Free Ebook.


Enter your email address:

Delivered by FeedBurner

« Millionaire Interview 23 | Main | What's the Top Financial Stress in Your State? »

September 27, 2016

Comments

Feed You can follow this conversation by subscribing to the comment feed for this post.

I guess I have a slightly different take on this question. To me the objective is to reach financial independence as quickly as possible, so the target isn't a savings dollar amount, but rather the ratio of net investment value divided by annual expenses. Once this ratio hits 33x, you no longer depend on your paycheck. Your earned income affects only the numerator, but your expense rate affects both numerator and denominator. When you reduce expenses not only do you accumulate more seed capital, but also your needs also shrink, and both factors accelerate your journey to financial independence.

So while savings rate would see income and expenses as equally important, for time to financial independence, expenses are twice as important as income. In other words those frills that accumulate as your income rises over time are costing you more than you think.

The comments to this entry are closed.

Start a Blog


Disclaimer


  • Any information shared on Free Money Finance does not constitute financial advice. The Website is intended to provide general information only and does not attempt to give you advice that relates to your specific circumstances. You are advised to discuss your specific requirements with an independent financial adviser. Per FTC guidelines, this website may be compensated by companies mentioned through advertising, affiliate programs or otherwise. All posts are © 2005-2012, Free Money Finance.

Stats