Friday, July 20, 2007

How Do I Know When I Have Too Much Money?

There's a lot discussion around the blogosphere about whether people are saving too much retirement. My initial opinion was that one cannot save too much. However, recent articles in the Internet have convinced me there may be an amount above which I would have too much money.

If I could afford any of these three items, I would know I have too much money and could stop saving for retirement. :-)

Luxury Golf Membership

The $750,000-Fee Golf Club describes a new golf club in the Hamptons. For only a $750,000 initiation fee (plus $62,000 tax) and $20,000 dues per year, one can belong to a casual golf club for the wealthy. Early members were able to sign up for a $500,000 initiation fee.

If I play 5 times a week, for 200 days a year, that equals $100 per round based on the yearly dues. I'm sure that there are minimum spending requirements at the facility also. Also, if I am a member at the club for 20 years, the cost of the initiation fee can be amortized to $3750 per year.

What a deal! :-)

My frugal recommendation: Ask if they have a junior membership for applicants under 35.

An Extreme Luxury Car

If I had a lot of spare cash, I could consider buying an expensive car, such as a Bugatti Veyron, for $1,700,000, or a Ferrari Enzo, for $1,000,000. Both are sharp looking cars that will turn a lot of heads. I also wouldn't be too concerned gas mileage or the cost of gasoline if I owned these cars.
Insurance costs might also be a bit high . I am currently checking with my insurance agent and expect it to be a bit higher than the $300/six months that I currently pay for my truck :-

My frugal recommendation: Buy a used one and save the depreciation that happens to new cars.

Ultra Luxury House

If I were ultra wealthy, I could buy this $135 million home in Aspen, Colorado. At 56,000 square feet, it has 15 bedrooms, 16 baths, a private barbershop and beauty salon just off the master suite and enough space for a party of 450 people. For reference, an acre is about 44,000 square feet.

I would hope to negotiate the price to $100 million. With a 20% down payment, a 30 year mortgage at 6.75% for the balance would yield a monthly payment of $518,878.48. And that doesn't include taxes and insurance.

My frugal recommendation: Wait until the house is auctioned and make a low ball bid of $48 million.

At this point, I am not seriously considering purchasing any of these luxuries. Therefore, I guess I will continue to save for my retirement. :-)

For more on Reaping the Rewards , check back every Friday for a new segment.

Photo Credit:, Kenn Kiser

This is not financial advice. Please consult a professional advisor.

Copyright © 2007 Achievement Catalyst, LLC


Anonymous said...

Niiice!! I think if you had too much money it would be certainly too easy to spend it on these things. Either that or give to charity right? Seriously who needs this stuff. If I had tons of money I'd just relax, enjoy life, hang out with my kids all the time, and do more volunteer work. I'll certainly have a budget for the luxuries but nothing as crazy as those on your list ;).

traineeinvestor said...

If society as a whole saves "too much"(whatever that may be), presumably some of that savings comes at the expense of consumer spending which means the economy will grow at a slower pace (or even contract).

For the individual, unless you are going to extremes and living like an unreformed Ebenezer Scrooge, I have trouble seeing how people can save "too much". In the very unlikely event that I ended up saving too much, I would either adjust my standard of living upwards (e.g. more travelling), retire sooner or give more to charity (or a combination of the three).

Super Saver said...

@ Digerati Life,

Agree on relaxing and spending more time with family. However, I did quite a bit of volunteer work in my younger days. So, I'd pass on volunteer work and try a "relaxed" business startup using Web 2.0.

@ Trainee Investor,

Yes, I agree that saving too much shouldn't be an issue for the majority of people. I too would choose to spend more lavishly later in life, if I ended up saving too much. However, even if my savings allowed, I don't think I would buy a $1 million dollar car:-)