Financial Happiness

Copyright 2004 David A. Wheeler, Ph.D., PHR, CMT NoStress@mail.com   Last updated 10/11/05 04:10 PM

File: happymoney.htm

  1. Don't spend money -- be frugal
    1. Insurance
  2. Don't get your money from a paycheck
    1. Small business owner
    2. Unearned Income
      1. Learn Value Investing
        1. Hulbert Financial Digest
        2. http://www.prudentspeculator.com/
        3. http://www.foliofn.com/
      2. Real Estate
  3. Save all you earn
    1. Live off your savings like a trust fund -- withdraw 1/2 % of value of fund per month
  4. Minimize your tax burden
    1. A great way to do this is with the Roth IRA.  Check out this link for more info.
    2. http://www.retireonyourterms.com/
 


Example:
    10% 6% Ending  
Year Salary Unearned Spend Balance  
1 10,000 0 0 10,000  
2 10,000 1,000 -600 20,400  
3 10,000 2,040 -1,224 31,216  
4 10,000 3,122 -1,873 42,465 Graduate
5 20,000 4,246 -2,548 64,163 First Job
6 20,000 6,416 -3,850 86,730  
7 30,000 8,673 -5,204 120,199 New Job
8 30,000 12,020 -7,212 155,007  
9 30,000 15,501 -9,300 191,207  
10 50,000 19,121 -11,472 248,855 New Job
11 50,500 24,886 -14,931 309,310 1% increases/year
12 51,005 30,931 -18,559 372,687  
13 51,515 37,269 -22,361 439,110  
14 52,030 43,911 -26,347 508,704  
15 52,551 50,870 -30,522 581,603  
16 53,076 58,160 -34,896 657,943  
17 53,607 65,794 -39,477 737,867  
18 54,143 73,787 -44,272 821,525  
19 54,684 82,153 -49,292 909,070  
20 55,231 90,907 -54,544 1,000,664  
21 55,783 100,066 -60,040 1,096,474  
22 56,341 109,647 -65,788 1,196,674  
23 56,905 119,667 -71,800 1,301,446  
24 57,474 130,145 -78,087 1,410,978  
25 58,048 141,098 -84,659 1,525,465  
26 58,629 152,547 -91,528 1,645,113  
27 59,215 164,511 -98,707 1,770,132  
28 59,807 177,013 -106,208 1,900,745  
29 60,405 190,075 -114,045 2,037,180  
30 61,010 203,718 -122,231 2,179,677  
31 61,620 217,968 -130,781 2,328,484  
32 62,236 232,848 -139,709 2,483,859  
33 62,858 248,386 -149,032 2,646,071  
34 63,487 264,607 -158,764 2,815,401  
35 64,122 281,540 -168,924 2,992,139  
36 64,763 299,214 -179,528 3,176,587  
37 65,410 317,659 -190,595 3,369,061  
38 66,065 336,906 -202,144 3,569,888  
39 66,725 356,989 -214,193 3,779,409  
40 67,392 377,941 -226,765 3,997,977  
41 68,066 399,798 -239,879 4,225,963  
42 68,747 422,596 -253,558 4,463,748  
43 69,435 446,375 -267,825 4,711,733  
44 70,129 471,173 -282,704 4,970,331  
45 70,830 497,033 -298,220 5,239,974  

Don't like these assumptions? Here is the spreadsheet so you can play with the numbers yourself.

How much should you be worth?  This is the wealth equation from Stanley and Danko's book:

Networth = Age * Income / 10

You are wealthy if you have twice that amount, and poor if you have half that amount.

Resources:
Rich Dad, Poor Dad by Robert Kiyosaki
The Millionaire Next Door: The Surprising Secrets of America's Wealthy by Thomas J. Stanley, Ph.D. and William D. Danko, Ph.D.

 

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Last modified: 10/06/05