Posted by Maneesh Sethi :: November 20, 2007 @ 10:26 am

Remember the crossover point? The crossover point is my final investment goal--it is the point where the interest from your investments equals your income. Essentially, it is the point where you can retire and still be earning the same income.

After this topic received a lot of attention, one programmer took it upon himself to create a crossover point calculator. You can see the calculator at Ryan Stewart's What's My Crossover? This awesome calculator is incredibly simple. Just enter in some basic data like your income and investments, and it creates a graph that shows you when your investment returns and your income intersect!

For example, if you are 20 years old and are making 60,000 a year (with a 4% annual raise), and you promise to put away 25% each year, your crossover point for when your returns equal your expenses will be under the age of 40. The crossover point for when your returns equal your income is under the age of 45.

Try inputting some valid, reasonable numbers that you think you can achieve. If you are able to spend less than you earn, always pay off your debts, and invest the rest of your money, you will be able to retire much earlier than you might have thought possible. Your investments – P2P loans on Lending Club, mutual funds, etc. -- will help you live without the need for a salary. Should you choose to keep working, you can very quickly become very wealthy!

Remember, the trick is simply to spend less than you earn. Compound interest will do the rest. Good luck!