Two examples of VeriPlan's 5-AFTER-DEBT PROFIT graphic

The 5-AFTER-DEBT PROFIT graphic: Profit, after Expense, Tax, & Debt Payments (real $/yr)

Below are two examples of the blue-tabbed 5-AFTER-DEBT PROFIT graphic, which come from VeriPlan's "Sue and Sam Saver" tutorial.

You can download a free copy of this VeriPlan tutorial file using this link:

DOWNLOAD THE FREE VERIPLAN TUTORIAL HERE

This 5-AFTER-DEBT PROFIT graphic projects your net income, including expenses, taxes, and debt payments. It is the same as the 3-PRE-DEBT PROFIT graphic, except that it further reduces your net earned income by your projected debt payments related to your currently outstanding debt obligations and any future unfunded consumption debt.

This 5-AFTER-DEBT PROFIT graphic excludes both your asset earnings and your asset expenses. Furthermore, it does not include any long-term capital gains taxes related to asset withdrawals. (It includes taxes related to asset distributions taxed at ordinary income tax rates.)

The first tutorial graphic below shows a projection for Sue and Sam's lifetime debts when they pay industry average investment costs. VeriPlan automatically extracted the investment cost information that Sue and Sam provided for their investment asset portfolio on VeriPlan's yellow-tabbed assets worksheets. Sue and Sam pay investment costs that are about average for full service retail brokerage customers. The year-after-year cumulative and compounded lost investment earnings and asset growth due to these cost inefficiencies would dramatically undermine Sue and Sam's personal assets.

SEE THESE INVESTMENT COST EFFICIENCY ARTICLES elsewhere on The Skilled Investor website.

If at any point in the future, your expenses would exceed your net income and would fully deplete your accumulated cash, bond, and equity financial assets, then VeriPlan automatically would begin to accumulate an "unfunded consumption debt" loan for you. In this first graphic, that is what happens to Sue and Sam in their mid- 90s. They run out of financial assets, and thereafter, VeriPlan automatically accues additional interest charges for their unfunded consumption debt.




This second tutorial graphic shows Sue and Sam's revised projection with lower investment costs that they consider to be more reasonable. (All other projection assumptions and data in VeriPlan remain the same in these two scenarios. Only the level of investment costs changes.)

When Sue and Sam decide to pay reasonable costs, they switch on their reasonable cost assumptions in Section 4 of VeriPlan's orange-tabbed "6-Cost-Effectiveness Tool" worksheet. When Sue and Sam use their reasonable cost assumptions, their financial assets last beyond age 100, and therefore, this graphic does not project any unfunded consumption debt in their late-90s.