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Why $2.5 million is the perfect level of FUCK YOU MONEY...

25/9/2015

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Editor: Crass Cash
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In the movie THE GAMBLER with Marky Mark Wahlberg there's a scene where John Goodman (loan shark) is discussing "the position of fuck you" or "fuck you money" as I like to call it.  What's fuck you money?  In case you don't already know read the definition above. 

How do you know when you've gotten to fuck you money?  Well it depends upon your situation, but in my financial opinion, if you're a married American couple the magic number is around $2,500,000.  Why?

Because with $2.5 million you could into perpetuity make 3% on your money (dividends) and never have to draw on the principle.  This is the ideal situation.  Why is $75,000 ($2.5 million x 3%) an important number though?  Well it doesn't need to be that exact and it changes each year, but ideally you wouldn't want that number to be above the 15% tax bracket.  As of this year it's actually $74,900 but taxes are a tricky game where everybody's is different.  This is theoretical so look at your own situation when implementing this.

If you put $2.5 million into ETF's netting at least 3%, after 1 year they would be classified as ordinary income, which is great because it taxes them at a lower tax bracket.  The tax laws changed favorably over 10 years ago when Congress decided to not tax passive income for people who's income was within the 15% or lower tax bracket.  If you're married and make under $74,900 this year, you pay no federal income tax!  

This is huge!  Since you wouldn't have to pay any taxes this is the equivalent of making probably $120,000 of earned income.  Put $2,500,000 in investments, have your house paid, and a small emergency fund to cover insurance premiums if needed.  You're good to go!      
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The theory of Relativity

15/9/2015

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How much are you worth? What if I told You it was wrong regardless of what number you told me? How could this be?

It's true because it's all relative. Like Einstein's theory of relativity, which states that your location and place in space/time is relative due to constant movemeant, your money buys you different things at different prices in different areas. Your money is constantly relative. Today you live like a god in Thailand tomorrow like a pauper in NYC. This not only includes space, but also time. How so?

Well would you rather be middle class today or John D Rockefeller 100 years ago? I'd take middle class today. Better homes, electricity, indoor plumbing, better health care, the list goes on and on. So if for some reason you don't feel rich. Think, "Relative to what?".

Americans over the past 24 months have almost double or increased their wealth/income by 50%. Doesn't seem like it? Go to another country and see for yourself. No greater example of this is probably Russia. You can now go there and buy items for 25 cents which would have used to have cost you a dollar. Relative to the Russians you're at least 4 times richer.
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LIFE INSURANCE

14/9/2015

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Editor: Crass Cash
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September is life insurance awareness month (yes there is such a thing). With that said there are two basic rules for life insurance in my non-professional opinion.  

1. Only buy life insurance if you have dependents.  This would mean that you have a wife or kids or an elderly relative that depends upon you for their lively hood.  What would happen to them if you died?  That's how you need to look at it.  If you don't have anybody effected by your death (financially that is) than you don't need it.  Note this also applies to people who have student loans that are co-signed by their parents. 

2. Only buy term life insurance.  It's been proven repeatedly that you can increase your net worth and flexibility by buying term life insurance and then taking the difference between that amount and whole life insurance and investing the rest.  Here's how it works:

term life insurance: $50 a month
whole life insurance: $450 a month
*this leaves you with a difference of $400 a month to invest with.   Take the $400 each month and invest it in ETFs for both domestic and international.  If you're within 10 years of retiring you should be putting it into bonds funds.  This assumes that you have the emotional stability to not sell when your portfolio drops by 50%.  If you don't, put it all into bond funds. 


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    This website was created due to the atrociously misguided financial advice that I've heard over the decades.  Financial freedom is not intellectually strenuous, but it takes discipline. 

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