At the end of the month tally up your expenses and tally up your income.
At the end of every month I add up my expenses – mortgage/condo fee plus cash plus utilities plus the credit card bill – and I add up my income and I plug those numbers into another spreadsheet.
Based on the value of this investment account, it automatically calculates how much income my investments could throw off at either a 5% or 10% return.
Once you start tracking your income and expenses you can plot the figures every month.
Add in what you think you can reasonably make in returns off your taxable investment account – somewhere between 5% and 10% – and you will be able to see yourself getting closer and closer to the crossover point: this is the most important point for early retirement because it is when your monthly investment income crosses above your monthly expenses.
I can see from the graph that in early 2011 my expenses started to decrease and since then I have never had a month where my expenses exceeded my income.
I have yet to have a month where my expenses fall in between the 5%-10% investment income line – the crossover point – but I am damn close.
This article was summarized automatically with AI / Article-Σ ™/ BuildR BOT™.