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URL:  http://boards.fool.com/matt-at-what-age-in-life-did-you-and-your-19453835.aspx

Subject:  Re: FIRE checker for Fools Date:  8/13/2003  5:24 PM
Author:  SloanT Number:  354 of 5085

Matt:At what age in life did you (and your spouse) achieve a net worth equal to that of your household income?

In The Complete Idiot's Guide to Getting Rich by Larry Waschka the author lays out the three stages of wealth. I loaned my copy out, so I may be butchering this, but I believe this is how it went:

Stage 1: You spend less than you earn and save the difference. You are accumulating wealth.

Stage 2: Your savings appreciates in value (not including new contributions) an equal or greater amount than what you contribute. i.e. You have a $100,000 port earning 10% and your annual savings are $9000. Your port is appreciating by more than what you are saving, and if you wanted you could stop saving so much.

Stage 3: Your savings appreciate in value an equal or greater amount than your annual income. At this point you are essentially FI without the safety net of 25x spending.

I like to use these three guides to gauge my progress on the road to FIRE. So far I am still in stage 1, but I am working on getting to stage 2. I estimate it will be another 5 years or so. One of the funny things about a high savings rate and assuming that spending increases with inflation and not with salary is that I will likely achieve Stage 3 at the same time I hit stage 2. According to intercst's spreadsheet I will save more than I spend in four years and then it's just another year after that before my port will appreciate more than I spend.

By the way, I recommend 'Guide to getting Rich.' It's not anything earth-shattering for anyone who is personal finance savvy, but I recommend it for anyone who is trying to learn more on the subject. If you'll look next time you go to a half price books, they're impossible find, unlike most 'idiot's guide' books. Good stuff.

st
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