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« Reader Profile: Mark | Main | Money Commandment #6 »

April 27, 2011


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Did the person in the first example really make $500K/year? If that's the case, his PAW score (Age * annual income / 10) needs to be at least $2,350,000 (47 * 500,000 / 10). If that's the case, is it really that impressive that he has a net worth of $2,850,000? If we accept these numbers, then he really isn't doing that well. It just looks impressive because the numbers are big. Now, if he made $50,000, this would be an impressive story.

I would love to know how many kids the people in these examples have!

500k salary for the first example? Am I reading this wrong?

To be clear, the first person did eventually make $500k -- but not until much later in life. IMO, this is a great example of saving early despite a smaller income, then growing your income over time.

In other words, this person didn't make $500k for 20 years...

This made me chuckle:

" I hit $1M~, then a divorce took $400K+ "

Since I'm part of a "We" in a community property state, I also tend to think of "My" personal net worth as the total of our household net worth, but really, it's only half of that.

Seems I'm not the only one who makes that miscalculation.

@Everyday Tips - That's the same thing I was thinking! My gut feeling is neither have any children but I'd love to hear the answer.

The amount of energy that you have to enjoy the many things and activities that this world has to offer follow the familiar "Bell Shaped Curve".

Sadly, my wife and I are over the top and on the way down at 76 and 78 respectively. Looking back, the peak period for us started in our mid 40's and lasted into our late 50's. We were still very active and travelling all over the world in our early 60's but very gradually from then on after my wife needed a couple of hip replacements and another surgery, the rigors of very active vacations combined with the fact that we had crossed all the most important destinations off our list, had cut way back on the amount of entertaining we did, and had also begun to thoroughly enjoy a much quieter life style and do a whole lot less driving.

Also, by the time the three children had left home and their rooms became AFR, "available for reassignment", to coin an old phrase from my working days, we had no motivation whatsoever to move into something else. We made quite a few improvements around the home, one that worked out very well was to convert a free form spa in the back garden into a beautiful pond and waterfall that is home to some water lilies and very beautiful fish.

The bottom line is that your expenses, just like your energy, also follow the familiar "Bell Shaped Curve" throughout life, and providing that your healthcare needs are fully covered by Medicare, and that you have a large enough net worth to see you through a move to an assisted living facility should it be necessary, you can remain in good financial shape. We have been in our home now for over 43 years and love it and the neighborhood. We each have a beautiful Mercedes, both quite old (like us) but, unlike us, with very low mileage. We have reached that point where we don't envy anyone in the world and are completely happy and satisfied with our lifestyle.

We followed all of the FMF principles of living well within our means, saving as much as possible, investing wisely, and retiring debt free, and are multi-millionaires because of it, and over 80% of our total assets are in investments that continue to grow by over 5% every single year, regardless of the housing market.

Best advice ever.

"Learn to sign checks on the back"

@ Everyday tips- I had written the 2nd comment. We have no children at present but are thinking about changing that. My wife is 31 and I am 37. We are getting a bit older to have children but our finances are very secure.


Hey Mike!
Thanks for responding. I had a feeling you didn't have any kids, but didn't know for sure. You sure have done a great job with your finances, and you will set a great example for those kiddos if you do decide to have them. By the way, I don't think you are a 'bit older' for having kids. It seems most people have kids in their 30s now.

@ Everyday Tips,

Well, I am almost 38 and we haven't 'tried' for anything so far, if you know what I mean. So likely to be in my 40's when the first kid arrives.

We need to make sure we don't spoil our kids. Part of the fun of growing up is being forced to make choices and that you can have anything you want but not everything you want. Saving is one of these choices that can lead to more options over time. And the things you want require patience and focus. I don't like seeing spoiled, unappreciative children so hopefully we can be good parents.


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