I receive three paychecks this month, instead of the usual two paychecks. That helps the cash-flow front just a bit.
On the spending front, We plan to buy an iPad for my wife and daughter. We will use it as a car entertainment device for our daughter during those long interstate trips to visit relatives. I also bought an unlocked iPhone 4 at the Apple store for use oversea (IPHONE 4 WHITE 32GB, $749). By the way, the annual homeowner’s insurance is paid this month.
Also, I just redo the calculation, and the date for our financial independence (FI) is much earlier than I thought, provided that I keep mining my human capital into financial capital at the current, constant rate. For my analysis, I am using the Trinity Study’s 4% safe withdrawal rate (SWR). That study assumes we spend 4% of your retirement portfolio during the first year and raise the amount for inflation every succeeding year so that the odds of a 4% SWR failure are very low.
As a result, financial independence happens when our assets are equal to our expenses divided by 4%. In other words, FI Requirement: Assets = Expenses / 0.04 = Expenses * 25.
Once our assets are 25x our expenses then we are financially independent. To be financially independent is mathematically simple. However, to get there requires determination, hard work and living below our means.
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