Saving for the future – 2.91 days at a time

Here’s how I am thinking about our long term savings.

Eventually we are not going to want to work, or at least we will want to step down from full employment to some form of partial employment. We need to fund that.

The easiest and funnest way we have to find that right now is through the accumulation of paper assets (stocks, bonds, cash on deposit). Real estate has turned into a little too much of a job and running a business isn’t as appealing as our day jobs – so for now paper assets it is.

This month we have saved $5,600 in our ‘never touch it again’, passive index fund portfolio.

Based on our current household expenses we need $27,924 a year in passive income to not work again, which is about $77 a day. Assuming a 4% safe withdrawal rate this month’s savings of $5,600 will give us 2.9 days of basic income, everyday, for the rest of our lives.

Yay, only 362 days to go.

A man called Sam

Once there was a maxresdefaultman called Sam. Sam has done well, he had carefully saved 40 cents of every dollar he had earned. He married well, had a lovely family and his colleagues were always grateful to have him in the office.

One day Sam turned 45 and started to think about retiring. Because of his excellent savings habit Sam was ready to enjoy some of his big stack of money build up in his retirement account. He drove himself to work, made a hot cup of coffee and sat down to log into his financial provider. OH NO – WHERE HAD HIS MONEY GONE. He has expecting $500,000 but there was only $420,000 in his account. had there been a stock market crash? Had he been robbed?

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My first long term plan

In 2001 I was 25 years old. I had been working on the idea of rental property investment could lead to wealth. I wanted to buy more rental properties but had two constraints – my wife wasn’t sure it was a great idea and I wasn’t convinced that I had the formula right.

So I developed what was the first of my long term plans to help our decision making.

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Rule 2: Have a long term plan

In this series I’ve written up the rules I follow for a life free of money stress. It’s really easy!!

To live happily you need to have your finances sorted takes and little bit of thought, some good habits and a touch of self control. All you need to do is make sure you live within your means while also having long term goals that you are working towards. Then make sure you are organising the money that comes in and tracking your spending, and doing this all simply.

See here for the whole series of posts

Our story

unspecifiedWhen I was 21 I sat down and developed a long term plan for our money. I had seen my father stop working at age 52 due to health issues and I realized that we needed to be financially secure so that work was optional in our middle years. I developed a plan that would allow us to replace one of our salaries with investment income. Once we both agreed on it we started to put it into effect. That plan was real estate based and over the next six years we built up a portfolio of five rental properties.

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Rule 1: Live within your means

In this series I’ve written up the rules I follow for a life free of money stress. It’s really easy!!

To live happily you need to have your finances sorted takes and little bit of thought, some good habits and a touch of self control. All you need to do is make sure you live within your means while also having long term goals that you are working towards. Then make sure you are organising the money that comes in and tracking your spending, and doing this all simply.

See here for the whole series of posts

 How we live within our means?

Its ristock-492939830eally simple – we never spend money we don’t have in cash. If your income always exceeds your expenses then you will be happy. Sadly its really easy these days to borrow money and use this to buy consumables. When you start to borrow to cover your cost of everyday living, then the debt grows and payments start to steal your income, so you borrow more. Soon a few years have gone by and you have nothing long lasting to show for your hard
work and effort.

There are three easy tricks for living within your means; Continue reading

Your First Million

I woke one day a few years ago and realised money was a solved problem for us. We had figured things out to the point where we had enough that even if we were able to work all our basic living costs would be covered. This had been my goal since my first full time job, at age 21 – to build our assets up enough so hard work is optimal, not essential. I hadn’t noticed when it happened, life was busy with new babies and our finances were on autopilot at the time, but when I realised it was an incredibly freeing moment. 

Since that time I’ve mentioned to a few people how we did it, each time it gets strange looks – I’m not really sure if it’s because it’s quite odd to talk about your money, or if people thought it very strange that 20 year old Mark would have been thinking about ensuring he had enough money in his late 30s and 40s. Because of  this I’ve decided to write up this series of posts, aimed at my kids in their late teens, who I hope will read these and realise that nothing stops them from also figuring out how money works, building wealth and solving the money problem.

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