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Assumptions: - You're financially independent once you saved 25 times your yearly cost of living - You earn $150,000/year - You can live on $25,000/year Cal
by miguelrochefort 9y ago
Assumptions:
- You're financially independent once you saved 25 times your yearly cost of living
- You earn $150,000/year
- You can live on $25,000/year
Calculations:
- Earn $150,000/year
- Pay 40% income tax ($95,000 left)
- Spend $25,000 ($70,000 left)
- Save $70,000
- Repeat for 10 years (save $700,000)
- $700,000 > 25 years * $25,000 = $625,000
These numbers are very conservative, and assume no raise in salary, no interest on savings, no tax deduction or 401k matching, and a is achievable in just 9 years.
The key is to live frugally, and the US makes that super easy.
To give you some perspective, I earn about $25,000 USD (after income taxes) as a full-time software developer in Canada.
- icebraining 9y agoThat doesn't seem conservative at all. I very much doubt the average US developer is making $150k/year for the first ten years of their career. Maybe in some places, but those are also the same where the rent will eat more than half of those $25k.
- miguelrochefort 9y agoIt also works if you earn $100,000 and spend $20,000. - $100,000 - $60,000 (40% tax) - $40,000 ($20,000 spending) - $500,000 (10 years of savings at 4% interest rate)
- BOOSTERHIDROGEN 9y agohow hard is for you to live frugally for 10 years and what is your perspective after those 10 years.
- miguelrochefort 9y agoI live on less than $20,000/year, and will continue until I'm financially independent. This is not difficult, if you're rational and don't seek luxury. I sleep on the floor, eat once a day, only buy things on sale and in bulk, choose free entertainment, live in a single room, don't own a car, dumpster dive, etc. Once I'm financially independent, I'll finally be able to do research (which I can't at the moment since I lack a degree).