3 ms·

I wish I could have $25k per year, or $20k really... $25m would be such a dream. What people do with all this money?

by kome 8y ago

snarf21 8y ago
Not being attacking or sarcastic. Once you hit $25K, you likely wish you could get to $40K because you could finally buy a nice.... etc., etc. It is the rare individual that can stop the chase. With a 7 figure salary, you just have a nicer and bigger house. Your vacations are to Europe and first class instead of driving to the beach, etc. The one thing that most studies have shown is that (in today's dollars) once you get above about $80K household income, any more income doesn't make you any happier. If you think about it that makes sense, since at the level and above you can have some financial security and not be paycheck to paycheck (in most areas), have a small house and decent cars which greatly reduces your stress and leaving room for contentment. Of course, each person's goals are different and the amount of Jonesing they can control is too.
- pc86 8y ago
  Not to be nitpicky but you can do a European vacation with first class airfare when you make much less than a million dollars a year in income. Two people NYC to London 6/18-25 is $10,200 for airfare. Assume that everything else you do costs 2x that much if you're going all out (the few times I've purchased first class tickets, that cost has ended up being 50% or more of the entire trip). You're still at $30k for a vacation, which is an astounding amount of money to spend on a week for sure. But at the same time, if you make $250k a year and this is a special event, 10th/20th/30th anniversary, big birthday event, etc, it's not outside the realm of possibilities to spend 2 months salary on something like that. Obviously you still need to save and plan it, and if you're making $1 million a year you can probably spend $30k without thinking about it. But just wanted to point out that it's doable. As for the $80k study you're mentioning I've seen numbers all over the place, from $70k up to $105k, but I've definitely noticed the satisfaction from each raise has decreased even while the raw dollar amounts have gone up. The last raise I got only served to go toward paying down debts faster, which I can attest makes me very happy.
  - ryanwaggoner 8y ago
    I just want to point out that if you live in NYC, that $30k vacation will cost you about $50k in pre-tax income. And no one I know in NYC who makes $250k is going to spend 20% of their annual income on a vacation. And ironically, those who could are disciplined and frugal enough that they probably never would.
    - pc86 8y ago
      Well nobody calculates the cost of their vacation based on pre-tax income. And someone making $250k in NYC is doing much worse off than someone making $200k within a few hours drive of major NYC airports. I just picked NYC because there are a lot of one-way flights to London.
- kome 8y ago
  I already live in Europe; but point well taken. People needs more and more money... I wonder if there is a marginal utility: at what point you would stop thinking about money? I think that around 40k perhaps 50k per year, I would completely stop thinking about money.
CameronBanga 8y ago
They buy things they don’t need that they think will make them happy. Spoiler: It doesn’t make them happy.
pjc50 8y ago
The FT has the answer: https://howtospendit.ft.com/ https://howtospendit.ft.com/ Even undramatically, suppose a family want to have a nice house in the centre of a big popular city, have a couple of Teslas, give two children private education debt-free to graduation, go on five-star holidays for a month a year, and have pensions that enable them to maintain this lifestyle, that's probably more than half the $25m right there. And it doesn't even look all that extravagant.
hendzen 8y ago
Things rich people like to do with large amounts of money: - Housing. Multiple dwellings around the world. A penthouse in London, a villa on the southern coast of France, etc. - Travel. No more sitting in an Uber or public transit on your way to economy class travel. Helicopter from nearest helipad to small private plane equipped with chef and luxurious sleeping quarters. - Collecting. Buying (expensive) things that you like. Art, cars, horses, stamps, etc. - Entrepreneurship/Investing. Buying up cash-flow generating assets like companies or land w/ natural resources. Investing or starting companies in potentially risky areas like spaceflight or human life extension that most people wouldn't do if their main goal was to get rich to begin with. - Philanthropy. Support your causes of choice. Also a good way to keep the non-extremely-high-earning spouse busy in the event that they don't want to keep working. - Politics. With super PACs unlimited money can go in to the political system. Usually this is done in tasteful amounts of a few million here or there to retain some influence but some people make this their main goal (Mercer family, Tom Steyer, Kochs, etc.) - Legacy. Structuring trusts and other legal structures (potentially offshore) to ensure that the wealth is multigenerational. It can be possible to guarantee that your offspring 1-4 generations out will live comfortable lives.
ryanwaggoner 8y ago
By the standards of this article, I'm not wealthy, but I feel like you have to be cursed with a pretty poor imagination to not have any idea what you'd do with $25mm. Or even $100mm. A conservative safe withdrawal rate is about 3-4% per year. So that's $750,000 to $1mm per year of income in perpetuity on $25mm. On the one hand, $1mm per year is a ridiculous amount of money, and it's an order of magnitude above what any normal person would need for their lifestyle. On the other hand, it's pretty easy to ratchet your lifestyle up to that level. Here's an easy way to spend $1mm per year: you live in a really nice place in a HCOL area, have a fancy vacation home elsewhere, employ a few staff (housekeeper, nanny, personal trainer, etc), have 2-3 kids in top private school, do several luxury vacations per year where you stay in 5-star hotels and fly international first class, etc. That doesn't cover the kind of crazy lifestyle where you're chartering super yachts or owning a private jet or renting out Necker Island or having Beyonce perform at your birthday party. That's nine or ten figure wealth territory. It also doesn't leave a huge pile of money left over for the really fun stuff, like philanthropy, buying and selling businesses, doing large real estate investment or development, angel / venture investing, etc. I personally think that I'd have a harder time finding interesting things to do with anything more than $100mm, but I suspect that's due to my inexperience and lack of imagination, more than an actual dearth of opportunities that billionaires have to do interesting things :)
- kome 8y ago
  I think I would like to open a university department in my city - or a museum of contemporary art. But I have NO IDEA of how much money is needed for that. $25mm seems so astronomically high I googled: $145 million is the MoMA yearly budget. For a little museum in a peripheral town $25mm seems appropriate. If people is willing to invest $25mm please contact me, I have big ideas now :P
  - l1n 8y ago
    Here's a NYT article on some museum budgets from 2014: https://www.nytimes.com/2014/03/20/arts/artsspecial/start-up-success-isnt-enough-to-found-a-museum.html https://www.nytimes.com/2014/03/20/arts/artsspecial/start-up... From the article, it looks like you could do it on ~10mm + ~6mm endowment for a small museum. For a university department, Duke has some good numbers: https://giving.duke.edu/ways-to-give/endowment/endowment-giving/ https://giving.duke.edu/ways-to-give/endowment/endowment-giv... Assuming three full professors and three assistant professors, plus some extra for the chair and one visiting professor, I'd estimate a 16mm endowment would run a department quite nicely for a while.
falcolas 8y ago
I've heard it put simply: they do whatever they want to. When money isn't a concern anymore (at those levels of wealth, it effectively makes more money on its own), you view going to a restaurant with a $200 a plate fee as equally fulfilling as a burger joint that's under $10. Want to go on vacation? Do it. Want to take a year to pursue painting? Would you prefer to try Oils or Acrylics? Want a personal tutor to help you become that better painter? No problem. Want to see how hard it is to make another $10M? Go for it. Want to start a business? No? Buy an established business and be its CEO? Go for it. When money doesn't matter, you can do whatever you want. All that stress you face trying to make that $25k a year is completely gone. All that brain- and willpower it takes to be frugal can be applied to whatever you want it to be applied to. [EDIT] This is why I view UBI as a good goal. Get rid of the need to put so much brainpower into merely surviving, and let's see what comes out the other side. I feel that we're at a point in society where the struggle to survive could be put behind us for everyone, not just the ultra wealthy.

I wish I could have $25k per year, or $20k really... $25m would be such a dream. What people do with all this money?

by kome 8y ago

I wish I could have $25k per year, or $20k really... $25m would be such a dream. What people do with all this money?

Not being attacking or sarcastic. Once you hit $25K, you likely wish you could get to $40K because you could finally buy a nice.... etc., etc. It is the rare individual that can stop the chase. With a 7 figure salary, you just have a nicer and bigger house. Your vacations are to Europe and first class instead of driving to the beach, etc. The one thing that most studies have shown is that (in today's dollars) once you get above about $80K household income, any more income doesn't make you any happier. If you think about it that makes sense, since at the level and above you can have some financial security and not be paycheck to paycheck (in most areas), have a small house and decent cars which greatly reduces your stress and leaving room for contentment. Of course, each person's goals are different and the amount of Jonesing they can control is too.

pc86 8y ago
Not to be nitpicky but you can do a European vacation with first class airfare when you make much less than a million dollars a year in income. Two people NYC to London 6/18-25 is $10,200 for airfare. Assume that everything else you do costs 2x that much if you're going all out (the few times I've purchased first class tickets, that cost has ended up being 50% or more of the entire trip). You're still at $30k for a vacation, which is an astounding amount of money to spend on a week for sure. But at the same time, if you make $250k a year and this is a special event, 10th/20th/30th anniversary, big birthday event, etc, it's not outside the realm of possibilities to spend 2 months salary on something like that. Obviously you still need to save and plan it, and if you're making $1 million a year you can probably spend $30k without thinking about it. But just wanted to point out that it's doable. As for the $80k study you're mentioning I've seen numbers all over the place, from $70k up to $105k, but I've definitely noticed the satisfaction from each raise has decreased even while the raw dollar amounts have gone up. The last raise I got only served to go toward paying down debts faster, which I can attest makes me very happy.
- ryanwaggoner 8y ago
  I just want to point out that if you live in NYC, that $30k vacation will cost you about $50k in pre-tax income. And no one I know in NYC who makes $250k is going to spend 20% of their annual income on a vacation. And ironically, those who could are disciplined and frugal enough that they probably never would.
  - pc86 8y ago
    Well nobody calculates the cost of their vacation based on pre-tax income. And someone making $250k in NYC is doing much worse off than someone making $200k within a few hours drive of major NYC airports. I just picked NYC because there are a lot of one-way flights to London.
kome 8y ago
I already live in Europe; but point well taken. People needs more and more money... I wonder if there is a marginal utility: at what point you would stop thinking about money? I think that around 40k perhaps 50k per year, I would completely stop thinking about money.

CameronBanga 8y ago

They buy things they don’t need that they think will make them happy. Spoiler: It doesn’t make them happy.

pjc50 8y ago

The FT has the answer: https://howtospendit.ft.com/ https://howtospendit.ft.com/ Even undramatically, suppose a family want to have a nice house in the centre of a big popular city, have a couple of Teslas, give two children private education debt-free to graduation, go on five-star holidays for a month a year, and have pensions that enable them to maintain this lifestyle, that's probably more than half the $25m right there. And it doesn't even look all that extravagant.

hendzen 8y ago

Things rich people like to do with large amounts of money: - Housing. Multiple dwellings around the world. A penthouse in London, a villa on the southern coast of France, etc. - Travel. No more sitting in an Uber or public transit on your way to economy class travel. Helicopter from nearest helipad to small private plane equipped with chef and luxurious sleeping quarters. - Collecting. Buying (expensive) things that you like. Art, cars, horses, stamps, etc. - Entrepreneurship/Investing. Buying up cash-flow generating assets like companies or land w/ natural resources. Investing or starting companies in potentially risky areas like spaceflight or human life extension that most people wouldn't do if their main goal was to get rich to begin with. - Philanthropy. Support your causes of choice. Also a good way to keep the non-extremely-high-earning spouse busy in the event that they don't want to keep working. - Politics. With super PACs unlimited money can go in to the political system. Usually this is done in tasteful amounts of a few million here or there to retain some influence but some people make this their main goal (Mercer family, Tom Steyer, Kochs, etc.) - Legacy. Structuring trusts and other legal structures (potentially offshore) to ensure that the wealth is multigenerational. It can be possible to guarantee that your offspring 1-4 generations out will live comfortable lives.

ryanwaggoner 8y ago

By the standards of this article, I'm not wealthy, but I feel like you have to be cursed with a pretty poor imagination to not have any idea what you'd do with $25mm. Or even $100mm. A conservative safe withdrawal rate is about 3-4% per year. So that's $750,000 to $1mm per year of income in perpetuity on $25mm. On the one hand, $1mm per year is a ridiculous amount of money, and it's an order of magnitude above what any normal person would need for their lifestyle. On the other hand, it's pretty easy to ratchet your lifestyle up to that level. Here's an easy way to spend $1mm per year: you live in a really nice place in a HCOL area, have a fancy vacation home elsewhere, employ a few staff (housekeeper, nanny, personal trainer, etc), have 2-3 kids in top private school, do several luxury vacations per year where you stay in 5-star hotels and fly international first class, etc. That doesn't cover the kind of crazy lifestyle where you're chartering super yachts or owning a private jet or renting out Necker Island or having Beyonce perform at your birthday party. That's nine or ten figure wealth territory. It also doesn't leave a huge pile of money left over for the really fun stuff, like philanthropy, buying and selling businesses, doing large real estate investment or development, angel / venture investing, etc. I personally think that I'd have a harder time finding interesting things to do with anything more than $100mm, but I suspect that's due to my inexperience and lack of imagination, more than an actual dearth of opportunities that billionaires have to do interesting things :)

kome 8y ago
I think I would like to open a university department in my city - or a museum of contemporary art. But I have NO IDEA of how much money is needed for that. $25mm seems so astronomically high I googled: $145 million is the MoMA yearly budget. For a little museum in a peripheral town $25mm seems appropriate. If people is willing to invest $25mm please contact me, I have big ideas now :P
- l1n 8y ago
  Here's a NYT article on some museum budgets from 2014: https://www.nytimes.com/2014/03/20/arts/artsspecial/start-up-success-isnt-enough-to-found-a-museum.html https://www.nytimes.com/2014/03/20/arts/artsspecial/start-up... From the article, it looks like you could do it on ~10mm + ~6mm endowment for a small museum. For a university department, Duke has some good numbers: https://giving.duke.edu/ways-to-give/endowment/endowment-giving/ https://giving.duke.edu/ways-to-give/endowment/endowment-giv... Assuming three full professors and three assistant professors, plus some extra for the chair and one visiting professor, I'd estimate a 16mm endowment would run a department quite nicely for a while.

falcolas 8y ago

I've heard it put simply: they do whatever they want to. When money isn't a concern anymore (at those levels of wealth, it effectively makes more money on its own), you view going to a restaurant with a $200 a plate fee as equally fulfilling as a burger joint that's under $10. Want to go on vacation? Do it. Want to take a year to pursue painting? Would you prefer to try Oils or Acrylics? Want a personal tutor to help you become that better painter? No problem. Want to see how hard it is to make another $10M? Go for it. Want to start a business? No? Buy an established business and be its CEO? Go for it. When money doesn't matter, you can do whatever you want. All that stress you face trying to make that $25k a year is completely gone. All that brain- and willpower it takes to be frugal can be applied to whatever you want it to be applied to. [EDIT] This is why I view UBI as a good goal. Get rid of the need to put so much brainpower into merely surviving, and let's see what comes out the other side. I feel that we're at a point in society where the struggle to survive could be put behind us for everyone, not just the ultra wealthy.