Shunning home ownership leads to early retirement
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- Опубликовано: 14 авг 2016
- How a 30-something couple got rich and retired by not joining home ownership 'cult'
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As part of my retirement plans and also owing to the very shaky housing market now, I just sold a property in Philly and I'm thinking to put the cash in stocks, I know everyone is saying its ripe enough, but Is this a good time to buy stocks? How long until a full recovery? How are other people in the same market raking in over $200k gains in months, I'm really just confused at this point...
@TammyLouise-8999 That's impressive, my portfolio have been tanking all year, tried learning new strategies to gain in the current market but all of that flew right over head, please would you mind suggesting the adviser you're using ?
@TammyLouise-8999 Thanks a lot for this suggestion. I needed this myself, I looked her up, and I have sent her an email. I hope she gets back to me soon.
Home ownership is not the issue, living beyond your means is.
Stop portraying that your house is an asset in which it is not. Take inflation into consideration and you'll soon realize that the value of your home isn't that much of a difference than where it was 5, 10, or even 20 years ago. Basic macroeconomics. Unless, you live in a hipster gentrification neighborhood....
Will, what do all those years of paying an ever increasing amount of rent leave you with, except for a higher rent to pay next month? You have to live somewhere. Landlords make money off of people who pay rent...they're not about to lose money so a stranger can have a nice place to live. When I purchased my home, my payments, taxes and insurance came to about $700mth. A similar place could be rented for about $600-700mth. 30 years later my last payment, taxes and insurance was just under $1000 (tax and insurance increased), and a similar home is renting for about $2500-2,750. I now have an asset worth about $500,000 in my pocket, and only taxes, insurance and some maintenance going forward, meaning I have profited over my entire payments by about $150,000. So I have not only lived in a great place, but I have earned 150K for doing so. So tell me about the returns your rent have given you?
Jamie, you're throwing in numbers without doing your calculation with percentages. Come back to me when you do the math with the adjustable inflation rate. What 99% of American's (including you) failed to do is the calculation on the devaluation of the petro dollar. Let me explain because you seem to not understanding macro/microeconomics. According to the Burea of Labor statistics CPI, the USD averaged an inflation rate of 3.81%. $1$ in the 1960s is equivalent to $8.11 in 2016. What does that mean? If you bought a house back in the 1960's for $100,000, today's value will be $811,000. You are calculating by the actual figure when you FAILED to understand the VALUE of $811,000 is still the same when the home was bought for $100,000. So did you make a profit? NO , because the value of the home remained the same. Its an illusion and basic finance that majority will still not understand til this day..... I did not mentioned anything about renting, what I am saying is the home you live in is not an investment, its an liability. You think you profited 150k? Redo your math and come back to me.
@Jamie And if you want to talk about returns? I be very glad to share you my brokerage investment portfolio.
William Kim defo is an asset brought 3 flats in London about 30 years ago sold it for 1.9 million. The increase in value of the house was worth more than I made 30years working
Life Changes Quick. It's true. I went from having $1,000 in the bank to saving up $500,000 to buy a home (which I also ended up not doing) by doing exactly what this couple talked about. I lived left CA and lived cheaply in Thailand, rented a low cost apartment, sold my car, and invested the money. At 35 I retired.
I still don't own a house today, but could if I really wanted to. But it's no longer the goal.
More like two computer engineers making 300k or more with no kids = financial free.
Software engineers don't make 150k on average in Canada, it's closer to 60-120k depending on experience.
+Stuart Spence A lot more than the on call casual work I get. made 11k last year. meanwhile foreign kids drive around Van in paid off new beemers. rlly not sure how u make money in this life without being born into it. Or receiving help.
if you're not sure how then you should learn to budge and live within your means. If you cannot do both simultaniously, you will never be sure how to make money and live.
"Financially free." I know of couples who make, jointly, over $200,000 USD per year. They have no investments and are awash in debt. A large income does not equal large assets. Most people can't delay gratification.
... engineering
Bought my house 25 years ago but paid it off in 10 years and retired very early. No regrets.
Price of it probably increased by 300% by now
congrats you bought a house when it was affordable. it no longer is. youre not special youre just lucky
The market is quite different now
Early retirement has become a movement now-a-days. The movement is now called FIRE (Financial Independence Retire Early). I actually did a video on this that will probably be helpful to you.
funny how we've been taught your home's an asset....
exactly, its a consumer good like a tv, except for a few "collector" tv in the GTA, you're not winning. and thats only propped up by current demand, i remember when houses south of the 401 where 100k.
It is a good asset if you don't move...
A home is an asset to your banker, because it pays him or her every month.
Your brain is your only true asset.
If you buy your home with cash then yes it is an asset, if your mortgage your house, where you're basically "renting money" then it is a major liability.
I caught an interview they did in early 2021. They survived the pandemic and their account actually grew. I think they said they were up 40%. So from when they early retired, their balance went from $1 million to $1.4 million.
"If you figure out money life is incredibly easy."- best quote from this video!
These 2 people are awesome, it takes a strong will to not spend your money on every little desire. Save it and use the lump sum to retire early :)
How do you live without spending? Rent?
I want them to adopt me.
You are the loser here
no u
What people don't understand is that savings bring with it security. And the best thing about it is it doesn't cost anything! You don't have to pay a dime for it. Just save.
Most important message at last! “If you figure out money life is incredibly easy. If you don’t life is insanely hard.” You will not learn this at school of course. 😒
I've owned a home for the last 3.5 years and I can totally understand this. There's always something that needs to be fixed and building supplies are not cheap. I love my house, but one quote always stuck with me: "Your rent is the maximum you pay, your mortgage is the MINIMUM you pay." Yes, rents get raised but so do property taxes, utilities, insurance, interest rates, and building supply prices. I think ultimately it depends on the life you want to create, and for many, renting is much more cost-effective and convenient. I, however, have a $162,000 mortgage and look forward to having a mortgage-free home before early retirement.
very interesting perspective. Thank you for sharing that. I have always been a rent owner, my parents as well, so I do not know what it's like on the other side of the fence, as a home owner. I would like to be the first in my family, but it seems very daunting.
I completely agree. Owning a home is not the "good thing to do" It's a liability that tricks you into thinking your doing what you should be doing.
They should have bought the house for 500,000 and then sold it for 900,000.
In other news: having money leads to retirement. WOW!
Yes, perpetuated by the Banking and Insurance industries.
Goonky it's a asset when it's paid off
Old people save money and takes time to build wealth not instant.
Money 💵 does lead to retirement ah!
Goonky Not spending the money you make, investment, lower cost on rent, other bills and turning that cash into more = retirement.
People assume they should be paying a fortune on bills, but you don't. That extra savings turns it into huge savings accounts.
Stop making excuses....or stop the bitching and continue being poor
FIRE is an interesting community, but you don't have to literally "retire" either. You can take mini retirements while you're still young enough to enjoy them, work less, try working remotely while travelling, and more. You can keep growing your portfolio while living a balanced life, rather than relying on your current portfolio alone to support you for the next 70 years.
That’s true
lol why is a $500k house even the goal
It's Toronto. Housing prices are inflated.
That's so cheap. An average house (not apartment) in a good suburb in Sydney Australia costs $1.5 to $2 million dollars. The current average price for a 3 bedroom apartment is $750K.
6 years ago, you could get a 3 bedroom apartment for $500K or a house far from the city for same price.
And Sydney is now more expensive to live in than London, LA or New York.
I can't even get my mind around these prices. I bought a 4 bedroom stone house in Illinois for $115 thousand.
poodlegirl55 and that is one of many reasons why we're still the greatest country in the world
poodlegirl55 just brought a 3 bedroom house in london 1.8 million. fingers crossed intrest doesn't increase for the next 90 years :*(
Renting is NOT throwing your money away. You are paying for convenience. You are paying NOT to have property taxes. You are paying NOT to have mortgage insurance. You are paying NOT to have homeowner’s insurance. You are paying NOT to have maintenance costs. You are paying NOT to have HOA dues, if applicable. When I owned my own home, all of these were looming over my head on a monthly basis. I’ve since sold my place and happily went back to renting. Now I invest money I save into my retirement and now I travel a lot more. No regrets.
My parents raised 5 kids, working and traveling around the world. It was a great childhood. But they did not “understand money.” What they did was buy a house in a promising suburb in the early 1960s, got a reliable estate/rental agent, and rented out the house to other families while we were in other parts of the world.
I sold everything! Other tips:
1. You don’t need two cars. The one you do have should be bought out right without financing...buy used a smaller or used hybrid.
2. Get rid of cable TV and your TV (less commercials) but keep your WiFi however possible
3. Get cheaper cell plan
4. Kids don’t need smartphones
5. Grow your vegetables (you will loose weight in the process)
6. When you loose weight you may not need all those meds and the savings and health benefits are considerable
7. Avoid sugar. Why? You think more clearly, do not eat as much, sleep better and become more productive.
I changed my life and it is sooo much less complicated and less stress. Positivity returned to my life.
I agree 100% what he said at the end "If you figure out money life is insanely easy"
My wife an I have been flirting with this idea but one of the downfalls of renting is that you're at the whim of your landlord. If they decide to sell the rental property, you have to up and move a long with your family. I guess this is not always the case if you rent from a larger rental corporation like Medallion, Kaneff, or Daniels...
Yes rent from good societies. Also, dont buy expensive furniture and useless stuff so that if you have to move someday...its a minor pain
Take care of your health and wealth and the rest of life falls into place easily.
kingmike40 -yes, and in that order!
The smart solution now would be for them to make the minimum down payment on a house and rent it out while they travel. Move in after 10 years or so when the tenants have paid it off.
These guys should be life coaches. They really put a smile on my face and gave me a nice start to the day.
Owning a house is such a life suck 😕.
This couple also looks like they have extremely high energy and don’t sleep so that also helps a tremendous amount. Using their brain for them is fun not a chore. Always underlooked with success and wealth
When you are making 100k each you can save 500k pretty quickly. Most of these FIRE people have very high paying jobs in IT and engineering.
That's not true. On paper I make 105k an year. After all the taxes, mandatory LTD insurances etc. I am left with ~60K-65K in hand. From that, I pay $1600/month in rent for a 1br apartment + hydro + internet + ttc pass. That's 2000/month without even buying groceries. After groceries and no restaurants, I end up spending ~2500-2600 / month on basic necessities for myself. That's 30,000 / year out on basic necessities. Factor in some travel, health insurance for my visiting elderly parents, flights tickets etc. I end up saving ~20-25K / year at the most. And That's Canadian dollars which is worth 75 cents per USD, which is what I used to earn. So in reality, I am only saving ~18000 USD / year despite earning a good >100k salary on paper. Trust me, it is NOT that easy to save up 500k on a 100k salary
NoOne I would reconsider your expenses, I feel like you’re paying too much just for yourself, your expenses should be way less! You could be saving a lot more. I’d recommend watching videos that show how to spend $100 a month on food by making it at home. There’s a ton of info on RUclips.
NoOne Also if it’s just yourself I would recommend a studio, you’d be paying a lot less saving a lot more.
I made close to 100k selling copier and fax machines door to door at age 24, started when I was 22, made 30 the first year, 60 the second and finally hit 100, doesn't take brains to make that kind of money, just sweat and determination
I work in recruiting. Graduated in Japanese studies though, so completely not related. I learned about FIRE 3 years ago, hoping to retire in 10 years.
Rent and invest in dividend stocks. Use 4% withdrawal rule. Smart. And ,as they say, easy as pie.
"Having a low rent and not having a car was a big part of it." Yeah, I bet it was. Most people don't have low rent (compared to their income). Most people don't live where they don't need a car. If you are living in an area in which housing costs $500K, then goes up to $900K, how do you find cheap rent? It doesn't make sense. I just moved out of San Francisco. I know a few people there who make good money. But that can't buy a house because they can't save enough to buy a house (at least not in the Bay Area). Why can't they save money? Because of high rent. The two go hand in hand. In a market in which houses sell for $1.2 million, rents are proportionately high. That's how it works.
James Allen thank-you!
James Allen its hard and some of it is luck.
I live in Sacramento with a roommate, we pay $950 total so $475 each for a 2 bedroom duplex with new kitchen, big living room, garage and good size backyard. Took awhile to get but now if we were to reapply it would be over $1100 easily.. timing is a big factor and we were lucky.
I feel you on the SF rent i visit there a couple times a year but couldnt imagine living there its so expensive.
mizzmolly Show me a real estate market anywhere in the U.S or Canada in which the cost of renting doesn't follow/parallel the cost of buying. You can't. If a market offers only expensive houses for sale, rents will also be expensive there. If real estate is cheap to buy, then it is also cheap to rent. This is the case everywhere. The gentleman in the video specifically used the numbers $500K and $900K; that's the market he/they are in. So where do they find cheap rent in such a market?
When you buy a house you have to pay a down payment which is a percentage of the house. Then you have to pay the mortgage.
nationwidebw no you are missing the point. You don’t need to invest every penny you have into the house. Let’s take these two as an example. They saved up $500k which they invested fully. The smarter thing would be to take $100k put a down payment on a $500k home and slowly pay off the house which is also appreciating in the mean time. You can then freely invest the remaining $400k which also compounds. Now you have two investments instead of one. The first home my family owned made us $250k profit in a short amount of time (7years) which we sold and invested into the market and into another home. I have never seen a rental property on the market (big cities) which was cheaper than paying mortgage and property tax + insurance yourself. The person renting out the property would have to be a complete moron if he or she didn’t add those expenses into the rent.
I applaud these guys for making this decision.
Real estate is a great investment, as long as you're not buying in a bubble market. Smaller cities experiencing high growth rates are good markets to buy property in. It's also a more stable investment, long-term.
I figured this out like 10 years ago. I have 25k saved. And it keeps going up.
Honestly thought about this, but in the end I decided to keep home ownership as a goal because it's an asset that can transfer to my future kids or grandkids, saving them the trouble of having to save for a home or rent.
why not buy a 1bed 1bath condo or a little flat townhouse you don't have to buy a house you'll get tired of rent going up things may or may not get fixed and a lot of times you can own a condo cheaper than rent in the same area
In the US mortgage interest deduction makes houses under $750k really lucrative.
The craziest thing they said wasn’t about home ownership it was the concept of saving money. Somewhere along the way people have gotten the idea that they can become rich by borrowing money rather than saving it.
This news feature was the best thing that I ever came across back when it came out. It stopped us from buying a money pit rental property and started us investing. Should be ready to retire in 7 years if we want to and we only started 3 years ago. And this 7 year FIRE goal is also includes putting 2 kids through university. We should have done RESP's back in the day but we didn't know much about it. Bryce is so right. We have to be financially literate and life gets easy.
No kids, no anchor, and making shitload of money in some IT job, no wonder "money is easy"
Who can save up $500 000 at such an early age!
Give me a break!
They did!
they probably have no life. Maybe they never hit the bars or go partying with friends.
Squid unless you hate that kind of work and will be miserable for the entirety of your career
They are smart enough to be in high paying jobs.
+Joel Betances
So, hitting the bar every Friday and partying in some sweat-soaked hall with smelly armpits on Saturday night is supposed to be living the life? You need to re-evaluate your view of life.
Traditional 'Home ownership' as we commonly call it should not be the key. My question would be, why not buy a small condo, or townhome? Does the $900 a month (or X amount more than property taxes & HOA dues) one spends on rent, going towards nothing, win out over owning a place that is paid off? I wouldn't think so...
The author goes in deeper with your question in the book and the answer is always depend on the market and how much your rent now is.
Kristy is so funny! I just read her book and she cracks me up. Great book with sound advice.
Funny, my experience was the opposite. Owned 2 homes (consecutively) that I lived in. After 33 years cleared $1M.
For many...it’s an investment and security. 😉
No risk of eviction, or if the owner sells you must vacate, no rent hikes, etc...it’s stable and predictable.
If you lose your job or break a leg/arm, you can rent out a room to help cover costs. (Subletting is not usually allowed with leases or rental agreements).
But! To each their own. It just depends on what you want your lifestyle to be and what your lifestyle currently is. 😊
Step 1: Get high paying jobs. Easy.
Step 2: Don't have kids, they'll only hold you back financially.
Step 3: Live in a dump and pay cheap rent.
Step 4: Don't buy cars. Just use buses, or better yet, don't ever go out.
Step 5: Save more money by cutting your own hair.
Michael T 😂😂
😂 nice one.
+ cook your own meals. Don't eat out.
haha savage
It's healthier than having strangers reheat processed 'food'. My parents have been rear ended twice while at fast food drive thrus, my friends complain how a sandwich place took 4 hours to deliver food, etc.
Lol, your face expression makes me laugh!”There’s nothing crazy.” 1:00 You are a nature comedian!
This is something that I am learning way too late in life.
Now take that money and buy a really nice house in Alabama for $150,000 and two Tesla 3s and they'll still have $250,000 left from their savings and live happily ever after.
Their first mistake was living in a big city in canada, you aren't suppose to spend all of your money on a house, you need to buy a cheap house, fix it up, live in it, all while investing most of your money else where. That way when you retire you have your house payed off, and you get the passive income. They are creating a false delemia saying that you either have a one million dollar house or a one million dollar investment profile.
If you're going to live in a neighborhood where you won't get stabbed, $500,000 is a normal price to pay for a small apartment in Toronto. If you're "paying your house off" which means you're paying the banks, then it's already a sunken investment.
For an urban house, %99 of the time, you will never earn back the interest you pay to a bank. Buying a land that will earn value over time with loan? Doable. Risky, but doable. An apartment within the city? Either buy it in cash, or invest your money instead.
The author goes in deeper with your question in the book. She breaks down the cost of ownership of house that comes with (recording fee, transfer title fee, HOA fee, house insurance, broker fee, interest in the house not going to principle much in the first 10 years, and etc). They also say in the book that buying primary residence is a problem but buying rental properties while being real estate savvy is different. If the person knows how to invest wisely turning into a rental properties and flip house, you can go ahead and do it.
I was saving to buy a house but right now, i feel like investing it on my portfolio is a better choise. It's true. A million dollar house wont pay you as much as a million dollar portfolio.
I bought a pair of duplexes, I live in one and rent out the rest. I live rent free. Best move I ever made.
It's true that you need a high-paying white collar job for several years with a saving rate above 50% before you can do what they did, but that doesn't make their lifestyle invalid. Not everyone can do it, but those who can should consider it.
The most important thing is discipline.
I retired at 40 (renter with no hydro bill, living on the TTC line) not an Engineer: worked for minimum wage and free-lance jobs since 1990: which was the first graduate recession. ALSO: NO STUDENT DEBT (worked for Tuition each year: no loans).
Peers with condos can't afford the fees anymore and can't sell the condo because the ceiling fell down and the dryer blows fluff into the living room and the plumbing went last year along with the shelves in the closets and no money to fix it up for decent living at this point in time.
My stove breaks down on Wednesday: it is fixed or replaced by Thursday. Walls replaced last year and suite re-painted.
Bought my home in Toronto in 2006. Paid off. Now it’s over a million . I will retire when my kids leave the house.
They are seriously way too hyper. Holy cow
Enr1997 They're a fine, joyous couple who humbly let us know they're just like us. If people want to envy other's financial success and cry about their life, they can never change where they are. Period.
Well firstly, I made no remarks what-so-ever about their financial status in my comment. Secondly, they are extremely hyper and talk so quickly it seems as though I am watching this video at 2X speed. Lastly, why do you feel the need to come on here an accuse me of some made up jealousy you think I have for these people? Why don't you try minding your own business? This couple doesn't need you on here defending them from every little thing that is said about them, my comment was not malicious, it just implied they are high strung and annoying quite honestly. "Period"
Enr1997 then watch the video at half speed. Idk what to tell you lol sounds like you’re just an unhappy person with a lot of things going wrong for you
Couldn't be further from the truth. Would love to be able to leave a simple comment on a video without everyone getting all butt hurt about it, however, we all have our cross to carry don't we?
Enr1997 you’re just an annoying person from what I can tell lol
I like these people. I wish everyone was as sensible!
I dunno, but to me it doesn't seem like you've truly retired if your living off the stock market. Monitoring all that would likey be a full time job in itself. Not to mention the greater risks involved.
4% rule works 50% of the time. Great job getting there! I'd say look into a better distribution strategy for when the market corrects.
Sorry, if you're listening to this and don't know any better, buying a home is a better option than renting. If you can buy a cheap home straight cash, do that. If you can't do that, save 20% to avoid PMI and have an emergency fund of three to six months of expenses before you get a 15 year fixed rate mortgage at no more than 25% of your take home pay. Think of your house, if it's located in an appreciating area, as a piggy bank. When you rent, that money does not go anywhere but your landlord (and the fact that you have a roof over your head which is great). If you buy an appreciating asset like a house, you're pretty much paying yourself as you can later sell that home and get your money back (and more as the home value most likely made you money in the form of equity). Renting for a long period of time is not the wisest option for your financial future. It's true what the couple said that a million dollars pays you (assuming the market does well, which it has done so historically) and a house doesn't work the same as an investment fund, but that's a different debate. RUclips Dave Ramsey for more practical advice. Again, pay yourself and buy a home (you do have to live somewhere) than rent. It's okay to rent temporarily but not for life like this couple. It just isn't smart.
I love what they did but key components they forgot to say :
1. Have a job that puts you in the "middle class". They probably make $100k per person. Easy to save $500,000.
2. You can't do this alone! Make sure your spouse is in that same income bracket. Make sure you HAVE a spouse. People tend not to realize that they more than likely wouldn't have gotten their on their own.
3. Don't have kids until you "retire". Having kids early will be like going backwards.
4. Don't live beyond your means. Duh.
5. Have an investment. This couple used an investment portfolio, but the average person doesn't know anything about that. You gotta have the knowledge to know how to spend your money. Unfortunately, they don't delve into details about that in this piece
she might have forgotten inflation...ten years from now, your 500k becomes 400k and it keeps diminishing...you need at least one million per person to retire with a paid off home.
Why do people actually want to retire early? I have a great, well-paid job that I enjoy doing. I probably could retire early, but would probably be pretty bored if I did.
This interest in early retirement speaks more about job dissatisfaction than anything else IMO.
You can work and create portfolio at the same time not have to retire. They just happened to realized that money = time (not vice versa) so instead of buying house, they live by dividends and interest, and they also work remotely a little bit. They know how to play the stock and bond market at the time of collapse as well. You can semi retire while working less and putting more time in your passion or literally just retire all at once, or replacing with the job that you always wanted at this point. It’s about the flexibility and what you wanna do with it at the end of the day. To me I have other things I wanna do other than jobs so I will do this like them
They have done an amazing job. Good education, work ethic, discipline and an outside of the box thinking that enabled them to achieve their goals. The naysayers are the ones who do not have the discipline hence they complain.
LOL so their entire retirement "plan" is hinged on the stock market giving them a 4% return every year????? That's a really bad idea
a good portfolio appreciates in value. that value is greater than the 4% they take out every year to live.
The 4% rule takes in consideration possibility of issues with stock market.
They are spot on on most points but imo the housing thing DEPENDS on your market. My rent in a cheap apartment was the same as my mortgage and increasing substantially every year. I did not have the "cheap rent" option. Even my studio apartment was about 1k 4 years ago and now rents for $1400. If you can live at home or rent truely cheaply this works but in hcol areas buying is still a viable option.
I Save money consistently maybe one day we'll buy a home but rent is cheap and the portfolio keeps growing
Truth be told, I'm freaked out when it's time to sell my house with this millennial generation coming up and the global market subside, huge bubble looming.
Funny that he says that a 500k house becomes 900k, but it's somehow not a good idea to buy. Had he purchased that 500k house with a 5% down payment (25k plus fees), he'd have an extra 400k. With this statement, he proves that his own approach is flawed. Real estate produces more millionaires than anything else and it's due to leverage. Saving every cent can work, but leverage will make it 10000 times easier.
He didn't say that. He had a plan to buy a 500k house. He was saving for a 500k house but that house became a 900k house and he couldn't afford it. The house appreciated in value faster than he could save for it.
Study up on liquidity
Read The Millionaire Next Door by Thomas J. Stanley and William D. Danko. The, "live below your means and invest wisely" philosophy is how many millionaires are made and, the reason they are next door is that they don't live like millionaires. That's kind of the point. Two Engineers could buy a home and still live below their means, but by not buying a home, the money will grow that much faster.
I’m so confused here. I was taught that we can’t withdraw our retirement money until we are 59.5 years old?
I think what they've done is great, and once you're talking about those levels of savings compound interest will work wonders. However some of us need homes to raise children.
Don't have kids.
U if fbk Ttg response of the year lol
stop breeding
....or have animals.
single mother raised a son in an apartment working for minimum wage..... you DON'T need a house to have children. I retired at 40 btw
wait till your stock portfolio crashes 50% in the next crash, then you will have to unretire and get back to work! These people have not lived that long to go through realistic economic cycles... their limited experience makes them incredibly naive.
oh god wow they have to go back to their engineering jobs making 150k combined a year, tragic.
smart people expect stock crashes and plan accordingly, diversifying is one way, investing in the right companies will assure you a rebound
@@dom1abc1mbc Like Terranos, yeah.
@@justin60222 They will not get jobs easily since their knowledge would be outdated in a year or two.
@@TheFourthWinchester Nah maybe 5 years
for most people not well off , rent is more expensive than a mortgage would of been
No secret to saving money is my favorite. They just saved more than they spent, and watched what they spent.
Maintenance taxes and insurance crushes the aversge appreciation of the house. And since the bank front loads the interest you really only "pay yourself" in the later years of ownership. Putting down the minimum and borrowing from the bank is a scam.
So true. Its insane looking at the principle VS interest paid in the first half of the mortgage.
"If you figure out money life is incredibly easy. But if you never figure it out, life is insanely hard."
Well, no sh*t... lol..If I could roll my eyes any more, I'd smoke them.
Sounds simple but most people don't figure it out. They rack up debt and think material things equate to happiness. Before you know it, you're 50 with a $700k mortgage.
I would like them to explain how they travel the world for $40K I was just on vacation the prices were the same as if not more then the USA and the sales tax was 13%
Depends where you travel. You can cheaply travel around south Asia. For Europe, Japan, Korea etc. you need some travel hacking, stay in a hostel or cheaper hotel, etc. No need to spend money at fancy restaurants etc. You can easily google cheap travel hacks for each country. I am planning to travel around the world with my friend and we calculated that it will cost us 25K. One of my friends from Uni managed to travel the world for a year on about 15K.
Compared to my friend which whom I will be traveling around the world I am bit extreme, but I want to take several additional months off solo traveling around Japan on a bicycle, so I bought a tent and will be only spending 1-2 days a week in a hotel.
You eat out of the garbage can duh
I've traveled exploring,backpacking,etc. to over 57 countries since the 90s and met many traveling this way. Many cheap tricks once you're out there.
Actually I travel a lot cheaper than that in any class with free lifetime global flight benefits.
First I thought this was a prank but half way into the video this stuff began making solid sense. So many things are counterintuitive, omg.
He is not 100% correct. He said "1 million dollar porfolio will pay you..." wrong!!! wait until you lose 20-30% on portfolio then you probably regret not buying a house. Stock portfolio does not always guarantee returns. remember 1999 or 2008?
I still think buying a moderate house/condo is the key to early retirement.
Okay, so if you look at any 30 year period of the stock market's history, you will see a average annual growth rate of roughly 7-8%. If you look at the majority of dividend paying blue chip stocks, they continued to pay and raise dividends even during the 2008 downturn.
Both the stock and real estate markets go up over time. The difference is that the former generates cash flow while the latter generates debt and maintenance costs (it can generate cash flow if you become a landlord with more properties, a totally viable option. But be prepared for even MORE debt and maintenance costs, as well as "sweat equity").
James, what you are saying is not 100%. As a matter of fact, it is patently wrong.
If you sell it at 2008, you will loose money. Most people do! If you were to keep the money in, it would have more than tripled.
you spend less in a down year and have two years of cash saved for down years.
Houses can crash in a hurry too. At least a stock portfolio is liquid
You must like paying property tax...nah you love it
They moved back with their parents. If that's considered "retirement" then ok.
Yes, I'd love to see the source of this false information too.
Mr. Wreak Havoc no they didnt, they travel the world
They're still traveling the world and rocking while you haven't figured anything out in life smh
They seem to so eager to sell their story.
MrChip, I read their full story, apparently they initially lived with roommates, etc to keep costs down, etc. but they made the right moves to get what they want. The worth of home ownership is way over blown, and this couple figured it out, basically not succumbing to the 'money pit' like most do.
Why not both? Assuming you're making good money and don't have children, you might as well invest in a diversified portfolio. Pay off a house quickly by not having debt outside of a mortgage while also investing 15% towards your retirement. You can pay off the house in 10-15 years and any income after that goes into savings + new investments since you'll only be paying taxes/insurance/maintenance.
This only works once you're above a certain wage so I would recommend following their advice by having roommates to keep rent manageable and putting money aside for maybe training that can lead to a higher income career.
They speak about importance of education but they were only making $125,000 per year after tax combined. They also talk about the wage can be lower than that as well. It’s not about how much you save but what percentage you save have more impact on when you can retire. You can read the book for more info
DINK, high income, and no grad school assuming you don't need one for engineering... Very rare combo
I've got a house for rent, they can rent it and pay my mortgage for me if they want.
The Dude Abides be ready to fix their pipe bursts and replacing their carpets and old appliances. After property tax and mortgage interest, I hope you aren’t bankrupt.
The Guillotine Well. . It's a risk vs reward thing. One financially bad economic year would get you underwater ( No renters, no job ). Versus, if you have 15 to 20 years of renters, the house is yours.
Home owning is a tricky path, buy only if you know the area in and out.
I would say a place like SF or NY will ALWAYS be in demand versus let's say a place like pittsburgh
DING DING DING. We've got a winner here folks!! Nothing wrong with owning a home, as long as you're not the one living in it or paying for it.
The Dude Abides Don't bother commenting about passive income. Renters for Life will never understand
So....When they stop travelling then they have no home of their own to return to..... so they become couch surfers 😃
They will still have 500K, so they will be able to buy/rent if they want (they are only spending interest)
What if you buy a house and rent it out to earn passive income while paying off the mortgage? Sound like a good plan to me
I bought my house in Regina for $358,850 back in 2015. Now (2018) I rent out the 5 extra bedrooms for a total of $3,264/month; $1,288 of which is profit.
I can't imagine trying to pay for a house just with income from a 9-5 job.
Investing in stock is all well and necessary, but risky. Owning property is part of building a diversified portfolio. It is insane to cut that out of one's retirement egg. At their income level, 30 is way too early to retire. Inflation is going to catch up with these guys and hit them hard.
I knew this before I had 5 kids. I chose to have the kids. I am rich , I am not a millionaire , but I am happy , my wife is happy the children are happy . We go on vacations all the time all over the world , all of us. I am an engineer just like they are , my wife has a Masters degree in Nursing . Our house has increased in value since we bought it in 2001 , and in the last 2 years significantly . I am positive we are in a much better position than they are in......life cannot be just about the money.
townman1 not everyone wants children, so I'm glad that worked out for you but that's probably notthe life either of them want. And who said they weren't happy or that their life centered constantly around money? They just shared their advice
Way too hyper and no children as consumption , one can save easily
The Guillotine okay.....
Great planning! They went against the accepted norm & are living the lives they want. I'm trying to convince my fiance to go for a fixer upper & force the appreciation so we're not working just to live. Very inspiring
These two were my inspiration to pursue Financial Independence Retire Early. I learned about them about six months after I discovered Dave Ramsey's book "The Total Money Makeover." These two picked up where Dave Ramsey left off.
How much do you need to retire? how far u off.
@@befree9579 you need 25x the amount of your yearly expenses in index and bonds, and some cash and yield shield that they talk about in the book so it depends on people. Now I’m sure the lady is who commented here is not retired yet since she only knew this info for couple years
Ok wait. So, by the time they saved $500k the house that was $500k was now $900k. So, if they bought that house they would have made a $400k profit instead, they had to save and save when the market would do it for them.
Great Point Josh!
minus the property taxes, maintenance and general cost of owning a home. Not to mention, it isn't free to buy or sell a house. there are closing costs, expensive mortgage interests etc. I still think what they did is the way to go
Eventually the rent will be more than your mortgage payment
For me, that was the moment I signed the mortgage papers. They are 30. What will their rent be when they are 60 and could have been mortgage free (lots sooner if they kick it)? That is what they are not factoring in. Since they are spending their money traveling and having fun, I guess that about the age home owners are mortgage free and retiring, they will in-retire and try to find a job to pay the rent that will have gone up about 3-5x over what it is now. They will be crushed. We'll be living for free.
Did you even watch the video Jamie? They arent losing money/spending all their money. Theyve already doubled their 500k they saved to 1m through investing it and making their money work for them. By the time they are ready to fully retire in their 60s theyll have enough capital to buy a mansion free and clear if they want to
El Jefe but by that time, mansions will cost 3-5x more than they do now so it probably won't be all that easy.
Yup, and even if they do buy it free and clear, the taxes on that mansion will be really high.
Housing does not necessarily follow linear growth and besides, who wants a big dumb McMansion anyway.
I paid off my house when i was 40, 17 years ago. Now my only bills are the taxes (property and school) which come to less than $250 a month. How much do they spend in rent a month?
I am in my forties and I am retired.
I own a few rental properties mortgage free because my tenants pay me.
Live within your means and you can also do it.
ok so instead of playing the housing market they are playing the stock market..... well you do you.
They are most likely buying into index funds which cover thousands of stocks. That means that they will make whatever the stock market makes or loses in a given year. Which over the last 100 years has averaged out at 8 percent. If you were to buy a house with a 30 year mortgage, by the time you payed off the mortgage you probably have paid several times the house value in interest. Even if the price tripled in that 30 years you have made nothing. Where as in the stock market if I just leave it alone and don't panic if there's a recession I can make 8 percent a year compound interest.
+Mr.Grunt Exactly. You understand. I keep telling people I'm enjoying my life "now" not when I'm 70 when life has passed me by.
Joe Lau can you suggest a good company to start an index fund with?
SoleEater608 vanguard
Vanguard also TIAA-CREF.
sure... and I spent 52 G on a house when I was 32.. and now my house is worth 14x that much and I would have had to pay rent anyway. you can own a house and have savings..
They make a great point. In the past it was smart to but your own home. In the Canadian and some areas in the US (SF, NYC etc). It’s actually not smart to do it.
I managed something similar by working, saving, investing in Tokyo, instead of buying an American house in Silicon Valley with huge mortgage like my colleagues.
Then when the real-estate market tanked in 2008, we had the CASH to buy the Silicon house at about 50% its previous price, mortgage-free.
Resulting in FINANCIAL INDEPENDENCE and EARLY RETIREMENT (at 40), travel the world young.
Of course, much depends on LUCK. If you have kids, you want a house, even with a mortgage.
Current events (Covid-19, March 2020) have threatened this arrangement,
but then everybody ELSE is in WORSE shape.
And markets always REBOUND (eventually)....
Buying a home is NOT an asset.... You NEVER own your home..... Don't pay property tax and see what happens. It's illiquid, you have maintenance cost.... Assets pay you..... A house doesn't pay you
Well what ever it causes (aheem), I did watch my dad do makeovers and maintenance and repairs of all kinds, roofs, heaters, flooring, termite treatments, painting, siding, building a bathroom, landscaping, snow removal, Bla bla bla and it cost him a bundle to keep his house nice.
Considering I never had the income or marriage power to buy a home, I’m somehow not worried I didn’t - life is full enough of headaches and let-downs without the worry of what thing your house is going to do and end up keeping you poor all the time..... it enslaves you! Who wants that? Good lord, raising 2 kids and keeping a job was enough work & worry for me!!
The same way you'd pay your property taxes and maintenance costs on a house. Owning a house doesn't mean it doesn't continue to cost you money.
This is the content we need!!!!!!
I agree with everything this couple said in the video. Well done, as in shunning the conventional social pressure, and living your own style.