It’s not a suggestion or a recommendation. It’s a challenge. If you can find a way to meet this savings challenge, you will be rewarded handsomely.
Living on half of your take-home pay, or to put it another way, saving and investing as much as you spend, should lead to financial independence (FI) in roughly 15 to 20 years.
With a 50% net savings rate, representing 35% to 40% gross savings rates, these physicians are indeed financially independent in 14 to 19 years with a realistic range of real (inflation adjusted) returns from 2% to 6%.
All you have to do is live with a budget of 60% to 340% more than the average American household, which spends about $50,000 a year.
You can spend half your paychecks, and we won’t count debt payments as spending. As long as the other half of that check is being used to retire debts, it’s being put to good use.