Item 1: Spending/Earning/Savings

As for earnings, I put this into 2 basic categories. Gross Earned Income (The income as a result of working for it) and Residual Income (Income created by money put to work for that income). Why do I distinguish between the 2?

Earned Income is money that is mostly used for current expenses, but also have to be used for countable savings which I set 25% of actual gross earned income must go to such countable savings.

Residual Income is either in retirement funds (That is specifically to help with that purpose, but must have contributions to help that residual income so as to be able to retire relatively comfortable) or in the Emergency Fund (Note, the EF is not in just some 0.10% APY savings account. It is actually an overall investment of the money that’s available here and now). Yeah, yeah, I know Dave Ramsey would be saying I’m playing with death with this, but there’s some very important things about this fund that has to take into account of other things such as reparation/replacement of long-term assets over a longer time period when *REAL* inflation and taxation will eat up the power of that money otherwise.

As such, it stands to reason, residual income CAN NOT count as part of “Countable Savings”, but if such money is taken out of such investment, that money taken out is then counted *AGAINST* “Countable Savings”, which is in the opposite direction of the goal.

Item 2: Inflation

When I think of inflation, I not only think about the increased costs on the same goods (many people in society want you to only think about this aspect of inflation, but also the aspect of increased demands placed onto households by both the society itself and the government. Two such areas are safety (How much did people have to pay for various safety stuff say 30 years ago as compared to now day? Very little as far as I’m concerned), and technology gadgets (eventually after a while, how much of the technology gadget does society tend to require us to have available to us such as for communication purposes)?

I also don’t buy into such argument that such things truly save us money over the long run. If we are in the business and we find ways to save time, which then ultimately saves the business money (Even if it ends up costing the business more money up front), that’s one thing, but to require households to pay for those same items for the same costs, even though it doesn’t do much for households in regards to saving money, no good argument. The only item I have found to where this argument may actually apply, but even then, only from an indirect stand point of view, not directly, the computer with a spreadsheet program. Why do I say that? True, it’s not those 2 items themselves that have saved us money as those 2 items cost us money. On the other hand, with the help of the spreadsheet, I created my own financial files with the various things in it. By having the system do the work much more accurately and much more faster than what I could humanly do while also tracking our stuff, it has more or less served as my financial adviser. Not only has it served as my financial adviser, it has saved me in so many cases of not using the money else where. The worksheet that saved me of this very thing is the “Cash Flow Management” worksheet. That worksheet is by far the worksheet I use the most and it has had the greatest benefit.

As for any other added expense on the home front is concerned, there is no such argument for a such expense. That’s why I not only add in the inflation of goods/services, but also add to it the increased costs to the increased standards of living put onto households by it’s society and government.

Item 3: Assets and Liabilities

This was one of the very first things I did within the spreadsheet program after me putting together the cash flow management worksheet (The cash flow management worksheet was the very first worksheet I did). As for me, this is what’s known as the balance sheet, which I would not only say Assets and Liabilities, but also Owner’s Equity. Even when I had first put it in, my OE was very much so in the negative territory. Now it’s 5 digits in the positive side after taking taxes into account.

Item 4: With the help of tracking within my own spreadsheet program, I have determined rate of return can vary greatly depending on what set of assets and with whom you have it if it’s not self done. Example: The retirement account with the employer returns about 2% below benchmarks even though stated expenses are only suppose to be between 0.50% and 0.75% according to prospectus, but the remaining 1.25% to 1.50% is assumed to be taken out via the 12b loophole (so called operational) fees, so that’s why I put employer’s retirement account at 2% below market benchmarks. My other investments outside of account has been trending about 1% above market benchmarks, though 2010 year was way above, but that’s more of an exception than the norm.

Item 5: Tax Brackets, I do highly suspect we will end up in the federal 35% and state 8.1% tax brackets (thus where I get my 43.1% from as this not only take into account of federal, but also of state income tax) come retirement years. However, if I move to some place like TN, I will instantly cut out that 8.1% income tax. The only thing I would end up taking up would be the consumption tax rate but even that would only go up by about 3.5%, which that’s still a net of 4.6% savings.