How Much is Enough?

To those of you who entered my competition to win a share in the Euromillions £100M prize fund last week – bad luck – we didn’t win. In fact, nobody won. The jackpot now stands at:

£119M – Wow! What an unimaginably large sum of money! I am sure that everyone has at some point imagined what they would do if they won the lottery; the crazy things they would buy and (hopefully) all the good that they would do. Although this post is not around winning the lottery, here are the top 3 things that I would do:

1. After handing in my notice at work, I would pay off our mortgage. I would also pay off our family’s and close friend’s mortgages and invest in around 5  properties to rent out.
2. I would then prepare for an around-the-world trip with Mrs Scot, with no real plans other than to have a family later down the road.
3. For the foreseeable future we would visit the most remote places in the world and hand-pick a number of projects to help out in. I don’t mean by writing a few cheques, I mean hands-on help.

While I would ensure to help those closest to us first, my life’s purpose would change dramatically. I would feel that we had a massive responsibility to use the money in the right way and to do good things to leave a legacy to be proud of. I wouldn’t buy countless supercars and crash them wasted after drug-fueled parties. I wouldn’t buy a house so big I forgot what one wing looked like. I wouldn’t buy a private jet and a 100ft sailboat. There are lots of things I wouldn’t do.

Going back to the topic of today’s post –

How much is enough?

Well this is a tough question: As human beings brought up in a materialistic world, we never have enough. We adjust our wants and expectations so that we are never satisfied. Our pay rise or special bonus is quickly absorbed by the increased car payments for the upgrade we just bought. The new kitchen and landscaped garden are installed and our increase is quickly forgotten. We spend more money on bigger and better hotel rooms with an extra star rating, that we don’t even notice.

We always want MORE

Don’t worry, it is not your fault. We are programmed to be like this. Let me give you an example:

Mrs Scot works in a sales environment. She is surrounded by young and ambitious people who have the potential to make some serious money. They don’t have a clue how to spend it. Stories of men who drive Bentlys/Aston Martins yet still live with their Mums and haven’t considered buying a house are not uncommon. People who waste money on first class tickets – just because they can! Commission is short-lived and not guaranteed. It frustrates me to hear these stories as I know there are so many better ways they could set themselves up for the future!

What to do with more?

My advice is simple. If you get more, think more. Don’t spend more on the same things or for the sake of it. What age do you want to retire at? Will you be conventional and follow the status-quo? Will you work until you are 65 while fooling yourself that you are happy because you drive a fancy car?

Just because you earn lots of money, it doesn’t mean you need to spend it. Consider investing it into your future. A rental home, savings, pension plan.

Our Plans

Assuming that we don’t win the lottery tonight and that we have to continue working a while longer, our plans will look something like this:

• Pay off our mortgage as soon as possible. My post on ‘Why Amortization is Important’ reflects the benefits of making over-payments on your mortgage. It is incredible to think how many people are saving money in low-interest accounts each month instead of reducing the capital owed on their houses!
• Upon paying off (or almost paying off) our mortgage, We fully intend to buy a second property for rental purposes. Any inheritance money along the line will also be used towards additional properties. I would like to think we could have 3/4 properties by the time we are 50.
• In the UK we have ISAs which are Tax-free savings accounts which we can invest a fixed sum each year (£5640 for 2012/2013). Mrs Scot and I can have one of these each and we fully intend to use these when we own more capital on our house.
• Between my final salary pension and Mrs Scot’s pension, we should never have to worry about money come retirement age. However, we fully intend to go traveling while changing people’s lives. Eventually we will start a dive center – probably around 50.

That’s right – I intend to retire at 50! If we are sensible with money, this is easily doable. With some savvy investments, but more importantly – by not joining the Status Quo – we can do this and raise a family! So long as we don’t get caught up in keeping up with the Jones’s and waste our cash on cars – it won’t even be that hard!

Today I ask :

How Much is Enough for you?