Reducing my already low expenses by 20% and nearing 1 Jacob

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classical_Liberal
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Joined: Sun Mar 20, 2016 6:05 am

Re: Reducing my already low expenses by 20% and nearing 1 Jacob

Post by classical_Liberal »

@matt3121

What I find so interesting from your scenerio above is how you incorporate cash flow into the picture. You've done the same in your situation. Low rate real estate leverage is certainly one of the best ways to garner some cashflow. I'd probably be hesitant to completely count on it over a lifetime. Although, generally, I think it's probably as safe as counting on a general 4%WR from more liquid assets. Meaning it could work out just fine, but there' a big enough chance it won't that you should have some back up plans too.

Anyway, a cashflow mindset seems so different from a net worth mindset, I've been having a bit of a difficult time integrating them both in my semi-ERE. Outside of selling my time by working-for-other part time to generate the cashflow I mean. This is something I need to work on, because I think cashflow may be a bit more instinctual for some people. Thanks for your thoughts.

Matt3121
Posts: 66
Joined: Mon Sep 09, 2019 7:45 pm

Re: Reducing my already low expenses by 20% and nearing 1 Jacob

Post by Matt3121 »

classical_Liberal wrote:
Fri Jul 03, 2020 7:06 pm
@matt3121

What I find so interesting from your scenerio above is how you incorporate cash flow into the picture. You've done the same in your situation. Low rate real estate leverage is certainly one of the best ways to garner some cashflow. I'd probably be hesitant to completely count on it over a lifetime. Although, generally, I think it's probably as safe as counting on a general 4%WR from more liquid assets. Meaning it could work out just fine, but there' a big enough chance it won't that you should have some back up plans too.

Anyway, a cashflow mindset seems so different from a net worth mindset, I've been having a bit of a difficult time integrating them both in my semi-ERE. Outside of selling my time by working-for-other part time to generate the cashflow I mean. This is something I need to work on, because I think cashflow may be a bit more instinctual for some people. Thanks for your thoughts.
@classical_Liberal

Yeah, I think I started to consider the cash flow mindset when I was reading a lot of Jacobs stuff, and I had to consider where I was going to live. I realized that buying a house would save me 2k a month, so that kinda got the ball rolling in my mind. I definitely wouldn't count on it completely as is, because things WILL go wrong, you will have to pay to fix certain things. The benefits though are so much more than investing for 7% annually. I can buy a house for 20k down and start netting about 600 or 700 a month from it. So a 42% return on my investment. Even if you figure half of your income will go to expenses (shouldn't be that high though), it's still a 20% return.

I'm not even one of those crazy "Just invest in real estate and life will be wonderful" people. I think if someone buys a duplex or triplex or whatever it could be amazing. I almost bought a quadplex for 270k. My living space would have been small but renters would have paid all my expenses, and I'd have been netting a free 450 a month in equity. But that was a bit much for me and I didn't want the headache. Now I basically have the same situation but only have to deal with 1 roommate

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Lemur
Posts: 952
Joined: Sun Jun 12, 2016 1:40 am

Re: Reducing my already low expenses by 20% and nearing 1 Jacob

Post by Lemur »

@OP

Food at $100 a month...very impressive. What do you do here?

Matt3121
Posts: 66
Joined: Mon Sep 09, 2019 7:45 pm

Re: Reducing my already low expenses by 20% and nearing 1 Jacob

Post by Matt3121 »

Lemur wrote:
Sat Jul 04, 2020 8:59 pm
@OP

Food at $100 a month...very impressive. What do you do here?
@Lemur, oh I definitely don't spend 100/mo on food, I was just giving a theoretical example on how you could live cheap enough to retire ultra quick. I could get by on 100 if I worked at a restaurant and got left overs tho.

I generally spend about 220 a month on food.

horsewoman
Posts: 567
Joined: Fri Jun 07, 2019 4:11 am

Re: Reducing my already low expenses by 20% and nearing 1 Jacob

Post by horsewoman »

That's not so hard, we spend around 200-250 Euros a month on food for 2 adults and 1 teenage girl. This sum has been pretty consistent for a few years.
We are vegetarians and cook from scratch, other than that I don't think we're doing anything extraordinary. Food is relatively cheap in Germany, but I do try to get quality stuff (local/organic if possible), otherwise it would be doable to spend even less.
We do grow some of our food, and I strongly believe in eating with the seasons, so I wont buy imported out-of-season stuff.

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