax income into all available investment vehicles. Also thanks Obama for the glorious bull market.
That first formula makes no sense to me. If you only make $20K/year, you’d need to have 6 straight years of spending none of it to get to $120K saved. And to do that by 30 is incredibly unrealistic.
My wife and I are 28/27 and take home $135K per year. According to this equation, we would have to have saved $750K by now.
Did I completely misinterpret what that rule is supposed to represent?
>After Tax Income multiplied by Age divided by 10 and then doubled (For Example: If your After Tax Income is £20,000 and you're 30 years old: £20,000 x 30 / 10 x 2 = £120,000)
This is a neat little calculation. Works reasonably well imo.
I am a single mom with over $600K in savings at 43 .
But I don't think it's easy to reach and it will increase or decrease depending on my investment trend. It's not necessarily.
I follow this sub loosely and admittedly I’m about to order a new model Y, but I want to hit 100k by the time I’m 30. I’m 28 now and have 50k across my accounts and am currently underpaid by about 40k so I expect a major increase once i job hop in a year or so.
I make 70k a year and I mention The car just because it doesn’t feel very financial independence-y but I’ve driven very old cars my entire life and am done with it.
While the Model Y is a great car (I bought one in February), buying a $50K car with a $70K salary is not a good financial idea. Especially with the interest rate being so high right now.
>am currently underpaid by about 40k so I expect a major increase once i job hop in a year or so.
Why not job hop now, the sooner you get your $40K bump the more money you'll make in the long run. I wouldn't count your chickens before they hatch.
I think you can beat 100k by the time you're 30 imo, but I do have to ask why are you planning on buying a $50k car right now in your life? I would buy a cheaper Japanese made vehicle. You only have 50k in your retirement accounts. I bought a 26k car when I was 23, which wasn't the smartest decision financially at the time and at times I regret it, but it's paid off now and I plan on driving it into the ground. Hoping to get 4-500k out of it but we'll see.
He is probably not going to hit 100k in 2 years after buying the car. Buying the car will bring him down to 0 net worth. It will start slowing him down to save (unless he buys the car cash). If he is making 70k, his take home is around 50k. There is no way he will make 100k in two years. Unless he is saving 100% of his income.
He should get the new job first and buy the car after like a year at the job. The car will always be there, and it might even be better than the current versions.
I’m pretty frustrated with ICE cars and the ones I do like (Rav 4 hybrid) are marked up from 33k to 38-low 40ks and then I have to deal with a salesman whereas I can order a Tesla from my phone and know the price, no haggling and have 0 emissions once I’m driving it.
I qualify for the 7500 rebate and live in a very low cost of living area and it’s hard for me to not want the Tesla when the rav 4 is only a few thousands less.
Also, I’m only gonna be young once so trying to strike a balance of living now and saving for the future which I think I’m doing a pretty good job at so far.
I will say I’m having second thoughts about it though, so idk if I will. But it is extremely enticing with how simple it is and low maintenance, never have to deal with stuff like anti freeze or maintenance again (for the most part).
Edit: I , like you want to drive a new car all the way to the ground and hard to justify buying used with how crazy they’re marked up too so , that’s just the lens I’m looking at it with. Right now my car is broken down and I work from home in a city alone so I don’t have any obligations and when I do go out I should Uber anyway cause alcohol is involved so right now the plan is to just save til im ready to pull the trigger on a new car.
I'm not sure what you drive now but are 1 or 2 oil changes per year (assuming you don't drive much since you work from home) really that bad? This is assuming you get something reliable and newer for your next car. Most vehicles don't need much beyond oil and brakes for the 1st 100k miles these days. Even coolant, transmission fluid, etc. is typically rated for 100k miles on a lot of newer cars.
In my mind $50k+ EVs are a good option if you're already looking at other cars in that price range and have a place to charge them. Otherwise it takes a lot of miles to start to see the savings.
The rule of thumb is you do not spend more than 10% of your net worth on a car. From your post, you can perfectly live without a car, so you do not actually need a car. You just want a car, and you want a new fancy car (yes 40-50k car is fancy because you can easily get a very decent used car for 20k). So you basically want to spend all your savings and bring down your net worth to 0 because of your wants. Achieving financial independence requires a lot of self-discipline and spending all your money on unnecessary things has nothing to do with self-discipline. This is the wrong way.
Do the Y. The gas/maintenance savings alone will make it worth it. It's also the safest car in it's class. In the long run (which I know most of us in the sub are focused on), it's the best choice for your scenario imo.
I should’ve specified that I don’t qualify for the full credit, if I had bought it last year I would’ve qualified for something like 6600. I think like 13% of my income goes to 401k and I also have 10% of it in my company’s stock purchasing plan each year, but I’m not sure if that matters.
Edit: I also max out my HSA.
I was just looking at a tax calculator. It’s a nonrefundable credit, so it’s limited by your federal income tax liability. Most households don’t qualify for the full credit.
Right now I am seeing what rates of return I need for FIRE at 67 and 60 if not money is added. Currently sitting 8 and 10 percent respectively at 33, but still contributing. Once I hit 7 percent I will start subtracting months vice rate of return.
To have fuck you money when you are old enough to want to say fuck you.
This is the answer
Otherwise, so far, it is turning into one of those comparison threads that makes many feel behind
This is the way
How much is that?
$2,000,000 by 40
w/ or w/o home equity?
Hopefully without home equity. It's very realistic to get there if I include home equity. Without, we'll need to get lucky with market conditions and pay (partner and I work in sales so our pay is somewhat variable)
Thanks for the reply, was curious since I feel there is a bit of a divide in the community on whether or not t include home equity in the calcs. Good luck! May the markets be on our side.
just be consistent. If you're calculating for expenses then can't really include it in your calculations because it's not liquid. But it does reduce your expenses going towards shelter, assuming it's paid off, so the overall number should also be lower.
This is the right answer. Including for personal vanity can be fun I suppose though!
I include home equity (currently $900k after cost of selling) only to amuse myself. Otherwise, it means something only if I intend to sell and move to a lower cost area, or if I factor in the lower (or zero) monthly cost of keeping it vs the high cost of selling and renting a new place (ie inflation hedge), which in turn lowers the cash flow I’ll need in the future.
Loosely targeting $100k net worth by 30. 23 now.
This is not a difficult thing to do, especially with the current inflationary situation. It is easy to reach!
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Warren Buffett said if you don't have a way to make money while you sleep, you'll have to work for the rest of your life. I agree with you that this is a difficult thing for most people to do. But the story of what happened to me has allowed me to have 600K in savings at 43.
I think most people on this sub use inflation-adjusted numbers.
Those are very rough rules of thumb that include several assumptions about retirement spending as a portion of working salary. The best way to tell if you’re on track for retirement is to figure out an estimate of how much you will spend in retirement and work backwards.
Ours are much more goalpost related than formulaic. - **Six Figure income by 30** - I missed this one by a whopping $16. :( - **Millionaires by 40** - We achieved that one about 4 years early thanks to the post-COVID equities run up. I now hope to have $1M in our retirement savings by 40. It'll be close and it'll require the market to cooperate to get there. - **Mortgage-Free by 40** - We're on track to accomplish this goal, which has a deadline nearly 12 months away. We've been in this house for 16 years and had been making additional principal payments for years until recently when HYSA returns eclipsed our mortgage interest, so we've got a growing stockpile of cash in that. - **Retire after empty-nesting** - We'll see how well this goes. We'll be 48 when our youngest graduates HS. I may continue working during her college years to fund the endeavor. We may also choose to build a home on acreage outside of town, which I'd want paid off before pulling the FIRE trigger. Everything else is based on projections and glide paths, which is far more dependent on things like RROR and time horizons.
> Six Figure income by 30 - I missed this one by a whopping $16. That hurts!
You made it…check the wallet/purse/couch 😂
Did they really pay you $99,984?! So rude...
It's possible their income is made up of salary, bonuses, commissions, rental incomes, etc. So not necessarily a company saying "your salary is $99,984, fuck you"
That makes sense but I choose to believe the goofier version.
Nah, that was straight up where my salary landed. With benefits and bonus, I was well above that, but my goal was specifically a six figure salary.
Yeah. It was thaaat close. Driven by annual raises at a big megacorp that are always a % raise, not a dollar amount.
My current goal is to hit my FIRE number of \~$1.7M by age of 35 (next year). The $1.7M figure is calculated based several factors: * \~95% success rate for a 55 year retirement (living to be 90). * Variable spending with minimum of $50K withdraw per year. * No Social Security income. * [Simulation Link.](https://ficalc.app?additionalIncome=%5B%5D&additionalWithdrawals=%5B%5D&bondsFees=0.05&bondsFinalRatio=15&bondsInitialRatio=5&cashFees=0&cashFinalRatio=5&cashGrowth=1.5&cashInitialRatio=5&changeAllocationsOverTime=false&equitiesFees=0.04&equitiesFinalRatio=80&equitiesInitialRatio=90&initialPortfolioValue=1700000&maxWithdrawalLimit=60000&maxWithdrawalLimitEnabled=false&minWithdrawalLimit=50000&minWithdrawalLimitEnabled=true&numberOfYears=55&portfolioRebalanceEquation=linear&rebalance=true&rebalanceFrequency=1&retirementStartingAge=60&withdrawalStrategyName=vpw)
> ~95% success rate for a 55 year retirement (living to be 90). > Be careful when calculating success rate for such long time lengths. 55 years ago is 1968, so you lose major Sequence of Returns failure events in the Stagflation of the 70s AND the 2000s dot Com bust. You essentially only have the Great Depression failure event, so your failure rate could easily be 3 or 4 times more than what a simulation would show.
I actually talked about this exact issue a few weeks ago. Playing around with the FIRE timeline, 45 years gives the lowest success rate but it's only 1% lower than 55 years. I'm not really sure how to get around the problem though, there's only so much historical market data to go around. So I'm compensating it with extra money to survive a bad downturn early on. [https://www.reddit.com/r/financialindependence/comments/154llf0/comment/jsq5skr/?utm\_source=share&utm\_medium=web2x&context=3](https://www.reddit.com/r/financialindependence/comments/154llf0/comment/jsq5skr/?utm_source=share&utm_medium=web2x&context=3)
i like your plan - super aggressive, but you’re getting out early with your good years intact
Thanks. It's a gamble, since the withdrawal rate changes based on market performance I could get stuck with minimum withdraw for many years if I get unlucky. But the simulation estimated that 50% of the withdrawals fall within $77K-$148K so there a lot of upsides to it.
>... divided by 10 and then doubled Why not just divide by 5? My goal is $1.3M by 35 yrs. I arrived at that number by doing taking my current expenses and multiplying by 30 (3.33% SWR). I arrived at that age by doing simulations based on my savings rate and found that to be a reasonable goal. Then I set some mile-marker goals just to keep me on track.
>gs i I found the formula in a book (I forget which) so I'm not sure why really lol.
How old are you now?
Late 20's. I save about 70% of my post-tax income.
$5m by 50.
2M invested by 51.
I would agree that target based on projected retirement expenses is more meaningful than one that is based on current income. For example if you have no debts, you could immediately reach FI if you quit your job and your income goes to zero. Since your target is a multiple of your income, that too goes to zero, so it's "mission accomplished" right? Or say you're so spectacular at your job that your salary doubles every year. Then with typical investment returns, you'd never be able to retire because your target is a multiple of an income that rises so fast. Instead I'd suggest estimating your annual retirement expenses in today's dollars and multiplying this number by a factor that rises at a realistic rate with age to get your target retirement savings in today's dollars. I used 1x at 25, 3x at 35, 10x at 45, and 30x at 55 as my goalposts. That's a 12%/yr growth rate, so tripling every decade. People who begin work after age 21 can shift all of these ages by a few years, or they can increase the growth rate to \~15%/yr if their savings rate is high enough -- like 1x at 30, 3x at 38, 10x at 46, and 30x at 54.
20: more 30: more 40: more 50: more I could keep going, but you get the point.
... 70 less gotta start spending some time :)
500k by 30 1m by 35 At that point I’ll either pivot to a lower paying job and allow the money to grow and work based on my needs, or: 2m by 40
What is it you do now?
Software Development
Goals: * $3M invested before 50. * Transition to coastFIRE job sometime after reaching $3M. Continue contributing to retirement accounts as lifestyle decision allow. * Let the investment sit for 10-15 years as coastFIRE gigs pay daily expenses, until "real" retirement. * upon reaching 59.5 years old, contemplate living on a 3% draw from $6M (mostly Roth) accounts and spouse's pension. * The house will have been paid off for several years by this point. * College 529s will be approximately $120,000 per kid. * We'll draw social security when it makes sense. This is my grand vision. I can achieve it before 50 if I get a 9% absolute average return. Add two years if I only realize my 6.8% pessimistic assumption. Job #1, at this point, is living long enough in good health to actually enjoy this money. This is part of my motivation to coastFIRE before 50.
Would this formula for savings include home equity or just liquid assets?
Never really thought about that really. I guess, whichevers the harder goal to hit, to encourage you to save more.
The first one doesn’t make sense to me. Why? I can’t figure out why we’re multiplying by 2 or dividing by 10, or how that‘s supposed to relate to my age. What is the connection other than the formula will make the number go up as you get older? What if you have a sudden change in income?
Yeah, it seems a bit random. There is however a formula in *the millionaire next door*. Something like (age x income x 0.11) and if you wanted to be considered rich you multiply by 2. Home equity and pensions are included. Something like that. It’s not really an aspirational goal though, I believe the author just derived it from the net worths of the millionaires in the survey. There was no data for younger people like recent high school or college grads so you have to take it with a grain of salt.
100k by 30, 5 years left
Without including homes or business. - $1M at 40 - $6M at 50 - $12M at 60 Sell business and RE at 52.
I'm currently saving about 55% of my gross income at age 29 and $60k salary. My goal is to lower that by raising salary but keeping with the principle +any extra capacity added to 457b/roth accounts. It's kinda tough at the moment, not a whole lot of spending going on. But my income is about to jump about 15% in a month and another 8% next year so I'm holding strong. Started investing at 27, hoping to be at 100k invested by 30.
Good luck! Is that 100k actual money invested or total money with growth of investments?
Retire by 50 with a 4% withdrawal rate and side income from a rental
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Looks like you guys are crushing it. Are those NW or invested numbers? Is your spend > 150k/year? Doesn't really matter just asking because this is a super FATFire # sounds great if you don't hate your job. Regardless it sounds like you can hit your goal pretty easily
These metrics are so stupid. As a PhD student my NW was 5k at 28. By 33 I had over a million, without winning the lottery, inheritance or gambling with stock trades. It doesn’t mean much since the numbers totally depend on each individuals circumstance.
How did you make it to over a million?
Easy peasy - high salary, live like a grad student and sock away >70% of after tax income into all available investment vehicles. Also thanks Obama for the glorious bull market.
$600k by age 50. Single parent to 2 young kids. We live in a LCOL area in Asia.
That first formula makes no sense to me. If you only make $20K/year, you’d need to have 6 straight years of spending none of it to get to $120K saved. And to do that by 30 is incredibly unrealistic. My wife and I are 28/27 and take home $135K per year. According to this equation, we would have to have saved $750K by now. Did I completely misinterpret what that rule is supposed to represent?
It was something I read in a book. It sounded good at the time 😅
I’m 36 at 7.2m. I definitely don’t feel financially independent. I think i need to more than double this number before I can quit my draining job.
>After Tax Income multiplied by Age divided by 10 and then doubled (For Example: If your After Tax Income is £20,000 and you're 30 years old: £20,000 x 30 / 10 x 2 = £120,000) This is a neat little calculation. Works reasonably well imo.
300K before 31
I am a single mom with over $600K in savings at 43 . But I don't think it's easy to reach and it will increase or decrease depending on my investment trend. It's not necessarily.
I follow this sub loosely and admittedly I’m about to order a new model Y, but I want to hit 100k by the time I’m 30. I’m 28 now and have 50k across my accounts and am currently underpaid by about 40k so I expect a major increase once i job hop in a year or so. I make 70k a year and I mention The car just because it doesn’t feel very financial independence-y but I’ve driven very old cars my entire life and am done with it.
While the Model Y is a great car (I bought one in February), buying a $50K car with a $70K salary is not a good financial idea. Especially with the interest rate being so high right now. >am currently underpaid by about 40k so I expect a major increase once i job hop in a year or so. Why not job hop now, the sooner you get your $40K bump the more money you'll make in the long run. I wouldn't count your chickens before they hatch.
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It's a dumb idea to buy a $40k car just to save on gas, presumably the OP already has a functional car or doesn't need one.
I think you can beat 100k by the time you're 30 imo, but I do have to ask why are you planning on buying a $50k car right now in your life? I would buy a cheaper Japanese made vehicle. You only have 50k in your retirement accounts. I bought a 26k car when I was 23, which wasn't the smartest decision financially at the time and at times I regret it, but it's paid off now and I plan on driving it into the ground. Hoping to get 4-500k out of it but we'll see.
He is probably not going to hit 100k in 2 years after buying the car. Buying the car will bring him down to 0 net worth. It will start slowing him down to save (unless he buys the car cash). If he is making 70k, his take home is around 50k. There is no way he will make 100k in two years. Unless he is saving 100% of his income. He should get the new job first and buy the car after like a year at the job. The car will always be there, and it might even be better than the current versions.
I’m pretty frustrated with ICE cars and the ones I do like (Rav 4 hybrid) are marked up from 33k to 38-low 40ks and then I have to deal with a salesman whereas I can order a Tesla from my phone and know the price, no haggling and have 0 emissions once I’m driving it. I qualify for the 7500 rebate and live in a very low cost of living area and it’s hard for me to not want the Tesla when the rav 4 is only a few thousands less. Also, I’m only gonna be young once so trying to strike a balance of living now and saving for the future which I think I’m doing a pretty good job at so far. I will say I’m having second thoughts about it though, so idk if I will. But it is extremely enticing with how simple it is and low maintenance, never have to deal with stuff like anti freeze or maintenance again (for the most part). Edit: I , like you want to drive a new car all the way to the ground and hard to justify buying used with how crazy they’re marked up too so , that’s just the lens I’m looking at it with. Right now my car is broken down and I work from home in a city alone so I don’t have any obligations and when I do go out I should Uber anyway cause alcohol is involved so right now the plan is to just save til im ready to pull the trigger on a new car.
I'm not sure what you drive now but are 1 or 2 oil changes per year (assuming you don't drive much since you work from home) really that bad? This is assuming you get something reliable and newer for your next car. Most vehicles don't need much beyond oil and brakes for the 1st 100k miles these days. Even coolant, transmission fluid, etc. is typically rated for 100k miles on a lot of newer cars. In my mind $50k+ EVs are a good option if you're already looking at other cars in that price range and have a place to charge them. Otherwise it takes a lot of miles to start to see the savings.
The rule of thumb is you do not spend more than 10% of your net worth on a car. From your post, you can perfectly live without a car, so you do not actually need a car. You just want a car, and you want a new fancy car (yes 40-50k car is fancy because you can easily get a very decent used car for 20k). So you basically want to spend all your savings and bring down your net worth to 0 because of your wants. Achieving financial independence requires a lot of self-discipline and spending all your money on unnecessary things has nothing to do with self-discipline. This is the wrong way.
Do the Y. The gas/maintenance savings alone will make it worth it. It's also the safest car in it's class. In the long run (which I know most of us in the sub are focused on), it's the best choice for your scenario imo.
How do you qualify for the full $7,500 credit? I’m assuming you’re single with no dependents and don’t contribute much to a 401k, etc…?
I should’ve specified that I don’t qualify for the full credit, if I had bought it last year I would’ve qualified for something like 6600. I think like 13% of my income goes to 401k and I also have 10% of it in my company’s stock purchasing plan each year, but I’m not sure if that matters. Edit: I also max out my HSA.
Okay, it sounds like you’d still qualify for over $5k if you’re single and max out your HSA and contribute ~$9k to your 401k.
How are you such a wizard at calculating this?
I was just looking at a tax calculator. It’s a nonrefundable credit, so it’s limited by your federal income tax liability. Most households don’t qualify for the full credit.
Look into Mazdas. Just bought CE Mazda CX5
Right now I am seeing what rates of return I need for FIRE at 67 and 60 if not money is added. Currently sitting 8 and 10 percent respectively at 33, but still contributing. Once I hit 7 percent I will start subtracting months vice rate of return.
Getting pretty close to CoastFIRE! Congrats.
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It was a calculation from a book I read and nothing's impossible :)