Comments on: When Your Income From Investments Covers Your Living Expenses: The “Crossover Point” http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/ Financial talk for the rest of us Sat, 16 Feb 2013 01:14:45 +0000 hourly 1 http://wordpress.org/?v=3.5.1 By: Robert Taylor http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-737630 Robert Taylor Sun, 26 Jul 2009 03:37:53 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-737630 I created a template on Google Docs that will enable anyone to calculate their crossover point very easily.

http://docs.google.com/previewtemplate?id=0AtDm4XtWaYwEdEhLZ3JiTmI0cDh3MkZyYm5SWTFYWXc&mode=public

]]> By: Kfish http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-96488 Kfish Mon, 29 Oct 2007 04:45:59 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-96488 Not to harp on the point, but if you read the book, it explains that when you do make the shift, you need to get out of high-risk, high-growth investments into something with a lower, but guaranteed return. A lot of questions that people are asking here are answered fairly thoroughly in the book, which outlines the consequences of ‘crossover’ in great detail.

]]> By: Dave http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-93025 Dave Wed, 24 Oct 2007 11:41:02 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-93025 What happens when a year or so after passing the cross-over point, the market drops 12-13% in a year? What if it does this 3 or 4 times over the first 10-12 years of your “retirement”?

]]> By: andrew brunsch http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-85310 andrew brunsch Fri, 12 Oct 2007 03:51:30 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-85310 I am a 14 year old investor just starting out! I made a spread sheet and calculated my “crossover point” to be when I am 32. Of course this is whle having the stock market going up 15% a year and everything buy I think it s very reachable. I am pumped about the idea. Good Luck to everybody with this dream!

]]> By: JR http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-77731 JR Wed, 26 Sep 2007 12:34:04 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-77731 Owen – or someone else looking more deeply at this spreadsheet… Shouldn’t the first row formula for “TOTAL INVESTED” add both the “Initial Investment” (from cell M9) AND the “Money Invested” from the first year (in that same row) ? Looks like there are two solutions:

1 – If you want to include the “money invested” in the current year – as the rest of the spreadsheet seems to do – than you can fix the “Total Invested” in F2 to be “initial investment” + “money invested” – that is M9 + E2.

2 – If you want to include it in the following year , you could just change the formula in F3 to add in the “money invested” from the first row/year.

I took option 1 in a copy that I made of this spreadsheet:
http://spreadsheets.google.com/ccc?key=pO3Ze62OAU2GZyk-E9ar4fA&hl=en

I also made some format fixes (changed ages to not be a currency field ;) and I added links to credit both the book and this blog… Owen should speak up if he wants a link back to his site ;)

]]> By: phil http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-75450 phil Sat, 22 Sep 2007 17:47:18 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-75450 what is in columns H, I and J.

]]> By: Robert MacEwan http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-64285 Robert MacEwan Thu, 30 Aug 2007 20:56:26 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-64285 @Owen, Nice work on that Google Spreadsheet.

@no, Everything seems to change once you hit about 39. Just wait and see.

]]> By: no http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-60486 no Wed, 22 Aug 2007 12:41:47 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-60486 I’m 30 years old and I’ve assumed for many years now that I’d probably be dead by 35. If I’m lucky, maybe 40. So these long term plans are not relevant. Even if I were to manage to live until the average lifespan of 72, what would be the point of reaching financial independence at the age of 60?! By the time you have reached this point, you’re too old to do anything BUT work. What are you going to do, retire and spend your final decade of life staring out the window of a motor home or playing bingo?

]]> By: Komissar http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-59218 Komissar Sun, 19 Aug 2007 21:48:00 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-59218 Financial independence does not mean sitting like a vegetable staring at the wall with 0 income because you’ll soon go crazy if you do, watching the crap that passes for entertainment in the media.

Financial independence means NOT DEPENDING ON A PAYCHECK TO SURVIVE FROM MONTH TO MONTH and put you in a position where if you miss two paychecks you’re living in a car. It buys you TIME to SELECT OPTIONS free from PRESSURE in your OWN DUE TIME. It liberates you from FEAR which is the whip the capitalist system uses to force you to do things you don’t want to do.

Your savings income doesn’t mean if you quit working your work income will fall from 100% but rather from 100% to say a part time, writing, tutoring, hobby related income or something you like to do, which generates say 20% of your ex-full time income. Added to your investment income, this supplementary income can then compensate (or reduce) the gap between inflation and capital erosion since it can be capitalised.

Likewise, costs will decrease since, you don’t need to throw money away buying Armani Suits, SUVs and gas to fill the beast in order to avoid being labelled a loser and ostracised by your fellow workers.

This is why the purely statistical model doesn’t hold water. It indicates the BROAD CHOICES AVAILABLE to make broad lifestyle decisions.

Finally you can live with a minor erosion effect if income dips below the crossover point when you are say 124 years old (which in other words means you still leave a nice fat inheritance for your “children” who will only be 76 ;).

]]> By: Daniel http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-57173 Daniel Tue, 14 Aug 2007 16:58:02 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-57173 I couldn’t understand some parts of this article o.us poetry, but I guess I just need to check some more resources regarding this, because it sounds interesting.

]]> By: Trent http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-55071 Trent Wed, 08 Aug 2007 15:48:28 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-55071 However, at that point you no longer pay income tax. All you pay is the capital gains on your investments.

]]> By: Scott http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-55068 Scott Wed, 08 Aug 2007 15:38:29 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-55068 EMF is right… this “cross-over” point is no “F U” point. If you quit at your cross-over point:

+ You now need to pay the capital gains taxes, so your spending must decrease by ~25% to avoid eating away the nest-egg, even without inflation.

+ As EMF pointed out, you can’t escape inflation…. the only way to keep your nest egg indefinitely is to keep actual dollar spending constant for the rest of your life, which means that every year your standard of living will decrease as inflation rises.

Of course, you could avoid this by continuing to work at a lower paying, more fulfilling job…. or you could live with the fact that your nest-egg will erode, as long it outlives you, which may be the point of the article, after all.

]]> By: Robert Deloyd http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-54991 Robert Deloyd Wed, 08 Aug 2007 09:30:42 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-54991 Yes most folks invest in boom eras, I invest when folks are selling. I went to the website from the above post “Wesabe” and it looks mighty nice and useful. I might even give it a go (I still have money to invest that I made following the advice in “Your Money or Your Life).
As for living in a “sandbox” I live in the high desert of California in a place called Joshua Tree, where you can still see the stars at night and the air is clean. And I’m loving it!
I write a column for a small newspaper there in my “spare time” (you can read it on my website). There are a lot of new things you can do when you don’t have a job and don’t need one.

]]> By: McS http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-54797 McS Tue, 07 Aug 2007 19:33:28 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-54797 “You don’t have to live in commuting distance from a job anymore; I moved to area where it is less expensive to live (in a desert community) that I call “Home Base” and I can travel from there to where I wish. You have really got to read the book to understand the concept!”

Two things;

1. The concept is very basic and barely okay. It only happens in very ideal situations. What if you had invested in the boom eras and not in the lows? Same is critical to when you withdrawal your funds. Do it at the wrong time and you will be broke 15 years ahead of schedule.

2. Do you really want to live in a sandbox with the winner above me? Make your money work for you… really work for you…

]]> By: Robert Deloyd http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-54294 Robert Deloyd Mon, 06 Aug 2007 09:24:22 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-54294 Oh one more thing! When you stop working, you stop driving to work, you stop spending the money it takes to support your having a job (jobs can be very expensive to maintain). You don’t have to live in commuting distance from a job anymore; I moved to area where it is less expensive to live (in a desert community) that I call “Home Base” and I can travel from there to where I wish. You have really got to read the book to understand the concept!

]]> By: Robert Deloyd http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-54286 Robert Deloyd Mon, 06 Aug 2007 08:59:08 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-54286 I read “your money or your life” some 17 years ago. I followed what it said, and I have been living off my interest from my investments for ten years now! No job to go to, I do what I want when I want. It works and I am a good example of it.

]]> By: Jeff Caylor http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-53742 Jeff Caylor Sat, 04 Aug 2007 14:33:46 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-53742 Excellent post. Del.icio.us’d. Hopefully I can get out of debt soon enough to use this…

]]> By: Abhimanyu Grover http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-53542 Abhimanyu Grover Sat, 04 Aug 2007 00:33:22 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-53542 I like it. I think its quite right to have your long term goal to achieve this crossover point.

I realized after reading this article, that this is actually my long term goal itself in someway. The crossover point basically requires high amount of stability in all terms though – basic and side income, which I believe is the only challenge here.

]]> By: Dave http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-53434 Dave Fri, 03 Aug 2007 18:43:30 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-53434 So this is looking at the return of investment as income, not growth. So wouldn’t that be factored back into salary for the year?

]]> By: Owen http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-53269 Owen Fri, 03 Aug 2007 12:18:17 +0000 http://www.thesimpledollar.com/2007/01/12/when-your-income-from-investments-covers-your-living-expenses-the-crossover-point/#comment-53269 Here’s my stab at Doing something like this with Google Spreadsheets. The graph looks ropey but the figures are fine.
http://spreadsheets.google.com/ccc?key=pPXrdSQ5U4ZqBWecC01H8VA&hl=en_GB

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