The Expert Podcast

…$10 million Do you have that much? Are you going to make that much You're going to need to that's how much you're going to need to live the rest of your life. Are we exaggerating? Are we crazy? Well let's take a look. Let's do some math You see our calculator right on the screen. How do we come up with the fact that you need $10 million not a penny less to live life Well, let's take a look at the numbers, so let's take 10. Million dollars…First thing you do is take out taxes. Multiply that times point. Let's say seven too, because most people that are gonna make that much money you're going to be at about a 25 to 30% tax bracket in current tax brackets That percentage might go up. That leaves you with how much? 7 million $200,000 seems like a lot of money. But how long is that going to last you for…let's suppose you…Mid forties. Mid fifties late fifties And you have about 40 years left on your life, right If you're 50 years old maybe you live to 90. If you're 55 years old maybe live to 95. So if you're going to take that $7.2 million. And divided by 40 years. That leaves you with $180,000 per year. That seems like a lot of money too Right? Well how much is that per month Divide that by 12 months, that gives you $15,000 a month to spend. Well now you're talking about numbers that you might be familiar with. Well for $15,000 can't you live a pretty good life You probably could. But let's look at what expenses might be. Right about now. If you were going to buy. A reasonably upscale home You're not buying a big huge mansion You're not buying, you know a castle. You know and in the Highlands, But you're also not buying. A cheap shack either. In most significant markets in the us to buy a nice house you're going to spend between six and 700,000. Can you find a house for 400 maybe 500, probably can. But the median house right now is about $400,000 4 0 6 or four 20 depending on what numbers you use. So if you're going to buy a house, that's a little bit above that you're going to be spending let's say six 50 let's call it right in the middle. Well if you put down 10% down payment which is what most people do and you finance about. You know five 80 or five 90, your mortgage payment is going to be $5,500. For your mortgage on your home…So let's take 15,000 subtract 5,500. That leaves you with $9,500 a month Well how do we come up with 5,500? Well if you take the current. Price of a house in the. six 50 range minus 10% and do a mortgage that's maybe eight or 9% Cause that's probably what you're going to be at. That's going to be your payment 5,500 That leaves you with 9,500. You're probably going to have a couple of decent cars maybe own one for cash. Maybe you finance one. Well, an average car right now cost 45 to $50,000 for a nice car. A five-year loan. On a $50,000 car is a thousand dollars a month. So let's take a thousand dollars off of that. That leaves you with 8,500. Well, if you have that you're probably going to have, your utilities. Water. Sewer. Electric, you might have internet. you might have…things like HOA fees. Those are going to be at least a thousand dollars a month Let's take off 1100 for that. That leaves you with 8,400 where you need to buy food. Family of four I might be what A couple hundred dollars a week for food. Take off 800 for food. leaves you with 7,600. Do you have any expenses for insurance, your homeowners insurance auto insurance health insurance. Family of four, you might be 15 to $18,000 a year in premiums. So let's take off another 1400 a month on average for premiums that leaves you with 6,200. You're gonna eat out. Often deed out. Once a week, twice a week, let's say five times a month. Well every time you go out family of four is probably going to cost you what a couple of hundred bucks. Right. So times five times there's another thousand take off a thousand. Now you're down to 60 That was a hundred. So we'll take off another 900, 900. That leaves you with 5,200. Leftover. Well certainly if you're a family of four, you have holidays you have four birthdays You have Christmas you have…mother's day father's day anniversary. You're going to be buying gifts that might cost you maybe three or 400 three 4,000 a year for gifts maybe 5,000. So average that out that could be 400 a month. Now you're down to 4,800. Certainly you're going to take vacations right? So if you go on vacation twice a year, maybe a cost you three grand for a vacation maybe one you fly stay in a hotel One you drive you stay in the lower end place. So that's going to be let's say $3,000 times two. Times a year six grand divided by 12. That's going to be another $500 a month on average for. For vacations leaves you a 4,300. It's about a thousand a week You have leftover, you're going to put be putting any money away for retirement. You can be putting any money away for savings. Maybe you need to have a college fund set up. Maybe you need to have, you have elderly relatives that need help. So let's take 800 a month. And put that away Now you're down to 3,500. Now if you have a house or even if you rent an apartment. You're going to have certain upkeep and maintenance and repairs and furniture. replacing appliances. Well let's average that out to say that's going to be 700 a month. Already you're down under 3000 you're 2,800 a month in today's dollars. That's in 2022 or 2020 $3, not counting inflation. So. You're getting pretty close down to zero I am sure. The in a monthly budget. For an upper middle-class family. That there are going to be other expenses we haven't even gotten into that are $2,800. A month clothing. You're going to have to. Every once in a while get some new clothes you're not wearing the same old thing over and over. What about real estate taxes on your home? What about special assessments for your neighborhood? What about…school expenses for school trips or for band practice or for. Football uniforms or for…cheerleading fundraisers. A few hundred dollars a month. Right. What about external birthdays? You have at least 12 friends meaning you have a birthday every month. Right That could be 50 bucks. A month. So as you can see this. Budget is very very quickly eroding down. To a thousand $2,000 a month. That's with a $10 million earnings. Over the rest of your life. So 10 million sounds like a lot…But if you are an above average, Family that wants to live a comfortable life. Not lower class not struggling not paycheck to paycheck. But a comfortable life. You need to think about how are you going to accumulate or earn or generate $10 million. Over the rest of your life. Now granted you have 40 years to do it So you have some time. But you also can't. Delay the start of this. So is either putting money away increasing your income starting a business. creating an enterprise. Think about that number every single day $10 million Don't let it scare you I don't let it demoralize you because you know 10 million may seem like a lot. But putting together 10 million over 40 years is doable. As long as you start from day one, tell me what your thoughts are am I off my rocker We're thinking you need 10 million. Is it. Maybe privileged to think that that's the life you need to lead. Is there other ways to skin the cat My is my math wrong? What are your thoughts?