241 | Troy & Lindsay Calculate Their FI Number with Brad | Households of FI

<h3> </h3> <ul> <li>The Troy and Lindsay are new on their journey, finding FI several months ago after making a budget and realizing they had no money left over at the end of the month. Compared to other systematic approaches to becoming debt-free, they felt FI was creative and adaptable to a variety of lifestyles.</li> <li>The first step Troy and Lindsay took was to determine where all their money was going using a budget tracker, which enabled them to cut monthly expenses and continue to do the things they enjoyed doing, like going to happy hours.</li> <li>Except for their mortgage, the Troy and Lindsay have paid off all of their debt, contribute to a 401k, and have an $80,000 net worth, including a $15,000 emergency fund.</li> <li>Though they both enjoy their jobs now, Lindsay is a teacher, so Brad suggests considering her pension's “worth vs worth it” as Grumpus Maximus has discussed on the podcast and in his book, <a href="https://www.choosefi.com/the-golden-albatross/" target= "_blank" rel="noopener">The Golden Albatross.</a></li> <li>Use the 4% rule of thumb to determine what your net worth should be to reach FI. Using the 4% rule, you can withdraw 4% of the balance each year to live off of and reasonably expect it to last for the rest of your life. To calculate your FI number, multiply your annual expenses by 25. For every $100 cut from your monthly expenses, is $30,000 less you need to save to reach FI.</li> <li>Troy and Lindsay recently refinanced their mortgage from 4.75% to 3.25% and are investing the $500 a monthly savings into 401ks and Roth IRAs.</li> <li>When wondering about paying off their mortgage, Brad acknowledges that there is a real psychological satisfaction the goes along with it, but he looks at it in this way. The interest portion the payment is the true expense, while the principal payment is a reallocation of net worth going from your checking account into home equity.</li> <li>Brad suggests taking the time to document a year's worth of expenses and look at different scenarios for wha