Editor: Crass Cash
I've been mulling this over for a few years now and I had the "one more yearitis" disease of constantly putting it off. I heard a podcast with mrmoneymustache.com where his advice to those considering early retirement was to just go ahead and do it! Set a date and do it! So I did! Now the fun begins of trying to get everything done in time. What do I need to do? Well keep reading...
Editor: Crass Cash
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!
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.