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I know this is an odd question, but me and a few of my friends have been pondering this question for a while now.
Here’s why. I’ve come to the conclusion that it would be pretty hard for someone worth $5M+, who is responsible to squander their money.
For example, if I had to spend $300k today, I’d probably go buy a Lambo. But in buying a Lambo you didn’t really spend $300k. The Lambo is still worth $250k. So you’ve blown $50k.
However if I put a turbo on my 4Runner and give it a chrome wrap for $15k, my 4runner’s value doesn’t go up. It probably goes down, so in this case I’ve actually spent and wasted $15k. But this is something I’d never do.
Private jets and parties are all things that you’ve actually spend on and get no equity afterwards. But that’s not something that I’d spend on. So I’ve been racking my brain on how to spend way $1m and get no equity from it afterwards.
The one thing we would all spend our money on is housekeepers, private chefs and trainers but these all cost $30-$150k a year. I thought that was kind of interesting. Vacations and travel we all agreed on, but it’s really tough to blow more than $100k on vacations in a year. You get tired of them, seriously!
We would all also buy more houses, land, ranches and vacation homes. But again that isn’t really spending. In could increase your net worth instead.
It’s an interesting mind exercise because it makes you realize that you don’t need as much as you think and that you can buy some of your wants now because you aren’t spending as much as you think.
Just to use another car example. When I pay $100k for my Mclaren, I didn’t spend $100k. I moved $100k cash from a savings account into a depreciating asset. When I sell it for $80k, I’ve lost $20k. So what I really did was pay $20k to have a Mclaren for 2-3 years. I did not lower my net worth by $100k.
Here’s why. I’ve come to the conclusion that it would be pretty hard for someone worth $5M+, who is responsible to squander their money.
For example, if I had to spend $300k today, I’d probably go buy a Lambo. But in buying a Lambo you didn’t really spend $300k. The Lambo is still worth $250k. So you’ve blown $50k.
However if I put a turbo on my 4Runner and give it a chrome wrap for $15k, my 4runner’s value doesn’t go up. It probably goes down, so in this case I’ve actually spent and wasted $15k. But this is something I’d never do.
Private jets and parties are all things that you’ve actually spend on and get no equity afterwards. But that’s not something that I’d spend on. So I’ve been racking my brain on how to spend way $1m and get no equity from it afterwards.
The one thing we would all spend our money on is housekeepers, private chefs and trainers but these all cost $30-$150k a year. I thought that was kind of interesting. Vacations and travel we all agreed on, but it’s really tough to blow more than $100k on vacations in a year. You get tired of them, seriously!
We would all also buy more houses, land, ranches and vacation homes. But again that isn’t really spending. In could increase your net worth instead.
It’s an interesting mind exercise because it makes you realize that you don’t need as much as you think and that you can buy some of your wants now because you aren’t spending as much as you think.
Just to use another car example. When I pay $100k for my Mclaren, I didn’t spend $100k. I moved $100k cash from a savings account into a depreciating asset. When I sell it for $80k, I’ve lost $20k. So what I really did was pay $20k to have a Mclaren for 2-3 years. I did not lower my net worth by $100k.
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