The “crossover” was a phrase or term popularized by one of my favorite books, Your Money Or Your Life. The crossover is basically the moment where your monthly passive income finally exceeds all of your monthly expenses. When I first read YMOYL and the chapter where this term was coined, it became a dawning moment for me; a moment where I felt like my eyes had been opened for the first time. I realized that it was possible to pay for expenses without going to a jobby-job for 50+ hours a week, and seeing it on a graph made it all the more possible for me to buy in to this theory.
A great site that conveys the crossover point for you in graphical terms is What’s My Crossover. I decided to visit this site recently and input various numbers into the calculator, ranging from conservative to aggressive, and the chart shows me reaching financial independence anywhere from 34 years old to 40 years old! That’s pretty encouraging, seeing as how my ultimate goal is to reach FI by 40 years old. I think 34 is probably unrealistic, but it’s very exciting to see that passive income line cross over the expense line so early in life!
There’s a lot of retirement calculators out there, many of them much fancier than the one I’m discussing today. But it’s the graphical nature, in a way so similar to YMOYL, that excites me. It’s especially exciting to see when the “second crossover” occurs. That’s when your passive/investment income actually exceeds your main income source. That’s when it truly becomes apparent that your money can work harder than you can.
What’s your crossover?
Thanks for reading.