Saturday, February 25, 2006


Hello. Consider this my first post towards blogging the journey of my wife and I towards financial freedom. My blogging goal is to collect and convey wisdom on the subject of personal finance. I personnally view the use of personal finance blogs as an excellent source of entertainment and education which can aid an end user's own financial due diligence.

Where I am, where I came from, where i'm going? Just three years ago I went through a divorce. I took on all the debt of my ex and had a net worth of about $14000 in the red. Thirty three months later I remarried. Today, we save aggressively and invest moderately. Our goal is to retire with an annual passive income of $80,000/yr (adjusted annually for inflation). Retiring at the age of 47 is a secondary goal for me. I ultimately consider both of us as members of the "rat race." Once I reach 47, I'll do whatever makes us(me) happy and exit the "rat race." If it's continuing my career, blogging or handing out shopping carts at wal-mart... whatever makes us happy, i'll do it. My wife will retire whenever she wants to.

I view NET WORTH as important but SECONDARY to level of passive income. In reporting our passive income, I report what my wife and I would collect if we retired NOW. I follow the following rules:

a) Stock Assets: Contributes to passive income only through dividend yield.
b) Bond Assets: Contributes to passive income only through coupon (yield).
c) Money Market Assets: Subtract unsecured debt then report passive income as the net interest income.
d) Investment Property: Annual net cash flow
e) Military pension: I assume that I will serve until i'm at least retirement eligible (20 years). For presentation purposes, I ignore the 20 years of minimum service rule and report what I would collect now based on current years of service. Otherwise, I follow all other military rules for calculating pension - Pension equals 2.5% per year of service times the running average of last three year's base salary.
f) Other: I ignore it unless it provides a source of passive income.

Using these rules, our net annual passive income would be $16,779 if we retired today, 21% of our ultimate goal.


Anonymous said...

I like your idea of a passive income goal. Are you a RichDad/PoorDad devotee?

Finance Junkie said...

Thanks for the compliment and the post.

While i'm not a devotee, per se, I do love his message. I have watched his PBS special twice and play his board game whenever I get a chance.

I consider myself more of an "Alex P. Keaton" fan (family ties). At least that's the one famous character that people say I remind them of. I don't try to emulate him on purpose... I guess I just come off that way.

Now that i'm a blogger, i'll probably do a couple of Kiyosaki book reviews. One of his newer ones will likely get reviewed.