The Crossover Point - A good read about what should probably be your financial goal: Independence. Read the article and the comments have some links to spreadsheets that you can work with to figure out your crossover point. If you want to do it yourself so you can adjust the numbers how you want, here is what I did.

I have 6 columns in a spreadsheet:
1) Years Away - 0 thru 30 or you can do Age if you want.
2) Income- This year’s income and then a calculated 3% raise a year (a1 * 1.03 and drag down the column)
3) Expenses - I calculated at 85% of income - adjust accordingly.
4) Savings - Income minus expenses or Income * .15
5) Investment Sum - I used 9% return (adjust accordingly). I entered my starting savings in the first cell and for the second entered the (previous Investment Sum + 1.09) + current savings. For Instance Cell E8’s formula looks like =(E7*1.09) + D8
6) Investment Return = Investment Sum * .09

Now watch the Age/Years Away for Investment Return surpasses Expense and Income. You can adjust your savings rate to see how much you need to save per year until you reach finanical independence. Very cool!

Update: Or you can just visit WhatsMyCrossover.

Tuesday, August 7th, 2007 @ 10:47 am Links, Money, Useful
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