Earning More/Less When Nomading™
Since we're comparing multiple
Gross Paychecks and Expenses both increase with inflation over time.
With income varying, the amount able to be saved varies too. When you earn less with the same expenses, that means you save less. When you earn more with the same expenses, you save more.
The chart below also includes unrented properties (that's the one you're living in) as part of your expenses. Your mortgage payment (principle and interest) remain fixed (unless you refinance, pay it off or move to a different property), but taxes and insurance do change over time.
Once you achieve financial independence and you stop working your job, your savings from your job goes to zero (actually it goes negative since your income is zero and your expenses are subtracted from zero).
Achieving Goal of Financial Independence
What is the first month you've achieve financial independence? We define financial independence as the sum of the following exceeds your Minimum Target Monthly Income in Retirement (MTMIR):
- Cash flow from rental properties and
- Passive income (like social security, pensions, annuities) and
- Your Safe Withdrawal Rate times your total Account Balances
How quickly do you achieve your goal of replacing your Minimum Target Monthly Income in Retirement from your cash flow, passive income, and your safe withdrawal rate times your account balances? This chart shows what percent of your goal you've achieved over time. The dotted black line is when you've achieved 100% of your goal and you've achieved financial independence.
A major factor in calculating Debt-To-Income is income. The Real Estate Financial Planner™ software does check your Debt-To-Income before it allows you to purchase your next property.
Minimum Gross Monthly Income Required
What's the minimum gross monthly income required to execute the strategy?
Number of Properties Owned
Your income impacts how quickly you can save down payments and qualify to buy your next property. The following chart shows how many properties you own over time for the 3
The impact on your overall Net Worth?
First $100K Is The Hardest
Charlie Munger says that saving up your first $100K is the hardest. So, how quickly does each of these strategies save up their first $100K?
Let's then look at how long it takes, in months, to build a Net Worth of a million dollars in $100K increments.
Same data showing how long it takes to achieve each $100K but presented as connected lines instead of as columns.
The following shows what happens if we zoom in and just look at how quickly these achieve a net worth of one million dollars.
We've limited the $100K charts above to just show up to the first $1MM (ten $100Ks).
The chart below shows how long it takes, in months, to acheive groups of one million dollars.
To get additional information on the models we're comparing, you can check out the narrative Blueprint describing in extreme detail what is going on or link to copy the Scenario and see a shorter summary below.
- Blueprint™ or College Station, Texas Nomad™
- Blueprint™ or 01 Nomad™ Earn 10% More Income from Job
- Blueprint™ or 02 Nomad™ Earn 10% Less Income from Job
More Model Comparisons for College Station, TX
- Nomad™ vs 20% or 25% Down Rentals - What if instead of buying properties as a Nomad™ you bought a single property to live in and then put either 20% down or 25% down to buy rentals directly?
- Self-Managed vs Professional Property Management While Nomading™ - In the baseline Nomad™ scenario you're self-managing your properties. What if you hired a property manager and paid them 10% of gross rents collected?
- Buying at a Discount or Paying a Premium When Nomading™ - In hot seller's real estate markets, you may be asked to pay a premium above current Fair Market Value. In softer buyer's real estate markets, you may be able to more easily buy properties at a discount from the current Fair Market Value. What difference does that make on your journey toward financial independence? Does being able to get a 5% discount or 10% discount really have a signficiant impact? What is the cost of paying a 5% premium or 10% premium to get your offer accepted and buy properties in hot markets?
- Having a Real Estate License While Nomading™ - What if you got your real estate license while Nomading™? You could get a discount equal to your commission or choose to earn the commission when you buy effectively reducing the amount you need for your down payment by the commission amount.
- Better or Worse Rents When Nomading™ - What if you were able to get slightly better or slightly worse rents? What impact does that have? You could get 10% low