25x is another way of stating the commonly-cited 4% Safe Withdrawal Rate. It wasn't invented by MMM, it's from the well-researched Trinity Study[1].
If you're planning on a higher withdrawal rate you're probably heading for trouble. One big market downturn and you'll end up eating so much capital that you won't be able to recover. It's sort of like playing blackjack without a sufficiently large bankroll - if you hit one bad run of luck you're done even if you should've won according to the averages. A good way of visualizing this is playing with numbers at FireCalc[2].
If you're ahead of the market for a short time then that's great but it usually means you just simply haven't been running your program long enough to average out the ups and downs. The guy running mr Moneymustache is pretty savvy and has already weathered a couple of fairly bad storms in his personal finances without losing too much speed.
If you're consistently earning on the order of 10% after inflation then you're doing spectacularly well, way better than the 5% that most people assume.
This means you're investing either in a high risk high return asset classes or you have an error in your math somewhere, in that case better be careful!
4% interest is about what one can reliably get through all scenarios. Sure, a hot stock may give you 20% this year; but it could also give -20% next. No one wants to take that much risk.
25x (or 4%) is widely accepted as a safe withdrawal rate for retirement assets. It leaves enough that your investments can still grow over the long term to keep pace with inflation. If your investments have been doing better than that in the short term then bully for you. I wouldn't count on it in the long term however.
Long run return of the US stock market is a tad under 7%, accounting for inflation and dividends. Expecting 8% is unrealistic, although I suppose you could be invested in real estate directly.
I agree that 8% is unrealistic, but it's what many pension plans are using. [1]
The article I linked to (found via a quick Google) discusses using values of 6.25% to 6.75%. But IMO even that is unlikely, because one of the traditional investment pillars for pension funds is "fixed income" aka bonds, and those are way under that. Thirty yr US Treasury paper is just over 3%. A moderately risky company I follow (low investment grade) recently issued thirty year paper for 5.75%. [2]
I made a few cents selling google ads next to a version of the bubblebreaker game I built. Seems to be hard to make money on games...
http://games.jeffslutz.com/bubblebreaker/
Been earning a couple hundred per year with a time-tracking/report-generating site for therapists-in-training. I think one of the big downfalls of the concept was that I chose too small of a niche to serve (marriage and family therapists in training in the US). The most tangible benefit from building the service was the coding knowledge gained which serves my freelance work very well. http://www.therapyhourstracker.com/
You should consider expanding this to include other types of therapy workers. I know from doing tech work amongst mental health professionals that most are required to log x amount of hours doing y before they can obtain licensing as a z. Since you have the platform and domain knowledge you should be able to add features to widen your target demographic.
I'm trying to think how to explain it without using anecdotes, as I want to understand it myself without punting to simile. I know that I undervalue the importance of money in my own life (I have been poor to the point of homelessness once, poor the point of selling possessions to get rent/food money a few times). I also undervalue my worth, almost never charging an appropriate amount for my time.
I've cultivated a niche expertise that I translate well to a wide range of communities, but when asked politely I tend to give my time and even tangible goods away for free.
Now, I'm actively trying to change that. I'm getting married next year and am very excited to have a family in the relatively near future, so I'm paying off debts, I re-entered the workforce at a decent salary, and have been trying to train myself to be comfortable asking people for money in exchange for my time & expertise.
It has been harder than you might imagine, but I'm making progress. Being able to externalize the need to earn money via the idea of a future family has helped me, but I remain very uncomfortable asking and often find myself under-reporting hours spent, transportation costs, etc.
If I could just produce content, conduct research, give workshops & lectures & have someone else handle the money, I would be in heaven, but the few people I've spoken to about it, despite initial enthusiasm, have never followed through. Considering my own disposition, I obviously don't blame them at all :)
I read your comments here and then I saw it. I think it is a sign :)
Seriously, I am not sure this aproach will help you. It looks like to me that it is more about "why do it" than "how to do it". I think what you should do is put yourself in a position where will just assume you will charge for it, so you don't have to say "oh, I would like you to pay for that".
But that wouldn't help with you refusing to charge for long hours. But you may consider a transparent aproach for it. Why not sending an email asking your clients if they feel confortable with you charging some extra hours. If they complain, you don't charge, but I guess some may accept it and even enjoy if they are rewarding a good job. This way it is no more a binary "I don't charge and they never know/I charge and they don't like it". There is a dialogue about that may substitute any confrontation.
I am like you. Recently, I was given the advice (by someone who the advice was working for well) to hire a business manager. You do what you are good at (producing content, conducting research, giving workshops & lectures) and they manage the business. You need to be able to trust them, but assuming you can find somebody like that and afford to pay them, it makes a lot of sense. Perhaps there should be an app for that (outsourced business management??).
I'd love to! But, the 3 people I've approached about it so far have all failed to work with a single lead. Literally I'll forward them an email asking me to come speak somewhere, and they never communicate with the person or me about the work again.
If anyone on HN wants to start a speakers agency for tech/security folk, I'd be first in line to sign up :)
I'm interested in your need - in your example, you have a verified, paid speaking lead and you need someone to line up the work for you, get it billed, maybe find you other leads, what else? I'm not going to promise anything other than to think about your need and see if I can come up with a simple solution (I have an idea in mind). If you'd like to email about it, send me a note - noj AT dimensionsix.com.
The person asking you politely for free work is probably someone good at sales and manipulating people. In other words, you aren't doing them a favor. They see you as a sucker. You sound like a nice guy, and everyone assumes most people are like themselves. But in business there are tons of wolves in sheeps clothing. The line of people who will take advantage of you will last longer than your life on earth. So you have to learn communication, and learn that you bring value and they should pay what they agreed to pay. Invoice them for the full amount, and don't give them any freebies unless either they complain (even then they need a good reason), or at the very least they have to know that you are trying to do them a favor. If you do free work and they don't even know about it, you have just shot yourself in both feet. You remind me of me. I speak from experience. It's not easy, but it is worth it.
Hey, halfcat, I hope you revisit this thread and see this, but you are apparently hellbanned (only those of us with "showdead" on can see you. I actually can't imagine why, your comment history all seems pretty reasonable. Anyway, figured I'd leave this here to let you know. Good luck.
Not the OP, but I can put forth that perhaps it's an ethical dilemma? Objections could be raised to collecting money without expending effort. Similar to objections to copyrights that last indefinitely.
I do think that it has some sort of knurled ethical/moral center in the middle there. It's definitely an emotional response, but logic & emotion are at odds on this one for me.
