Okay, years until financial independence. We are familiar with this one.

Years needed = amount needed / savings per year

amount needed = 25 * outgo per month * 12 months — note:[25 could be 33 if you’re conservative]

savings per year = (income per month – outgo per month) * 12

So for me we have something like

25 * $2000 * 12 months / (12 * ($7800 – $2000))

= 25 * $2000 / ($7800 – $2000)

time in years = 25 * expenses / savings

or

time in unit = expenses / (inflation adjusted RoR during unit * savings)

If you double the inflation adjusted return, you need half the time.

If you half the expenses, you half the time.

If you double the savings, you half the time.

Historically, the safe bet for RoR is about 3-4%

Let’s just move all the numbers by 20% and see the impact

let’s say expenses is 1, savings is 1, and RoR is 1. Then let’s move all those numbers by 20% in a positive direction.

1 year if i = spend 1 dollar/ (double my money every year * 1 save one dollar)

okay cool. now what about.

= .8 / (1.2*1.2) = .55

I think moving these numbers by 20% (especially on rate of return) is probably the max a person can do once they’ve severely cut back their lifestyle (there just isn’t much left). But it’s pretty cool that they compound to HALF the time you need to retire.

For example, if you look at my spending… Roughly $3000 spent per month and $7800 income. Cutting 20% is cutting $600 down to $2400. That adds $600 to savings. But savings is $4800 already, and needs to increase by $960, so I need to earn another $360, which means I need to increase my take home pay by about $360/.62(tax adjust)*12 = $7000.

So ignoring the RoR factor (which in the long run… hopefully I’d be able to increase by 20% b/c I have all day to think about how to do that), I’d need to cut $600 in spending and increase my salary by $7000.

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