@@TableForOne2025 no worries there and yes great advice. My list of interests and activities is nearing 50 at this point. I’ll be more busy in retirement than while in career mode. Lol. Can’t wait!
Passive income is the answer didn’t really know about FIRE 4 years ago but refinanced my home invested in real estate 4 years later approaching double my former salary with passive income. 40 years to get out of the rat race too long for me this year at age 50 instead (August) depends on how hard anyone wants to work on it and how much they are prepared to learn. Your video is sound for the majority of people who want to take next to no risk.
I would like to see a video that compares investing the extra payment in a taxable brokerage account vs paying down the mortgage. 30 year vs 15 year. Considers the average person moves every 7 years. How much interest would be payed vs how much gains would be made? How long would it take to have a lump sum to pay the mortgage? Considers taxes paid at the end of the term of the brokerage account. I’m sure there are more things to consider than above.
Big fan of the channel, but there's one thing I don't quite understand here. Perhaps I'm calculating something wrong or misunstanding, but here it is: Using your calculations: An example 50k income and 50% savings rate (25k yearly), mixed with all 3 of your strategies (cash buffer, flexible spending, and guard rails) mean FI would be in an average of 5.9 years. What I don't understand is how that's possible with such low nestegg numbers. Using that 50% savings rate (25k yearly), at an 8% investment earnings rate you'd have around 193k. At 15% earnings rate you'd have 238.5k. At 25% you'd have 322k. What I don't understand is how cash buffers, flexible spending, and guard rails allow even 322k to be enough for the above example, unless you rely on an incredibly large withdraw rate (near 15%) in the above example. I'm assuming I'm doing something wrong or misunstanding, but would really love to see this covered in a future video, giving full examples of an average case using these systems and a breakdown of what year to year life/withdrawals would be. Or an explanation here if it's something I'm obviously doing wrong. Thanks for making great content!
When your home price goes up, your tax bill also goes up. It isn't just the rent that goes up. Inflation that increases home prices means maintenance also goes up
That's true! Maintenance, taxes, insurance, utilities, and optional renovation costs will all go up. Though the increase in raw dollar terms is (usually) not quite as much as the increase in rental costs (at least on a consistent basis), unless you find some good deals or are also taking advantage of some other cost saving techniques (such as geographic arbitrage). General rules of thumb would suggest that between regular maintenance (~1% of home value per year), insurance (~$35 per month for every $100k of coverage according to Zillow), property taxes (~0.5% - 2.25% of home value per year), and utilities (figure $250-$500 per month depending on the size and energy efficiency of the home and whether or not you consider internet a utility) you'd be paying something in the ballpark of $800 to $1,500 a month for a $500k home before utilities (which obviously would also have to be paid on a rental, though depending on the rental in question they may be lower or higher than the home) and $1,050 to $2,000 a month including utilities. Every homeowner is going to have a different experience depending on how much breaks on their home, where they live, whether they wish to renovate more or less often/extravagantly, but these are fairly typical ballpark estimates. You can certainly find places to rent for these amounts in some locations, but it isn't a guarantee. And if your rental costs $2,500+ a month (not uncommon if you're renting the equivalent of a $500k home), the difference in expenses over the years when it is increasing annually at ~3% is larger than the same 3% increase on your $1,000-$2,000 ongoing home-related bills. Not to mention the fact that you might be able to DIY some projects on the home to lower things like the maintenance bills. Or even improve the home over time to make it more energy efficient if you're so inclined. So (again usually) there is still a net benefit. But you're absolutely right in that it wouldn't be a 100% cost reduction from the rental scenario :) Thanks for the comment!
You should change technique #1 to “save like there is a tomorrow” instead of “save like there’s no tomorrow”.
Haha, fair point. I suppose if there really was "no tomorrow" saving wouldn't be the biggest concern ;)
I’ve done it. FIRE has arrived. I am resigning a week from today.
Congratulations
Congratulations!!! Make sure to keep yourself busy and content otherwise it can get OLD real quick 😁
That's awesome, Cato! Congratulations 🎉
That's very true!
@@TableForOne2025 no worries there and yes great advice. My list of interests and activities is nearing 50 at this point. I’ll be more busy in retirement than while in career mode. Lol. Can’t wait!
Important information especially for those who haven't even entered The RAT RACE. If you can avoid the race before it starts, your off to a good start
An excellent point! Getting off on the right foot is so helpful :)
The point of the 4% rule is that it includes room for inflation! So it's still only necessary to collect a nestegg of 25 * annual spending
Start early contribute often. Have a plan and stick to it.
Couldn't have said it any better myself!
I don’t know how im the first viewer. It’s crazy I’m 23 and I needed this!!!
Glad you found the video worthwhile :)
This is a great time to get started on FIRE. You're young. I didn't grow a brain until I was 30.
Passive income is the answer didn’t really know about FIRE 4 years ago but refinanced my home invested in real estate 4 years later approaching double my former salary with passive income. 40 years to get out of the rat race too long for me this year at age 50 instead (August) depends on how hard anyone wants to work on it and how much they are prepared to learn. Your video is sound for the majority of people who want to take next to no risk.
Living off dividends sounds more attractive than some generic 4 percent rule. Big fan of dividend growth investing
Live on less. Then you can escape much sooner regardless of what your portfolio is.
If I have 10k do I use it to pay off my credit cards and my truck then start saving for investments
Nice work buddy, your videos are always great, thank you
Myself Aditya from India
Glad you like them!
Outstanding! Thinking about and comparing costs before and after FI usually has the effect of convergence of those costs. That’s the secret.
RULE OF 25 OTHERWISE KNOWN AS THE 4% RULE FIRE MOVMENT .
I would like to see a video that compares investing the extra payment in a taxable brokerage account vs paying down the mortgage. 30 year vs 15 year. Considers the average person moves every 7 years. How much interest would be payed vs how much gains would be made? How long would it take to have a lump sum to pay the mortgage? Considers taxes paid at the end of the term of the brokerage account. I’m sure there are more things to consider than above.
I decided my retirement plan is "freedom 155". I'll probably die on the job, never retiring, which is ok, since I have nothing better to do anyway.
Great tips Daniel. Thanks!
You bet! Glad it was helpful :)
Big fan of the channel, but there's one thing I don't quite understand here. Perhaps I'm calculating something wrong or misunstanding, but here it is:
Using your calculations: An example 50k income and 50% savings rate (25k yearly), mixed with all 3 of your strategies (cash buffer, flexible spending, and guard rails) mean FI would be in an average of 5.9 years. What I don't understand is how that's possible with such low nestegg numbers. Using that 50% savings rate (25k yearly), at an 8% investment earnings rate you'd have around 193k. At 15% earnings rate you'd have 238.5k. At 25% you'd have 322k. What I don't understand is how cash buffers, flexible spending, and guard rails allow even 322k to be enough for the above example, unless you rely on an incredibly large withdraw rate (near 15%) in the above example.
I'm assuming I'm doing something wrong or misunstanding, but would really love to see this covered in a future video, giving full examples of an average case using these systems and a breakdown of what year to year life/withdrawals would be. Or an explanation here if it's something I'm obviously doing wrong.
Thanks for making great content!
Great Video. Hit the nail!
Glad you liked it!
the future can be changed
Another banger brah! 🔥
Thanks!
Third isn't bad and yeah I need this video from tx
Absolutely! I'm glad to hear that you got something out of the video :)
When your home price goes up, your tax bill also goes up. It isn't just the rent that goes up. Inflation that increases home prices means maintenance also goes up
That's true! Maintenance, taxes, insurance, utilities, and optional renovation costs will all go up. Though the increase in raw dollar terms is (usually) not quite as much as the increase in rental costs (at least on a consistent basis), unless you find some good deals or are also taking advantage of some other cost saving techniques (such as geographic arbitrage).
General rules of thumb would suggest that between regular maintenance (~1% of home value per year), insurance (~$35 per month for every $100k of coverage according to Zillow), property taxes (~0.5% - 2.25% of home value per year), and utilities (figure $250-$500 per month depending on the size and energy efficiency of the home and whether or not you consider internet a utility) you'd be paying something in the ballpark of $800 to $1,500 a month for a $500k home before utilities (which obviously would also have to be paid on a rental, though depending on the rental in question they may be lower or higher than the home) and $1,050 to $2,000 a month including utilities. Every homeowner is going to have a different experience depending on how much breaks on their home, where they live, whether they wish to renovate more or less often/extravagantly, but these are fairly typical ballpark estimates.
You can certainly find places to rent for these amounts in some locations, but it isn't a guarantee. And if your rental costs $2,500+ a month (not uncommon if you're renting the equivalent of a $500k home), the difference in expenses over the years when it is increasing annually at ~3% is larger than the same 3% increase on your $1,000-$2,000 ongoing home-related bills.
Not to mention the fact that you might be able to DIY some projects on the home to lower things like the maintenance bills. Or even improve the home over time to make it more energy efficient if you're so inclined.
So (again usually) there is still a net benefit. But you're absolutely right in that it wouldn't be a 100% cost reduction from the rental scenario :)
Thanks for the comment!
step #1 live off of dividends, boom done