Let's be honest: it's all about the exit. I was chatting over theoretical exits with a coworker, and he was surprised to hear that a $1,000,000 exit for me wasn't enough. I've realized I've never had a number in mind, just a generation notion that I want an exit that gives me "f u money."

So that got me to thinking: how much is "f u money" to me?

To me, having "fu money" means that the money you make on interest rates exceeds (or is close to) your net expenditures every year.

Assuming you start living the "f u money" lifestyle, I'd imagine your yearly expenses would run about $150,000 (and that's pretty aggressive). Assuming the market someday normalizes and you can find investments which return 5% of your net worth, the basic math boils down to:

$150,000 / 0.05 = $3,000,000 (after taxes).

Which means the exit I'm want should stake me $3.5 mil, since Uncle Sam will take a nice long-term capital gains cut of 15%.

Obviously I'm not taking into account taxes on that $150,000, but for rough numbers, that seems good enough.

Posted by roy on January 6, 2010 at 05:32 PM in Ramblings, Finances | 2 Comments

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pc1oad1etter (guest)

Comment posted on January 6th, 2010 at 07:53 PM
Dave Ramsey's rule of thumb is to get where you can live off of 8% of your nest egg.


PM5K (guest)

Comment posted on January 6th, 2010 at 06:23 PM
You've been reading too much UrbanDictionary.