When is Enough Enough? Know Your Magic Number

When is enough enough…What do I mean by this? I mean what is your magic number. How much money do you require in your fuck you fund to achieve a comfortable standard of living and fulfillment in life?

when is enough enough
Fulfillment Curve (Taken from, ‘Your Money or Your Life’)

What is a Magic Number or Fuck You Money?

This is the figure or amount of cash required to live comfortably, day to day without actually worrying about money again. Due to the annual passive income created through years of hard graft and self-education.

And the passive income required in order to tell your Boss to well…you know what I mean (without worrying about the consequences i.e. being fired).

The thing is, money buys options. It lets us create a business, invest in robust investments, help our family and give back to society.

The problem is, some people don’t know when to stop. They exceed the fulfillment curve (myself included), whereas they should be sitting comfortably on the crux of that curve.

The secret in life is identifying the peak of the curve…that my friends, is the point of maximum fulfillment (shown as ‘enough/ luxuries’ on the curve above):

when is enough enough
The Mexican Fisherman and the American Investment Banker Parable

The Mexican Fisherman and the Investment Banker

There is a famous parable, ‘The Mexican Fisherman and the Investment Banker’.
It’s been tweaked little by little, over the course of time…

The American investment banker was at the pier of a
sleepy Mexican beach town, when he came across a fisherman, sitting on the sand. The Mexican fisherman had his tug boat moored and was grilling freshwater crawfish.

Inside the small tugboat were lots of freshwater crawfish.
The American complimented the Mexican on the quality
of his fish and asked how long it took to catch them.

The Mexican replied, “Only a little while.”

The American then asked, “Why didn’t you stay out longer
and catch more fish?”

The Mexican said, “With this, I have more than enough to support my family’s needs.”

The American then asked, “But what do you do with the rest of your time?”

The Mexican fisherman said, “I sleep late, fish a little, play with my children, take siesta with my wife, Maria, stroll into the town each evening where I sip wine and play guitar with my amigos, I have a full and busy life.”

The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing; and with the proceeds, buy a bigger boat:

when is enough enough

With the proceeds from the bigger boat, you could buy several boats. Eventually, you would have a fleet of fishing boats. Instead of selling your catch to a middleman you would sell directly to the processor; eventually opening your own cannery.

You would control the product, processing, and distribution. You would need to leave this small coastal beach town and move to Mexico City, then Los Angeles and eventually New York where you will run your ever-expanding enterprise.”

The Mexican fisherman asked, “But, how long will this all take?”

To which the American retorted, “15 to 20 years.”

“But what then?” asked the Mexican.

The American laughed and said that’s the best part. “When the time is right you would announce an IPO and sell your company stock to the public and become very rich, you would make millions.”

“Millions?…Then what?”

when is enough enough

The American said, “Then you would retire. Move to a small coastal town, where you would sleep late, fish a little, play with your kids, take siesta with your wife, stroll to the town in the evenings where you could sip wine and play your guitar with your amigos.”

Story by, Heinrich Boll

It’s perfectly normal to be ambitious, but there does come a time…when is enough enough? There are plenty of contractors with the same mindset as the American Harvard MBA. Don’t get me wrong. I do believe in building a business, a lifestyle one.

However, they take on numerous big loans and overstretch themselves. It’s not just one sport’s car…but three. Then there are the expensive hobbies. The only problem with all this, you have to pick up another contract to sustain it.

Maybe some of these contractors could have retired by now? But they wanted more. Some can’t let go of the platinum lifestyle (this was me not too long ago). They’ve opted for a temporary high, as opposed to sustainable wealth.

when is enough enough

How Much Money is Enough for You?

1. Like a golfer on top of the leaderboard, who’s just about to win a major. Do you catch them glancing at the scoreboard? No, they’re 100% focused on themselves and their game only.

What I’m saying is, don’t worry what everyone else is doing or making. Have your plan in place and stick to it. And work your way towards that magic number.

You can never have enough if you are measuring by what others have or think Click To Tweet

2. Don’t get sucked in with all the shiny stuff and the world of consumerism. Do you really need a garage full of cars, more outfits for work, crazy expensive hobbies or a Michelin star meal in the top 10 restaurants in the world?

Most of that stuff is not going to make you happy. Believe me.

3. Don’t let it get in the way of relationships. The number of divorce rates in the contractor game needs to slow down. Do what you have to do to reach your magic number, then cut down on the long distance gigs and late nights in the portacabin. Out of sight, out of mind.

when is enough enough

4. Beyond the point of enough, we achieve happiness by exercising our capacity to give. So, try and not define your worth in cash value. Sure, we all have our financial goals. But, start giving back to friends, family and to those that really need it.

5. Will more money lead to a more meaningful change in the quality of your life? If not, ask yourself why the hell you’re still contracting.

6. Remember, the really important things in life are either free or inexpensive i.e. walks in the park with your better half, spending quality time with your grandchildren/ niece or nephews, reading a good book, pursuing your hobbies or building up a business that’s truly fulfilling.

So, What’s the Answer?

It really depends on the individual and their set of circumstances.

1. Where Do You Want to Base Yourself?
Some folk are happy with their setup, where they grew up and wouldn’t dream of moving. And fair play to them. Maybe you’ve relocated for career purposes.

when is enough enough
New base…new life

What I’m saying is, cost of living plays a huge part on your magic number. If you do have the opportunity to move city/ country, then you could really take advantage of:

  • Cheaper monthly rental
  • Actually being able to afford a (half decent size) property
  • Going out for meals/ leisure pursuits on a more frequent basis, without watching your bank balance
  • More affordable healthcare
  • Some place more stable or secure
  • Cheaper schooling and childcare for those who require it
  • Building new relationships/friendships

2. What are Your Responsibilities?
Perhaps some of you have kids at private school, a spouse that doesn’t work or even several properties that require attention or needing to be paid off.

Then your magic number has to accommodate these factors and your financial independence date will change to reflect this.

3. Your Portfolio
You want to cut down trading time for money

when is enough enough
How much are you trading your life energy (time) for?

Keep on reinvesting your income/ dividends and maintain regular contributions to your portfolio. Until that passive income pays out your magic number.

If you have more asset classes in your portfolio, then even better. You are diversified and set up to weather downturns etc.

For example, your dividends could be paying out 10K per annum, index tracker 5K per annum, property rentals 5K per annum and peer to peer lending 4K per annum.

You could add more passive incomes into the mix.

I’m only throwing numbers out there. You can play around with these until you reach a number you’re comfortable with.

4. Liquidate all your assets
This is a good option if you’ve overindulged and have way too many toys/ homes etc. Also, if you’re fed up of trying to be a somebody and keeping up pretenses. Sell the cars(s), gold, watches, property etc. Obviously ensuring you have enough equity built up in them.

For instance, you could invest the proceeds in an index tracker and draw down 4% per year, using the 4% rule.

If you can stick it in a non-taxable account such as ISA/ tax-deferred account etc, then even better.

For example. If you cashed in all your assets for say 300,000, that would give you an estimated annual income of 12,000 per annum. I’m being really conservative here. Index funds can potentially pay out double-digit total returns on an annual basis. However, I’m using 4% as a safe withdrawal rate.

Can someone really live on 12K per annum? Possibly.

Depends on your lifestyle and where you live.

If not,  you mix this up by doing 3 months per year contracting/ part-time job/ side hustle. Giving you the option of NOT contracting/ working full time.

Then that 12K suddenly becomes a more comfortable number to live on.

That 12K will compound over time, to the point where you don’t need to contract/ work at all.

Then, if you’ve planted enough seeds in the past i.e. SIPP (pension), paid off properties, mature ISA’s etc, they will come to fruition over time. Boosting your fuck you fund in the process.

It’s the same scenario for option 3 above. Play around with the numbers. 12K is only an example. And index funds are only one example of investing.

But what about taxes? Well, that really depends on your base and other criteria you need to implement…we can cover that in another post.

What’s Your Magic Number?

After working several contracts, in different countries, I’m kind of comfortable in knowing what my magic number is. The annual amount to live on, to feel secure and live a good life for less.

I know I can live on 25K (sterling) very comfortably, with all debts paid off. Preferably living in a lower-cost/ low tax country, with a decent health system, quality food and affordable property market.

When is enough enough? It’s when you pass on a golden opportunity to take an exciting new contract/ job so you can spend time with family and friends and do work you truly love.

Now I would like to hear from you

What’s your takeaway? When is enough enough for you…and what magic number works for you?

Let us know in the comments…

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