Quote:
Originally Posted by xxweekxx
will, what if you are rich, but save up and stil spend money,
say you make $100k a month, and you put away $80k, then whats wrong in blowing $20k a month on a car payment for say a ferrari plus a mortgage on a $1mil house..
you gotta live a little.. i save a lot but im not flying economy class for a 12 hour trip, if i couldnt afford first class then my long hours and giving up my teenage/early 20's will all mean nothing...
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Nothing wrong with that at all. I was explaining the same thing in another thread, touched on it in this one but didn't get into details. The main thing is to have a plan, decide what % of the money you make will go to different things, with some of it going to just having fun and blowing it.
The problem with most people is that if they make 100K a month they put $0 of it towards long term retirement. Even if you only took 20K a month and put it towards retirement and took the 80K to spend on other investments like real-estate or spent it on toys and blew it, etc... than you still would be setting yourself up real good for retirement.
In the example above, if you took 20K every month and put that into retirement, after 10 years you would have saved up 3,347,000 (7.2% rate). Now lets say your business failed and you lost everything. If you started pulling 6% from your retirement you would have about 200K a year to live off of.
IMO, since most of us are self employed and majority of us are successful or semi successful (right now), it is important to have a Plan B. Our business and short term investments like real-estate, stocks, gold are Plan A. We have all seen people make and lose fortunes in the last 10 years in both our industry, the stock market, and the real-estate industry. One year you can be making 1M and the next 100K. It is even more important when we are making really good money to take a percentage of it to build plan B to at least insure if all else fails with Plan A in the future, that we can still retire at 65 and not have to work until we die. On the other hand if Plan A never fails, then great you have even more money in Plan B you can play with when you get older, or leave it to children, or give it to charity. Better to be safe than sorry.