We will assume their savings earn a 5% return, whether from paying off the mortgage or saving in index funds:Įnd of Year 1 ‘Stash: = $46,000, plus investment gains of $1150, total = $47,150 Total spending is thus, $34k/year, leaving $46k of their $80k take-home pay available to save. Let’s say they spend just as much as the MMM family does for our lavish lifestyle with plenty of travel, great bicycles, and two cars ($24k per year), plus have zero equity on their $200,000 house, so they pay $10,000 of interest per year on that as well. These folks have a combined before-tax income of $91,000, which works out to $80k after federal and state taxes according to the tax calculator at. So if you happen to be part of a working couple earning this much each – congratulations, you are no more than nine years from retirement, even if your net worth is currently ZERO!īut what about a more typical family – say, a high-school teacher (median US salary $51,000 according to Wikipedia) and an elementary school teacher ($40,000 from ) with a kid and a mortgage on a $200,000 house. That brings up the annual average to $67,255 each. PLUS I made a $100,000 profit from renovating one of our houses and some appreciation. When we average our salaries together, we were equivalent to a couple earning $61,700 each. So my 9-year average earnings were $83,000, and hers were $40,400. Let’s look at the averages over that 9-year period. And many people agreed that with a top salary of $125,000 per year, and a wife that made it up to $70k in her short career, we were indeed earning a ridiculous amount of money. If you get paid a ridiculous amount of money, and spend only a normal amount of money, it builds up very quickly to become an accelerating and unstoppable force, like a snowball on a steep hill. In the article, I tried to explain that it wasn’t a struggle or a sacrifice to become financially independent in nine years, it was in fact unavoidable. Money Mustache’s combined savings history from zero net worth to retirement. Earlier this week, I spilled the beans and detailed Mr and Mrs.
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