Meet the Frugalwoods: Achieving Financial Independence Through Simple Living Elizabeth Willard Thames

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.

The Importance of Savings Rate in FIRE

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.

Frugalwoods online community

If we’d had lower incomes, we wouldn’t have been able to save nearly this much. It was a necessary examination for us, but after a few years, we realized it wasn’t sustainable for a lifetime (at least, not for us). It was a transformational experience that made us realize how much money we’d been wasting on stuff that ultimately did not matter to us. I define financial independence as no longer needing to work for money. We’d also, of course, no longer have that employer’s salary, retirement benefits or healthcare.

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.

You should aim to have everything paid off, from student loans to credit card debt, by age 45, O’Leary says.
The calculation we made (in spring 2021) is that paying off our mortgage in this interest rate environment is akin to a bond allocation for our portfolio.
An additional factor spurring us on is that we don’t know how long we’ll be around–life is short and unexpected.
In 2014, Liz wrote that she and Nate both maxed out the $17,500 federal limit on 401K contributions, explaining that these didn’t factor into their annual percentage of saved income, which was already a whopping 71 percent.

Do You Really Need That? Don’t Be Owned By Your Stuff!

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.

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.

We’ll stay in touch regularly, making sure you not only understand what you need to do next, but also have a clear picture of your lifelong financial path. By taking the time to understand your specific needs, I will provide personalized financial advice that truly benefits you. I’ll help you understand how much you need for retirement, when you can retire, and how to ensure you don’t end up penniless. If you’re ready to release your financial fears and confidently spend on what matters most to you, I will help you get there! And since you’re on this journey with me, I MUST know… Crucially, we have the time, space, freedom and clarity of purpose that we lacked nine years ago.

Mr. FW’s Early Retirement

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.

I’m a financial consultant who helps people figure out their money

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.

–and read the advice I offer on their money questions.
The Bureau of Labor Statistics puts the median weekly income for Millennials with a high school diploma at $692, which amounts to barely $36,000 for a full-time annual salary.
Mr. FW loved his job as a software engineer and was with the same company for 14 years.

Welcome to the NEW (looking) Frugalwoods!

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 likely have higher interest rates.

We figured this was what our lives would be for the next years. I never want to lose sight of how fortunate I am to have a family who could support me through college and launch me into the world without debt. Learn about the pivotal choices we made to break free from the cycle of consumerism and materialism, leading us towards a homesteading lifestyle in a rural setting.

What do you want to read about on Frugalwoods this fall?

We figured if we lived frugally enough and saved well enough, we could obviate work-for-pay from our lives. I felt like I was bumping through life as a balloon just ricocheting off of other people’s expectations. A job at a nonprofit that paid pretty well.

The frugalwoods good thing about a mortgage is that it’s denominated in the dollars you originally paid for the house. Sure, you could sell the house, but then you’ll need to pay for somewhere else to live. By comparison, historical stock market trends demonstrate that–over many decades of investing–the market delivers somewhere in the range of 7% annually. Longtime readers well know that I’m not a “pay off your mortgage at all costs” evangelist. A recent study by ApartmentList claims that the rarefied minority of debt-free Millennials are putting away twice as much money as their counterparts who are still paying off balances. #frugal #frugalliving #frugallife #frugalmom #frugalmama #frugalwoods #homestead #homesteading #homesteadlife #woods #vermont #vermontlife #vermontfarm #intentionalliving #minimalism #vermontermade #winter #2017bestnine

A guaranteed way to retire without a mortgage is to sell your current home at a profit and use the proceeds to rent a place to live in during retirement. At a shorter retirement, a full 81% of the lowest income quartile and 8% in the highest income quartile will run out of money. It’s generally not a good idea to withdraw from a retirement account to pay off a mortgage. The broader point is that, when you pull the trigger to retire, it’s likely the market will be high because that’s when you’re going to hit the net worth number you’re comfortable with.

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.