The $7 Million 7 Years Wealth System

Good follow-up to last night’s discussion, AJ!

I had calculated that I would need about $8-9M in about 5 years to achieve the lifestyle I’d like without relying on a J-O-B income.

Some of his assumptions are also based on where he lives and what grocery prices are. Being a cost analyst in my field right now, I can tell you that inflation should be included today, and perhaps a bit higher in some areas than others. We may be lucky again and skate free, but I recall the horrendous inflation in Brazil years back and already see the effects in my own meagre salary (as do we all I am sure). Thanks for the (free) “food for thought”!

P.S. Don’t forget the cost of health care rises as we age (prescriptions on a daily basis seems to be the norm; hence my drive to be in good shape/health/strength and avoid those as long as possible) – I would suggest taking out at least 40% of your income, rather than the 35% suggested, to get to the take-home figure.

eeek -

I haven’t done my own numbers yet. Been too busy being sick and WORKING my J.O.B trying to catch up from the sick days – sigh. But this post resonates with me. We live on just over $100k a year, and I am so flipping frustrated that we still struggle and we still worry and we still don’t have extras! This was supposed to be our benchmark – making 6 figures=grand life. HA!

I’ve got a lot of catching up to do for my J.O.B, but will do my numbers ASAP – I’m sure it will be eye opening.

@ Di – Thanks; take a look at the next two day’s posts and see if they exhibit the same ‘issues’ as you see them … and, keep sharing. This site is all about collaboration, so, thanks!

PS Also, note that he makes allowance for Tax – a key expense than I didn’t address in my own post. I feel that he underestimates the tax on the, probably erroneous, assumption that you will be tax-advantaged at these higher levels of income (writing off business expenses, etc.)

@ Deanna – Like all good things in life, you can afford to wait a little to make sure that you do it RIGHT.

@ All – The most important thing for now is to get a handle on your Life’s Purpose; if you have done that well, even a rough cut at these numbers (using what I am giving you today and for the next couple of days) – which shouldn’t take more than a couple of hours of work – will get you close enough to a Number that you can panic over …

… remember, these are ‘life destinations’ – presumably, we have 7 years to adjust our thinking

@AJC – Hopefully I didn’t miss this question last night, but here goes… It seems like you are a much bigger proponent of the Rule of 40 than the Rule of 20, yet you do state that we can use the Rule of 20. My Rule of 40 $11M is a lot bigger than my Rule of 20 $5.5M. Duh! =P How do we decide which number to use?

@ Shannan – Start with the Rule of 20 … if that doesn’t scare the sh*t out of you then move up towards the Rule of 40 In truth, I used the Rule of 20 but now that my ‘nest egg’ has kept growing, I am aiming to keep my spending limited (at least until I reach Rule of 40 levels) to ensure that I NEVER run out … we’re about to see how well we’re doing at this (I’ll post soon).

[...] 7 Millionaires … In Training! thinks you need to think again if you’re of the opinion that 100k means you’re ‘rich’. [...]

100K is definitely not rich–particularly if you have debt that you need to pay down, like most of America does.

@ James – with or without the debt, it’s not rich in strict terms .. of course, if it is passive, indexed from inflation, and supports your Life’s Purpose, then you are indeed ‘rich’ in my book, at ANY [passive] in come level.

So true! I remember when 100K was an amount to aspire to. Now it is just middle class.

@ Andy – barely

[...] I pointed you to some typical personal budget allocations at varying income levels i.e. $100,000 p.a.; $250,000 p.a.; and $550,000 p.a. (before [...]

[...] if you come 4th (picking up a tidy $2.5 million, in the process) then you can afford to live this $100k lifestyle (and, still have $125,000 – once off - to splash around to help you celebrate). Similarly, [...]