Rich List -calculating your dream monthly expenses

[bicko]

Since starting our own business, my wife and I have experienced a huge paradigm shift towards believing that what ever we set our minds on achieving, then low and behold we achieve it. Ivariably these are all short term goals.

I have just purchased and read a new book "Get Real, Get Rich" by Paul O'Conner. He puts a different slant on the picture your dream house/car/lifestyle method of goal setting, by concentrating on how much cashflow will actually be needed to fund your dreams (he calls it the rich list)(not the wish list). Its interesting when you do the figures and you find out how much cashflow you might need.

Here is a snap shot of what my dream rich list is in 5 years time>>>>>

Mortgage $1,500,000 10,000 p/month IO payments at 8%
BMW M3 Lease 2,700
Subaru Tribeca Lease 1,200
IP Costs 3,000
School Fees 500
Clothes 1,200
Food 2,000
Insurance 600
Utilities 600
Bi annual Holiday 1,000
Miscelaneous 2,000

24,800 p/month

How the heck am I going to do that??????????
I sure we all have our opinions on how you could do it.

Ive got my ideas........
I guess by doing this exercise, it focuses on the oxygen of material wealth, cashflow.

 

[Mary]

Since starting our own business, my wife and I have experienced a huge paradigm shift towards believing that what ever we set our minds on achieving, then low and behold we achieve it. Ivariably these are all short term goals.

I have just purchased and read a new book "Get Real, Get Rich" by Paul O'Conner. He puts a different slant on the picture your dream house/car/lifestyle method of goal setting, by concentrating on how much cashflow will actually be needed to fund your dreams (he calls it the rich list)(not the wish list). Its interesting when you do the figures and you find out how much cashflow you might need.

Here is a snap shot of what my dream rich list is in 5 years time>>>>>

Mortgage $1,500,000 10,000 p/month IO payments at 8%
BMW M3 Lease 2,700
Subaru Tribeca Lease 1,200
IP Costs 3,000
School Fees 500
Clothes 1,200
Food 2,000
Insurance 600
Utilities 600
Bi annual Holiday 1,000
Miscelaneous 2,000

24,800 p/month

How the heck am I going to do that??????????
I sure we all have our opinions on how you could do it.

Ive got my ideas........
I guess by doing this exercise, it focuses on the oxygen of material wealth, cashflow.

This is something that Scott Pape of the Barefoot Investor discusses in regards to setting goals, i.e. putting a price tag on your goals to allow your brain to see a set figure.

It's nice to dream and i wish you the best getting there... but to be the devil's advocate for a moment, $24,800 per month = $297,600 per annum (AFTER tax)!


I think it's important not to get too greedy here! If you have a nett income of AUD$297,000 p.a. this equates to about AUD$620,000 p.a. which equates to about USD$482,517.98 on todays rates.

If you got to http://www.globalrichlist.com/ you'll find that you're in the top .001% of the world's wealthy!

Please tell me how the hell can you spend $1,200 per MONTH on clothes (custom made suits that are thrown out every month?)

Ditto $2,000 per MONTH on food (truffels flown in on a private jet from France?)

Just those 2 "expenses" alone will sponsor about 110 children in 3rd world countries providing them with food and education and a better life.

Did you know three billion people live on less than $2 per day while 1.3 billion get by on less than $1 per day? Seventy percent of those living on less than $1 per day are women.

 

[quoll]

G'day bicko

That's one rich list, well done.

I'd want to be using my company to expense alot of that, and not fund it from after tax dollars. You'll have to work out with accountant or browse ATO website and work out what you can expense.

I was looking at cars and thinking about finance. I figure you can either lease the car through a PTY LTD or sell a house to fund it.

What are your ideas so far on how to fund these wants?

I figure about 60 ip's should see you close to do able.

Cheers
quoll

 

[Aceyducey]

Shows you how far out of touch Australians are with the average global lifestyle doesn't it

Personally I don't see the goal of increasing wealth as being so you can be a faster running rat.

Cheers,

Aceyducey

 

[Bill.L]

Hi all,

I always love the "dreamin" threads.

It reminds me of a seminar I went to with a friend a few years ago (pushing a network marketing co), where the presenter stood up there and asked us all to picture our dream house, in exactly the area we wanted to live.

I turned to my friend and said "I already live there" he replied "so do I".

Oh well many live in hope, I'm sure the exercise worked on some.

If you are not where you want to be, what are you doing where you are??

bye

 

[Steve KKK]

I think a few are losing sight that this is just a dream list!

It doesn't really matter how much pre-tax dollars you must earn in the real world to live this lifestyle. If you are clever enough and have the right mindset, you could have all this and get others to pay for it (be it your profitable companies, your investments, one or two deals that give you residual income for a number of years, etc)

And of course it is all relative to your own needs, wants, ideals, etc.

Well done Bicko for sharing your thoughts on the matter.

 

[Mary]

I think a few are losing sight that this is just a dream list!

It doesn't really matter how much pre-tax dollars you must earn in the real world to live this lifestyle. If you are clever enough and have the right mindset, you could have all this and get others to pay for it (be it your profitable companies, your investments, one or two deals that give you residual income for a number of years, etc)

And of course it is all relative to your own needs, wants, ideals, etc.

Well done Bicko for sharing your thoughts on the matter.

If you re-read the posts, i think you'll find everyone that's replied so far (including me) has acknowledged that it's a "dream" list - except perhaps for 1 reply.

I also agree that it's all relative to your own needs, wants, ideals, etc. But it's also important not to lose touch with the BIG picture. I mean, how many suits can you wear, how many boats can you ski behind etc before you start feeling a tad guilty about those less fortunate who go hungry every night? As Acey said, i also don't see the goal of increasing wealth so that i can be a faster running rat (but still in the race).

My own personal goal is to be able to sponsor a new child every month ($30) and one day buy lots of land for an animal refuge

As someone once said, "be the change you want to see in the world".

 

[quoll]

I reckon if you are dreaming of getting something you may as well dream about how to get it. It always helps me when I can see a path to the goals.

I think you will find there are some like Peter Spann who have dreamed big and in the end they have arrived there.

So don't fool yourself and think that dreams are unattainable.

Cheers
quoll

 

[MichaelW]

Bicko,

Nice list, and its about where I see my net income in retirement too. I'll sit down and work it out for myself now that you've given me the heads up, but I'd definately add interest and maintenance on my $250K yacht to the list.

Mary, if you live off your capital growth then you don't need to pay tax at the marginal tax rate, just at the LOC interest rate... i.e. to get $300K after tax you only need to draw $300K from your net equity funded at 10% pa. So long as your asset base is growing faster than $300K pa then you're still ahead assuming you're neutral. So, $300K "income" in retirement would require an asset base of circa $6M net assuming a mediocre 5% pa to give you that income in retirement. Oh, and you'd have to leave inflation in your net assets too so you don't get limited to $300K, because you're indexed.

$6M net assets may sound kinda hefty to a lot of people but its certainly not an unattainable target. If I leverage to say $2M now (which my income and deposits via LOC allow) and buy up IPs, then I could conceivable double their value every 8 years (assuming 10% pa compound growth). So, in 8 years I'm at $4M but have borrowings of $2M still. In 16 years I'm at $8M with borrowings of $2M still and viola! $6M in Net Assets. Time to retire in just 16 years on $300K pa at not too much of a stretch...

Now, how to accelerate that retirement plan...

Ciao,
Michael.

 

[bicko]

yes of course where allowable these would be partially funded via business.
I'm sorry Mary for making you feel sick at my extravagent goals. Hopefully one day I will create enough jobs via my lofty goals so that I may sleep soundly at night despite my greed.

Yep I can feel myself running faster in that mouse wheel already, hopefully oneday I will escape the rat race.

Imagine if you were able hold your hand out, and a business spending 1million pa allowed you to take 8%

How many IPs could you fund with that.

I'm glad this thread has stirred some thoughts.

cheers

 

[Aceyducey]

I reckon if you are dreaming of getting something you may as well dream about how to get it. It always helps me when I can see a path to the goals.

I think you will find there are some like Peter Spann who have dreamed big and in the end they have arrived there.

So don't fool yourself and think that dreams are unattainable.

Definitely!

But DON'T dream of bigger debt!!!!

I know people who dreamed of owning big houses, fast cars, overseas trips....but they didn't dream about how to create wealth.

All of them are now neckdeep & swimming as fast as they can.

Dream the dreams, but don't neglect the strategies!

Cheers,

Aceyducey

 

[Olivia]

Bicko,

I L.O.V.E.D your post, I think its a brilliant dream, and I believe you will achieve it.

I have one slight issue with your list though, you spend the least amount of money on school fee's....that's wrong Bicko, wrong!...quick, change your list add a new goal, to spend more on the kids education than on the car. The kids will need the education to handle their inheritance well.

TW

 

[quoll]

Definitely!

But DON'T dream of bigger debt!!!!

I know people who dreamed of owning big houses, fast cars, overseas trips....but they didn't dream about how to create wealth.

All of them are now neckdeep & swimming as fast as they can.

Dream the dreams, but don't neglect the strategies!

Cheers,

Aceyducey

G'day Acey

When I wrote that I was thinking along the lines of how to fund the dream, what do I need to do to gain income to fund the purchase of the goodie. I think RK touched on it in RDPD something about a car and to get the car an apartment block was bought, the income from apartment block paid mortgage and had enough left to fund the interest payments on the car or maybe lease but the car was funded via passive income.

Cheers
quoll

 

[Mary]

yes of course where allowable these would be partially funded via business.
I'm sorry Mary for making you feel sick at my extravagent goals. Hopefully one day I will create enough jobs via my lofty goals so that I may sleep soundly at night despite my greed.

Yep I can feel myself running faster in that mouse wheel already, hopefully oneday I will escape the rat race.

Imagine if you were able hold your hand out, and a business spending 1million pa allowed you to take 8%

How many IPs could you fund with that.

I'm glad this thread has stirred some thoughts.

cheers

No need to apologise bicko. No i never said you made me feel sick, just nauseous perhaps

As i said earlier, i wish you all the best in getting there and i hope your lofty goals do eventuate and you can spare a few dollars for charity along the way

 

[Aceyducey]

When I wrote that I was thinking along the lines of how to fund the dream, what do I need to do to gain income to fund the purchase of the goodie. I think RK touched on it in RDPD something about a car and to get the car an apartment block was bought, the income from apartment block paid mortgage and had enough left to fund the interest payments on the car or maybe lease but the car was funded via passive income.

I accept that Quoll, but how expensive does your house need to be for you to be happy? How many gadgets, nicknacks & doodads do you require to chase away your blues?

Try reading the Millionaire Next Door sometime. You'll see that many people don't require conspicuous spending because they have found happiness in themselves.

Their wealth is simply a tool to alleviate stress and remove doubt.

Cheers,

Aceyducey

 

[quoll]

Come on Acey

This thread wasn't titled "How cheaply can you live and still be happy" it was about dreaming of big expensive stuff and how much it would cost.

I don't have a big hat but I do have some cattle!

Yep I enjoyed that book, happy with current house, happy with current main car, the second car had some scaff fall on it yesterday so not happy with that at the moment, happy with the kids and wife. Haven't got my Ferrari but I'm working on it.

Cheers
quoll

PS I'd like a nice boat as well.

 

[Andrew]

I have one slight issue with your list though, you spend the least amount of money on school fee's....that's wrong Bicko, wrong!...quick, change your list add a new goal, to spend more on the kids education than on the car. The kids will need the education to handle their inheritance well.

TW

Are you serious? Those dolts that teach school wouldn't know the first thing
about handling money. For my kid I'm going to spend the least amount of
money I can on his education and the most amount of time I can spend
with him.

Time is way more important than money when it come to small people.

andy

 

[Olivia]

Well actually Andy.....my reference to kids education, was holistic in nature , obviously I should have said that. It costs money to teach your kids lessons they should know. I didnt nessecarily mean 'school' as you know it.

Time with the kids is great, but then when you want to teach them about money etc, you need to show them by doing, this costs money. ( this is also spending time with them btw)

When Bicko listed education, I presumed ALL education, not just the abc's you learn in school.

"I list all my kids educational costs as school fee's, it's a tax fing"

goodness...I forget how this whole online thing works, I have to think! you really really CANT see whats going on in my head.

 

[natmarie73]

It's sure nice to dream ain't it. However I think that many of us, when we do eventually get to the stage where our dreams are reality will find (or have found) that what we really wanted then, we don't want now. Sure, I would LOVE to spend thousands every week on shoes, perfume, jewellry, clothes etc now (because I can't) but I know that If I could, I most probably wouldn't anyway because after a week or two it would be tres boring to do so not to mention a huge waste of time and money.

If I ever get to the stage where I have more money than I can spend I think it will just be spent on more houses and property, after charity deductions of course!

but in the meantime it sure is nice to dream...

Nat

 

[bicko]

I have a son who goes to a catholic school which costs around 2k a year. In 5 years time I will have two more children going to a similar school. For that 2k I believe it is the perfect trade off for smaller classes and quality teaching over wholly public funded schools. I have noticed that the more you spend on schooling the more holidays your kids are given as the schools cut down on running costs and increase their profits.

Yep who knows in 5 years time I might have completely different goals, maybe me and my family will be looking for a quieter life, but hey I love my toys.

Im sure my donations to PCYC and Cancer research will grow in accordance with my bank ballance.