Author Topic: What happens if you strike it rich?  (Read 58438 times)

Saverocity

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What happens if you strike it rich?
« on: January 20, 2014, 08:04:04 PM »
So, I'm wondering about the FIRE mindset, and wanted to ask: what happens if you reach FI and then RE and have done the numbers right and can sustain your lifestyle.  Imagine it's pretty lean, with say an annual budget around $27k.

What happens if you then suddenly find yourself with a 6 figure income from some side gig- is it Mustachian to maintain the low income and build up a massive wealth surplus or should you up the standard of living?

arebelspy

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Re: What happens if you strike it rich?
« Reply #1 on: January 20, 2014, 08:14:43 PM »
The wife and I have talked about this, and no amount of windfall money would change our plans.  More income = more to charity.

It really depends on your happiness and the concept of enough.  If you're happy with what you have, and you have enough, why would more change anything?

From what I understand, that's not the case for most people.  They'd up their lifestyle.  But then again, they're the type to not be happy with what they have, and want more, and they'll not ever have enough.  This probably isn't the type of person who will be able to FIRE in the first place, however.
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
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SavingMon(k)ey

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Re: What happens if you strike it rich?
« Reply #2 on: January 20, 2014, 08:43:30 PM »
Why up your standard of living and complicate it? More stuff=more stress. Ugh. No way. I second the charity route. I would start doing some serious charity work for causes close to my heart. The kind of charity that doesn't give the fish, but teaches how to fish. That would make me so much happier than any stuff I added to my lifestyle.

HappierAtHome

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Re: What happens if you strike it rich?
« Reply #3 on: January 20, 2014, 08:50:21 PM »
I think I'd let some of the extra income increase my safety margin, assuming I retired on a 4% withdrawal rate then it would seem okay to me to increase my stash so that it could be a 3% withdrawal rate. IIRC MMM is building up his stash to increase his safety margin with his additional income (from the occasional part time gig, that is - I think the blog profit goes to charity).

I'd love to say that I'd give it all to charity right from the start (and that is clearly the most mustachian way to deal with it), but the reality is that I'd probably let it increase my lifestyle a little for a short period of time. A few life-improving gifts for family and friends, almost certainly, and maybe my very own star destroyer fun and non-frugal toy of some sort.

After a year or two I think I'd probably be back to giving it all to charity after seeing that it made me no happier to spend a little of it. But I'd need to test that hypothesis first ;-)

frugaldrummer

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Re: What happens if you strike it rich?
« Reply #4 on: January 20, 2014, 08:57:33 PM »
Every once in a while I buy a $1 lottery ticket.  And for a few days I indulge in the fantasy of what I would do with the money.

I don't expect to ever win.  But the exercise helps me realize where my priorities lie. My fantasies are never about buying stuff for myself, except for time to travel.  I mostly fantasize about helping my relatives and dear friends achieve financial security (for instance, buying a house for my poor-but-talented musician friend).

Khan

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Re: What happens if you strike it rich?
« Reply #5 on: January 20, 2014, 09:05:23 PM »
If i stuck it rich suddenly, my life plans would change. I actually don't really want to FIRE... but I don't want to be limited in my life choices due to money. I want to work, I enjoy it a lot of the time, but I don't want to work as a form of slavery, asking my employer "Please sir, can I have another?"

Right now I'm working to buildup the freedom fund for a major life retooling(going to college, partially FI years on the GI Bill). If money were no longer an issue(instead of having ~1/2 the FI money I need, being > FI), then I've gained my freedom completely from that relationship. I have no idea what happens after I attend college at that point, but I don't have any idea now. A windfall only speeds up the timeframe of that indecision by ~1 year.

Increase the money to several millions of dollars, and then I become an allocator of capital too, because managing the change that I can affect with my excess capital becomes more powerful then the individual work-effort I alone could affect.

Cheddar Stacker

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Re: What happens if you strike it rich?
« Reply #6 on: January 20, 2014, 09:07:44 PM »
There are some things that I've always wanted, but will likely never have the money to purchase. I would think I would let loose a bit with 2-3x the amount of money I would need in a lifetime and buy a few fun things.

There are also some hobbies (golf and others) I'm passionate about but are expensive and I've put them aside for now in order to FIRE quicker. I'm more passionate about not working than I am about these hobbies, so they may fade into black forever. If I hit the figurative lotto I would certainly pickup the costly hobbies again.

the fixer

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Re: What happens if you strike it rich?
« Reply #7 on: January 20, 2014, 09:21:07 PM »
I wouldn't change a thing. I get super bored if I don't work at all, so I'd continue part-time work like I already do. I don't have the capacity for any more hobbies, the schedule is too packed already! It would probably just stress me out trying to decide whether to keep the money as a safety buffer or give it away to a cause that can use it more than I can.

I guess I might join a CrossFit gym again to make training more fun/social, but that's it.

imustachemystash

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Re: What happens if you strike it rich?
« Reply #8 on: January 20, 2014, 09:39:59 PM »
I might increase my standard of living slightly to accommodate more travel.  I would also increase my surplus just in case I might need it someday.  I wouldn't go too crazy because then my life would become dependent on that extra money and my side gig might not be fun anymore. I would donate whatever I didn't use to charity.

sheepstache

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Re: What happens if you strike it rich?
« Reply #9 on: January 20, 2014, 10:01:43 PM »
It's a good mental exercise.  Someone asked a similar question awhile ago about what you would do differently if you won the lottery but when I try to search for it all I find are threads about how stupid the lottery is.

Like CheddarStacker, I would change some things, but they wouldn't be indulgences that I would otherwise partake of if there were theoretically no option to retire early.  For example I'd buy beachfront property.  If I could do it with free money.  But if it was money I slaved for, I wouldn't spend it on something risky and with a low happiness ROI (compared with the rest of what I spend money on).  So, I think the question is angling to see if we aren't secretly making sacrifices in order to live with less money, but what I find is that the source of the money matters more.

For some reason I'm thinking I might also become an entrepreneur in this situation.  Buy a nail salon or car wash or storage units or something.  In reality I'm going to be far more conservative with my stash.  But if I had extra capital lying around I might use it to pay for this experience I'm curious about. 

What about you, saverocity?  Would you basically live the same as you do now but simply pay cash instead of juggling points?  Or would you try to leverage into more?

horsepoor

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Re: What happens if you strike it rich?
« Reply #10 on: January 20, 2014, 10:15:40 PM »
Interesting question, and something I've thought a bit about, since I could stand to inherit a reasonable chunk of money sometime around when I retire (no plans to RE).  Obviously that money is not figured into any of my retirement plans though, so it would be an unplanned windfall.

If I still had the ambition, I would probably pursue some more expensive horse-related goals, like either competing at some larger shows, or training intensively with a very good trainer.  I could also see using it to buy property in an area that might otherwise be cost-prohibitive - either coastal or near skiing.  I wouldn't go out and blow it on a Jag or anything like that, but would be willing to spend it on myself for actual experiences or standard of living improvements.

steveo

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Re: What happens if you strike it rich?
« Reply #11 on: January 20, 2014, 10:18:35 PM »
It really depends on your happiness and the concept of enough.  If you're happy with what you have, and you have enough, why would more change anything?

I wouldn't want to up my lifestyle much if at all. If I did it would be selective spending such as maybe travel a bit. I don't really travel at all now though.

prosaic

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Re: What happens if you strike it rich?
« Reply #12 on: January 20, 2014, 10:45:40 PM »

What happens if you then suddenly find yourself with a 6 figure income from some side gig- is it Mustachian to maintain the low income and build up a massive wealth surplus or should you up the standard of living?

I am living this scenario right now, and have been documenting it in my journal here on MMM.

My income went up between 1400-1600% in one year (waiting for bookkeeping to shake out expenses and see what the final tally is for 2013) due to a "side gig" that isn't going away (I self-publish romance novels).

I can tell you that the first thing we did was to dig out of all debt except mortgage.
Second thing was some unexpected 4-figure home improvements we had to do (but thank goodness we had the $).
Third thing was to stuff a ton of $ in savings.
Fourth was to have my husband quit his job (this month) to come on board my business and to start his own self-publishing front list in a different topic.

Going forward, we *are* spending more money on travel, but it's all travel that is tied to business when possible, so it's a write off (as much as we conservatively can). Otherwise, we're just proceeding with the new business and buying ourselves freedom. We've loosened up on being able to spend a little more money on our kids (guitar lessons) and on helping some family members with major, unexpected expenses. But we're not getting a new house or a brand new car. Still use our PagePlus prepaid flip phone lol.

If this continues (and so far, no sign of revenue slowing down) and if we experience the growth we're projecting, then we will get into a new level of tax deferral strategies with retirement accounts/personal defined benefit pension plans and we'll clear out our mortgage.

After that? Uh…talk to me in 2015 LOL. 2013 was one wild, crazy ride.

Rural

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Re: What happens if you strike it rich?
« Reply #13 on: January 21, 2014, 05:39:21 AM »
I would probably change a few things. Solar panels sooner, buy more land, maybe pay someone to do some of the work that my husband doesn't like. He would still do most of it, because he likes most of it (and doesn't trust someone else to do it right), but there are things he hates.

I think we would buy at least one newer vehicle so that we have something consistently reliable. We'd definitely pave our epic driveway.

I seem to be talking about doing sooner things that we will do regardless. I think this means we're pretty content as we are.

GuitarStv

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Re: What happens if you strike it rich?
« Reply #14 on: January 21, 2014, 06:22:35 AM »
I retire sooner.

Some money goes to various family members and potentially friends depending on how much money I strike.

Saverocity

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Re: What happens if you strike it rich?
« Reply #15 on: January 21, 2014, 06:26:58 AM »
Thanks for the replies folks, interesting to see.  From my perspective I would say bolster the funds to an even more secure level and probably would increase my outflows too - charitable giving is a popular one, but it is still a variable outflow which could be considered similar to other outflows in many ways.

There is a concern about surplus on my side, if you are earning more and not increasing your spend cycle you will create an estate which may or may not be inline with your frugal goals.  Do you want to pass on with say 10M in the bank when you are living on less than $40K a year?

PS - I do appreciate the other response about doing things sooner - but my question is specifically about what happens if you are already there, and your savings are sufficient to pay your costs - that this becomes a pure 'bonus' that is technically unneeded.

Rural

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Re: What happens if you strike it rich?
« Reply #16 on: January 21, 2014, 06:40:27 AM »

PS - I do appreciate the other response about doing things sooner - but my question is specifically about what happens if you are already there, and your savings are sufficient to pay your costs - that this becomes a pure 'bonus' that is technically unneeded.

Ah. Sorry for the misunderstanding. In that case, we buy land in wild tracts and immediately either slap a conservation easement on it or donate to a local land trust, the state wildlife management, or the national forest, depending on which property it adjoins. Repeat as suitable land becomes available. Any large tracts we still own when we pass go to some conservation group or other.

grantmeaname

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Re: What happens if you strike it rich?
« Reply #17 on: January 21, 2014, 07:15:47 AM »
There is a concern about surplus on my side, if you are earning more and not increasing your spend cycle you will create an estate which may or may not be inline with your frugal goals.  Do you want to pass on with say 10M in the bank when you are living on less than $40K a year?
Why would that concern you? Money wasn't made to be wasted on gasoline an Michelin-starred dinners, so dying with a positive net worth is not an indication that you didn't drive enough and eat enough escargots.

Dr. Doom

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Re: What happens if you strike it rich?
« Reply #18 on: January 21, 2014, 07:19:15 AM »
I don't think I'd significantly change my standard of living.  I get by on about 22K/yr right now and it usually feels like I have much more than I need.

The one exception might be to take a major trip each year, a 1-month slow vacation somewhere, Portugal or Brazil or Australia etc. 

I might also try to improve my mom's situation.  She's in her mid-60s on SS.  I'm too selfish to do it as things are right now.  I've also observed that she tends to squander any money that's given to her -- she's a live-in-the-moment spender for sure -- hence my reluctance to improve her own QOL especially while I'm still working on FI for myself.  Put the oxygen mask over your own head before helping the passenger next to you, right?   But if I'm good, I would re-evaluate that scene.

Also would definitely budget more money for giving, charities, etc.


StetsTerhune

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Re: What happens if you strike it rich?
« Reply #19 on: January 21, 2014, 07:28:34 AM »
My sense has always been that "frugal" has several different dimensions to it, and many of us are naturally very frugal on some of these dimensions, but not so much on others. Off the top of my head (not really a full formed/thought-through thought), I would say the main possible contributors (with my self-assessment) are
1. don't have a desire for things (10 out of 10).
2. don't care what people think (9 out of 10).
3. enjoy doing things for yourself rather than paying others to (2 out of 10)

In terms of end results, two out of three ain't bad for me, if one had 3 out of three relatively high, it'd probably look like MMM. If one had three out of three extremely high, it'd probably look like like Jacob at ERE. I'm sure there's more dimensions I'm not thinking of and this is obviously a simplification.

But my point is, if I retired and then got a windfall that allowed me to spend way more than I'd planned, I wouldn't change at all on (1) and (2), because those are just who I am. I'm not not buying a new car because it allows me to retire, it's just not something I want. On the other hand, I would  outsource things I don't really like (cleaning, etc.) because I'm lazy.

My guess is that everyone has things that they naturally are, and things that they are because they logically know it's more efficient.

dude

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Re: What happens if you strike it rich?
« Reply #20 on: January 21, 2014, 08:06:23 AM »
oh man, it would depend on how much is "rich," but for sure I would spend more!  I'd pay to bring friends together for group camping/climbing/skiing/diving trips out west and the Caribbean.

Saverocity

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Re: What happens if you strike it rich?
« Reply #21 on: January 21, 2014, 08:08:11 AM »
There is a concern about surplus on my side, if you are earning more and not increasing your spend cycle you will create an estate which may or may not be inline with your frugal goals.  Do you want to pass on with say 10M in the bank when you are living on less than $40K a year?
Why would that concern you? Money wasn't made to be wasted on gasoline an Michelin-starred dinners, so dying with a positive net worth is not an indication that you didn't drive enough and eat enough escargots.

So it is wrong to experience expensive things and better to hold that money and die as though you were poor (from the tradition financial perspective)?

arebelspy

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Re: What happens if you strike it rich?
« Reply #22 on: January 21, 2014, 08:10:50 AM »
oh man, it would depend on how much is "rich," but for sure I would spend more!  I'd pay to bring friends together for group camping/climbing/skiing/diving trips out west and the Caribbean.

But you aren't planning on doing that anyways when you hit FI?

I mean, I get that people are like "I'd travel a lot," because I love travel... but I'm planning on doing a ton of travel in FIRE already, so the money wouldn't change that.

It seems odd to me someone who is like "I'd love to travel a lot... but instead I'll hit FI and not do that thing that I love."  - I feel like you should work the "camping/climbing/skiing/diving trips out west and the Caribbean" into your plan anyways, so that you craft your ideal life for FIRE (and the money, then, probably wouldn't really change anything).

So what am I missing?  (Not just targeted at you, dude, but anyone who's said they'll do X if they had the money - but implying they won't do X, even when they hit FI, without a big windfall of money. Why not just build the stache a bit more to support your ideal lifestyle?)
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

arebelspy

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Re: What happens if you strike it rich?
« Reply #23 on: January 21, 2014, 08:12:46 AM »
There is a concern about surplus on my side, if you are earning more and not increasing your spend cycle you will create an estate which may or may not be inline with your frugal goals.  Do you want to pass on with say 10M in the bank when you are living on less than $40K a year?
Why would that concern you? Money wasn't made to be wasted on gasoline an Michelin-starred dinners, so dying with a positive net worth is not an indication that you didn't drive enough and eat enough escargots.

So it is wrong to experience expensive things and better to hold that money and die as though you were poor (from the tradition financial perspective)?

Your opinion of this guy may help you think through your thoughts on this subject.  (The royal "you" - i.e. anyone thinking about this, leaving a big chunk behind.)
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

Saverocity

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Re: What happens if you strike it rich?
« Reply #24 on: January 21, 2014, 08:20:23 AM »
oh man, it would depend on how much is "rich," but for sure I would spend more!  I'd pay to bring friends together for group camping/climbing/skiing/diving trips out west and the Caribbean.

But you aren't planning on doing that anyways when you hit FI?

I mean, I get that people are like "I'd travel a lot," because I love travel... but I'm planning on doing a ton of travel in FIRE already, so the money wouldn't change that.

It seems odd to me someone who is like "I'd love to travel a lot... but instead I'll hit FI and not do that thing that I love."  - I feel like you should work the "camping/climbing/skiing/diving trips out west and the Caribbean" into your plan anyways, so that you craft your ideal life for FIRE (and the money, then, probably wouldn't really change anything).

So what am I missing?  (Not just targeted at you, dude, but anyone who's said they'll do X if they had the money - but implying they won't do X, even when they hit FI, without a big windfall of money. Why not just build the stache a bit more to support your ideal lifestyle?)

Actually, a feeling I get from many folk on here is that they would do many things to ensure FIRE, making sacrifices to escapre the life they live, but it really isn't the life they want to have.

ace1224

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Re: What happens if you strike it rich?
« Reply #25 on: January 21, 2014, 08:37:01 AM »
if i struck it rich after FIRE there are a couple of things i would do that are totally anti-mustchian, that ive always wanted to do but its not like i'll die unhappy if it doesn't happen.
1. buy louboutins. i want them.  i want them in all their $750 dollar glory.  and i would buy them with "free" money.
2. fund the opening of a restaurant that i think my town needs.  i don't actually want to work there, i'd just be the money man.  and it wouldn't be a chain restaurant and it would have a no denim requirement.  i would love to have somewhere around here for special occasions that people dress up to go to.  and if i'm super rich i'd fund it for a while and not care that it lost money.  bc i think my town needs a place made with local foods and quality ingredients that are made to order

then i would just help out family by paying of mortgages and funding childrens 529 plans.  i wouldn't up my lifestyle because i don't feel deprived.  the only thing i'd spend more money on is possibly offering to pay for friends who couldn't afford it to go the places i would want to go, bc i think its more fun if friends are with you.

zinnie

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Re: What happens if you strike it rich?
« Reply #26 on: January 21, 2014, 08:51:38 AM »
I would spend slightly more to travel more, and either start a non-profit or contribute generously to one. I have even thought about working well past when I need to for my own living expenses, just because the ability to make a bigger impact on the world with more money is very attractive to me.

arebelspy

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Re: What happens if you strike it rich?
« Reply #27 on: January 21, 2014, 08:55:04 AM »
oh man, it would depend on how much is "rich," but for sure I would spend more!  I'd pay to bring friends together for group camping/climbing/skiing/diving trips out west and the Caribbean.

But you aren't planning on doing that anyways when you hit FI?

I mean, I get that people are like "I'd travel a lot," because I love travel... but I'm planning on doing a ton of travel in FIRE already, so the money wouldn't change that.

It seems odd to me someone who is like "I'd love to travel a lot... but instead I'll hit FI and not do that thing that I love."  - I feel like you should work the "camping/climbing/skiing/diving trips out west and the Caribbean" into your plan anyways, so that you craft your ideal life for FIRE (and the money, then, probably wouldn't really change anything).

So what am I missing?  (Not just targeted at you, dude, but anyone who's said they'll do X if they had the money - but implying they won't do X, even when they hit FI, without a big windfall of money. Why not just build the stache a bit more to support your ideal lifestyle?)

Actually, a feeling I get from many folk on here is that they would do many things to ensure FIRE, making sacrifices to escapre the life they live, but it really isn't the life they want to have.

Huh, interesting.  That probably warrants a thread of its own.

I'm planning on having my ideal life in FIRE, and assumed the same of most people.  The general sentiment around here is that most of us aren't sacrificing anything living the way we do.

Since many of the posts in this thread also have a "wouldn't change much/anything" sentiment, I'd assume the same for them, too...

I'll have to think about that.
I am a former teacher who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and am now settled with three kids.
If you want to know more about me, this Business Insider profile tells the story pretty well.
I (rarely) blog at AdventuringAlong.com. Check out the Now page to see what I'm up to currently.

Ottawa

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Re: What happens if you strike it rich?
« Reply #28 on: January 21, 2014, 09:00:14 AM »
Actually, a feeling I get from many folk on here is that they would do many things to ensure FIRE, making sacrifices to escapre the life they live, but it really isn't the life they want to have.

+1 Another thread.

Dr. Doom

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Re: What happens if you strike it rich?
« Reply #29 on: January 21, 2014, 09:05:42 AM »

Actually, a feeling I get from many folk on here is that they would do many things to ensure FIRE, making sacrifices to escapre the life they live, but it really isn't the life they want to have.

I just want to make the point that all sacrifices are not created equal.  Not going on a super expensive vacation once a year doesn't feel like a loss to me.  On a scale of 1 (least painful) to 10 (most painful), failing to do expensive tier-1 travel rates a 1, personally.  Also note that this isn't the same as not traveling -- I'll be out and about plenty on my currently allocated budget, happy as hell.

Whereas staying in employment that isn't fulfilling rates much higher on the scale for folks on this board.  That's the bigger sacrifice, from the perspective of a lot of people.  Living the vast majority of your life, your waking hours etc, being a slave, not doing what you want to be doing.

It's important to weight various variables when making these calculations.   The purpose of this thread was to speculate on any changes you might make to your plan if you had, suddenly, close to limitless resources.  Just because you might make a small change to your spending patterns if you suddenly had (a billion or something) doesn't automatically mean you should rewrite the entirety of your current plan.

Because, after all, the purpose of FIRE is to figure out how to get very close to your ideal life with limited resources.  How to recognize when you have enough to be happy.  Much, much happier than you currently are.

But anyways... I realize this is a subject for another thread.


Ottawa

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Re: What happens if you strike it rich?
« Reply #30 on: January 21, 2014, 09:20:26 AM »
I'm planning on having my ideal life in FIRE, and assumed the same of most people.  The general sentiment around here is that most of us aren't sacrificing anything living the way we do.

Since many of the posts in this thread also have a "wouldn't change much/anything" sentiment, I'd assume the same for them, too...

I'll have to think about that.

A word on sacrifice; Saverocity:  That is pre-Mustachian thinking...you are not hooked yet! 

To the Royal:

preFIRE - while not the ideal life, due to involvement of "The Man", it is still riding close to an ideal.  Involvement of The Man does loom large, since one is still beholden to a schedule that is largely not within your control.  Also, even if you love your job, you still have a percentage of crap associated with it that you may choose not to put up with in FIRE.  The Man also tells you when and for how long you can vacation, pursue other interests etc.

I think what a lot of people find awesome about Mustachianism is the challenge of gaining control over your life through iteration of certain habits and streams of thinking towards optimization.  Mustachianism itself becomes such a big new hobby that it empowers you to start to see The Man's involvement in your life as temporary.  Once you realize that, the journey to FI becomes much more enjoyable.

at FIRE and beyond - I think alot will change here, but the journey toward Mustachianism prepares you for this.  You might feel a sense of trepidation now, but that will wane as you become more confident in achieving your goals.

Striking it rich is interesting.  Because I think the perspective would depend on how immersed you are in the Mustachian mindset.  I don't think much would change for people that have been working toward FIRE in a hardcore way - it would just rapidly move up their plans. 

For people new to Mustchianism...hmmm...interesting. 

Saverocity

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Re: What happens if you strike it rich?
« Reply #31 on: January 21, 2014, 10:11:30 AM »
I'm worried about creating new threads, I feel a little like Pinkman in Breaking Bad selling meth in the rehab sessions... I can almost taste the luxurious spending ideas from this thread :)

I'm still trying to understand what it means to be a Mustachian, some of it doesn't make sense to me, for example I see no point in FIRE if you aren't maintaining the lifestyle that you want.  Hence the question on what happens to your plans with large cash inflows.

Someone mentioned that MMM gives all the blog money to charity, that is pretty hardcore and inline with the concepts here, can I be directed to where he talks about that decision?

netskyblue

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Re: What happens if you strike it rich?
« Reply #32 on: January 21, 2014, 10:25:09 AM »
I'd up my standard of living, for sure.  I don't think I'd acquire tons more STUFF - but I'd certainly eat out a few times a month, instead of a few times a year, etc.  Stuff I would love to do now but "can't afford."

grantmeaname

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Re: What happens if you strike it rich?
« Reply #33 on: January 21, 2014, 10:29:59 AM »
Why would that concern you? Money wasn't made to be wasted on gasoline an Michelin-starred dinners, so dying with a positive net worth is not an indication that you didn't drive enough and eat enough escargots.
So it is wrong to experience expensive things and better to hold that money and die as though you were poor (from the tradition financial perspective)?
No, not at all. But "not using every dime you have for consumption" is not a problem - it's the whole point of FI. If you're okay with having money and not spending it while you're alive, why is it sensible to have a problem with having money you didn't spend when you die?

starbuck

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Re: What happens if you strike it rich?
« Reply #34 on: January 21, 2014, 11:17:11 AM »

PS - I do appreciate the other response about doing things sooner - but my question is specifically about what happens if you are already there, and your savings are sufficient to pay your costs - that this becomes a pure 'bonus' that is technically unneeded.

Ah. Sorry for the misunderstanding. In that case, we buy land in wild tracts and immediately either slap a conservation easement on it or donate to a local land trust, the state wildlife management, or the national forest, depending on which property it adjoins. Repeat as suitable land becomes available. Any large tracts we still own when we pass go to some conservation group or other.

This is EXACTLY what I would do, up here in New England. I read a Boston Globe article about folks that do just that a few years ago and I've wanted to do it ever since. Hell, I'll still probably do it on a smaller scale.

Jamesqf

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Re: What happens if you strike it rich?
« Reply #35 on: January 21, 2014, 12:21:28 PM »
So it is wrong to experience expensive things and better to hold that money and die as though you were poor (from the tradition financial perspective)?

The question there is whether you actually want to experience those expensive things.  Just for instance, there are any number of (moderately) expensive things I could comfortably afford now: fancy clothes, a new SUV, dining out regularly, vacations involving commercial air travel...  But since I don't want them, whether I could afford them or not is irrelevant.

For myself, the only thing I'd really change is to buy a place with more acreage, say maybe 10+ acres of good pasture with national Forest access.  And maybe a Tesla Roadster, if I could figure out how to fit the dogs in it.

sleepyguy

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Re: What happens if you strike it rich?
« Reply #36 on: January 21, 2014, 12:38:56 PM »
Just retire earlier and do whatever I like.  Same thing if I ran into 1-2 million or some large cash.

I'm not into throwing money at charities (so many a terribly managed), I do however have no issues volunteering my time and skill. 

So, I'm wondering about the FIRE mindset, and wanted to ask: what happens if you reach FI and then RE and have done the numbers right and can sustain your lifestyle.  Imagine it's pretty lean, with say an annual budget around $27k.

What happens if you then suddenly find yourself with a 6 figure income from some side gig- is it Mustachian to maintain the low income and build up a massive wealth surplus or should you up the standard of living?

WageSlave

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Re: What happens if you strike it rich?
« Reply #37 on: January 21, 2014, 12:45:44 PM »
Two chicks.  :)

Ipodius

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Re: What happens if you strike it rich?
« Reply #38 on: January 21, 2014, 12:52:17 PM »
Interesting to see what everyone posts :)

I think my plan would be similar to others"

- I would try and keep the overall complexity of my life similar, but would upgrade individual things. IE I wouldn't buy a fleet of cars, but I may splurge and buy a much nicer car. I wouldn't buy a huge house and fill it would stuff, but I would buy a higher end laptop / TV / computer / phone than I otherwise would.

- Beyond that, as others have said I would travel more - probably not luxury travel, but rather indulge in relatively expensive sports such as skiing / flying / diving.

- I would indulge my inherent generosity more than I currently do :)

- I would donate to charity

smalllife

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Re: What happens if you strike it rich?
« Reply #39 on: January 21, 2014, 01:12:12 PM »
oh man, it would depend on how much is "rich," but for sure I would spend more!  I'd pay to bring friends together for group camping/climbing/skiing/diving trips out west and the Caribbean.

But you aren't planning on doing that anyways when you hit FI?

I mean, I get that people are like "I'd travel a lot," because I love travel... but I'm planning on doing a ton of travel in FIRE already, so the money wouldn't change that.

It seems odd to me someone who is like "I'd love to travel a lot... but instead I'll hit FI and not do that thing that I love."  - I feel like you should work the "camping/climbing/skiing/diving trips out west and the Caribbean" into your plan anyways, so that you craft your ideal life for FIRE (and the money, then, probably wouldn't really change anything).

So what am I missing?  (Not just targeted at you, dude, but anyone who's said they'll do X if they had the money - but implying they won't do X, even when they hit FI, without a big windfall of money. Why not just build the stache a bit more to support your ideal lifestyle?)

For people with lower incomes, FI is achievable as long as they keep some of those things in check.  If your choice is a more cost effective or watered down version of what you love vs. working another ten years to fund a lifetime of what you love not everyone would choose to work an extra 10 years.  It's not always "a bit more".

Carrie

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Re: What happens if you strike it rich?
« Reply #40 on: January 21, 2014, 01:18:03 PM »
Right now with FIRE dreams, I'm not sure I can fit in building my dream home.  If we came upon some wealth at the same time as FIRE, we would buy some acreage and finally build the dream house.  We may still get some version of that even without coming across extra wealth, but it certainly wouldn't be to the extent that I'd go with cash we hadn't planned on.  (I'm not talking large, or particularly luxurious; but rather eco-friendly, quality materials, quality construction and on some acreage with long range views.)  Current financial planning may enable us to build a small, well constructed home at FIRE, but it probably doesn't allow for the expansive views and studio space that I would LOVE to have.

matchewed

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Re: What happens if you strike it rich?
« Reply #41 on: January 21, 2014, 01:19:01 PM »
IMO more of what would already be happening, my charitable giving would be higher, or I'd start another scholarship (I intend to set one up some time in my future), I'd do more travel than I currently intend. But would things actually change? I'd like to think not, just an increase of what is already happening.

WageSlave

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Re: What happens if you strike it rich?
« Reply #42 on: January 21, 2014, 01:20:32 PM »
I agree with what others have suggested: if you are true-to-the-ideal Mustachian, then having a major windfall is basically pointless.  It's the mindset where happiness is already (1) maximized and (2) derived almost entirely from non-material things.  If those two conditions are met, what will more money do for you?  I think the real MMM (the superhero persona, not necessarily the man who writes the blog), might actually find such a sudden influx of money stressful: it's a new "job" (figure out what to do with it).

While I can easily recite the ideal from rote, I'm hardly there.  :)  I suspect few are born with it, and for many (most?) that internally-sourced, overwhelming happiness is a skill that has to be developed and nurtured.  But it's not a hard skill like welding or a foreign language that can be taught, it's more like a "spiritual" skill.  It's certainly a change in fundamental thinking, if nothing else.  How big of a change this mindset is and how much care and feeding it takes to achieve obviously depends on the person.

But I also see the "compromise" or "escape" version of Mustachianism, where the end-goal lifestyle may not be the dream/perfect one, but better than working as a wage slave.  But even this state I think has some working room.  E.g., endure the crappy job just long enough to establish sufficient FU money, i.e. not quite FI, but enough of a war chest to walk away from the lousy situation.  Maybe another job is found, which doesn't afford the same pay, but is at least semi-enjoyable.  This alone ought to re-frame the end-goal.  I.e., maybe the original thought was for life to be just "1 better", but simply taking a non-suck job alone is "1 better", and that makes one realize that life can actually be "2 better" or "3 better" or even "1000 better".  And the march toward "true" Mustachianism continues.

I naturally tend to be someone who doesn't desire much in the way of material possessions or even travel, but I tend to struggle more with the (financial) security aspect of the MMM lifestyle... so if I received this magical post-FI windfall, I'd probably beef up my accounts; I'd buy more (perceived) security, like an annuity or TIPS ladder that alone would cover all my family's expected expenses.

Side note: in case anyone didn't get it, my "two chicks" comment above is a joke, a reference to the move Office Space.

Insanity

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Re: What happens if you strike it rich?
« Reply #43 on: January 21, 2014, 01:42:53 PM »
Two chicks.  :)

BWAHAHAHAHA!!!!  Just had to say awesome to that…


I think the travel idea and that is part of my FI plan.  However, if I struck it rich -- paying for friends to go is an interesting one. It is definitely one I would do more of.  There's a group of us that graduated college, we have been friends through marriages and now kids coming into the picture..  But we seem to be haven trouble getting together.   The ability to just go away for a week with all of them at some point would be awesome.  Especially with kids.

I do wonder what psychological impact that would have on the group though - would some feel guilty?  jealous? lower class? 

As far as me - if I struck it rich, I don't think there is much more I would do.  My FI plan already includes travel (as I said before), being in a different house (we like the area, but I just want a newer house instead of having to renovate all the time), and continuing to upgrade electronics.  I might choose to get a pilots license at that point which is something I would like but am not factoring into FI.  And if I struck it really rich -- I'd try to by a sports franchise because.. well, I've always wanted to own a team ;-)

Villanelle

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Re: What happens if you strike it rich?
« Reply #44 on: January 21, 2014, 01:57:27 PM »
I'd probably do some things differently, namely more travel, to potentially include taking friends and family on at least one trip.  Likely we would pick dates and location and invite everyone we wanted to include.  Or, if we are talking many millions, I might do that and also let a few select people choose a trip, and we'd go together. 

I'd also increase charitable giving.

our FI plans do include travel and charity, but not at those levels. 

Other things, we would keep the same.  I don't have any desire to drive a fancy or large car, for example.  No amount of millions would change that, though I might upgrade to something slightly quieter than my Toyota Echo, and electric windows would be nice. 


Richard3

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Re: What happens if you strike it rich?
« Reply #45 on: January 21, 2014, 02:12:49 PM »
Money wasn't made to be wasted on gasoline an Michelin-starred dinners, so dying with a positive net worth is not an indication that you didn't drive enough and eat enough escargots.

Michelin starred dinners are not a waste. You only have X dinners in your life so why not enjoy them? Yes, it's not as financially efficient as buying good ingredients and making your own food, but unless you choose badly, it will be better.

If I had $10m, I'd probably eat Michelin starred food fifty times a year.

Saverocity

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Re: What happens if you strike it rich?
« Reply #46 on: January 21, 2014, 02:51:32 PM »
It seems to me that there are three main camps thus far:

Those that would not change their lifestyle or keep the money but pass it on directly to charity.
Those that would increase their savings/ financial stability but not increase their lifestyle.
Those that would increase their lifestyle costs.

Are the people in the last two groups therefore not ready financially for ER, and are they cutting it too fine, in terms of building the nut before they pull the career plug?

dragoncar

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Re: What happens if you strike it rich?
« Reply #47 on: January 21, 2014, 03:16:17 PM »
It seems to me that there are three main camps thus far:

Those that would not change their lifestyle or keep the money but pass it on directly to charity.
Those that would increase their savings/ financial stability but not increase their lifestyle.
Those that would increase their lifestyle costs.

Are the people in the last two groups therefore not ready financially for ER, and are they cutting it too fine, in terms of building the nut before they pull the career plug?

I don't the last two groups are not ready for ER.  I am in the camp: more money would mean more spending.  But that doesn't mean I'll wait until I'm 70 to retire!  Money has diminishing returns, but that doesn't mean there is no advantage to a sudden windfall.

FrugalZony

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Re: What happens if you strike it rich?
« Reply #48 on: January 21, 2014, 03:29:05 PM »
Interesting thoughts! And I agree that there are different FIRE Scenarios, and that different folks have different motivations for to embarce the frugal lifestyle.
So many a seperate discussion on that may be warranted!
There is the scenario where you get to do what you want when you FIRE and the one where you are trying to FIRE so you can just get out from what's making you miserable today. It depends how early you start, at what point of networth and how long you can keep it up... I guess.

I could FIRE much earlier if i wanted to continue to live on a much smaller amount of money. But I have certain plans that I want to maintain at current rate or
even increase (charitable giving) AND I have certain plans that I DEFINITELY want to increase by the time I FIRE (mostly non work related TRAVEL).

I could FIRE much earlier would I not factor these in, but then I'd be miserable and what would be the point of being FI.
I have two stages of FI that I am trying to plan for
1) to get to a point where I am FI enough to cover the bare bones budget, that I can choose some type of work I like better, without having to depend on it, whilst still adding to the stash. (Reaching that point will mostly have a psychological effect)
2) to get to a point where I do not have to work and still can cover all my expenses by withdrawing from the stash, as in being free to do all the things I REALLY want, but WITHIN reason.

A few years ago I loved my work that much, that when we were having "the lottery conversations" with friends, I always would say, I'd keep my job, becaus it's fun, as in some sort of entertainment kind of way. Boy those times have changed ;)

If I had a windfall of a couple times the stash, I would
- boost the stash to better insulate against risk
- increase charitable giving / start my own charity
- increase travel
- consider some home improvments
- possibly outsource a couple chores I really hate like cleaning or weeding LOL (yes, ok, I admit it alright, I TOTALLY WOULD, LOL!)

I would definitely not need more stuff, buy a bigger house or more expensive car or anything of that nature.

Saverocity

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Re: What happens if you strike it rich?
« Reply #49 on: January 21, 2014, 03:29:22 PM »
It seems to me that there are three main camps thus far:

Those that would not change their lifestyle or keep the money but pass it on directly to charity.
Those that would increase their savings/ financial stability but not increase their lifestyle.
Those that would increase their lifestyle costs.

Are the people in the last two groups therefore not ready financially for ER, and are they cutting it too fine, in terms of building the nut before they pull the career plug?

I don't the last two groups are not ready for ER.  I am in the camp: more money would mean more spending.  But that doesn't mean I'll wait until I'm 70 to retire!  Money has diminishing returns, but that doesn't mean there is no advantage to a sudden windfall.

But doesn't it mean then that you will live your live in FIRE with regrets that you could not do some of the things that could be achieved with the windfall?  VS the person who it wouldn't impact at all who clearly wouldn't have any regret.