If I Were Rich

Sure, we are all rich in a lot of ways, but what if we had a bunch of money too?

This story is a response to Kevin Buddaeus’ story around a thought experiment of what he would do if he was suddenly rich.

First off, I have to get this out of the way. When I read his title, the song If I Were a Rich Man from the play Fiddler on the Roof jumped into my head immediately and couldn’t be purged.

If it is stuck in your head now too, you are welcome! In it, during the lead up, the protagonist is speaking to God and asks, “So what would have been so terrible; if I had a small fortune?”

An excellent question indeed.

For Kevin Buddaeus’ purposes he chose a sum of $1 million dollars. That’s a good number, and at one point in time the delineation between well off and obscenely rich. The term “millionaire” once had a different meaning that it does today.

If a person suddenly came into a million dollars today, it is unlikely that they would be “rich” enough to stop working entirely. At least here in the Pacific Northwest. Assuming you took the money and invested it, one could then expect an annual income of about $40,000 from their holdings. I get that from the 4% number that most financial advisors tout as the amount one can take as income from their holdings each year without impacting the principle.

Forty grand is just barely above the poverty line in these parts. Strange what a few decades of inflation will do.

But for someone that has a moderate pension and has been dumping as much money as possible into their 401(k)-equivalent plan, a million bucks would do quite nicely. Quite nicely indeed.

So, here is what a million dollars would mean to my family:

First off, my wife could quit her job right away instead of next year. She is toughing it out so that we can pay off some debt from sending kids to school and our car, plus having cash to pay for her school and squirrel away a little extra here and there as well.

She will have her degree in five quarters, so we have been aiming for reducing our expenses and saving a bit for that date, when she will quit her job and we will pull up stakes and head somewhere that is much less expensive to live.

A component of our semi-nomadic lifestyle plan has us considering buying a vacation rental property in Mexico. We chose there because the “on” season for rentals is exactly the opposite from our Alabama rental’s on season.

By doing that we would always have a place to be in the off season, while the other property is in its money-earning peak.

As it stands, we are going to have to scrape and get creative to purchase the property because Americans have a difficult (meaning extra expensive) time securing a mortgage for Mexican property. Having a million dollars would easily allow for this investment property purchase without using any of the alternative funding mechanisms we are now pondering.

I am very impressed with Kevin Buddaeus’ generosity in saying that he would gift his parents half of his million dollars. Our intent would be to go more the other direction and make sure our kids had a bit flowing their way.

Up front, I think that we would probably just set up a trust for each of our five kids with $20,000. Using the other iconic principal of investment advisors, the “Rule of 72” it would mean that the younger kids would have their own cool million by the time they were hitting their 60’s. For the older ones, the math doesn’t work quite as well, but it would still be a sizable chunk by then.

Also, by having cash now, we would be relatively assured that our investments could remain intact and we would be able to easily live on the income; never touching the principle which would grow at least in pace with inflation, but hopefully faster.

With that being the case, the kids will also have a decent amount to inherit when we are gone.

So, to tally up. Maybe $300,000 for property purchase, $100,000 into trust for the kids, ~$50,000 to pay off stuff earlier than later, plus some living expenses in the interim. That leaves $550,000 intact for investment.

Unlike Kevin, I am not sure I need to purchase any “toys” (although I love shiny tech things!) at this point. We are trying to downsize and adding items to the household would be counterproductive. And, in general, as I get older, I am tending to find more value in experiences than things. I suspect that is true for many folks.

This has been an interesting thought experiment as it can be fascinating to find out what others consider to be a “small fortune” and what they would do if they suddenly came into that sum.

I am particularly interested in what Rasheed Hooda would do, and Sherry McGuinn, Chris Hedges and Holly Jahangiri. Thanks Kevin Buddaeus for bringing this up as a topic. Getting sidetracked by someone else’s topic ideas is always so much easier than coming up with something myself!

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Timothy Key spent over 26 years in the fire service as a firefighter/paramedic and various fire chief management roles. He firmly believes that bad managers destroy more than companies, and good managers create a passion that is contagious. Compassion, grace and gratitude drive the world; or at least they should. Follow me on Instagram, Facebook, and Twitter, and join the mail list.