Your goal might be to get out of debt or to save up an emergency fund or start investing for your retirement and I want to be helpful to you in that process. No, we didn’t inherit money (nor will we) and no, our parents didn’t buy us houses or cars, but crucially, they did pay for our undergraduate education. With that, we’re now officially FIRE’d (financially independent and retired early), with the caveat that I continue to work part-time as a freelancer. The second profound life change this spring was Mr. FW’s early retirement! If you’re considering paying off your mortgage, and if you’ve met at least the top three criteria outlined above, you’ll want to plan ahead. By paying off your mortgage, you are reducing your reliance on market increases.
In fact, I have many times counseled against it in Reader Case Studies over the years. At any rate, this is not about my favorite topic (moi…. ), so I’ll try to get back on point. I like my part-time schedule because it allows me to be with the kids and spend a lot of time outside working on our homestead. But I also have no plans to work full-time.
- In fact, I have many times counseled against it in Reader Case Studies over the years.
- You can’t avoid your finances forever – we’ll create a personalized, easy-to-follow financial roadmap to ensure a robust financial future.
- When we got married in 2008, we didn’t have much money, but we didn’t have any debt.
- Your goal might be to get out of debt or to save up an emergency fund or start investing for your retirement and I want to be helpful to you in that process.
Meet The Frugalwoods
According to the Federal Reserve, Millennials in their twenties carried an average debt of $22,135 last summer. And for the millions of Millennial freelancers toiling away in the “gig economy” — which is growing larger each year — benefits like 401K plans and employer-paid insurance slide further out of reach. That’s before their paychecks are flattened by rent, utilities, and exorbitant health insurance premiums and deductibles. There’s still time to join us in revolutionizing our finances this month—link in bio! For that reason, she told PBS, she prefers to describe herself as “financially independent.”
Empowering You to Build Financial Security & Confidence
However, this percentage will fluctuate over time thanks to the income from our rental property and my freelance work. And so, a reasonable thing to do is to pay off a mortgage to lock in that savings going forward. The greatest danger to the next 50 years of your economic viability comes in the first few years after your retirement.
- We avoided incurring debt from undergrad through a combination of attending an inexpensive state school, working while in college, scholarships, and–most crucially–financial help from our parents.
- Crucially, we have the time, space, freedom and clarity of purpose that we lacked nine years ago.
- In paying off our mortgage, we traded maximum possible end value for a reduction in variance.
- He retired early, and I left my unfulfilling job to focus on helping people like you.
- We figured if we lived frugally enough and saved well enough, we could obviate work-for-pay from our lives.
How To Pay off a Mortgage
Yes, you might be able to get a Home Equity Line Of Credit (HELOC), but that’s not a guarantee and certainly not if you’ve lost your job. 2) A paid-off house is an illiquid asset. That does not mean 7% every year, it means a 7% average over the lifetime of an investor.
Why Homesteading?
Hard to believe I’ve been doing this for so long yet am still invigorated and excited to type words at you and help people with their money!!!! I believe that managing your money opens up a world of options for how to live your life. I’m a financial consultant who helps people figure out their money. Meet the Frugalwoods is the intriguing story of how Elizabeth and Nate realized that the mainstream path wasn’t for them, crafted a lifestyle of sustainable frugality, and reached financial independence at age thirty-two. This was made financially possible by the fact that we’d always lived well below our means and that we’d continuously increased our salaries over the years, while saving ever higher percentages.
Confront & overcome your feelings of financial fear and insecurity
You should aim to have everything paid off, from student loans to credit card debt, by age 45, O’Leary says. But, the data is only slightly better if you are living in retirement for 20 years. The above data refers to people who will be retired for 35 years. The average Social Security retirement benefit check is $1,907 as of January 2024. If your bank interest rate is more than your mortgage rate, keep the mortgage for now. When we got married in 2008, we didn’t have much money, but we didn’t have any debt.
Without advertising income, we can’t keep making this site awesome for you. Custommapposter is a website that shares useful knowledge and insights for everyone about finance, investing, insurance, wealth, loans, mortgages, and credit. If you take more than this from your nest egg, it may run short; if you take less or your investments earn more, it may provide somewhat more income. This Is the Average Income for Retirees in America The median income for Americans 65 and older is $50,290. It can also benefit those who have a high-interest mortgage or who don’t benefit from the mortgage interest tax deduction. So while today’s post is allllll about the mortgage and the FIRE, this won’t become the focus of Frugalwoods’ work.
Start The New Year In Control Of Your Money
Mr. Frugalwoods and I both went to college at the University of Kansas (where we met our freshman year), did relatively well, graduated in 2006 without any debt, and got good jobs. Join me as I take you on an incredible journey through the defining moments and decisions that have shaped my life and led me to embrace a life of financial freedom and purpose. So, the more you withdraw in order to pay off your mortgage, the more potential tax burden you may face. This is because these other types of debt frugalwoods likely have higher interest rates.
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Today, they are financially independent and living out their dream on a sixty-six-acre homestead in the woods of rural Vermont with their young daughter. My writing is a narration of our successes, foibles, and lessons learned along this path to a wholly unconventional, whimsical, and purpose-filled life. We’re striving for a life where we work hard, but on projects that are rewarding.
Mr. FW Retired and We Paid off Our Mortgage: Frugalwoods FIRE is Complete – Frugalwoods (
The Frugalwoods are tight-lipped about their income, though back in 2012, before they moved to Vermont, the couple bought a $460,000 four-bedroom house in Cambridge, a short walk from MIT, according to their blog; last year, they rented it for a monthly rate of $4,400. He retired early, and I left my unfulfilling job to focus on helping people like you. Our income is much lower than when my husband was working, but we live happily and we live well. We continue to invest for retirement (through my solo 401k), contribute to our taxable investments, save into 529 college savings plans for our kids, and add to our Donor Advised Fund for charitable giving.
There’s a lot that we love about dense, urban environs, but it was time for a change. Our desire to live in ways that we find personally meaningful was powerful. At first we thought, ok, we’ll move to the woods when we retire at 65.
Welcome to the NEW (looking) Frugalwoods!
Before the Frugalwoods, there was Broke Millennial, a self-described “financially independent” New Yorker whose parents covered half of her college tuition and began teaching her about building capital when she was seven years old. Following the 2008 recession, a new kind of self-help guru — the Millennial frugality expert — emerged from the rubble. Many of the modern rich are prolifically frugal, and for Americans who dream of a more gilded life, the art of bean counting can become its own form of religion. This is one of the most integral metrics of the Millennial experience because of its implications for how much money a young person can save.
This moderation plays out not only in the way we spend money; it permeates everything we do. That brings us to the present day and what I identify as the “Frugalwoods financial maintenance phase” (hat tip to my favorite podcast). We “practiced” this for several years while saving my husband’s income, which was a fabulous way to determine the feasibility of this plan. We’ve never initiated a drawdown of our assets because we’re able to continue living on my income combined with the net profit of our rental property. I seem to have a knack for birthing children at REALLY stressful/busy times. I left my office job after Kidwoods was born and started working more hours on freelance writing and Frugalwoods.
This was accomplished, yes, through extreme frugality, but also through having good, white-collar salaries. During 2014–our first lean Frugalwoods year–we vacillated between saving 65%-82% each month making our average savings rate 71.4%. →Eliminating everything is an easy way to figure out what you value and what you want to add back into your life. The way my husband, Nate, and I decided to achieve that was through financial independence. I wanted to change how I lived. A job I was fortunate to have.
We’ve settled into a more temperate version of our old selves, which extends its tendrils into every aspect of our lives. In the spring of 2021, we made the decision for Mr. FW to retire from his job as a software engineer after being with the same company for 14 years. We continued to save at a pretty high rate–typically saving all of my husband’s salary and living off of my income combined with the rental income. We moved to Vermont full-time in May 2016 and began renting out our Cambridge house in June 2016.
If you simulate retirement over the course of known financial history, there is a very specific set of circumstances whereby a person fails (runs out of money) in retirement. When you pay off a mortgage, you’re not going to end up with the highest dollar return at the end, but you’re also way less likely to run out of money. You can’t use a paid-off house to buy groceries or fix your car or pay for health insurance if you’ve lost your a job. A paid-off house essentially returns the rate of your mortgage interest rate. This makes it easier to put a down payment on a house, build a portfolio, and — if you’re lucky — retire early, Frugalwoods-style. The 2008 recession may have cratered the wages and employment prospects for people just entering the job market, but according to the myth of the American Millennial, the real problem young people have today is themselves.
The better question, however, may be whether that’s enough for a 70-year-old to live on in retirement so that you can align your budget accordingly. If your bank interest rate is less than your mortgage rate, pay it off. As a result, an oft-stated rule of thumb suggests workers can base their retirement on a percentage of their current income. That could reduce your retirement income too much. Based on this rule, if your annual preretirement income was $100,000, you need $80,000 a year in retirement to cover your expenses. I get bored writing about myself (I mean, kinda…. ) and I want to dig into stuff that’s relevant to your life and your financial journey.
