The Cross Over Point, is when your passive income, surpasses your cost of living. And in this video, I’ll teach you how to calculate when that’s going to be possible and how to make it happen much faster.

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1. Now there are 3 variables in this equation
By the way, this isn’t algebra but it just sounds cool to use the word variable

First is your Active income
The money you make trading your time for money
Yes it involves skills, but the trade is usually time for money
And you use this money to cover your cost of living
Your goal should be to make as much money as possible without sacrificing your integrity and health
Not be so worried about this isn’t my dream job
So write down your active income number and how many hours you exchange to make it
So I make $4,000 per month, and I exchange 160 hours to make that much money
not including the money I make to pay for my car, eat out, the clothes I buy, vacation I take, the leisure time I have to take to stay the same, there are a lot of other cost associated with that job, but let's keep simple for now

Second your Cost of Living
between shelter, utilities, groceries, and transportation, I spend about $2500 dollars a month of my money
and my goal is to lower this number as much as possible
by not having payments and trying to eventually get my shelter expense paid for
the less money in expenses I need, the less passive income I need, and those the less time I need to spend working for money

Third Your passive income
this is the money I make by putting my capital to work
the money that I make I can invest it and that money can make me more money
since the goal is for this money to cover my cost of living, I don’t want to take a lot of risk

2. Predicting at which point you’ll go over the crossover point
Well let's calculate how much disposable income you have ( I have $1,500 )
Let's calculate my cost of living ( $2,500 aka $30,000 a year )
And my current passive income is $0

How can I figure out how much money I need and how long it’ll take me to get it
First, if you want to do stocks: we have the 4% withdrawal Rule
So just multiply 30k by 25 and boom that’s how much money you need in stocks
That gives me $750,000 dollars
Second: if I invest $1500 a month, by year 18 I will have over 750k and thus have made the crossover point
How can I decrease this number ( instead of spending 18 years doing this, how can I do this faster )
First decrease your cost of living: if I spend 2,500 and I can lower that to $1500 by having a paid of home or moving, then that means I don’t need 750k now I only need 450k and since I’ll be investing $2500 instead of 1,500 I’ll be done in 10 years
Second increase your withdrawal or return: instead of just taking out 4%, you can take most likely 5% safely or do real estate where you might be able to get away with 8% potentially ( the more you can takeout the less money you need, at 5% you only need 600k, and at 8% you need $375k )

3. So what if I don’t want to wait 18 years or 10 years
The answer is, this doesn’t happen overnight, it's going to take time
But one way to speed things up is by trying to earn more money for your time and have reduced expenses

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I'm an Accountant but I'm not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.