And that s not all. If the government charges you retroactively, it s going to assess interest and possibly penalties retroactively for the taxes you should have paid way back when, but didn t. And that can get expensive. Therefore, you must think seriously about this and pay particular attention to what you re doing. There are also other considerations to think about.
Insurance is a biggy.
You need to make sure you have proper auto, homeowner, and health insurance, because without an earned income, it won t take as much to disrupt your finances. Typically, people assume their expenses will remain constant. So you have to guard against that, and that means having proper cash reserves. You also need to make sure you have a proper estate plan so the income stream is not affected for your surviving spouse and children if something happens to you. It s difficult making a promise that you re gonna have to live with for at least the next five years, and possibly longer.