what about the 50 mil lottery?

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Post by slacker »

This one thought has been really bothering me. I would really like to know what everyone here thinks about it. It's frugality (again). Now, I know, frugality and the frugal life have been tossed around so many times here,it seems so banal to even discuss it, except in the context of replicable frugality tips and pointers. It's also beyond doubt that most people worth their salt here are frugal. But what I would really like to know is this: are you embracing frugality because that's the only practical way for you to get to ERE and remain ERE, or do you really think it's just as important for other reasons, ie: as some kind of manifestation of the values you hold dear.

Now, I know the easy answer is both. But that's not what I'm talking about. I'm talking about you seeing a deeper meaning in frugality, beyond ERE, irrespective of the circumstances. I'm also talking about you being completely honest :) So, to the thought experiment: Assume when you're ERE and at your frugal best, you win 50 million in lottery ( okay, you didn't buy it..you wouldn't spend money on lotteries of all things...you just found it) Now, would you not change your lifestyle even a little? Leave out the invetsment aspects of it and think only about how it'd affect your lifestyle. Only lifestlyle. I cannot honestly say that I wouldn't change anything at all, though I'd like to think I wouldn't. So...?

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Post by akratic »

If I were ERE with $1.5 million/yr in investment income (3% of 50 million...), I would pay up for the following luxuries:
1) A ridiculously nice view in my apartment
2) I wouldn't sign another lease or probably even buy a house. I would prefer to stick to month-to-month situations where the landlords deal with everything.
3) The best version of each of my possessions, irrespective of cost. For example, $100, tailored t-shirts, instead of $25 "nearly top of the line" ones like I would buy now. Blankets that are 1000 thread count instead of 600, etc.
4) I wouldn't let flight prices affect which times I booked.
5) I would donate money randomly. For example, I would throw at least $10k each at blogs I really like, Kahn Academy, Wikipedia, etc.
6) Maybe I'd take cabs more often, or even consider a personal driver. This would be infrequent though.
7) I'd probably pick up entire bills when forced into restaurants, instead of splitting them.
8) A 30ft-40ft new catamaran... *sigh*...
I think that's about it. I certainly wouldn't want an enormous house filled with unnecessary possessions. No amount of passive income could get me to trade my flip phone for a smart phone (because I prefer a flip phone to a smart phone irrespective of cost).
None of these luxuries are really worth staying employed long enough to have, but I would certainly enjoy them if I won the lottery by accident.
In general, frugality is aligned with my distaste for waste and inefficiency. But there are still luxuries I would indulge in if I had the extra money.

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Post by mikeBOS »

I wouldn't change much.
I might spend a little more on the land I plan to buy to build my retirement cabin. Something with a better view or a private pond or some such that costs $750k instead of the $40-60k I plan on spending. But the house itself wouldn't change at all, still small and easy to maintain.
Some people say, "But with that much money you can hire a property manager to take of any maintenance, so why not have a big estate?" Which is true, but then you have to manage the property manager. And who needs empty rooms anyway?
I'd probably setup trust funds for my nieces and nephews and immediate family. Not huge amounts of money, because I think that can lead to sloth and unhappiness. But maybe something like $1,000/month perpetuity for each of them so that if they wanted to live frugally off that they could, but they still have the incentive there that some people need in order to do something other than be a couch potato their entire lives.
I'd probably just give the bulk of it away to deserving charities. Maybe give scholarships to people who want to study things that don't lead to high paying jobs. I like to support education for the sake of itself, like the study of history, astronomy, art, literature, and poetry.

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Post by Redsted1 »

I would have to echo akratic's sentiments as well. I share an overall dislike of waste and accumulation of crap with many of the other people on this forum that no amount of money could alter. I don't think I could even envision having anything more than a new Honda Civic, it just seems outrageously wasteful and disrespectful in so many ways to flaunt money in a materialistic fashion when so much good could be done with it. Of course I would donate plenty to places, people, and causes I would see fit. A few things I would "trade-up" for:
1)I would pay cash for a VERY modest house.
2)I would buy the highest quality foods (i.e. the very best organic fruits and vegetables as well as nice fish and poultry)
3)I would make travel plans at a whim and go wherever I pleased at the drop of a hat.
4)I like sports...so I'd probably have season tickets to my favorite teams, I'm allowed one crazy indulgence, right? ;)
Other than that, I don't envision my life changing much in the event of something like that happening. In fact, I envision much of the above being possible on some level even without winning the lottery, which is exciting to think about.

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Post by KevinW »

I've thought about this as well. The problem with the hedonic treadmill is that you never hit "enough." If you watch an episode of "My Super Sweet 16" you'll see that these kids are dissatisfied with parties that probably cost as much as a complete ERE portfolio. Likewise, your average American suburbanite is dissatisfied with a lifestyle that is orders of magnitude more lavish than what's typical in the undeveloped world.
So, I think the "big rocks" of my new lifestyle would be the same as they are now. However I could afford to ignore some slack in a few areas around the edges:
- Relocate to the city of my choice without considering price
- As akratic said, upgrade from "nearly top of the line" to "truly top of the line," e.g. instead of an old Ultegra bike I'd have new Dura-Ace. But I'd still ride a bike.
- Never consider price when ordering at a restaurant, booking travel, using an ATM, etc.
I would give a lot of the excess away:
- Buy some freedom for my immediate family, e.g. pay off my parents' mortgage and pay for my nephew's education
- Donate substantial amounts to charities, websites, my local library
Truthfully if I were that rich I might splurge on one expensive, ERE-sin hobby, too.

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Post by dragoncar »

I would definitely spend more. I am doing ERE because I don't want to spend so much of my time working... giving up certain luxuries is a sacrifice, not something I derive independent satisfaction from. It's the things I can do with that free time that I expect to be satisfying. Nevertheless, I would buy higher quality food, keep the house warmer (I was fine in my bed at 45 degrees last night, but it's not ideal) and having kids would be an easier choice.
In other words, I'd live a "normal" early retirement (maybe on that magic 75k number) instead of "extreme". But being aware of the lure of lifestyle inflation, I would probably use the excess for a good cause.

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Post by AlexOliver »

Things I would change....
I'd get a(n)


-small house in Portland - $500k - $1m, connected to the grid but energy self-sufficient.

-maybe a personal chef- not one who lived with me, but one who lived close enough to make me meals at his/her place and bring them over when I wanted them

-100% organic+local food
if I *had* to fly, I would get a private jet.

probably a driver. with an electric town car (does this even exist?).

maybe a maid once a month.
I would buy books, rather than borrowing them.
Actually, I would probably open a private library that was open to the public. The only thing I can see right now preventing me from it is capital. Most private libraries are funded by grants.

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Post by RightClawSouth »

Yeah, I definitely see it as a means to an end. If I hit the lottery I would get (assuming this all fits into the 4% budget and in this order):
1. An iPhone.

2. Cable TV

3. Extravagant Skiing vacations.

4. Flights to visit my family / friends whenever I wanted.

5. Rent a small but awesome apt in a city with a nice view, awesome kitchen, and underground parking.

6. A nice car and possibly a Terrafugia Transition.

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Post by Marius »

"Two chicks at the same time." ;-)
(obligatory quote from Mike Judge's fantastic movie Office Space)
But seriously, I suppose (no way to know until it happens) that I would embrace simplicity but not so much frugality.
My home would be a bit more spacious than what I'm currently planning, but I would try to avoid displays of wealth that make others jealous or think of me as "rich".
Because life/time is finite and precious, even for the rich, I would limit the amount of stuff I own, outsource cleaning and meal preparation and generally splurge on things that protect my health, slow physical aging and save time.

I'd spend my time having fun and working on projects that provide meaning.

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Post by Britz »

To me, frugality is an attractive mode of thinking that ties in with self-discpline, ethics, and making conscious and rational choices. This can be healthy but has also lead me to live and think in unheathly extreme frugal ways (at least when I was younger and didn't have kids to be responsible about).
More generally, frugality is (to me) just one aspect of optimising my life and maintaining mental and physical health. For instance, the lottery example boils down to this: how can the extra money make you more contented? Does it in fact make any positive difference? An old man near where I used to live turned down a million-dollar lotto prize, presumably because he already liked his life as it was. In fact, studies have shown that winning lotto prizes actually leads, on average, to less happiness.

I would spend almost all of the lotto money on trying to make the world better, but keep about $1M for ERE-type purposes. It would be very important to keep up the frugality and, even more importantly, to keep up work of some kind, paid or not, that could do good and give purpose, pride, and satisfaction.

All in all, free money wouldn't do much: $1 or $10 or $100 is nice to find on the road but it makes no difference as money. $1000 or $10000 can buy you some toys that you don't really need and could afford anyway. $100000 or $1M would give a good ERE-type investment sum/buffer; I wouldn't mind those amounts. $10M or $100M could do some good in the world on a small and local scale but not much, so I wouldn't be very interested in these sums. $1B or $10B could maybe have some tiny effect on the world, and $100B could actually fix a few world problems, so I wouldn't mind that money. However, even these sums are pretty trifling though: even Bill Gates or Warren Buffett don't have any "real" money, at least not to fulfill any sort of grand dreams, like a trip to Mars or even the moon, so even their riches are more like bling than substance. All in all, there's no realistic level of richness that could really fulfill you or realise your dreams... unless you have sad and bling-full dreams ;)

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Post by AnneBentham »

What I would do depends on how far along I was in my life at the time of the lottery but it would have very little effect on my lifestyle overall. If I already purchased my 100 acre parcel, I'd buy the surrounding land and leave it untouched. If not, I'd buy a large piece of land with cool things on it like caves and lakes but otherwise continue with my plan in the same way.
@Marius :)

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Post by Redsted1 »

@Britz -- Well put. :) I could not agree more. Bling dreams are all most fortunes amount to...and what good are those dreams if they are just empty overall? My dad always drove that into my brothers and I when we were kids. We'd say something about a neighbor having a "cool" house or car, not fully grasping the concept of money/utility, and he would always say "We have a roof over our heads and food in our stomachs...just like Bill Gates." Thanks dad. :)

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Post by InterfaceLeader »

I would upgrade the quality of the food I ate - to support organic, local farmers/produce etc. This is the one thing that I struggle with constantly in frugality vs what I think is better for the planet/my health.

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Post by Sven »

As some others here.. I wouldn't change a thing (besides putting aside some part of the money for a really rainy day).. I have everything that i need and trust myself to be able to get everything what i need.. when i need it.. if ever :-)
Something that has always fascinated me: buy a private island and start developing a self-sustainable community there. I already came to the conclusion that it comes with several flaws. F.e. how to get medical supplies, which i think is one of the few things that can't be acquired from the moment somehow the ties with the outer world are lost. But overall it should be doable.

Or just start developing communities in forgotten parts of the world with the interests generated. These should of course in the end also become self-sustainable.
The second best thing: support people like Greg Mortenson in making the world a better place one village at a time!

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Post by Spork Inthe Eye »

Giggle... for some reason it strikes me funny that the common thing people want is an iPhone. No offense intended.
For the most part, I'd be the same as before. I am a cheap bastard now and I'd be one then. I'm probably more of an ER guy instead of an ERE guy -- but the one thing I'd have is an airplane. I don't need a big gaudy jet, just a nice fast single engine piston.

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Post by DividendGuy »

Obviously ERE would change into ER..the need for "extreme" would vanish instantly.
I think my biggest change would be the fact that I would be eternally and perpetually traveling. Part of one of my ERE goals is to not really set roots in any one location and be able to visit family and friends as I see fit. Instead of couch crashing at my parents I could be globe-trotting to Paris and Rome and bring the family with me.

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Post by AlexOliver »

I think the "Extreme" part of ERE relates to the time it takes to retire (5 years) compared to ER (20 ish years) or R (40 years).

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Post by dragoncar »

I think for most people, the only way to retire in an extremely short amount of time is to extremely reduce their expenses. Maybe we should do a poll, but I doubt lottery winners count as ERE.

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