I created a new tool, which was a pain in the butt to create, but I think it’s pretty nifty.
Key inputs (all in yellow):
- Liabilities (including interest rates)
- Desired annual funding of each account (in green; put $0 if you don’t care to fund the particular type of account, like a 529 if you have no/grown kids)
- Desired retirement age
- Wealth over time
- Automated optimal debt repayment schedule (shown in blue, but you can override if you’d like)
- I hard-coded $0 extra repayments towards mortgage in row 118 for now, but feel free to override by copying down the blue row above it.
Let me know what you think. As with any model, it is very sensitive to the assumptions. I assumed a 3% real return, which is probably somewhat conservative. If you change this number, of course, the output model will change considerably.
It’s downloadable here (link).
This spreadsheet, along with common sense, shows that the only way of accruing wealth (or getting out of debt) is to spend less than you earn. This is why I ruthlessly remove any expenditure from my life that doesn’t add value, which frankly is most expenditures other than the necessities of food, shelter, clothing, and my $15 3mpbs internet. I just spent a few days trouncing around the mountains with my family for a couple of bucks of gas and a couple of bucks in granola bars. The best things in life don’t cost much money.
Curious to see what your $100/month cell phone plan is costing you over your lifetime? Play around with the model and see. With this model, it’s easy to visualize how your consumption decisions today will influence your future wealth (and thus your future ability to consume).
People who criticize me for being naively cheap fail to understand that I’m simply trading off consumption today for either consumption or free time later in life. When my broke peers are eating beans and rice out of necessity in their old age, I’ll be eating beans and rice (b/c it’s cheap, healthy, and environmentally responsible) when I’m older while being financially secure. Does this mean I’m crazy?
Let me know what you think of the sheet and whether you found it helpful.