Whew, things got pretty crazy over the weekend with that controversial guest post. I’d like to lighten up a little bit with two interesting things that MMM readers have created to share with each other.
#1 The Fancy Graphical Version of the Shockingly Simple Math:
Do you remember that post I wrote a while ago, explaining that the solution to all monetary problems lies in understanding and controlling your savings rate, rather than focusing relentlessly on income? It was called The Shockingly Simple Math Behind Early Retirement.
Well anyway, a guy made a slick and beautiful interactive graphic version of it that is much more fun and intuitive to play with than my article will ever be. It’s right here: http://networthify.com/calculator/earlyretirement
My enthusiastic thanks go out to ‘Kablamo’ from London (and I hope we don’t crash your web server!).
#2: A Savings Extrapolator Tool that Rewards you with a Growing Mustache:
A famous and cheerful Excel spreadsheet ninja who goes by the name Chandoo created a simple but fun spreadsheet that extrapolates 10-year savings from various expenses you promise to slice from your fatty budget. He probably used the formulas from the antique MMM classic article called “Eliminate Short-termitis: The Bankruptcy Disease“. If you just want the numbers, here’s what I said:
- to calculate a weekly expense compounded over ten years, multiply the price by 752
- for a monthly expense, multiply by 173
You can see it in action here:
The excel file is here:
I hope these clever tools help to spice up your Monday.
Perhaps I’m dense, but I feel this is a bit too simple to work if it doesn’t include the effects of income tax, particularly in a progressive tax system like there is in my country.
Eg, on a gross $100k pa, in my country (New Zealand)I would net about $68k. Suppose I save half and spend half, a 50% savings rate. If I want to retire when I have enough saved to generate a *net* $34k (what I spend) then I actually have to save enough to generate $40k gross.
The details are going to differ depending on which country you live in, but the calculator linked to is going to greatly underestimate the sum required to accumulate, especially for people who are aiming high relative to the top tax threshold.