Thus far we have made it through Steps 1 through 7, in Your Money or Your Life. Reading this book has been an eye opening experience for us.
Step 8 focuses on financial independence and what to do with your pot of gold when you get there.
Step 8 entails…:
Each month we apply the our plot our total monthly investment income on our wall chart, using this formula:
Capital (current long-term interest rate) / 12 months = monthly investment income
As you start entering your actual interest income on the wall chart, trends become clear. As more money is saved, you reach a crossover point and are able to project your investment income outward.
So why is this important?
By projecting the trend outward you will be able to estimate how much time you have to work for money, before reaching financial independence. This is “where the income from your invested capital surpasses your monthly expenses.” All of your expenses for your chosen lifestyle are covered by your investment income.
Imagine that – you could actually stop working for money!
It will be interesting to see what our projection line looks like as we move forward with this program. We will keep you posted!
For more on this topic:
- Step 7: “For Love or Money”
- Step 6: “Living the American Dream on a Shoestring”
- Step 5: Is saving an impossible dream?
- Step 4: “How Much is Enough? The Nature of Fulfillment”
- Step 3: “Where is it all going?”
- Step 2: “Money ain’t what it used to be – and never was”
- Step 1: Your Money or your Life
