What's your "enough" point?...
I sometimes get lost in my quest to become debt free and liberate my family from the debt monsters of the world while trying to change my family’s legacy. With that in mind, I’ve never thought about “How much money is enough”, until I checked my email today and saw the article topic staring right back at me.
Needless to say, I clicked the link and within the article there’s a 4 step process to figure out how much is enough. For me, I’m thinking I have a more simple formula.
Short Answer: Being debt free is enough money for me because without debt our lives tend to change. No longer are we FORCED to go to work on dreaded Monday’s. No longer are we bound by legal contracts to credit card, mortgage, and loan companies. Instead we can focus our attention on PAYING OURSELVES (which we should do anyways).
In the previous blog entry I wrote of a goal of mine. To be at a point to where I don’t have to work if I don’t want to. If we pay off our home and her student loan payment, I’ll quickly be at that point. The beauty of it is… after those are paid off, it’s smooth sailing. Income will be just that… INCOME!
But for the lazy (which I tend to be) here’s the 4 steps from the article:
Step 1: List your top five goals or desires.
In contrast with the hundreds or even thousands of cravings and urges you feel each day, your deepest desires may include benefits to others and not solely to yourself, may be characterized by patience rather than a childlike urgency and may carry a sense of profound importance: “I yearn to do or have this before I die in order to feel truly fulfilled.” You may wish to begin by listing all the desires you can in 60 seconds and then select the five which most fit this definition.
Step 2: Put a price tag on each goal.
If your deepest desires include things like buying a home, you (or your financial planner) can fairly easily convert that goal into a monthly or lump-sum financial requirement. But if your goals include states of being — such as a desire to work half time and spend more time with your kids or volunteering for a cherished cause — you’ll need a replacement income source.
For these types of desires, list the amount of annual income you’d need to replace. Our rule of thumb is that you’ll generally need an investment portfolio equal to about 20 times your annual withdrawals. So if you’re hoping to have your investments cover $25,000 a year of expenditures, for instance, you’ll need to have or save $500,000 to cover it.
Step 3: Calculate your “enough for life” number.
By adding up the total of all the lump sums needed, you can calculate how much is enough for you to achieve your deepest desires.
Step 4: Create a financial plan to get there.
If your financial net worth exceeds your “enough for life” number, great news: You can stop worrying and live the life you most want to live. I don’t mean to be glib, but if you know you have enough to take care of your deepest desires, as well as your basic necessities and retirement savings, it may be time to stop chasing each extra dollar. Instead, solidify your sense of abundance by sharing your good fortune with others, through philanthropy (or just plain old-fashioned generosity).
http://www.rapiddebtloss.com/blog/2008/07/23/how-much-money-is-enough/
I sometimes get lost in my quest to become debt free and liberate my family from the debt monsters of the world while trying to change my family’s legacy. With that in mind, I’ve never thought about “How much money is enough”, until I checked my email today and saw the article topic staring right back at me.
Needless to say, I clicked the link and within the article there’s a 4 step process to figure out how much is enough. For me, I’m thinking I have a more simple formula.
Short Answer: Being debt free is enough money for me because without debt our lives tend to change. No longer are we FORCED to go to work on dreaded Monday’s. No longer are we bound by legal contracts to credit card, mortgage, and loan companies. Instead we can focus our attention on PAYING OURSELVES (which we should do anyways).
In the previous blog entry I wrote of a goal of mine. To be at a point to where I don’t have to work if I don’t want to. If we pay off our home and her student loan payment, I’ll quickly be at that point. The beauty of it is… after those are paid off, it’s smooth sailing. Income will be just that… INCOME!
But for the lazy (which I tend to be) here’s the 4 steps from the article:
Step 1: List your top five goals or desires.
In contrast with the hundreds or even thousands of cravings and urges you feel each day, your deepest desires may include benefits to others and not solely to yourself, may be characterized by patience rather than a childlike urgency and may carry a sense of profound importance: “I yearn to do or have this before I die in order to feel truly fulfilled.” You may wish to begin by listing all the desires you can in 60 seconds and then select the five which most fit this definition.
Step 2: Put a price tag on each goal.
If your deepest desires include things like buying a home, you (or your financial planner) can fairly easily convert that goal into a monthly or lump-sum financial requirement. But if your goals include states of being — such as a desire to work half time and spend more time with your kids or volunteering for a cherished cause — you’ll need a replacement income source.
For these types of desires, list the amount of annual income you’d need to replace. Our rule of thumb is that you’ll generally need an investment portfolio equal to about 20 times your annual withdrawals. So if you’re hoping to have your investments cover $25,000 a year of expenditures, for instance, you’ll need to have or save $500,000 to cover it.
Step 3: Calculate your “enough for life” number.
By adding up the total of all the lump sums needed, you can calculate how much is enough for you to achieve your deepest desires.
Step 4: Create a financial plan to get there.
If your financial net worth exceeds your “enough for life” number, great news: You can stop worrying and live the life you most want to live. I don’t mean to be glib, but if you know you have enough to take care of your deepest desires, as well as your basic necessities and retirement savings, it may be time to stop chasing each extra dollar. Instead, solidify your sense of abundance by sharing your good fortune with others, through philanthropy (or just plain old-fashioned generosity).
http://www.rapiddebtloss.com/blog/2008/07/23/how-much-money-is-enough/
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