Would you be frugal if you were a billionaire?

[Forbes]

Read an article on yahoo finance about tips from frugal billionaires
http://finance.yahoo.com/banking-bu...ips-from-frugal-billionaires?mod=bb-budgeting

1. Keep Your Home Simple
2. Use Self-Powered or Public Transportation
3. Buy Your Clothes off the Rack
4. Keep your Scissors Sharp
5. Drive a Regular Car
6. Skip Luxury Items​

If you were a billionaire would you live frugal?

 

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[Anon3587x]

2 Simple words,

"F*ck No"
If I had a billion dollars i would buy a 250 million dollar house.
I'd spend 10 million on cars

I'd buy a 5 million dollar boat.

I'd spend the first 500 million on stuff I could re-sell if I had to for at least 250 million

 

[Rickson9]

Speaking for myself, frugality is a character trait and the money has been a symptom of that. So, to answer the question, I would be frugal because that is my character and that hasn't changed since the days when I had no money.

 

[FDJustin]

Incredibly unlikely.

I might not live too lavishly, but.. Let's just go down the list you proposed.

1. If I buy a house, I will have a room that is a hottub. Is that simple?
2. Probably, but not for the sake of being frugal.
3. I don't know. Clothing bores me, I can really see myself getting custom stuff all the time just to be part of the process of creating it, and making it 'mine'.
4. Yes.
5. I don't intend to drive myself.
6. Erm... No. I like things, and I would have things. What kind of things?
[video=youtube;2TBndcBjQFM]http://www.youtube.com/watch?v=2TBndcBjQFM[/video]

 

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[Gaulkin]

First thing i would buy is a jet pack.

 

[Jill]

Generally speaking, I think people are "frugal" about purchases for which they have little emotional attachment. It's far easier to be logical when you aren't emotional. If clothes hold no interest for you, then you will be unlikely to purchase a $20k Kiton custom suit, with $5k Latanzi shoes. If cars don't flip your switch, then you will be more likely to buy a nice, solid Toyota, than a Lambo or such.

I would like to think that most of us would spend a fixed amount on fun, emotional indulgences, then mete out the remainder on a more logical basis. I know for myself, I would blow about $10 mil, then invest the remainder so that I could continue to live large, without depleting the principle. But that's just me!

 

[Rickson9]

That jet pack is hilarious! LOL!

Initially I might end up giving a lot of money to a charity actually...

 

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[Darkside]

Generally speaking, I think people are "frugal" about purchases for which they have little emotional attachment. It's far easier to be logical when you aren't emotional. If clothes hold no interest for you, then you will be unlikely to purchase a $20k Kiton custom suit, with $5k Latanzi shoes. If cars don't flip your switch, then you will be more likely to buy a nice, solid Toyota, than a Lambo or such.

I would like to think that most of us would spend a fixed amount on fun, emotional indulgences, then mete out the remainder on a more logical basis. I know for myself, I would blow about $10 mil, then invest the remainder so that I could continue to live large, without depleting the principle. But that's just me!

You're right. I'm not a car guy; I don't drool over lambos and other types of expensive cars. However, if I were rich I would buy a few expensive cars to impress the chicks. Buying a lambo would get me laid without even having to try and that alone makes it worth the money. But, I would live a meager lifestyle in other ways; no $800 haircuts for me, that's for sure and no dinner at fancy restaurants that end up costing me hundreds of dollars for a meal.

One thing that I am passionate about is wines. I would love to have a wine cellar with thousands of bottles of fine wine.

 

[FDJustin]

First thing i would buy is a jet pack.

See that? Lost opportunity there, I should have made a deal with the company to give me a cut anytime someone made a reference to FDJustin!

But more seriously, I don't know when they'll be out for public sale. When I first heard about them, I believe the estimated cost was going to be about 70k. The website's FAQ says they are planning to release the civilian model for 100k (USD). Other stats include: Ultralight classification. 100kph speed at 30 minute operating time. (So 50km maximum distance on a tank. The first stats I saw claimed 30 mile maximum distance at 60 mile speed. I'm currently too lazy to do a conversion to see how close those numbers are.) and.. It uses gasoline. So yes, you can touch down at a quickie, fuel up, grab a small slushie then go back to site-seeing.

Of course, convincing your city to let you fly around will be difficult... And in some ways, more dangerous than you would expect. When I lived out in Calgary, the apartment building I lived in was dotted with many high-powered microwave thingies that were supposedly strong enough to cook your brain. (I believe it. Microwave satalites can do this shit.) Then there's powerlines, kites, smog may be an issue? Being such a spectacle may or may not distract ground-bound motorists. You know somebody is going to get carried away and forget to pay attention to their fuel at 6,000 feet- which will make it harder on any other jetpacker as the first excuse to really crank up the premiums on mandatory jetpack insurance happens. Plus Martin will get sued and have to put a sticker on every pack: Warning! Running out of fuel at dangerous heights may result in injury or death!

But when people say they're concerned about safety, what they actually mean is they don't want someone like me landing on top of condos and other sturdy looking high buildings to take a picnic with a view. That's a temptation that would be very hard to resist.

 

[Russ H]

2 Simple words,

"F*ck No"
If I had a billion dollars i would buy a 250 million dollar house.
I'd spend 10 million on cars

I'd buy a 5 million dollar boat.

I'd spend the first 500 million on stuff I could re-sell if I had to for at least 250 million

. . . and before you knew it, you'd be broke.

You sound like a lottery winner, bateati, not a self-made billionaire.

Spend a QUARTER of your net worth-- on a house?

Something that won't earn you a DIME?!?!?

One of the common characteristics of those who have made their own fortunes is this:

They understand how money works.

And they make it work for them.

Something else, too:

They value things like time & health-- much more than $$$.

The bling, getting laid, showing off . . .

Pales in comparison.

Hard to believe, perhaps.

But that's certainly been my experience in my clients

(most of whom were worth between $50,000,000 to over a billion).

None of whom owned $250,000,000 houses.

Even the ones who were worth a few billion.

-Russ H.

 

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[Anon3587x]

. . . and before you knew it, you'd be broke.

You sound like a lottery winner, bateati, not a self-made billionaire.

One of the common characteristics of those who have made their own fortunes is this:

They understand how money works.

And they value things like time, and health-- much more than $$$.

The bling, getting laid, showing off . . .

Pales in comparison.

Hard to believe, perhaps.

But that's certainly been my experience in my clients

(most of whom were worth between $50,000,000 to over a billion).

-Russ H.

Depends what you consider broke.
Were talking about a billion dollars here.
Even if you spent 99% of it you would still have 10 mill!

 

[Motivated]

Yeah but the upkeep on a 250 million dollar house and all the supercars would soon have you scratching your head wondering where all the money went!
You would never use the monsterous house to its potential anyway better off buying something under 10 million and make it feel like a home than a hotel.

 

[Rickson9]

Depends what you consider broke.
Were talking about a billion dollars here.
Even if you spent 99% of it you would still have 10 mill!

To be honest I'm not sure $10m would be enough to maintain a $250m house for very long.

 

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[Russ H]

That's what I mean about not understanding the power of money:

In this example, how much something costs to maintain.

AND--- how, if you had a billion dollars, and invested it in, say, T-bonds (which are paying a pathetic 3.6% right now), you would be getting:

1,000,000,000 x 3.6% = $36,000,000 A YEAR (!)

Meaning you could spend (before taxes) 3 million A MONTH-- and not touch your billion dollars (it would still be there, 30 years later).

This is an oversimplified example of having your money work for you (real billionaires would have it invested in much higher-yield assets/vehicles, and would also have a comprehensive tax strategy).

You could do a LOT with $36 million a year-- or even $20 mil a year (if you weren't smart enough to defer or avoid big taxes).

And you wouldn't go broke.

-Russ H.

 

[Jonleehacker]

Frugal, probably not, but responsible, then yes. It's just like food, if you eat crap, even really tasty crap every day, you're going to get sick.

If you buy stuff that you don't really need or enjoy, or you can't integrate into your life, you'll get sick in the same way... may not show up in your physical health, but the effects will manifest somewhere in your life.

 

[Russ H]

Great points, Jon Lee.

-Russ H.

 

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[Gaulkin]

Russ, you remind me of a father. Your always around to give realistic and heart breaking advice.

 

[Rickson9]

Frugal, probably not, but responsible, then yes. It's just like food, if you eat crap, even really tasty crap every day, you're going to get sick.

If you buy stuff that you don't really need or enjoy, or you can't integrate into your life, you'll get sick in the same way... may not show up in your physical health, but the effects will manifest somewhere in your life.

Very interesting analogy and perspective.

 

[Russ H]

Russ, you remind me of a father. Your always around to give realistic and heart breaking advice.

Sorry. Not intended to break hearts/rain on anyone's parade.

I just never had anyone to kick my a$$ when I was in my 20s and dreaming.

Took me *years* to get on track.

(sigh). I guess that's why I'm always challenging you guys to think different.

-Russ H.

 

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[Forbes]

Rich people buy big houses, cars and jewelry. Wealthy people buy companies and businesses.

I want to be more like the latter

 

[Anon3587x]

I googled the most expensive houses in the world and was only to find 1 home worth more than 250 mil. I couldn't spend 500 million dollars on bs even if I wanted to. Everything I said above were extreme exaggerations.

In the event I did spend 500 million on assets & materialistic items, I could just re-sell everything and gain minimum 250million back.

Really thinking about it, it's hard to even think how one would spend 1billion dollars just on bs. For 10 million dollars you can live in a absolute dream home resembling a palace.
I've seen EXTREMELY nice houses going for 600k lol.

In a way, I could think of more ways one would generate a billion dollars than spend a billion dollars.

 

[Russ H]

In the event I did spend 500 million on assets & materialistic items, I could just re-sell everything and gain minimum 250million back.

Um, not to poop on your parade, but resale is usually a LOT less than 50¢ on the dollar. Heck, it's not even 10¢ on the dollar! :smx4:

-Russ H.

 

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[Anon3587x]

Um, not to poop on your parade, but resale is usually a LOT less than 50¢ on the dollar. Heck, it's not even 10¢ on the dollar! :smx4:

-Russ H.

That depends entirely on what was bought.

The more I think about it, how could anyone even spend 500 million dollars to the point of going "broke"?
It's not even possible for any reasonable person.

In this case, you would have 500 more millions on top of that. You would never go broke, if the lump sum in the OP was 50 million I would have another opinion about this.

 

[Anon3587x]

I did some math,

Assuming the average person lives for 73 years. If given 1 billion dollars they would be able to spend around 37,000$ a day before running out of money.


365 days * 73 years = 26645 days

26645 days * 37,000$ = 985,865,000$

I feel like I misplaced a dot somewhere, correct me if I'm wrong.

 

[Russ H]

No, you're right.

Precisely why one of my clients started drinking $300 bottles of burgundy every night, and had his organic veggies fedex'd in each day:

He'd done the math, too. Was worth about $400 million at that point, and couldn't see ever spending even a tenth of it in his lifetime.

He has a simple life: No drugs, happily married, not into exotic cars, lives in a beautiful-- but not huge-- home (has an aviary, whole thing was designed and built specifically for him/his wife). Doesn't travel much, etc.

He enjoys life, and has fun. He's just not into bling. Or showing off.

-Russ H.

 

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[unicon]

Comical!!

Big money demands more responsibility, not less!

Youth is so predictable, however if youth can think like an elder he may truely acquire that wealth. Frugality was considered a character issue by the Founding Fathers. Waste and debt were considered almost sinful.

Money allows you to learn and expand your capacity to learn if you purchase larger and larger assets, including businesses. It would be an opportunity to test yourself at different stages of growth. It would give you the power to change things that need changing. Then if you get big enough (Gates & Buffet) you would give back as a natural evolution and even then they demand thorough due diligence before they spend money (unlike government).

Stages of growth are quite predictable, a rich individual who mismanages his money telegraphs lack of character, easy come easy go.

Growth and discipline are synonomous - not separate. If one had to deal with survival over a period of years to make it in business and take this accomplishment to a new positioning of millionaire or billionaire status, one may find that the position gained has geometrically expanded his responsibility and discipline requirements.

The good news is the growth and insight gives you experience to then in the future predict where all the chips will fall. This is earned mastery.

It will not be about what you acquire, but about the quality of associations and respect you have in your life.

 

[FDJustin]

I can't help but wonder if this is kind of moot. Along the way to making that billion, I expect Bat will probably learn to manage his money well enough not to go dirt poor. Maybe by going poor a couple times, maybe just by organically watching how his money goes up and down.

Heh, at this point I took a pause to read Unicons post; see if there was something to comment on. Looks like we're thinking in the same way with a different focus.

The thing is, I don't think learning more about how to manage money will curve what he wants. So if and when the day comes, mark my words: I bet he'll plan a way to cover the purchases & their maintenance before making them. By the time he can, he'll have gained enough knowledge to do it. Or, at least enough money to hire someone who has the knowledge to enable it.

After all, a 500 million dollar house doesn't have to be a frivilous purchase when properly planned for.. It becomes a goal. (And it can be done. You'll just have to have it made custom, and or include the land costs. Private islands aren't cheap, for example...)

Side note: I'm glad you're trying to teach us inexperienced people we need to be careful of ourselves, Russ. Even if no one pays attention now, each exposure helps us figure out how to have our cake, without getting diabetes.

 

[Russ H]

Thanks.

Like I said, I just wish I'd come across this kind of info (and mindset) when I was getting started.

It would have pointed me in the right direction a lot faster.

Instead, I spent years searching-- trying to figure out what to do!

BTW, we've talked about getting rich and "going broke" before:

After you're a millionaire, will you go broke?

It's a pretty good read. :banana:

-Russ H.

 

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[jeffs]

I think it depends if you have 1 billion or 12 billion. I would buy a ton of toys if I had 12 billion. I would be a little more conservative with 1 billion dollars.

 

[hatterasguy]

I don't know any self made individual who isn't frugal, that's why they have money.