daylatedollarshort
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Feb 19, 2013
- Messages
- 9,358
One thing I find interesting is that he's not budgeting - he's just claiming straight-up cash accounting (assuming his numbers are legit). Notice he doesn't have anything listed for the eventual items: accidents, appliances, home maintenance, healthcare, etc. He squeeks by with some good results, and says he only spends $25k/year.
Assuming the initial $400K house, $400K investable assets:
4% real return on the $400K of investable assets = $16K, not $25K
Budgeting 1 - 2% for repairs on the original $400K house would mean allocating $4 - 8K for annual home maintenance or reserves for future home maintenance alone, out of the $16K.
Maybe some households of 3 can retire forever on $800K of net worth in their thirties, but I don't see how it could be done on $400K of investable assets and a $400K house to support. I don't see how one can have a sustainable withdrawal rate of $25K for 60 or so years on $400K, even without all the travel and other expenses attributed to the business and not included in the $25K.
Annual home maintenance costs:
"According to a report by the University of Illinois Extension, homeowners need to budget 1% to 2% of the purchase price of their home, each year, to cover the costs of home maintenance and repairs. That’s $3,000 to $6,000 a year on a $300,000 home, and if it’s older or has appliances that will soon need to be replaced, you may need to set aside as much as twice that amount."
Sources:
https://www.mint.com/blog/goals/home-repair-02022011/
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