Strategy to reach FI

[aznboi1107]

Hello,

So I'm thinking maxing out my 401k, IRA, and whatever is left into a brokerage account. Do I include all of that as part of my saving percentage? Or is it after taxes only?

Next, Let's say I saved 50% of my money after taxes from a regular job and then I also build a side business that would equal my savings rate after taxes from my regular job. Would that cut my retirement rate of 50% savings of 50% in half?

[prognastat]

I would count anything that goes to savings or is invested as part of savings.

I'm not sure exactly what you mean about building a side business as far as it affecting savings rate. If it brings in more money and you put it towards savings/investments I would count that.

[aznboi1107]

Ok I'll write it.

Let's say I save 50% of my money after taxes from my regular job. Then I make a side business and also save 50% after taxes. How would I calculate that towards how many years I need to save to be FI.

[prognastat]

It depends a lot on what you consider FI, for many this is having 25x your expenses invested.

So if you had 50% savings rate on your regular income and then got a side gig with 50% savings rate it wouldn't speed up your FI time as you increased your spending by the same percentage as the savings. You would need to save a higher percentage of your side gig income to speed up FI.

In the end what you need to look at is the total amount of spending you do and how much savings you do in total from all sources of income during the same time frame. The higher the % of those two that is being saved the faster you will reach FI.

The exception of course would be if you plan on reducing your spending when you reach FI, however it's harder to reduce spending than it is to keep it low.

[aznboi1107]

Wow exactly the answer I needed thanks man you rock!