Living Off a Million Dollars

I talk off and on about the capability to live off a million dollars, which a lot of people tell me I am wrong about.  I like to respond that…I am not.  Without delving too deeply into my income I make between 20-25 thousand dollars a year, myself; depending on how much overtime I work.

Now if I switched to only working two days a week at my current job and rate, I would make about $8,000 a year.

So let’s look at what would happen if I went from working 40+ hours a week to working 16 hours a week, but had a million dollars in the bank.

I could place my million dollars into a 5-year CD (Certificate of Deposit) with my credit union which would bring an interest rate of 1.88% interest per year (the last time I bought a CD it had 3.30% interest; damn economy).  I could live off the dividends, which would equal out to $18,963.  So a million dollars only pays a thousand dollars or so less than I make working 5 days a week, every week, with no time off: Working 2,080 hours a year.

Keep in mind that million dollars’ interest would be $18,963 for 0 hours of work a year.  If I work 2 days a week and take no additional time off, that’s only 832 hours a year of work and I’d make a grand total of $26,963.

Amazing what a million dollars can do for you in a 5-year rolling CD.

Elin Nordegren, whom I recently spoke of buying a $12 million mansion and razing it, got $100 million from her divorce settlement.  So let’s take a look at what kind of money you could make, doing 0 hours of income-bearing work, and putting the entire $100 million in the same 5-year rolling CD I was just speaking of.

You’d make…$1.9 million a year in interest.  That’s right.  And you’d pay a lower tax rate on it than you did if you actually earned that money.

Let’s say that Nordegren builds an $18 million mansion where the $12 million one stood.  That will leave her with $70 million to put in the bank.  She would make…$1.3 million a year in interest.

And look at Republican Presidential Candidate Mitt Romney, who makes about $20,000 every 8 hours.  That’s equivalent to making $2,500 an hour if he worked 24 hours a day, 7 days a week, 365 days a year; that’s a grand total of $21.9 million a year in income.

And both Romney and my million-dollar CD only pay 15% taxes, whereas I pay closer 22% tax on the money I bust my ass for.  In other words, he pays a little less than $3.3 million a year in taxes.  If he paid the same 22% that I do on my hard-earned money, that’d be a little more than $4.8 million.  Whereas I pay a little more than $4,600 in taxes, but if I only paid 15% in taxes, I’d pay a little more than $3,100.

I’d love to have a million dollars or so, I’d never have to work again in my life if I didn’t want to.  Warren Buffett might be issuing challenges about donating money to the government in taxes; but I’ll challenge any wealthy person to disprove me by giving me a million dollars to try my theory out with.

If I can’t live as comfortably as I am now with just the interest from the million dollars they pony up, I’ll give the million dollars back.  If an independent source can vouch that my quality of life is on-par, or better, with me living just off the interest dividends then I get to keep the million.

I guarantee not a single millionaire/billionaire will take up my offer.

~RCS

Elected Stock

I thought of an interesting piece of legislature for elected officials that will help cut down on some lobbying and biased views.  Elected officials within the Senate, House of Representatives, and President’s office (including the Presidential Cabinet) will only be allowed to acquire income through their office’s salaries.

So if the President is paid $250k a year, that is all he can get for his 4-8 years in office.  If he owns a tenement building, he can’t claim any of the income from that building.  Any property he owns that produces income must be automatically given to a registered charitable organization, sans any applicable property taxes.  This is not tax deductible donations, either; this money never sees his tax returns as a donation.

Elected officials in the higher offices must also own no stock when they take office.  So the president is elected into office in November…he has until he takes office in January to liquidate his stocks so that he does not own any shares of any private companies.

Likewise an elected official’s immediate family must own no stock or have their own income, as well; that is children under 18 and spouses.  So the elected official and his immediate family are not weighed down by biased decisions that will benefit or detract their fortunes.

Of course, I also support getting rid of the House of Representatives and cloistering the Senate; so we already know that I don’t really like how Congress is working, huh?

~RCS