Accurate Passive Income Forecasting Is Vital For Long-Term Happiness

Accurate passive income forecasting is important for tax minimization, better time utilization, stronger mental health, and increased overall happiness. Some passive income investments are harder to forecast than others.

In 2020, I made a big mistake by inaccurately estimating my passive income.

At the beginning of 2020, I estimated I would earn roughly $70,000 from my various real estate crowdfunding investments. The combined estimate for all my passive income sources would be roughly $265,000.

My Error In Passive Income Forecasting

Instead, by November, I had already received $226,600 in real estate crowdfunding distributions, alone. Although it's nice to make more money than expected, you don't want to make so much more that your taxes get blown up.

It is unclear yet how much of the $226,600 in real estate crowdfunding distributions is capital gains versus original principal. It certainly can't all be taxable capital gains.

However, there's wording in my investment dashboard that says “Earnings excluding principal.” If this is true, then my unanticipated extra tax liability for the year is going to be at least $50,000.

Accurate passive income forecasting is important

Realizing Capital Gains When Ordinary Income Is High

Paying an extra $50,000 in capital gains taxes on top of already paying a hefty amount in property, federal income, state income, and FICA taxes is a real kick in the shins. Yes, paying lots of taxes is a good way to help society. However, bad financial planning is not the Financial Samurai way.

If I had planned better, I could have cut the $50,000 tax liability probably in half. This would have been possible by paying myself a lower salary, investing in more growth stocks instead of income-producing assets, and increasing business capital expenditure.

Thankfully, the year wasn’t over yet when I wrote this post! Further, I'm pretty sure a good chunk of the $226,600 isn't profits. I'll just have to wait until I get my K-1 to see.

As a financial freedom seeker, it's important to know the difference between short-term and long-term capital gains tax rates. Long-term capital gains are taxed more favorable.

Let's talk more about the importance of accurate passive income forecasting for financial freedom.

The Importance Of Accurate Passive Income Forecasting

Passive income should be your #1 source of income in early retirement. Think of your passive income as your core life force. All other income sources are supplementary, including forcing your spouse to keep working long after you hang up your boots.

If you have enough passive income from your investments to cover your desired living expenses, you are financially independent. There is no other appropriate definition, no matter how many impatient souls try to redefine financial independence.

As you advance in your financial independence journey, you will calibrate the ideal income you need to live your best life. You will then take the appropriate steps necessary to get there.

The Ideal Passive Income

Before I had children, I thought the ideal household income for my wife and I was $200,000. $100,000 for me, $100,000 for her sound right. Equality is so simple. $200,000 wasn't as much as what we were making combined at our full-time jobs. But the lack of income was more than made up by our abundance of freedom.

Once we had our son, we bumped up our ideal household income to $250,000. $100,000 for me, $100,000 for her, and $50,000 to cover all our son's living costs. The figures seemed reasonable after running the numbers.

Then once we had our daughter, we bumped up our ideal household income to $300,000. $100,000 for me, $100,000 for her, $50,000 for him, $50,000 for her. Again, equality for everyone.

It's important that your passive income is truly passive, or semi-passive at most. Otherwise, you might end up spending more time and energy than expected, which takes away time doing other things.

Learn the difference between active, semi-passive, and passive income to avoid confusion.

How I Made Such A Big Passive Income Miscalculation

Although my passive income goals seemed logical to me, there was a lot of uproar after I published a post about living a middle-class lifestyle on $300,000 a year. The budget and income weren't specifically ours in the post. But it was similar to our ideal early retirement lifestyle.

There was anger at the idea that a middle-class family deserved to own a house, have two kids, afford college, and save for retirement in a big city. It was interesting how some of the critics couldn't reconcile cost of living differences across the country. Therefore, I mentally throttled back my passive income goals to avoid further backlash.

I felt bad and maybe even embarrassed for wanting to earn $300,000+ in passive income to take care of my family. When I had a $250,000 passive income goal, I didn't get a lot of backlash. Therefore, I decided to mentally revert back to the $250,000 figure instead.

By focusing on $250,000 as a more reasonable passive income goal, I failed to properly forecast the likely future returns of my investments. At the end of 2016, I had made $260,000 worth of real estate crowdfunding investments.

I then invested another $550,000 in real estate crowdfunding in 2017. The funds came from selling my rental property in San Francisco to simplify life. Managing a rental with five guys when I had a newborn was too much.

On average, the investment terms of my 17 real estate crowdfunding investments ranged from 3 – 5 years. Therefore, it would make sense that starting in 2020, a significant portion of my capital and profits would start getting distributed.

Even just estimating a 20% return on an $810,000 investment would equal $162,000 in profits. Instead, I estimated just a 8.75% return.

Pandemic Fears Might Reduce Capital Distributions

Further, because of the pandemic, I had my doubts that any capital would be returned. A more probable investment scenario would be a 24-36-month delay in distributions until 2022 -2023.

However, as I learned in my November 2020 review, Q22020 wasn't as disastrous for my real estate crowdfunding portfolio as anticipated. With only two hospitality investments out of the remaining 13, I was properly diversified. My portfolio could weather the worst of the storm.

Now, things are recovering. The strong performance of large IPOs such as DoorDash and Airbnb is proving there is a lot of pent-up demand.

Remember, hospitality is still largely shut down, but Airbnb's shares increased by about 100% on its first day of trading! The company is now worth over $100 billion. What a home run for Silver Lake Partners who invested in Airbnb in April 2020 at a $18 billion valuation.

The Power Of Outside Influence

Fearing public scrutiny and the negative implications of a pandemic made me overly conservative. In general, it's better to be conservative than aggressive when it comes to financial forecasting. However, not by this magnitude.

I've always thought I wasn't easily swayed by public opinion. Given my track record of telling the truth versus telling people what they want to hear, the truth should win. But this gross miscalculation of passive income definitely shows I am still affected by what others think.

Therefore, going forward, it is better to be more private about my passive income goals. With a new political ideology in 2021 and beyond, it may be more important to go stealth than ever before.

My Taxes Are Going Up

You might be thinking: Why are you blaming yourself for your passive income miscalculation when the real estate crowdfunding distributions would have happened regardless?

The answer is that real estate crowdfunding is only one source of passive income. Further, passive income is only one source of total income.

[Karateka Final Boss]

As a Financial Samurai, you must create financial buffers for your financial buffers. Each financial buffer protects you from harm's way.

A global pandemic is a clear example of a random exogenous event that could have obliterated your finances if you weren't properly prepared.

Harm can only reach the final stage (you) after a series of unfortunate events. Even then, you still have a fighting chance to win against misfortune.

In addition to my passive income sources, I sometimes earn corporate consulting income. Further, I constantly earn active income from Financial Samurai. The occassional consulting income and active online income are considered my supplemental retirement income.

Every year, I sit down and work on my passive income forecasting. I estimate how much passive income I expect to earn and figure out how much supplemental retirement income is needed to fill the gap.

Earning supplemental retirement income is important for retirement longevity since interest rates have collapsed. Until this day, I still don't know any early retiree who withdraws at 4% or who doesn't early supplemental income.

Wasting Time And Mental Health

Besides paying more in taxes than I needed to, the worst part of inaccurately forecasting my passive income is the time and mental health aspects. After all, of the best reasons to retire earlier is more happiness!

Because my passive income estimate was much lower-than-expected, I spent more time generating supplemental retirement income to fill my perceived gap than necessary. The time I spent trying to generate supplemental retirement income could have better better spent with family or healthier activities.

This is why eventually entering a decumulation phase is important. You don't want to die with a ton of money, or else that means you spent way too much time and stress trying to make that money.

There are worse things than making more money and having to pay more taxes than expected. However, it's important to be more precise when it comes to financial planning. The government goes after income, not wealth.

Finally, with better passive income forecasting, you may feel less stress and anxiety. When the world is falling apart, the natural instinct is to cut costs and work harder. And that's exactly what I did in 1H2020.

However, had my passive income estimates been more accurate, I would have been less stressed. At least I was thinking clearly enough to call the stock market bottom in March with a logical post.

How To More Accurately Calculate Your Passive Income

The steps to improve your passive income forecasting should be pretty obvious. But sometimes things need to be spelled out as reminders.

1) Keep a monthly record

The more regularly you can keep track of your passive income, the more accurate your forecast will be come the end of the year. Making an annual forecast at the beginning of the year and then seeing how things turned out a year later precludes you from making adjustments intra-year.

You must diligently add up all passive income streams by month and compare whether they are on track to meet your annual forecasts. You need to also add up all active income streams to come up with a total income.

Once that's done, compare the total income to your desired income and adjust accordingly. Since I made an error in my passive income forecasting in 2022, I've been much more diligent in estimating my future passive income for tax minimization.

One trick to be more diligent in your forecasting is to do your own taxes every year. This way, you manually see what is coming in and out. You also do calculations on some long-term capital gains tax examples to help you realize the most opportune time to sell assets.

2) Track initial investment dates

For rental income, the income streams should be relatively consistent each month. For stock and bond income, the income streams should at least be relatively consistent each quarter. But for private equity investments that have long investment periods, it's vital to keep a record of when your initial investments were made.

For example, if you invested in a private equity fund in 2021 that says it plans to invest for 10 years, circle 2031 in your calendar. Better yet, give yourself a heads up starting in 2028 that you might start seeing distributions from your fund. This way, you can better plan your income streams for the next three years.

In my case, in 2017, I should have started creating monthly calendar reminders at the end of 2019 that distributions are likely coming in 2020.

Related: What Is Considered Passive Income? Analyze Stock Sales, Distributions, and Windfalls

3) Create at least two passive income estimates

You should create a conservative and realistic passive income estimate. Creating a blue sky estimate is nice, but it may do more harm than good. A blue sky estimate might lead you to undershoot on your passive income goals, which would reduce your chances of living your best life.

A conservative passive income estimate will help motivate you to generate supplemental active income. A realistic passive income estimate will help throttle your active income activity and better manage your tax liability.

Feeling Good Is What Having Passive Income Is All About

The pandemic has made the majority of us feel worse due to heightened uncertainty. When stocks are getting crushed, your job is at risk, and you're afraid of getting sick, it's natural to feel more anxious.

If you are like me, you like to take action during a bad situation to try and make things better. Being able to take action is why I prefer real estate over stocks. However, this constant desire to take action can produce an unhealthy amount of stress and unhappiness.

The goal of passive income is to save you time from work and provide more financial peace of mind. Therefore, please do your best to accurately predict your passive income streams. Once you do, your life should get better.

Our New Passive Income Goal

Going forward, I will have two or three sets of passive income estimates to account for different scenarios. Further, I'm going to throttle my public passive income estimates to avoid unnecessary criticism.

Biden has said $400,000 is the income level deemed rich enough for higher taxes. Therefore, any household earning less than $400,000 should be acceptable by society. However, based on my observations, it seems like $300,000 is the household income limit before people start getting upset.

As a result, I'm going to keep my passive income goal below $400,000 if tax rates are going up. Anywhere between $250,000 – $350,000 is enough passive income to provide for a family of four in San Francisco or Honolulu.

It is also a large enough passive income figure where we can continuously save or reinvest 20%. However, if we have another kid, our passive income goal may increase again. I hope this will be OK if circumstances change.

2024 Passive Income Breakdown

For 2024, here is my latest estimated passive income streams by type. I've decreased online savings, stocks, bonds, and my severance negotiation book income. My passive income was tracking to be about $380,000, but I sold a bunch of stocks and Treasury bonds to pay cash for a house.

I've added a new rental income stream and I have increased my real estate crowdfunding passive income. I'm hoping this is a more accurate passive income forecast than last year. Although, estimating distributions from my private funds is still going to be a challenge.

2024 Passive Income Investments from Financial Samurai

If the economy continue to recover, there should be a natural increase in passive income as dividends, rents, ad business increase. However, I still plan to invest another $250,000+ a year to try and generate more passive income.

Favorite Passive Income Investment Today: Real Estate

The multi-decade trend of working from home and relocating to lower cost areas of the country is intact. Therefore, I continue to be an investor in the Midwest and South where valuations are cheaper and cap rates (net rental yields) are much higher.

My favorite platform is Fundrise, where you can own a diversified fund of real estate suited to your situation. They have diversified private eREITs for investors to gain real estate exposure. With over $3.3 billion in assets under management and 500,000+ investors, Fundrise is doing very well. For most investors, investing in diversified funds is the way to go.


For accredited investors, CrowdStreet offers a way to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations and higher rental yields. These cities also have higher growth potential due to job growth and demographic trends. 

If you are a real estate enthusiast with more time, you can build your own diversified real estate portfolio with CrowdStreet. However, before investing in each deal, make sure to do extensive due diligence on each sponsor. Understanding each sponsor's track record and experience is vital.

I got another massive $122,000 real estate crowdfunding distribution in July 2022. But I expected more passive income given we're past the 5-year mark of the funds. In all, I've invested $810,000 in private real estate across multiple funds and individual deals.

private real estate investment dashboard

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81 thoughts on “Accurate Passive Income Forecasting Is Vital For Long-Term Happiness”

  1. How did you earn so much passive income from Fundrise (100K on a 850K investment) while their income funds return a max of 8% dividend? Am considering Fundrise, but can’t find a vehicle on their app that shows 10% dividend.

    1. I invest in a couple funds and individual investments. I’m including dividends and distributions.

      I just got $122,000 in July 2022 alone. But I won’t be able to figure out what is the split between the original capital and the actual returns until they send me the K-1 or the next quarterly update.

      Let me update my private real estate dashboard now. Thanks for the reminder

  2. Hi Financial Samurai

    What is the source of your passive income, from crowdfunded real estate? Is there such a solution out there? What are the yield rates you go for?

  3. I think the problem here is everyone wants to be a critic but not put in the work Samurai is putting in the blog.

    Haters don’t to be thankful that this man put his information out there and exposed himself in some capacity just to be judged and criticized by some of these comments.

    Samurai man, you do you. Thank you for the insight, point of view & writing all this website info. Real numbers give detail. I wouldn’t throttle a single thing because it would tone down the authenticity of the articles you write.

    I have a few coworkers who are 78+ and don’t want to retire anytime soon although they could. I’m not going to do that, but again, you do you. They’ll retire when they want.

    I know a couple who spends $2k a month on food. A Family of 5 here spending $600/mo. and it’s gourmet food. Again, you do you.

    So to any haters on his annual budget: your jealous and ignorant and maybe consider having a polite debate with him instead of being an online bully. Samurai I wouldn’t even reply to the demeaning negative comments.

  4. Personally, I love reading about your true passive income numbers. It’s what attracted me most to your FS website! It’s awesome and unique. And even thought your numbers are generally higher than mine, your achievements always inspire me to set higher goals and think bigger – not get upset. So, what comes to mind is the old adage, “You can please some of the people all of the time, you can please all of the people some of the time, but you can’t please all of the people all of the time.” Therefore, to avoid any public backlash from things like the disclosure of your $300k passive income goal, maybe you could express forecasting in terms of percentages instead of actual dollars? That way, your audience could plug in their own numbers without being offended by yours. And you won’t have to make compromises to speak your truth.

    Thanks for all your wisdom and insights!

    p.s. I’m looking forward to hearing more about your real estate market predictions in the coming 3-5 years because I’m waiting for the next real estate downturn to load up on more rental properties. I feel that’s the best time to buy!

    1. Thanks! Yes, I’ll be using percentages or throttling the numbers down in the future. I think it’s a good idea so that people can focus on the message and not be distracted by the actual figures.

      I’m very bullish on real estate over the coming 3-5 years. But perhaps a wave of foreclosures will provide opportunity.

  5. Definite agreement on using passive income to fund early retirement.

    Let the main portfolio double or quadruple before tapping it, and it starts being less of a concern what happens to that passive income in the long run. Because nothing lasts forever.

    You don’t know what is going to happen. For example, if medical advances start pushing most of us towards eventually becoming centenarians, then I would bet laws would change and pensions that were meant to be “for life” will no longer be so. You might be lucky to get a lump sum payoff. And, as always, the future of Social Security is far from secure.

    Likewise, suppose advances in self driving electric cars turn all those parking garages into white elephants, and people flee the cities and towns to live further out? Because they can. What will that do to government pensions when the cities can’t collect enough taxes?

    And those are just two of an enormous number of possibilities for drastic change in our lifetimes. The one thing about the future we can be sure of is that things will change. The best way to be ready for that is not to have eaten through your savings before those changes start impacting you in a major way.

  6. Why does a new born infant require $50,000 each year ? Really, and additional $50,000 of hard cash is needed per infant each year ? So if you were to have another kid, you would need a minimum of $150k after taxes just for their unique expenses? 150k net is like an income of 200 k gross. So someone with 3 kids making $ 200k will need to spend their entire net income on 3 infants just meet their expenses? According to this, a salary of 200k and 3 kids means you will be homeless and jumping into dumpsters. You mention that you calculated an income of 100k for youself, and at least 50k for each new born. Why does a new born need half your expenses? Im a father of three living in NYC and all of this is quite baffling indeed.

    1. What’s wrong with having a goal of $50,000 in gross income per child? Takes into consideration taxes, cost of living, tuition, and a savings buffer.

      Share what your expenses and income are for three kids and what your goal is. This way, we can scrutinize your finances.


      1. I think it’s because when people have goals, and especially higher goals than themselves, people tend to feel uncomfortable. It makes people question why they aren’t working as hard or making as much.

        When you question someone’s way of doing things by sharing your own path, it can get people upset.

      2. If you look at Someguy’s comment he said ‘required’ which means he’s assuming just because you’re trying to allocate 50k per child, that he needs to also be allocating 50k per child. Which is not the message, it is just that for Sam’s family lifestyle they are projecting with college savings, activities, travel, etc. that he wants to cover 50k a year per child.
        Personally if that is what you, Sam, want to aim for, go for it. I’m sure you’ll make it.

        1. I think one of the problems people have is that they don’t correctly anticipate inflation and the rise of future expenses. It’s easy to estimate with some thing cost today. But once you put in a 5% compound expense growth rate over 15 to 20 years, things get expensive quickly.

  7. Thanks Sam, definitely agree that planning your passive income is an essential step.

    To help counter this, would it be worth estimating your taxes to be higher and plan to have a certain number of expenses at the end of the tax year that you want but don’t need. Can then slip them into the next year or even avoid paying them altogether if the passive income doesn’t come in? May be able to avoid any panic buying late in the year and make sure you’re still getting value out of your purchases. Thinking as spending money on something you don’t want is effectively 100% tax!

    I’ve got a semi-wish list of gadgets/software that would help but I don’t need. Always a happy moment when I can justify this spend!

  8. I really enjoyed the article and you should be proud of your ability to generate that much passive income !!! I’ve had my own real-estate portfolio for some time and the ease of crowdfunded assets sounds worth checking out.

    A couple of the properties I own are in another state resulting in my needing to file income tax in that state ( in addition to my own). I noticed some of the these crowdfunded opportunities invest in assets across multiple states. Doesn’t that create a bit of a tax filing “chore” as each state would require its own filing ? Also, do you generally need to ask for a filing extension due to delayed K-1 tax forms ? Again, sounds like a great way to generate truly “passive” income but am a bit freaked out by the tax implications ( I do my own and am not an accountant so suffice to say, the simpler the better!!)

    1. I’m interested in the state tax issue as well and have trouble finding an answer, but haven’t asked any of the platforms directly. My simple understanding is that income is sourced from the state its generated and don’t want to have to file taxes in 5 or 10 states.

  9. One word for the recent graduate: plastics er, the cloud. Every company is a digital company now and making major investments in their technology infrastructure to support the shift to WFH and digital storefront: cloud infrastructure, security, POS, identity management, etc etc is rising the tide of the nasdaq. Look to the clouds for your growth plays.

    Software is the modern day gold rush: low barrier of entry, not capital intensive to get started and the payouts are absolutely massive. Look no further than the founders of many of the recent IPO and those upcoming and you’ll see kids in the late 20’s and 30’s with great ideas and coding skills becoming multi hundred millionaires. God bless America!

  10. For an accredited investor, do you prefer CrowdStreet over Fundrise? Which asset class, .i.e. opportunity, core, etc., within CrowdStreet? I invested in my first CrowdStreet deal last week.


    1. At the moment, I like the diversification of Fundrise, even if you are an accredited investor. I’m HAPPY with 8% – 9% returns, which Fundrise has historically provided. I’m just too busy with two young children.

      Further, I believe every investor should invest in at least 3-5 projects for diversification. The CrowdStreet offerings are solid. If you can easily invest $50,000+ and enjoy the process of picking several different investments, I’d go with CrowdStreet b/c they are focused on 18-hour cities, which should have most growth IMO. Individual investments often have 15% or greater IRR targets as well. Of course, not every investment hits their targets.

  11. “$100,000 for me, $100,000 for her, $50,000 for him, $50,000 for her. Again, equality for everyone.”

    This is more “equal” than it is equal. Why did you decide equal shares, at least among generations, was the right way to divvy the income? Do you use the same format for expenses?

    I am the sole earner for my family but, my wife and I discuss all income and expenses as “ours.” Our financial philosophies are quite similar, so our meetings go really well most of the time. Wondering if there’s an advantage to your way.

    1. I was an economics major and worked in finance, therefore, I like to break things down into units for more clarity.

      However, I also believe that if we love our spouses, we should make them financially independent of us.

      When things are equal, at least in terms of work, and Money, etc., there’s a lot less resentment and a lot less arguing about money. And make no mistake about it, being a stay at home spouse to take care of kids is a ton of work.


      1. I agree that being the caretaker a lot of work, if not more work than having a job. We couldn’t support the ‘financially independent spouses’ method because she only has income as long as I work. That’s why I also asked about expenses.

        Does she get a raise if you have more children? Who decides on where the $50k per child goes?

        One thing we struggled with in the beginning of this method was not making her portion feel like an allowance, which it basically is. The solution was combining everything with equal say; total dependence.

        1. A raise? No, it’s not like that. We start with a top down methodology to see overall what we’d like and be comfortable earning. Then we calculate by unit rough estimates and just go with it.

          Everything is shared. Breaking the numbers down is just one way of doing things. Be precise and fluid at the same time since we can do both.

          1. Paper Tiger

            My wife has her own formula. She says what is hers is hers and what is mine is hers so 0% for me and 100% for her ;)


    Hi Sam,

    I recommend that you keep on writing on how much you need to live a middle class lifestyle in SF. Your analysis is thorough and it can be used as a guide for everyone in their own individual situation. Since I’ve been “blessed” with five kiddos and another on the way, SF is not viable since my passive income is not at the level it needs to be to enjoy our lifestyle as we do in Denver.

    Speaking of passive income to support lifestyle, I have a healthy chunk of my passive income from rental real estate. I learned about Peerstreet and it seemed a good opportunity. I tried Peerstreet and in the end was disappointed. I made an annual return of around 5%. What killed the return was principal loss due to some short sales. Maybe I’ll try Fundrise next.

    Look forward to your next post.

    Semper FI,

  13. Vincent Schultz

    Hi Sam – who says we are ever going to have herd immunity for Covid-19? I saw that in your newsletter today. We have had a vaccine for influenza for decades and there is no herd immunity, because the virus continues to adapt. There is strong evidence COVID will be similar to the flu in regards to it adapting and people being able to contract different strains again and again. Based on the evidence I have seen, COVID is not going away and will be around like the flu season after season with the need to get a COVID vaccine each season.

    1. When you have a vaccine that is 95% affective, and businesses and schools that will like require vaccination, Heard immunity is an inevitability. That is, unless all the vaccine manufacturers are lying.

      You don’t see measles much anymore. And that’s because of heard immunity and a 97% effective vaccine.

      But who really knows in the end. There are risks everywhere. And you just got a live your life and take precaution when necessary.

  14. Mike in Michigan

    I grew up on the east coast and went to college in the mid-west and settled there. I work in the software industry and have had several chances over the years to get work on one of the coasts. I have resisted that for many reasons, one of which is being unwilling to move to make 2-3x what I make to pay 3-4x in living expenses. That math, plus the pace of life in the mid-west being much closer to what I enjoy, has made me happy I’m living where I’m living. To that end, yes, $300,000+ on an annual basis is a lot of money. But it’s a lot less if your state borders an ocean than if it borders a large river or lake. That’s just the way it is.

    I think many of us appreciate the transparency and directness of your writing. In my own life I’ve toned this down over the last 15 years or so. I got tired of the arguing. I’ve got one kid almost done with high school and one almost done in college and still have a few years of work ahead of me before I can call it a career. I’ve enjoyed my work for most of my 25+ year career and, having lived in the mid-west I think that helped. I know people that worked in software on the coasts and they have taken a similar path that you describe here where they put in a solid 10-15 years in the pressure cooker, banked and invested what they could and got out as soon as is reasonably possible. I might have taken a similar path under those circumstances.

    I have friends on the coasts and it’s funny knowing that they make substantially more money than I do that we have the same issues with the cost of, and paying for, college. I am about 90% sure I’m in a better spot than they are on a fraction of the income because I do my best to lead the type of life written about here and on other FIRE sites. I fall way short, but I’m happy. I’m not ready to check out yet in my mid 40’s but I’m also not scrounging to find $1,000 like so many people you read about.

    Keep up the good work. If you are not comfortable with the feedback about your personal goals and achievements, talk about them in the abstract. Or you’ll just need to get more comfortable with the criticism and know that you are doing the right thing for yourself and your family.



    1. Howdy Mike,

      If you’re happy, that’s really all the matters. And since you are happy, congrats!

      I purposefully titled this post “For Long-Term Happiness” because money is meant to be improve the quality of our lives. We must never lose site of this.

      And for this post, it’s now easy to look back and think I didn’t need to be as stressed in 1H2020 as I was. However, perhaps this is just the Dad DNA in me that will always put up defenses and goes to war against anything that may harm my family.

      Fight on!


      Related: Solving The Happiness Conundrum In Five Moves Or Less

      1. Charles t. Conrad

        Money and happiness. I have found making a good sum of money is satisfying. However, not having debt is better. If my income drastically decreases I will be fine because I have few bills. I can live a very happy life on $80,000.00. I don’t worry about making more money. I don’t need it.
        I think you should tell your readers not to try and make more money. It costs very little to live without debt.

  15. Thinking of Roy Farhi’s comment, I’d appreciate learning about a blog which explores how to enjoy reaching one’s financial goal, and then taking the foot off the accelerator pedal of ‘more’. Especially when living a simpler, modest lifestyle, which has been perfectly adequate, is no longer useful. I realize that Financial Samurai, Sam’s blog — where folk are focused on increasing income — is not the best place. But Sam has provided a model for candid sharing, without pretension, which is important. Can anyone recommend a place to explore this issue?

        1. It’s going to be great! But first, I will set up an exit plan contingent on certain conditions.

          I’m really ready to wind things down a lot. Although, not sure my body will comply. It’s 6:24am and I want to get some things done before my family wakes up :)

      1. I appreciate your blog suggestions, which target the values we discussed. Following them up, the sites seemed to have the same enthusiasm and naivete that such blogs have shown for the past 4 decades. In that time, surely others besides myself have useful knowledge & experiences learned by living the suggestions in the blogs through one’s professional trajectory. I was hoping to find others at my life stage making comparable professional decisions after some decades in the trenches of those values. Know they’re out there – will keep trying. Many thanks for your thoughts!

  16. I really enjoyed the article and you should be proud of your ability to generate that much passive income !!! I’ve had my own real-estate portfolio for some time and the ease of crowdfunded assets sounds worth checking out. A couple of the properties I own are in another state resulting in my needing to file income tax in that state ( in addition to my own). I noticed some of the these crowdfunded opportunities invest in assets across multiple states. Doesn’t that create a bit of a tax filing “chore” as each state would require its own filing ? Also, do you generally need to ask for a filing extension due to delayed K-1 tax forms ? Again, sounds like a great way to generate truly “passive” income but am a bit freaked out by the tax implications ( I do my own and am not an accountant so suffice to say, the simpler the better!!)

  17. Sam,

    I have been investing in real estate crowdfunding literally since its inception after the JOBS Act change a little less than a decade ago. I have been burned and I have made some quality returns but each year I forecast on making more money from the previous because I reinvest my earnings.

    If people are chastising you for forecasting or setting a large number goal for your passive income …….then F*&@ them! Do it anyway. Tell it like it is, since that is the refreshing thing about your website.

    One of the tenets of the 9 things to give up if you want to happy is………………….
    “The need for other’s approval”

    Don’t lower your goal to $150k…..I expect that number to increase YoY based on your love of real estate and real estate crowdfunding.

    1. Maybe! It would be odd to think that with the stock market up, passive income with and also increase. And that’s kind of the power of compounding overtime. We are up so much since I left work in 2012, the bigger passive income figures and a higher net worth shouldn’t be a surprise. Everybody who has been investing and saving since then has made more.

      But new readers come all the time and they don’t have the history or the perspective of the journey. So I think throttling is in order.

  18. I think people were right to lose it when you published an article complaining how 300k a year income is barely enough to survive. The article was elitist and insulting to 95% of people who are living with a lot less. Even more so, you keep insisting that the 300k mark as a minimum is accurate, and the backlash is unjustified. You seem to have lost contact with the real world living in the San Francisco bubble. 95% of thr population earing 300k will consider themselves extremely fortunate or.even rich. 1 month internarional vacations every year and fully funded college funds are not an American norm, and in no way reflect the lifestyle of anyone who is ” getting by.” I think its time you admit that that article was a mistake.

    1. I don’t think I was complaining. I laid out a pretty clear budget on why it’s a pretty middle class income for a family of four in a big city. But I can see how people who don’t live in an expensive city or make such an income feel like it is complaining.

      I don’t complain. I just point things out and take action to make things better. But I think you’re right. I need to throttle my income and my efforts significantly to appeal to more people.

      It is better for me to alter my reality to fit the majority then to convince people my reality is real. It’s much easier. It’s also much easier to take things down a notch instead of keep on hustling. And that’s what I plan to do in 2021.

      Hopefully $285,000 is more acceptable. But I’m willing to throttle it down to $200,000 or $150,00 if you think that’s better.

      1. Sam I think you have every reason to be proud of your hard work and success. Being succesful should be a goal for everyone. You examplify the American dream that hard work and a bit of luck can take you places. However, while there is reason to celebrate your passive income accomplishment, its becomes difficult to not critique somone arguing that almost 6x the national avg income is barely enough to get by albait in a big city. 300k is a lot of change anywhere. Of course, there is no harm in always aiming higher, just dont try to concince the rest that its barely enough. I hope you understand and congratulations for your success.

        1. I’m not looking to celebrate. Instead, I’m trying to highlight some new findings I’ve come to realize on my journey to help people on their passive income journey. There are land mines everywhere.

          Come tax time, this is when we truly realize all our mistakes (or wins). Mistakes are our greatest teachers.

          What I did happily celebrate was getting to FS’s 10-year anniversary on July 2019. That was hard! Besides this celebration, I’ve always tried to keep things relatively low key.

          My struggle is trying to help as many people without angering people using my experiences. I used to be more irreverent and tell it like I saw it. However, due to your feedback, and others I will be adjusting my topics and writing in 2021+.


    2. Have you ever thought, maybe the reason why a $300K income offends you is because you lack mental maturity, don’t work as hard, have never traveled, only speak one language, didn’t go to a good school, and don’t work at a good job?

      To not recognize other peoples realities shows that you clearly have never been around the country or around the world. This is one of the biggest problems in America. Ignorance. It’s worth developing a stronger money mindset, because one person’s success or goals doesn’t impede your own.

      1. I think it’s not the amount that’s offensive, it’s calling it a middle class income when it’s clearly not, which by definition should be much closer to the mean.

        I’m at around the 95th percentile in income, and think I’m fairly well off. Sam is saying a 99th percentile income is middle class. As someone who likes nice things, I can imagine being on that income and spending in a way which would make me feel stretched, but I wouldn’t kid myself that it was anything other than fully a choice I made. As it is, I already feel sort of guilty for spending indiscriminately, but still know that it’s well below my means. I can’t pretend to understand what it would be like to be on a median middle class income because it’s so far removed from my reality.

        1. A couple things:

          * I didn’t say $300,000 is a middle class income on the income scale. I said why some households with kids need to earn $300,000 to live a middle-class lifestyle.

          * $300,000 is not a 99th percentile income, $470,000 is

          I am hoping you and some others focus on the meaning of a middle class lifestyle and move beyond an income figure. At the end of the day, money is meant to live a better life.

          What is your income, expenses, and family situation? That’s my other hope: more people share their situation instead of just be critics. I promise I won’t be critical, but encouraging. Thanks

          1. Hey Sam, I couldn’t resist. I need to comment on your $300 K is middle class lifestyle for some. 1. You are right, some high earners don’t save much. 2. It is an excellent illustration of lifestyle creep, a very common occurrence, 3. the expense items such as multiple vacations, private school, high end cars are affluent lifestyle choices that high earners can afford while they earn high income. So let me be clear (you might also agree) the $300 K lifestyle you outline is not middle class. Middle class earners / lifestyle must make spending choices that the high earner think of as must haves. BTW – living the urban life on the coasts is an affluent lifestyle choice for many. Last comment, not all high spenders $300 k have the ability to maintain this lifestyle, especially if they don’t save and invest large chunks. You are an excellent example of someone that can (you earned, saved and invested wisely + keep working hard). No need to apologize for your financial success.

            1. Thanks, can you share your situation? Where you live, your income range, and how many people you support etc.? It’s good to get different perspectives from people. Thanks

              1. I typically just read but… Married, both just retired (both 51). One kid done with college, one kid in HS. Live in midwest. Consistent savers and investors. Strong believers in public education (K-12 + college) and prudent spending. Just two midwestern middle class kids that hit it big. Will never need to work again. Our income before retiring was substantial. So is our NW.

          2. The first google search I did following this had at the very top a $300,800 99th percentile income based on 2016 figures from dqyjd dot com – but I’m guessing it’s based off you using a household income rather than individual, and possibly adjustments in the intervening years. I’m basing my percentile income on an individual basis as well.

            I’m a single person with no dependents, and I do admit feeling less well off when seeing a recent news article of household income, however I still live in one of the same neighbourhood as households of a similar income, only in a smaller place, and driving a crappier car. I think I could afford a house husband and one, maybe two kids on my income, but would no longer have savings, which is currently 30-40% of my net depending on the month. I’d say my main extravagance is post code, otherwise I live quite simply, and plan to keep on doing so.

            I expect if I do partner up, it would be with a person with a similar income, so would not expect living standards to drop, and will still retire early. If I had kids they will go to public school, but in a snooty neighbourhood (according to my brother in my housing choices). Obviously, I can’t know for sure how future me will feel when the time comes, however I agree with the below poster who posits that it is not a middle class lifestyle you’re describing.

        2. And I thought to also add it might be to do with the people you associate with that’s skewed your viewpoint.

          My older brother and his wife’s household income is the same as mine, though it’s a dual income house, which goes to show not all Asians end up with high incomes. They are a middle class household, and even then on close to average incomes, substantially better off than a median income household.

          In my industry, I have a high income because of seniority. I know of plenty of people who have to live and make do with average incomes and raise families with what they make. You came from investment banking, where I get the impression (could be wrong here) except for the very junior people, everyone is on a high income, so that is your norm.

      2. Derek , please point out where I said 300k income offends me persoanlly? How ignorant of you to assume that since I objected to the article, therefore, I must be one of the lazy and jealous bums who makes a lot less, lacks mental maturity, dont work as hard, have not travelled, dont speak another language, didnt go to a good school , dont work a good job and dont have a strong money mindset. So I am the ignorant one? What if my networth exceeds yours ( dont be surprised if it does) ? What if my qualifications and education exceeds yours ( dont rule it out) ? Would that immediately change you views ? The shallowest vessel makes the loudest noise, and you my friend seem quite shallow and quite loud.

        1. Sure. You literally say “elitist and insulting.” Please re-read your comment.

          Happiness is not being easily insulted by someone else’s reality, especially if it is not offensive in the first place.

          1. He didn’t say he personally found it elitist and insulting… he said it could be consi As such to 95% of a subset of people. Maybe you should read it again.

            1. Hence why I think it’s important to throttle the numbers below $300,000 don’t you think? What level of passive income a year would you find acceptable and not elitist? Thanks

              1. It’s your blog. If what you are personally budgeting is $300K, then that’s what it is. I don’t really see the logic in you changing it just to downplay your income because of jealousy on the part of others.

                1. The desire for more harmony. It starts wearing on you with repeated criticism after spending a long time writing a post. It’s one of the reasons why many sites have turned off their comments section. The constant criticism is also why a lot of bloggers give up after a while.

    3. It’s hard not to be envious, but try to move beyond the win / lose model.

      Someone else’s success or goals is not detrimental to your own, least of all, Sam’s, who has consistently written helpful content since 2009.

      I’m thankful for Sam’s content, especially during the beginning of the pandemic.

  19. So true about the importance of accurately predicting how much you expect to earn in passive income. I am totally guilty of not doing this. I clearly remember doing my taxes last year and being like “woops” when I got my final dividend and investment gains income numbers. When I was calculating my estimated taxes earlier in the year I had just taken the prior years numbers and kept it the same. I figured it would be about the same. But it ended up being roughly 2.5 times larger. I was happy to have earned more, but hadn’t paid enough in estimated taxes during the year. I should have been looking more closely at my holdings and paying attention to some structured notes I had that were maturing and how my div earnings were going to be larger because my positions were larger from investing more earlier in the year.

    Tax planning isn’t fun but it’s important. And accurately estimating passive income earnings is definitely an important aspect of managing ones finances! Thanks for the thorough article! Great tips.

    1. Yes! The miscalculations once tax time comes can be a real bummer. It is funny how we get stuck in our thoughts all year and don’t adapt as quickly.

      Thankfully, there are some things we can do before year-end to decrease tax liability.

      Perhaps a $50K charter jet flight to Hawaii or a $120,000 charter jet flight to Taipei might be in the cards! Should explore Taiwan’s COVID-19 fighting miracle and write about private jets. :)

  20. Christine Kwasny

    I wouldn’t call the unanticipated real estate income a mistake, so much as part of the risk of relinquishing control that syndications necessitate. But you make some good points on how to anticipate and hedge against unexpectedly large returns at potentially inopportune times (from a tax perspective).

    It is truly unfortunate that there is anger towards a realistic financial picture of what it takes to truly care for oneself and children (as you outlined with health, retirement, and schooling costs). This anger is misguided and should be illuminating 1) what families should be aspiring towards to truly care for themselves and 2) the inability for many to achieve these goals based on cost barriers to many working people. The current health insurance, retirement planning, and continuing education system is a joke. There are so many different and better ways to provide what should be deemed essential services to all, not just the few who are fortunate enough to afford it.

    Perhaps you could create a post on these issues? Showing people alternatives that are available today, as well as could be available given political change would be very valuable.

    For example, the health care debate seems to center around only 2 options: the current not so great system versus a potentially disastrous government-run system. There are other ways! The rest of the world doesn’t operate exclusively within these two hemispheres. Same for education: the prevailing belief seems to be you either go to college (potentially at enormous expense) or end your education at age 18 and get on the struggle bus. There are so many other paths! Trades, community college, and military service are just a few. Not to mention maximizing one’s value from education and not being blind to the cost.

    You should be proud of what you have achieved and the valuable insights you provide basically for free. Perhaps those of us who value your honesty and bravery to share reality need to express more gratitude to offset the jeering masses. Finding those who are willing to share their finances is very rare, and of immense value to those of us (like me) who don’t have the social connections that serve this purpose. I encourage you to continue being your true, honest self.

    1. Christine Minasian

      SOO well said Christine!! You are right about education for sure. Sam- you are doing an amazing job. My husband just sold a large part of his business last month. We met with our Financial Planners and said the same figure for a household of 5- we need $350K net to live our current lifestyle in a city due to property taxes, travel, education, food, etc. So don’t beat yourself up over it! Well done Sam once again.

      1. Congrats on the business sale! Hope you can find much needed rest.

        I’ve recently thought of selling a part of FS to a motivated young buck. But haven’t found the right fit yet.

        1. Christine Minasian

          He’s had a few offers over the years but did not go through with them for one reason or the other. I kept telling him “you don’t want to have to work for “the man”. When it’s meant to be Sam- it will be right. Listen to your gut and don’t take any less than what you feel it’s worth and what you’re willing to walk away from it all for. It does bring an awesome peace of mind though!

    2. Perhaps not a mistake, but very poor financial planning. The sad thing about doing your taxes once a year is that you re-live all the mistakes you have made, e.g. selling stock at inopportune time, forgetting about a distribution that now requires having to pay taxes etc.

      Then, if you spent any amount of time making supplemental income, you then feel foolish, unless you really enjoyed the activity.

      I love writing about health care and education. Will continue to do so forever!

      Some recent posts off the top of my head:

      How to choose health care plans
      Private or public? Saving $1 million seems like a good idea


  21. It is difficult to believe you are making $330k from $810k investment. I have several crowdsourced real estate investments and I will be lucky to break even. The story does not seem true to me.

    1. $330K is what I see on my dashboard and what I’ve gotten back so far in my checking account. I am sure a decent portion is principal and not profits. However, with a fund of 17 investments and quarterly statements that come 1-2 quarters after the quarter is over, it’s hard to figure out exactly what is profits and what is principal unfortunately. I’ll know for sure once the fund winds down by 2022 or 2023.

      BTW, your investments are probably different from my investments, so the returns will be different. Feel free to share what they are, how much you invested in each and when too. Thanks!

  22. The reason why people criticize others’ level of income is because it is far easier to do that than to go out and actually see what you’re really made of – and thereby worth. And perhaps also because there seems to be an increasing acceptance of socialism in US culture – therefore it is acceptable to shame “high earners”, and not to mention to tax them even more. We have a similar issue here in Australia called “tall poppy syndrome” but that ends more in jealousy than anything else more serious – such as harmful tax policies or violence.

    1. For happiness-sake, it’s probably best to give in to new political ideology and adapt. I left work in 2012 under the Obama administration and was so much happier.

      Many of us are exhausted after 2020 and I think many will also take things easier in 2021 under a Biden administration.

  23. You might find it useful to imagine the lifestyle tradeoffs of your readers living on say $150k gross with a family of four, to better ‘get’ the reader reaction you describe to an annual gross of $300k. My personal suggestion is both to enjoy the ‘flow’ of increasing your income, and also to research charities. In this following lifestage, support others of your choice who live without your advantages. It’s efficient, in terms of taxes and income transfer, and will broaden your personal horizon.

    I have passive income of $7k/mo on houses I’ve paid off, and $7k/mo on houses I’ll pay off in the next five years, but I’m so used to living simply, I don’t know if I’ll be able to learn how to swim in the consumer society. I’m actively transitioning to funding select charities. It’s more satisfying.

    1. Indeed. Perhaps publicly I should throttle it back more to $150K then to be more kosher. Not sure what you mean by enjoying the flow of passive income.

      I wonder if I should talk more about my charities. I like to give privately bc it feels off to tell people how much I’m giving. Then it may feel like I’m giving for public adoration. I also don’t like pressuring anybody to give.

      I enjoy giving by helping people gain confidence in their financial lives with no charge.

      1. ‘Flow’ is a concept explored by psychologist Mihaly Csikszentmihalyi. It describes positive experiences of individuals when engaging in projects they enjoy. It’s a holy grail in some circles, but certainly attainable.

          1. Sam,

            Please don’t lower your goal to $150k in a HCOL city with two kids. A goal should be what you strive for but not wear anybody out. There has to be a better number. I’ll vote for $250.

            1. Hi Marie,

              Thanks. That’s the thing though. Lots of people are wearing out, including myself. This year was so exhausting. Wearing out is one of the reasons why I wrote:

              Don’t Let Honor And Pride Keep You On Hard Mode Forever

              I’m empathetic to the struggles people face and realize how fortunate many others are with a booming stock market. I’d rather fight for the people who are struggling more or still early in their FI path in 2021+.


      2. When you get to the point of huge passive income and you were so use to living like a pauper, it is almost paralyzing. You have already conditioned the conditional money to keep growing!
        I think however to “get there”, more articles Sam on Living Under Your Means.
        Thank you

  24. The real Jim

    Wow Sam, you are cranking out the posts! Thank you. Right now, my passive income from my 3 rental houses covers my monthly mortgage for all 3 rentals and my primary residence. In 11 years, my wife will have a pension of about $3500 per month for life, at age 57. I approximate (could be a little more).

    That, coupled with my paid off rentals and interest income should put us at 8-10k per month before age 60. Of course I max my Simple IRA as well. And, social security, well, it’s like you said, I’m not factoring that into the equation either.

    I love passive income.

    I take a little issue with this statement. “Yes, paying lots of taxes is a good way to help society.” I’m not so sure. In fact I disagree. The waste and fraud with our tax collector overseers is rampant. I wouldn’t trust these knuckleheads with a #2 pencil, let alone the millions/billions of dollars they siphon from the hardworking (or smart working) taxpayer. Anyways, as always, really enjoying your work. Thank you


    1. When the ideas are cranking one must crank. For who knows when the ideas stop.

      If we don’t continue to pay our taxes, how old can our politicians continue to get paid while telling everybody to shut down their businesses and livelihoods?

      Looks like you have a great plan over the next 11 years!

      1. The real Jim

        Hahaha. I literally laughed out loud. Thank you. It’s been a lot of luck, some hard work, and just keep plugging along. Hope it works out as planned. Looking forward to tomorrow’s article :)

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