One of the self-made millionaires in my Rich Habits study told me that the biggest mistakes he ever made was buying a 100 foot yacht.
It had always been a fantasy of his to own a yacht. He said he and his wife, who were in their mid-70’s, envisioned spending their final years cruising around in their yacht to exotic places.
Now, he was worth about $22 million and the yacht set him back about $5 million, but it wasn’t the $5 million that was the mistake. Yachts can lose value, but they can also appreciate in value. So, as far as he and his wife were concerned, this was akin to buying a house.
The underlying mistake was the cost of maintaining the yacht. That cost included the financial cost of regular maintenance and a crew: Captain, first mate and a cook.
The stress, the headaches and the time it took out of his day in dealing with his crew and his yacht was taking a toll on his health and became more than he could bear. My millionaire sold his yacht. He said it was one of the happiest days of his life. He said he felt like he was set free.
Another millionaire in my study had three homes: their main home, a farmhouse and a home by the beach. After a few years of owning these three homes, she sold all but one. The stress of dealing with the problems associated with maintaining three homes was affecting her health and also affecting her marriage.
Most people don’t have problems like that. But, even for the average person, the stuff you own can end up owning you.
A vacation home sounds nice, but buying one doubles your home ownership problems.
Buying a high-end luxury car sound nice, but maintenance and insurance costs on luxury cars can be two to three times higher than the maintenance and insurance cost of normal cars.
I can go on with other examples, but the point I want to make is that the more stuff you own, the more problems you have. You minimize your problems in life by keeping your life simple.
Keeping life simple means not owning a lot of stuff. The less stuff you own, the fewer problems you have and more control you have over your life.
About Thomas C. Corley
I reluctantly admit that I am glad that I unexpectedly came across this article as I was planning and pondering about releasing some extra items this Friday andor this Saturday at the latest. However many of my music cds are I confess more challenging to release as many of the cds have unique songs that are not frequently played on local andor even online radio unless I seek them out to listen to them (even then they may not always be available online to listen). As I result, I admit that I need to give myself until tomorrow morning to decide how much to allow myself to keep and how much to release. Still, I am glad that I came across this article as I feel it was intuitive confirmation that saw this article less than 24 hours after planning to organize and clean around my apartment more this Friday.
Thanks for sharing. I think it depends on the value of the asset. Example – If you owned a vacation home, and you’re not renting it out during certain months of the year, I agree it wouldn’t be a very good asset. But if you owned the vacation home and the vacation home brought in a steady stream of rental income that could help to cover expenses on your personal income statement and/or provide you the opportunity to invest the rental income in a Roth IRA, index funds, stocks, another rental property, etc creating more wealth for you. I think it would be totally worth it. The extra income would provide an opportunity to be more charitable and the home would be at a service for others who rent it out and enjoy it. At the end of the day, it’s my understanding you want assets that generate passive income streams that cover 100% of your personal expenses.
I watched a documentary on Warren Buffet. And I know he keeps it simple too. He still lives in his first home, and he had said if he upgraded it would only create more headache for him with an employee staff. I would be willing to bet – based on what I saw in the documentary – he and his spouse live on less than $60k a year.
I agree and don’t agree. I believe if one is willing to take on the extra work or expense because they so enjoy their item, then the item doesn’t own them. When I bought my first “fancy” car (Jaguar), sure I had sticker shock when I realized that maintenance was more expensive. But I so enjoyed that vehicle and it required far less maintenance than my former less-expensive vehicle (not to mention I found an excellent mechanic) that it was worth it. Of course after awhile it became “just” a car but I still recall how much I enjoyed that car. I just don’t think everything in life has to be about living frugally. What is the point if you can’t enjoy some of the finer things in life that have NO point other than you enjoy them? However YES they better not own you or it’s time to get rid of them. We live relatively Zen but there are certain things we have simply because we enjoy them. Then again I study books like yours to ensure I don’t go off the rails (smile)!