Your Money or Your Life by Joe Dominguez and Vicki Robin
Your Money or Your Life is one of the better books i have read on how to retire, specifically, how to become financially independent.
Its only error is that it was written before cryptos were a thing, and back in a time when bonds where sure fire, safe investments. So, besides the last chapter, it is a really solid book. I highly recommend it. So highly that i have repurchased this book a dozen times, having given them away.
The thing about today's retirement planners are that they work on a model of getting enough capital (nest egg) to pay you, what you are making now, for the rest of your life. Nice idea, but it is really hard to get to that size of savings. Further, it is not future proof. If a stock market crash happens, you have no way of regaining your wealth, or if inflation becomes extremely high, or medical care becomes extremely costly.
There is another way. Make your living expenses zero.
Imagine if you won the lottery, and instead of doing what most of the lottery winners do, buy a fancy house, buy a fancy car, pay for fancy trips, you instead got a reasonable house, with land you can homestead. That you put in a mostly automated greenhouse, you built up a garden. You installed solar panels, enough to cover all your needs. You paid off the house, you bought bonds to pay the property tax. That you basically have reduced your monthly bills to almost zero. You can now, live pretty easily, no matter what happens to the financial markets.
The book, Your Money or Your Life actually talks about handling your retirement from both ends. However, i am mostly going to be talking about how to reduce your monthly bill to zero, because that will really work in the coming SHTF.
Paying of the house vs not paying off the house
One of the big questions for retirees is, pay off the house or not.
And the money people answer it this way: If you make more from your portfolio than you pay in interest on your mortgage payment, it is better, financially, to keep the mortgage.
But this is only one way of looking at it, and it is only concerns finance, avoiding all other concerns, and assumes that the financial system will stay the way it is. (which is a big IF, in our current time)
Can you imagine owing $100k on your house, and you have $100k in the bank, then, suddenly, the bank has a holiday, the money is revalued, or the bank is closed, and you will get your money later after the bankruptcy finishes. Now, the banks see you not paying them as your fault, and now you are in fear of losing your house. That they are holding your money hostage is just seen as circumstances of the bankruptcy.
Holding that money in the bank, or investments, is betting that something doesn't happen that leaves you without access to that money. And, as we get closer to the great reset, this is more and more likely. And as the yield on investments get smaller, the savings doesn't math.
But really, there is really only one question: Do you want to live in this house/property for life? If this is your forever home, your homestead, that having it full under you control is important. Much more important than the percent or two you might save. And the feeling of relief of not having a bill is worth quite a lot.
If you live somewhere you do not care about, than leaving the mortgage unpaid is a better plan. You have more options if you need to move. The money you would use to pay off the house is available to be put to better uses. And, having the cash puts you in a much better position when negotiating for a new place, or the bank playing games.
Paying off the house, putting in solar…
Solar electricity usually has a payoff of about 20 years. (depends on your location and govern-cement programs) Twenty years is a long time, however, that could go to 10 years if the electric company jacks up their rates.
But, how much is your peace of mind worth? To know that you aren't relying on the grid for power. To be free of the games that power companies are playing.
If you are living at your homestead, paying off your home, putting in solar, and such similar things is getting rid of a bill that is draining your life. The person in debt is a slave. And every chain you remove is a step toward a better life.
When you pay off your bills, you have less money you have to make each month to survive. The money you earn goes farther.
You can increase your nest egg and/or decrease your expenses.
The two paths to retirement or financial independence.
You can earn $4000 from passive income, with $3000 of monthly expenses or
you can earn $1000 from passive income, with $0 of monthly expenses.
Both are seemingly equal from a monetary point of view.
However, depending on your life path, they are VERY different.
If you are still working and do not want to settle down, or haven't found your place yet, than having a mortgage and enough money to pay it off gives you a lot more freedom. You have a lot of potential waiting for a direction.
If you already know where you want to be, taxes on $1000 a month is almost nothing. You are far less beholden to the govern-cement. Further, the things that allow you to live your life are much more difficult to take from you. (Having a mortgage means the bank owns the house, and any error can cost you your house)
Of course, this choice is only mostly equal as long as the financial system stays as it is.
If When the stock market gets shut down because of the rampant fraud that is uncovered, your stock portfolio may be worthless. Whereas if you have your homestead working, if the entire financial system collapses, you will be better off. If food goes up 100% you will be much better off. If the power grid fails/is taken out, you will be much better off.
Almost all bills can be reduced to zero, if enough thinking outside the box is applied. Still the big ones are easy.
House . . . $0
Electricity $0
Heating . . $0
Food . . . . .$0
Auto . . . . .$0
If you have a source of income, than it goes sooo much further. The freedom felt in this state is wonderful (not everyone chafes against the system as much) and so, may be worth going down this path, just for that feeling.
And, since i see the coming collapse, unCivil War, monetary reset, hyperinflation, famine, ice-age… coming. As a when, not an if, you all know which side of the equation i work most on.
However, bitcoin may completely change this. If bitcoin becomes the thing, everything else is priced in, it becomes the ultimate savings vehicle. It can't be taken away by the stock market shuttering, or the bond market collapsing. It will be better than gold, as it will increase with the GDP of the world.
Further, with owning a few of the correct cryptos, you may find yourself in a place where you don't care / don't need to care. You could have so much wealth, that as long as you don't choose to play the super-yacht lifestyle, you will have enough money to last forever.