How To Measure Fiscal Responsibility: Calculate Your FS-FR Score

FS-FR Score For Fiscal Responsibility
FS-FR Score Of 50

Want to know how to measure you fiscal responsibility? The key is to calculate your FS-FR score.

So far, we've got the Financial Samurai Debt And Investment Ratio (FS-DAIR). It provides a logical framework for deciding how much to invest and how much debt to pay down every time you have some disposable income. The acronym smartly “dares” people to take action with their finances.

I now announce the Financial Samurai Fiscal Responsibility Score (FS-FR). FS-FR measures each individual's fiscal responsibility level in a fun and easy way. It is also known as the Home-To-Car Ratio.

I expect some of you who have a low FS-FR Score will probably not be very happy with the concept and bash the crap out of it. But, that's part of the fun!

Financial concepts are usually quite dull and hard to comprehend. As a result, they are never followed. But if you come up with something simple like the 1/10th Rule For Car Buying, it might just catch on and save thousands of people from spending more than they should on a depreciating asset.

Before publishing this post, I researched the internet and found nothing similar to the FS-FR Score. Therefore, I'm pleased to report that once again, a new concept is born that may revolutionize our finances! 

Measuring Fiscal Responsibility With The FS-FR Score

We all know that a car is a liability with a 99% probably of losing value over time. The only cars that appreciate over time are collectibles that are often left untouched for decades. The normal person can't afford a collectible car.

We all know that a house is an asset with at least a 50% probably of gaining value over time. That probability goes up the longer you own the property. The times when homeowners get in trouble are when they take on too much debt to buy a house, or have to sell during a down market.

Both a car and a home are part of the “American Dream.” If a home tends to appreciate in value and a car tends to depreciate in value, the logical conclusion is that one should have much more house up to a certain point and much less car if they want to build wealth over time.

Let me be clear that determining “fiscal responsibility” is quite a subjective effort. The FS-FR Score is only one way to determine whether you're destined to run on the hamster wheel forever, or not. The FS-FR Score will be skewed lower for younger people and people living in lower cost areas.

Baseline FS-FR Score Is Based On Homes And Cars

To build the baseline FS-FR framework, we need to take the average price of a home in America divided by the average car price in America to get a score. You can do the same for whichever country you live. If you wish, you can also take your total value of all properties divided by the total value of all automobiles, so long as you are consistent with comparing totals with totals.

$40,000 is the average price of a car in 2021 according to Kelley Blue Book. And $380,000 is the median home price in America according to the US Census report.

Baseline FS-FR Score: $380,000 (median home price) / $40,000 (average car price) = 9.5. In other words, the typical American has an FS-FR Score of around 9 – 10. The higher your FS-FR Score, the better because that means your car's value is a smaller percentage of your home's value. The other assumption is that the average person spends way too much on a car.

So what happens if you don't own a car, but own a home? 

You automatically get a score of 21. If you have the ability to own a home, yet shun owning an automobile, you've got a wealth building mindset. You're resourceful because you take public transportation, car pool, and/or work from home.

So what happens if you own a car, but not a home?

If you are under 35 years old, then your status is uncertain. But if you are over 35, you move to the bottom tier for fiscal responsibility because the median age for first-time homebuyers is 31 according to I've provided a five year cushion beyond the median home buying age to help those who started out working later.

Of course, there are plenty of circumstances where one is fiscally responsible despite owning a car and not a home over the age of 35: folks who delay work due to graduate school, folks who have mobile jobs, and folks who don't want to be tied down to property. However, given the nature of inflation, rents, and real estate, if you don't at least own your primary residence, then you are falling behind every year if you ever do want to own a property.

Finally, what if you don't own a car or a home?

If you're under the age of 35, then your status for financial responsibility is also uncertain. Public transportation is getting even easier thanks to the likes of Uber, while real estate prices are out of control for the median income earner in cities like New York City and San Francisco.

If you're over age 35 and don't have a car or own property, you're in the middle of the pack with a FS-FR score of 10. The older you get without owning a home, the lower your score. But of course, it all depends on what you do with the money you aren't spending on a home. If you're wisely investing your money, then you're doing great.

Financial Samurai Fiscal Responsibility Score Chart

FS-FR Score REAL LIFE Examples

1) Mechanical Engineer, Age 36. Rents. Car: $40,000 used BMW 535i. FS-FR Score <5

2) Roofer, Age 52. Home: $780,000. Car: $250,000 consisting of five cars and two motorbikes. FS-FR Score = 3.1

3) Software Engineer, Age 39. Home: $720,000. Car: $25,000 Hyundai Sonata. FS-FR Score = 28.8

4) Entrepreneur, Age 37. Home $1,350,000. Car $20,000 Toyota Yaris.  FS-FR Score =  67.5

5) CEO of Publicly Traded Company, Age 37. Home $10,000,000. Car $130,000 Tesla P85+.  FS-FR Score = 77

6) Retiree, Age 69. Home $1,000,000. Car $3,000 1997 Toyota Avalon. FS-FR Score = 333

What's the missing ingredient here? Debt And Income, of course!

Perhaps the Mechanical Engineer who bought a $40,000 used BMW 535i is making a lot of money and just wants a lot of freedom. Actually, he makes $110,000 a year and rents because he bought a property and short-saled it in 2010.

His credit is ruined, and can't afford to buy for another three years. He is fiscally irresponsible because he decided to buy a $40,000 car after he stuck his old property back to the bank, and ultimately hurt taxpayers.

Take a look at the 69 year old Retiree with a FS-FR of 333. He's owned his same Toyota Avalon for 18 years, and bought his home 25 years ago. He has no mortgage, no debt, and a pension of roughly $70,000 a year.

The end game is reaching retiree status, in order to do whatever you want. The CEO of a publicly traded company is obviously much wealthier than the Retiree, but he's still working. Both are in fantastic positions.

The 39 year old Software Engineer makes roughly $200,000 a year, depending on bonus. He is an old client of mine who may receive a multi-million dollar windfall within three years if his company goes public. We decided to mobilize his capital and go neutral real estate by buying his own loft in San Francisco.

His net worth is diversified, he's frugal, and is the demographic of many of us who study hard, work hard, and are looking to accelerate our financial well-being. His only debt is his mortgage.

The other missing factors include savings and other investments. But if we start including multiple variables, things start getting complicated.

See: When Is The Best Time To Buy A Home? When You Can Afford It

Are You Fiscally Responsible?

On the one side, we have the YOLO crowd who spends freely. They don't care about saving for retirement as much as the average person.

On the other side, we have the Super Frugal crowd who saves a tremendous amount of money and never lets loose. Neither is ideal.

I'm more on the frugal side of the spectrum, but I'm doing my best to spend money on things I enjoy e.g., building a ridiculous master bathroom, tennis events, and travel.

I strongly believe we should all strive to have at least an FS-FR Score of 21 or higher. Once you get to 21+, you will develop this indomitable financial mindset that will help you achieve financial freedom sooner, rather than later.

Your FS-FR Score will probably fluctuate like the stock market over the course of your lifetime. But just like the stock market, the general direction is up and to the right.

Note:  There are many ways to measure “fiscal responsibility.” It's a subjective measurement. The FS-FR Score is just one very easy way to see if you're heading in the right direction. 

What is your FS-FR Score? (Total Value Of All Property / Total Value Of All Automobiles)

View Results

Loading ... Loading ...

Ways To Be More Fiscally Responsible

Manage Your Finances In One Place. One of the best ways to become more fiscally responsible is by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts in one place so you can see where you can optimize your money.

Before Personal Capital, I had to log into eight different systems to track 30+ difference accounts (brokerage, multiple banks, 401K, etc) to manage my finances on an Excel spreadsheet.

Now, I can just log into Personal Capital to track my net worth and manage my money. I can also see how much I’m spending and saving every month through their cash flow tool. Their free Retirement Planner is the best on the web. Leverage the Internet to gain financial freedom!

Retirement Planner Personal Capital
Is your retirement on track? Check for free after linking your accounts

Invest In Real Estate

If you can't buy a physical property just yet, that's fine. You can still be fiscally responsible by owning real estate through ETFs, funds, REITs, or real estate crowdfunding.

Real estate is my favorite way to achieving financial freedom because it is a tangible asset that is less volatile, provides utility, and generates income. By the time I was 30, I had bought two properties in San Francisco and one property in Lake Tahoe. These properties now generate a significant amount of mostly passive income.

In 2016, I started diversifying into heartland real estate to take advantage of lower valuations and higher cap rates. I did so by investing $810,000 with real estate crowdfunding platforms. With interest rates down, the value of cash flow is up. Further, the pandemic has made working from home more common.

Take a look at my two favorite real estate crowdfunding platforms.

Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and now manages over $3.3 billion for over 500,000 investors. For most people, investing in a diversified eREIT is the way to go. Fundrise invests in residential and industrial real estate in the Sunbelt, where valuations are lower.

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends. If you have a lot more capital, you can build you own diversified real estate portfolio.

Both platforms are Financial Samurai sponsors and Financial Samurai is an investor in Fundrise.

How To Measure Your Fiscal Responsibility is a FS original post. All rights reserved.  

99 thoughts on “How To Measure Fiscal Responsibility: Calculate Your FS-FR Score”

  1. Gennadiy from Belarus

    My primary residence value 290 but 2 cars book value -20.
    “15% of your house” rule fits me better.

  2. 457 if just primary residence:

    $3.2M primary residence house and:
    My 1996 Corolla (<$1k)
    Wife's 2005 Prius ($2k?)
    Our 2005 Odyssey ($4k?)

    Got 2 other investment properties – $3M more.

    So more like almost 1000!

    The interesting thing about FS-FR is that the more time you do nothing, the better your score gets.

  3. OlderAndWiser

    I don’t know about this. I may soon go from 33 to approximately 67 due to purchasing a condo for the in-laws. But my financial situation won’t be improving.

  4. I scored a 25. 2004 Focus on its last legs, 2011 Chevy HHR. House valued at $ 150k, cars at about $6k. I am keepig the Focus going by telling my wife ‘just one more year,’ but as I drive it I can keep up the ruse.

  5. Pingback: The True Cost Of Building A Luxury Master Bathroom | Financial Samurai

  6. Pingback: Can Financial Samurai Be The Next Billion Dollar Financial Technology Company? | Financial Samurai

  7. 242, also drive a 17 year old Honda Civic. I think it still has 70k miles left in it (fingers crossed)!

  8. 285, but I drive a 17-yo Honda Civic (OMG, time flies!) and live in an expensive housing market.

  9. Home value $115k
    Cars’ values $16k
    FS-FR score: 7= average American consumer

    Household income $170k
    Net worth $450k
    Age 25
    By all your other rules I’m doing great…

  10. total properties value (6): 3.19M, total values of cars(5): 158k.

    ratio: 20, need to purchase another property to get over the hump

      1. 2 sports car for track event (hobby), 1 family mini van. Couple of truck/SUV for business purposes.

  11. Fun stuff to think about! I own a home and no car, so looks like that puts me at a 21. Fortunately I like to walk places and the public transit in my area isn’t too bad. Maybe some day down the road I might get my own car, but thus far I’ve done fine using public transportation and now Uber.

  12. BeSmartRich

    I am in 21-50 range. Looks like I got lots of work to do. Haha Thanks for the interesting post!


  13. Like some of the others have said, I think I get stuck in the lower housing market.

    We live in a great 3000 sqft house in a gated neighborhood. We paid 285k, which is above average in FL.

    Just last year I moved offices and commute about 45 mins, so instead of driving my 2005 gas guzzler truck to work I bought a Focus for the 40mpg.

    The car itself will come close to paying for itself in the gas saved.

    However paying 15k for the car puts me in 19 range and I honestly see myself as a scrooge type person for buying that cheap of a car.

    I think if you dropped our house into a different area of the states and it was worth 5-600 then my number would rise.


      1. Thanks Sam! Been reading your site for a couple months now. Has really focused our spending and savings.

        Great work friend!

  14. practical patty

    do bicycles count as vehicles? I have a 25 year old car that is probably worth less than $1K, 2 vespas worth ~$2K each. but my custom road bike that i use for pleasure & not commuting is $8K

  15. 97.5 – 29 years old – 750,000 in property (400,000 primary and 350,000 rental). Own an 8,000 used 2002 Lexus paid for in cash.

  16. I do not really know were I am on the scale. But personally I do feel what I am doing is and on the right path. I do not own a home and I do not own a vehicle. But I have a net worth of about 500k now which is all in Index funds, REITs, Bonds, some individual stocks, P2P Lending and some cash and zero debt of any kind. I am 30 years old and an American citizen but living and working abroad now. I was able to increase my net worth from about 130k to 500k in the past 3 years with the help of market gains and of course a extremely high savings rate. Right now I do not simply have the need to own a home or own a car due to my location and needs so I feel the best course of action for now is save and invest the extra cash flow. When life changes I will surely own a home one day and a reasonable priced car. Right now its all about plugging away and growing my stash :) If I can get at least a 6-7% rate of return on my investments per year for the next 3 years, and in addition to new money added over the three years I will hit the 1 million mark by 33-34. Of course who knows what will happen, but its always nice to have plug in some numbers. But the plan is stay the course always. Hopefully 20 years from now I’ll be chillin nice some where nice and retired.

  17. Gen Y Finance Guy

    It says I am just the average American consumer with a score of 17.

    Looks like I still have some work to do.


  18. I’m going to guess that this won’t catch on because it’s a consumption based metric with regional bias built in (FYI- I’m in the Southeast and I get a 21), and a bias towards real estate investing.

    It also biases towards leverage which is a slippery slope for most people. For example, I own two properties with a book value of 130K which means I could reasonably leverage myself to 600K of property ownership, but why would I? I would have to devote a lot of time to finding cashflow positive rental properties that achieve higher ROI than stocks/mutual funds. Certainly not impossible (I have my eye on a few right now), but I will use real money to buy them, not leveraged money.

  19. I can’t buy that this is a good way to measure fiscal responsibility. If we lived in a world where our only choices were buying houses and buying cars then this might work. We don’t live in that world. Fiscally responsible people generally buy BOTH less house and less car than they can afford. A perfect example: someone I work with (who makes the same money I do) is buying a $1 million house, and drives a brands new bmw. I live in a $500,000 house and drive a camry. Based on this method we’re equally responsible with our finances. Yet somehow I can invest 4-5k a month and have a large reserve fund,and my coworker is living paycheck to paycheck.

    I agree that this is a good way to measure the ratio between these two purchases (you shouldn’t drive a Bentley and live in a one bedroom apartment), but it’s not a realistic way to measure your fiscal responsibility.

    1. How do you know your co-worker is living paycheck to paycheck though? I believe there is much more wealth out there than people know.

      One thing I’ve consistetly noticed is that those of us who live more frugally try to make ourselves feel better by saying others who don’t are living more irresponsibly. But who are we to say that they aren’t living exactly in the comfortable way they want? In other words, we begin to judge them, which is an unavoidable human condition it seems.

      Your coworker has a FS-FR Score of about 20. Not bad.

      Your score is also about a 20. Not bad.

      Why can’t we be happy with ourselves and your coworker as well?

      1. I know because he says he is and he I s always stressing about money. I’m not unhappy or mad at anyone else for having a nicer house than I do. I’m just saying this ratio doesn’t do anything to define fiscal responsibility. I could have a great score on your test and still be living WAY beyond my means because I live in a house that is too expensive for my income. I could also have a terrible score because I want to live in less expensive house, drive a quality car, and save a large percent of my income. Being house poor would give you a great score here, but not be fiscally responsible.

  20. First, I must say that I enjoy your blog and like your penchant for financial metrics. However, honestly not sure I like this formula. It penalizes you for having more car than you need, but makes you look like the most financially astute on the planet if you have more house than you need. I personally think both are signs of financial immaturity.

    I like formulas like Net Worth/Lifetime SS Earnings. There are many ways to drive this ratio higher, most of which show financial intelligence. The thing that I like about it is that it doesn’t show any favor to one investment method, savings strategy, etc. over another.

  21. Sam, I love your blog and especially posts like this with fun comparative metrics.
    Please allow me to critique how you’ve interpreted the “average American” consumer statistic… 30+k was the average price paid for a new car in 2014. So a score derived off that figure is not really representing Americans, but rather, Americans who bought new wheels in 2014. C’mon dude. What percentage of American consumers (drivers even) bought a new car in 2014? Probably not a representative percentage.

      1. When I calculate the ratio should I measure the value of my residence today vs the value of my car today? or is it to measure the value of my home at purchase vs the value of my car at puchase?

        My point is that the average price paid for a NEW car might have been 30+K in 2014, but that is totally different than the average value of cars owned in the US in 2014. The average car on the road is 11+ years old. The average American consumer is NOT rolling a new 30K+ car.

        Even for cars bought in 2014, I’d like to see used cars aggregated into the average (not asking you to – I looked for a minute just now and it wasnt popping out in a google search)

        If you want the ratio to capture purchase price of real-estate vs auto, thats cool, but your examples seem to use market value.

        Additionally, if I’m rocking a 50k Jaguar I bought in 2009 BUT STILL PAYING FOR, the ratio for me would look decent cuz that jag is probably down to <20K in value. am I more responsible than I was on the day of purchase? maybe, but probably not.

        1. If you use current market value for both items, then your FS-FR Score will appreciate over time.

          If you want to be more conservative and punish yourself for buying a $50,000 Jaguar, then keep the denominator fixed and assign a conservative market value to your properties.

          You can do whatever you want. The FS-FR Score is a gut check.

          1. Fair point Sam. I can manipulate and interpret the metric in a way that accounts for my situation and serves me. Point sent and received.

            This witch hunt I find myself on is more about your “baseline” stating the average American has a ratio in which the denominator is 31.2K. Ignoring the point that 31.2K is only the value of an average new car at point of purchase, that “average” excludes American consumers who:
            A: don’t own a car
            or B: buy used cars

            Americans buy more used cars than new cars!

            I couldn’t resist any longer. My wife and I are a healthy 30 with about 600K in home and combined 20K between 2 cars (market value, no Jags). We live in Seattle.

            I’ll leave it at that Sam. Keep up the great work.

  22. I would generalize this ratio to (appreciating assets and investments) vs. (depreciating assets). That might better capture some of these situations where people don’t really need or want a typical amount of house or car.

  23. I’like admit. I scanned this. But I am perplexed by a host of problems. I bought my car in 2007. My wife has had two cars since 2011. We bought our current house in 2011. It has appreciated at least 35% since then. Like, where do I even start?

    Maybe something like this would be better (home note + appraised vehicle value at time of home purchase)/net household income. That still seems kinda flimsy though.

    One time this banker contacted me to build out an alternative to credit score. He wanted to use both qualitative and quantitative variables to deduce a score. I modeled the whole thing in excel before I programmed it. He had this multi page pdf. It turned out his math and assumptions were all whack. But, I still felt like he was onto something good.

    You have a good knack for reducing complicated subjects into simple quantification. Perhaps you could build out a few tools for people to calculate things like FS dair as a resources section. It could be a big value add for your site. You could even throw in run of the mill stuff like amortization calculators. Refi affiliate ads would be great on a page like that.

    1. My goal is to make people think about their consumption and assets. I certainly don’t want people to have to build a multi-page model to come to a conclusion.

      Although the FS-FR Score is simplistic, it serves a purpose. A gut check to determine the ratio of likely appreciating assets to a certainly depreciating asset over time.

  24. Getting ready to buy a 500,000.00 dollar house. Currently have two free cars worth 3000 total. Will be taking the bus mostly after moving. I prefer appreciating assets to depreciating.

  25. mysticaltyger

    This is too simplistic. I live here in the SF Bay Area and will likely be a lifelong renter. But I am not one of those renters who treats savings and investments as afterthoughts. My net worth is 14X my annual spending and 7X my gross income. As long as my rent as a % of my income remains modest (currently at 25% of my gross…higher than I’d like, but not horrible) and as long as my investments grow faster than the rate of my rent increases, I should be fine.

    1. I agree here. This formula does not work for people in high price areas like San Francisco either. My score comes to 218 and I am embarrassed! I have a house and couple of investment condos in the bay area. Total value 2.4M/11k (two low end cars). We do not live like monks though. Cars are just not our thing and instead we spend money on expensive vacations. In terms of the financial situation me and the above poster are probably in the same range, but his/her score is too low and mine is too high. As other people mentioned, this needs to be based on net worth/car value or something similar!

      1. Your answer reminds me of when someone replies in an interview “My greatest weakness is that I work too hard and am so detail oriented.”

        If you were truly embarrassed about your score and your financial situation, I don’t think you’d point out your 200+ Score and $2.7 million in property.

        You’ve basically backhanded Mysticaltiger in the face for agreeing with him, yet he can’t afford property!

        1. O boy… You took this conversation way off! :) I am definitely not embarrassed with my financial situation, but I was definitely embarrassed by the score. And that was based on what you mentioned for people with score above 200 which is that they probably live like monks. And that is definitely not the case for us and many who may have a score of 200 plus. We just don’t care about the cars we drive or the clothes we wear (Target/Ross anyone?). But we easily spend 15k-20k on vacations…
          As far as Mysticaltyger is concerned we are probably in the same financial situation and here is the math. If we deduct the mortgages on my properties my networth would be around 1.5M. Mysticaltyger said his net worth was 7X his gross income. Assuming he is in his late 30’s working in IT in bay area he would be somewhere around 200k X 7 = 1.4M. But because he does not own a property his score is on the lower side. So despite both of us being in similar financial situation we are on the opposite spectrum of scores!

          1. I know you are not embarrassed by your property, hence the mention :)

            Yes, with a Score of 200+, it’s time to live it up a little, consistent with my chart.

            I would rather be in your situation with property than your hypothetical financial description of Mysticaltiger, who says he cannot afford property. B/c as time goes on, it is likely your financial system with outperform his situation.

            Let’s hear from MT himself on his NW and future.

            And don’t worry, learning how to make backhanded compliments is a skill that only a few possess.

  26. Sam – I think good first effort, but as others have stated needs some tweaks. But since it is a fiscal responsibility metric and not a net worth metric it has merit. If you hold onto your cars, you are being fiscally responsible.

    Maybe you can tweak a little while still keeping it simple.

    1. I agree, and one’a FS-FR Score should therefore increase over time if both assets are held over time. The score might even propel people to NOT switch cars in order to not lose a huge score.

      Sort of like a gamification of fiscal responsibility!

      1. After thinking about this some more, the score may be fine but it is really the trend that matters. Find out what your baseline is today and never go less – always try to increase it.

        1. Exactly. Create a positive trend. A virtuous cycle if you will. If you want to keep upping your FS-FR score, then look for ways to improve the value of your home (expansion is an example), buy a cheaper car, or keep your car for as long as possible.

          I’m not quite understanding the pushback from others who find this ratio (which I state in this post as a fun and easy way to do a fiscal responsibility check, and not the end all be all) worthless. But, I do. Money is personal. There is a lot of angst that gets reflected in one’s comments.

  27. My household is at a solid 8. However, we do meet the 1/10 income rule for our car purchases and we’re outperforming the net worth for above average couples metric, so 2 out of 3 ain’t bad! We’re in a small home that we absolutely adore and have chosen to put more in the stocks than real estate for the moment.

    I agree with other commenters that this ratio doesn’t tell the whole story, but I don’t think it needs to. I think it’s an excellent reminder to keep depreciating assets to a minimum. Keep the performance metrics up, Sam, it’s a great motivator for me to keep striving!

    1. Got me beat. $220K paid for house. $1200 Beast is still running. FR score 183. I recently crossed a weird threshold when I realized my bike is more valuable to me than my car. I would love a pimped out Caddy though.

  28. Prof. Services Consultant

    Yeah, it’s interesting to compare your house value to your car value, but it’s nearly meaningless as a measure of “responsibility” without a greater context and more variables.

    If you have a $1m single family home, a $10k car, and $0 in the stock market, you’re not doing so good in my book despite a score of 100.

    Not to mention this ratio rewards you for buying too much house instead just buying what you need. I think the majority of the problem with this approach can be fixed by adding the value of your investments into the mix, as others have said. The ratio of your investments to the combined value of your car and house would be a true measure of responsibility.

    For what it’s worth, I don’t mind sharing my personal stats:
    Age: 24 years next week
    Location: Michigan
    House: purchased for $48k, 36k left on mortgage
    2002 Ford Focus: $1,500 (33 Ratio)
    180K miles

    Investments: $139,303.88
    Total NW: $159,247.12
    (as of 3/1) (Zero debt except mortgage)

    2014 Income:
    Salary/Bonus/vested 401k Match/HSA: $70,204
    Per Diem Collected: $9,606
    Mileage Reimbursement (after gas fillups): $7,113

    2014 % of Take Home Pay invested: 75% (haven’t done my taxes yet, could go up with a refund)

      1. Prof. Services Consultant

        Sure. First a little about my journey overall: I graduated college with zero student loan debt at the age of 20. My first year of my career was temp jobs, so I saved money by living with my parents. The second year I had a average-paying steady job that allowed me to move out. I got laid off and within a month my friend from college got me into my current job, which doubled my pay to a base salary of $60k. I had just turned 22 a few months prior.

        So, how did I get to $139K invested? First, I always kept my expenses as low as possible. I inherited the frugal “gene” from my mom, and because I’m an IT guy the analytical part of my brain took her teaching and put it on steroids. I had a mint account and a spreadsheet since Fall 2012.

        As for that $70k gross income in 2014, I spent almost none of it. I travel on business almost every week, and the per diem allowance for meals (which I don’t spend ever, Marriott Platinums receive free breakfast and dinner in the concierge lounge) was enough to cover my monthly bills (rent/mortgage, utilities, food, gasoline).

        From a car perspective, I paid $5500 cash in for my car in May 2008 thanks to receiving the money as a 16th birthday gift from a Grandma a year before. More recently, I drove my car on many long distance business trips instead of flying which netted me $7k last year, and $2k YTD in 2015.

        I treat my per diem and mileage reimbursement as additional income sources

        I have maximized my 401k since 2013 and my Roth IRA since 2012. The capital gains from the market these last few years were a big help.

        Lastly, I had $20k already in mutual funds/stock when I graduated college in 2011 because that was the money my mom set aside for my college. Scholarships and working part time paid for it instead. The majority of my wealth has come from the last 2 years.

        I’ve been collecting data on additional sales that my clients made after working with me. I plan to use this information to ask for my base salary to be six-figures! :)

        1. Thanks for the explanation. Nice job stashing all that cash and saving the $20k college fund.

          When do you think is the right time to move out of your parent’s house? What do you plan to do with your money?

          1. Prof. Services Consultant

            It’s hard to say when the right time is, I would have stayed longer to save even more money but I chose to move out for greater freedom to have company over at my own place.

            For me, the requirements were:
            1. Healthy emergency cash savings
            2. A steady job I could live comfortably with (moving out was out of the question during the time I had temp jobs)

            I’m still figuring out what all I will do with my money. Three goals that I am pretty certain about are:
            1. Hit $1M in investments minimum
            2. Retire early
            3. Move somewhere that is warmer in the winter than Michigan with similar COLA

            Once I hit the million, there would no reason why the other two couldn’t be done immediately if I choose. When the time comes, I’ll have to decide how much more of a lifestyle I want and adjust my remaining working years accordingly. (could range from quitting immediately to just a handful more years to buy and pay off a nice house in the nice climate and buy a car upgrade, and maybe a 100″ OLED TV ^_^ )

  29. Part of this might be how much of the house you own? I mean if you own 100% of your home(s) versus someone with only 5% equity, are they in the same financial position? Look at Warren Buffett, his house in Omaha is worth $300k. Are you telling me he cannot afford a larger car because of this ratio. I have two homes, (one for me, one is a rental) and 1 old car. My Ratio is 54. Yes I can afford a new one, but don’t know if that is exactly right because of other factors.

      1. I know he is an outlier when when you look at this but again it makes sense when you are saying you don’t put anything with income, savings into this equation, it is just real estate.

        Maybe do something like this:
        (Real eastate assets + income) / (all debt (real estate, credit card, medical, school) + Amount to borrow for automobile)

        I have always gone by this this formula. What ever car you buy, have 1/2 of the price saved (ie. $40k car, saved $20k for a down payment), and the remaining should be less than 1/2 your annual savings rate. I define savings rate as: income – taxes – all housing expenses – all bills – all food – all debt payments. Basically income – all payments of any kind = savings rate. So for me, my savings rate is about $50k a year, so I can “get” a $50k ($25k down saved, $25k in income savings) auto by my formula. To finance is up to the finance numbers and if it is worth it.

  30. DividendHarvester

    Hmm…score of 150, but that’s because we don’t place value in a car; it’s a utility transportation and not a status thing. Pretty sure we’re not a financial hero that can do whatever we want forever (at least not at the moment). Se are planning on selling the house and moving soon for retirement, but then our score would drop to a 35 keeping the same car.

    Interesting point of view, esp for those coming up through the ranks and getting lured in my over priced cars

    1. Even with a score of 35, you are rocking on!

      Anything between 21-100 is good enough. The goal is to get over that 21 score hump.

      Again, the average American is around a 6-9.

  31. Leverage and house location make comparing two FS-FR numbers completely useless. Owning a $1M with no mortgage is totally different from an $800k mortgage. Also, cars are pretty much priced the same anywhere you go where houses are not. If you can’t compare numbers then there is no meaningful scale.

    Also, if a higher score is better, one could simply buy more house than they needed which would of course be oxymoronic (definitely not FR).

    1. I agree. I think the solution is to revise the formula to reflect amount borrowed for either the car or the home, and also to give credit for investments other than a home.

  32. Todd Guthrie

    While I’m feeling pretty good with an FR score of 103 (house worth about $720k / car worth about $7k), I feel this calculation is too simple a metric to be particularly useful.

    It should at least take into account the debt on those assets [ (house – mortgage) / (car + car loan) ].

    As Sam says, it might be good to consider the FS-FR to be just one of many possible measures of responsibility.

    Others could be [ Net worth / Income * (80 – Age) ] or [ Number of overdraft charges in a 12 month period * Interest rate on your consumer debt ] or whatever.

    Anyway, good food for thought, and good to think about how much your assets are appreciating or depreciating (btw, a car is an ‘asset’ too – just ask an accountant).

    1. I like the Net Worth / Income ratio. Hit 40X+ and you’re golden with the risk free rate at 2.5%.

      Definitely good points about the mortgage and car loans. I didn’t include them because I make an assumption that debt on such assets goes down over time.

      103 is fantastic! Well done. You should be feeling fiscally responsible.

  33. Hi Sam,
    How to calculate FS-FR score if I have paid off house ~220k and paid off MB 2012 (~45k)?

    Is my score 4.8?


    1. Roman,

      What an interesting situation! How old are you? A 4.8 would be too low. How does a 12 sound?

      One of the questions I’m curious about is the cost of your car. $45,000 is a lot of money for a car, no matter where you live in the US. Doesn’t $45K seem outrageously high compared to the cost of your house?

      I realized the FS-FR Score skews lower for lower cost living areas, but all the more to recognize how expensive it is to buy a newer/nicer automobile. $45,000 is a downpayment on a $200,000 house that you can actually buy, for example.

      I can’t buy a $200,000 house in San Francisco.

      1. Hi Sam,
        thanks for quick response.
        Im 33. Midwest. Yes, MB is not cheap car. And yes, it looks outrageously high compared to my house price, but I don’t need bigger house. You have to adjust FS-FR formula :-) .
        Im not a big believer in real estate investment. S&P 500 is my choice ;-)

        BTW – really nice blog. You are doing great job!


        1. Got it. If you’re rocking a $450,000+ income, then the $45K MB sounds good! :)

          At 33, I would use that $45K to invest more in the S&P 500 or build your real estate portfolio. Do it now, when you still have the energy, cash flow, and enthusiasm. I assure you, the energy and enthusiasm will fade eventually, by which time it will be too late.

          The $220K/$45K house/car ratio would propel me to buy a pre-2004 car for less than $8,000 for sure. The other takeaway is that it doesn’t make as much sense to remodel or expand in the MidWest. Best to buy the perfect house as is, which is probably easier to do than more expensive areas.

  34. This is fun, but why not wealth? (Wealth+house/car – I’m at 35. House/car I’m at 10. My house is cheap!)

  35. Discovered your site recently and have been reading all the past logs – very interesting and informative! Most, if not all, of your views resonate with mine, and hence it sometimes feels like reading about oneself, albeit to slightly lower wealth levels! :-) You are doing a great job of making us financially aware.

    Taking only the Primary Home residence value would mean giving extra credits for people who plough most of their networth in a single real estate property – which would surely end up “buying too much home”. That can even create a risk of over allocation.

    I understand the need to have simple rules – but perhaps a networth to expense ratio, Appreciating Assets to Depreciating Assets ratio (AATDAR for you) would be much more effective in capturing fiscal prudence.

    Keep writing and giving insights to us!!

  36. Interesting idea…not sure if I agree though. I bought a car last year because of my expanding family (used Nissan Rogue) and sold my ’01 Corolla. As a result, my FS-FR would have changed from around 80 to around 17. Suddenly I’m not responsible, even though I was able to pay for the car in cash and it was much less than the “average” car price?

  37. Have you considered using equity + savings instead of home price? Such high property values are not the norm for most of the country. Example: our 3200 sq ft home on half an acre is valued at 1.3X our combined yearly income. I wouldn’t want to deal with the maintenance on a larger place.

  38. Great article. I’d never thought of wealth in those terms. I drive a 12 year old Honda CRV with 85K miles, and “own” a home in an area with a healthy economy. Aggressively paying extra on mortgage, because I like the feeling of being “safe” and a paid for home would do that. Guess I really do cleave to the supposed Gen-Xer’s needs for being safe. Thanks for posting this!

  39. First, I love your site and articles. That being said, I don’t see how the FS-FR is really that accurate. According to your scoring, I have a FS-FR of 16 ($480k house with $30k of cars). I am far from “an average consuming citizen”. I am 46 years old and have saved (not inherited) $2.7 million in AFTER TAX accounts and another $550k in tax deferred accounts (my spouse does not work, so our retirement savings options are limited). Our house is paid for and we save 50+% of our after tax earnings. I could easily buy a $2MM home (for cash) but I choose a simpler lifestyle. The problem with the FS-FR is the only way to increase it is to buy more home whereas some people are content in a more modest home, and choose to build their investment portfolio instead.

    1. Good job. From previous posts Sam’s a real estate type of guy. Sounds like he would like you to take on a rental property to bring that score up. :)

    2. “The problem with the FS-FR is the only way to increase it is to buy more home”

      Exactly this.

      I respect the initiative to generate new metrics, but FS has SF-centric “a house is an asset” mania. In the sane world where home prices track inflation, the responsible choice is to minimize housing costs and invest the cash that frees up.

      To avoid just being a critic, I will propose FR = [net worth] / [primary residence + cars]. This would be <1 if you've overspent and multiples of 1 if you've chosen your lifestyle prudently.

  40. The score calculation is skewed by regional variations in property values. It penalizes anyone in a low-cost housing market in the South or Midwest, forcing them to drive clunkers to achieve a decent score.

    For example, Warren Buffett will most likely come out looking more fiscally irresponsible than Marcus Persson, since Persson’s LA mansion is worth a lot more than Buffett’s house in Nebraska, despite Warren’s famously modest vehicle choices.

    1. Please tell Warren I said hello. I don’t think Warren is a good example to reflect the common person in the world, even though he lives in an average house. When you are that rich, you’re free to do whatever you want. What percentage of Warren’s income is spent on a car, if you’d like to go that route?

      Does the FS-FR Score really penalize people in the South or Midwest though? Or does it shine light that an automobile is outrageously expensive compared to the value of one’s home?

      If a home only costs $200,000 in the MidWest, I sure as heck would not be spending $30,000 on an automobile. I’d use the $30,000 to buy another $200,000 property!

      1. As a former Iowan now living in SF, I agree with Pink4mica regarding the possibility of a regional bias against the South and Midwest. Property values are much lower, obviously, and truck ownership is higher (trucks cost more than the average vehicle). If the point of the FS-FR score is to reward smart investment and frugal living, does the measure properly deal with the possibility that choosing to live in a low-cost region is itself indicative of frugality? Just a thought.

        1. Definitely an angle to consider.

          But if you start off living in a low cost area and stay forever in a low cost area, are you really creating alpha? I say no.

          More impressive and actionable to make your fortune and save in a high cost area and THEN geoarb into a lower cost area.

      2. By the numbers, Warren Buffett bought a new 2014 Cadillac XTS last year (MSRP starting $45K). He paid about 30K for his house in 1958 ($250K in today’s dollars), which was valued at 700K in 2003. He is worth 71.8 Billion. His FS-FR score would be 15 based on those numbers, making him an average consuming citizen by your measure. Markus Persson aka “Notch” paid 70 million for his house, which has a 16-car garage. His net worth 1.5 Billion, and as of January, owned no cars in the US. He outscores Buffett, which demonstrates the flaw in your formula.

        1. Do you think it’s relevant and wise to use multi-billionaires for this formula?

          Maybe I should put a disclaimer, because I thought it was obvious, that if you are a billionaire, don’t waste your time trying to optimize your finances because you are a BILLIONAIRE!

          1. I was simply making a point by using public figures, but I’ll use a more modest example. I live in the South in a 5 bedroom house worth $330K. I own two luxury cars, bought used for cash, worth about $25K total. I’m in my late 40’s. My household income is $200K, annual expenses about $100K, and net worth slightly over 2 million. I score 13, almost the same as Buffett.

            Your formula, while potentially instructive, is biased towards real estate, which is biased by location, and ignores spending on other things like expensive vacations, designer handbags, or gambling habits. Wouldn’t it be simpler to just divide annual savings by annual income? That would remove all variations for location, car ownership, etc.

  41. In places of the country where real estate is expensive (San Francisco, LA, New York) this makes some sense. In the midwest as a single person I can buy a reasonable house with enough space for 100K and invest my remaining income each month (40-50%) in the stock market instead of a house. Given a 100k house value, I could only spend about 4.8k on a car using this calculation.

    Also, I think the value of all cars owned by a household should be included in the calculation.

  42. Above Average Black

    Currently, in the 51-100 range.

    Can you somehow modify your formula to apply to Apple Watches? :)

Leave a Comment

Your email address will not be published. Required fields are marked *