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In case you were wondering how they pulled this off at 35: The author retired from his CPA job at KPMG to live the life of world travel and financial freedom.
by jpatokal 11y ago
In case you were wondering how they pulled this off at 35:
The author retired from his CPA job at KPMG to live the life of world travel and financial freedom. When he retired in 1984 he was making in excess of $125,000 a year. The concept works best where you have a high priced personal residence in a hot real estate market. The premise is that you sell your high priced house and your status car. Then you take the proceeds and invest it in a SAFE, CONSERVATIVE investment living off the interest and never touch the principle. You move to a lower priced area, either in the US or outside.
(from http://www.amazon.com/Cashing-American-Dream-Paul-Terhorst/dp/0553278150 http://www.amazon.com/Cashing-American-Dream-Paul-Terhorst/d...)
Although that leaves it unclear how you got the high-priced house in the first place, much less the status car (why buy one if you're going to sell it anyway?). And the "safe, conservative" investment was cash deposits at a bank paying 8%/year, but good luck finding that these days...
- ville 11y agoThey mention in the article that they moved from cash deposits to stocks: "At the time, bank CDs paid around 8 percent. Ah, yesteryear. “We had to change our investment strategy. Instead of living off our interest, we switched to buying stocks,” says Paul. “We cash in from time to time just before our next trip.”"
- cozuya 11y agoI think you guys mean certificates of deposit..
- myth_drannon 11y ago"Although that leaves it unclear how you got the high-priced house in the first place," Get lucky and sell at the peak of the housing bubble. Let's say ten year ago you bought a house with a mortgage in Vancouver or Toronto for 300k, you can sell it now for 1mil if not more.
- rb2k_ 11y agoPlus they decided to have no children. Otherwise the equation is probably a bit more problematic :)
- ZeroGravitas 11y agoAnd if everyone decided not to have kids at the same time, things would get problematic for everyone shortly afterwards.
- douche 11y ago> Although that leaves it unclear how you got the high-priced house in the first place 1984, man. Prices were half or a third then what they are now. That probably means they originally bought the house in the 70s, when things were yet cheaper. I think back to my grandparents, that paid around 20k for a house around 1960. If I were to buy an identical house today, I'd be looking at 200k minimum, probably more like 250k, and it would be on a one acre lot, not 20.
- sokoloff 11y agoThat's equivalent to the effect of an average 4.25% inflation compounded over 55 years. The 10x headline multiple seems shocking, but when you unpack it, it's not that shocking.
- protonfish 11y agoAnd $125,000 a year salary at 4.25% for 30 years is almost $450,000 today. It wouldn't be a struggle retiring in 10 years if you made that today. A single inflation rate paints an inaccurate picture when the difference between income and living expenses increases are that dissimilar.
- samstave 11y agoMy grandparents bought their place in Saratoga .ca for 26k in 1959 and sold it for 2.5mm in 2003
- chovy 11y agomy grandparents paid $20k for their house and sold it for $1M.
- jsaxton86 11y ago> in 1984 he was making in excess of $125,000 a year According to [1], that works out to ~$285,000/year in 2015 dollars. [1] http://www.davemanuel.com/inflation-calculator.php http://www.davemanuel.com/inflation-calculator.php
- jmckib 11y agoHow does an accountant make that kind of money?
- waterlesscloud 11y agoI have a relative who make more than that as an accountant. He does forensic accounting, essentially auditing financial records in corporate lawsuits. Reconstructing where money did or did not go. Testifies at trials as an expert witness and so on.
- alltakendamned 11y ago> And the "safe, conservative" investment was cash deposits at a bank paying 8%/year, but good luck finding that these days... Correct. But inflation was higher too.
- deleted 11y ago[deleted]