a $1,500 bill is worth $562,500
Erasing a $1,500 bill from your month is worth about $562,500 in savings.
That applies to anyone still carrying a mortgage, a car loan, or any payment with an end date.
Your savings target gets built off your bills, so cutting a bill cuts the target.
Say your savings pays you 3.2% a year once you retire, and use your own number if yours is different.
Every $100 a month you take off your bills is about $37,500 less you have to have saved.
So a $1,500 mortgage payment that ends is about $562,500 of savings you never have to build.
Housing is usually the biggest bill in the month, which makes it the biggest lever.
I lived in one side of a duplex early on and rented out the other side, which put my own housing cost at about $350 a month.
This only counts when the bill actually ends.
A mortgage paid off on schedule, a car loan finished, a move to a smaller place.
And it only counts if you didn't empty the portfolio to end it.
So before you decide you need another million dollars, write down what your bills will look like the month after your paycheck stops.
As promised, income over wealth in under a minute.
- Dan
That applies to anyone still carrying a mortgage, a car loan, or any payment with an end date.
Your savings target gets built off your bills, so cutting a bill cuts the target.
Say your savings pays you 3.2% a year once you retire, and use your own number if yours is different.
Every $100 a month you take off your bills is about $37,500 less you have to have saved.
So a $1,500 mortgage payment that ends is about $562,500 of savings you never have to build.
Housing is usually the biggest bill in the month, which makes it the biggest lever.
I lived in one side of a duplex early on and rented out the other side, which put my own housing cost at about $350 a month.
This only counts when the bill actually ends.
A mortgage paid off on schedule, a car loan finished, a move to a smaller place.
And it only counts if you didn't empty the portfolio to end it.
So before you decide you need another million dollars, write down what your bills will look like the month after your paycheck stops.
As promised, income over wealth in under a minute.
- Dan