Experiencing Financial Freedom
If you ever want to be absolutely free, you need to develop multiple income streams so that when the inevitable change happens, you’ll be covered. I first recommend you start with the end in mind. What makes you happy? From this question, now you can derive how much money you honestly think will make you happy.
Once you’ve digged deep to answer these two important questions, you can then start building your income goals.
What makes me happy?
Family, friends, experiences, travel, freedom to say and do what I want, sports, relationships, the online community, hot tubbing with drinks, food and enough money to not have to worry. Good old nostalgia really makes me happy too.
What makes me unhappy?
Racists, bigots, haters, lying politicians, bad bosses, cronyism, inequality, people who say one thing and do another, thieves, and zealots who impose their will on others.
How much money do I need to achieve what makes me happy?
Anywhere from $3,000 to $15,000 a month after taxes to account for a single life to one that provides for a family of four.
I really don’t need much to be happy if I’m supporting only myself and have no debt. I was super happy living on nothing while in school, so $3,000 a month after tax would be fine.
$15,000 a month after tax is a large nut that equates to about $235,000 in gross income a year, the income level where I think maximum happiness is attained. With $15,000 a month, I can afford private school tuition for two if necessary, go travel 8 weeks a year, get huge and eat whatever I want, have a paid off car, live in a comfortable home practically anywhere in the world, and continuously save for a rainy day. Furthermore, $15,000 a month after tax can be used to help my parents in case they need financial help for whatever reason.
Think about an after tax monthly income number you’d like to achieve and let me know. For now, it’s time to open up the kimono and see what can be produced after over a decade of saving and investing. This is a long post, so make sure you go to the bathroom first!
Becoming wealthy has never been easier in America thanks to quantitative easing, improved financial education, an improving economy, a widening safety net, and a bull market in stocks and real estate. Surviving as a wealthy person on the other hand, has never been tougher. The government goes after you if you make much more than $200,000 a year (medicare tax, AMT, deduction phaseout, credit eliminations, education tax, net investment income tax). If the government doesn’t get you, regular citizens will. Who did you cheat or rob to get to where you are? This is a real problem for those who want to make it big in the land of dreams and hand guns.
As of 2018, with the average savings rate hovering around 4%, a median 401(k) of only $110,000, and an average 401(k) balance at retirement age 60 of around $230,000, many Americans are financially screwed. Just do the math yourself. Add the average Social Security payment per person of $18,000 a year to a 4% withdrawal rate on $230,000 and you get $27,200 a year to live happily until you die at 85. That’s clearly not enough!
We’ve got real estate tycoons and we’ve got stock market tycoons. We’ve even got wealthy bond investors such as Bill Gross who pulls in over $100 million a year. Now that the markets have recovered from the financial downturn, I’d like to have an open discussion on which asset class provides the the most amount of wealth over the long run.
Income and net worth amounts are intricately linked. However, I’m going to argue that building a sizable net worth is more vital for early retirement/financial independence than generating a high income. 
Early retirement is fantastic. There’s only one problem. Most early retirees no longer contribute to their 401Ks unless they start a business. Not only that, early retirees lose employer 401K match and profit sharing. I just took a look at my final year’s employer 401K profit sharing plus match and it came out to $27,000. There’s much more to your job than just your salary!
