Recently Physician on Fire asked the question what would you do with millions upon millions of dollars. I hastily gave an answer about having trouble visualizing expending more than $100K a year. POF suggested and I largely agree that my response perhaps deserves expounding into a post of it’s own. So what do I view as Extreme Spending?
Living in an All Inclusive for $73K a Year, The Extreme Spending Example
You see I did not only state I could not envision spending more than $100K a year. I gave a justification. A few months ago when we were vacationing in Mexico we stayed at a mid range All Inclusive Resort. The room rate without travel hacking was 200 dollars a night for a couple. At the time this got me thinking. If you were to choose to live at this all-inclusive resort 365 days a year it would only cost you $73K a year.
The Benefits of an All Inclusive Year Round
What would you get with your $73K? A pool, beach chairs, room cleaning, all you can eat food at multiple restaurants, entertainment, etc. Now, obviously I am not recommending you live at a single all-inclusive for a year, but for a few extra K a year you could probably cover flights to other areas of the world to continually visit new all-inclusives. Add in some health care and laundry and you arrive at around $100K. Not a bad life and about as luxurious as I could potentially imagine (though perhaps I am not that imaginative). At this point I could eat well, have people wait on my every need, travel the world non stop, and someone would clean up after me daily. Not a bad life.
The Cruise Ship Retiree, a similar concept
Just how out there is this life? Well, there are a whole group of retirees that have implemented something similar. Some retirees retire to constantly travel via cruise ship. A quick investigation shows it would be quite easy to book cruises habitually for about the same per day as the all-inclusive, $200. Then you would not need the flights between locations. You would still end up spending less than $100K a year, seeing the world with food, health, and housing included.
Not for me, but still Interesting
Now, as I denoted in my comment I would not choose this life. I prefer vacationing in off the beaten path places where there likely is no All-Inclusive. In fact some of these locations do not even have traditional hotels. I would expect parking our stuff at an AirBnB and cooking for ourselves would come in significantly less expensive. I also enjoy activities like camping and hiking which often have zero cost lodging depending on where you are. Not to mention I could see myself occasionally staying with family or friends where I would also have no housing costs.
In the real world where I traveled full-time and had unlimited funds I would stop into an all-inclusive every so often. Perhaps even a few weeks of the year. However, if I really think about it those days would be the most expensive days of the year. The rest of the time would fall into the categories I mentioned above: AirBnBs, camping, visiting family/friends, etc. Hence why I would view this as the upper end of my potential spend. The reality is it would still be lower than $100K.
One last point, some of you are probably thinking, what about Geo arbitrage? Is my comparison fair if I do not expect to spend the rest of my days in say Mexico since it is on the lower cost side of things. It would logically be cheaper than a trip to the Netherlands. In some respects you are right. An all inclusive or a cruise to certain parts of the world can cost significantly more than $200 dollars a day. You also would be correct in thinking I would want to see everything, so I would want to see both the expensive and inexpensive locations.
The thing is, there is nothing to say how you mix the locations to average out over a year time. I should set things up so there is a good mix of lower cost and higher cost locations. When combined with the alternative lodging as referenced above, I still would not expect to exceed the $100K a year mark. This does illustrate the benefits of outright Geo arbitrage, but such limitation is not necessary. Geo diversification can also help to keep costs down.
Extreme Spending has Limits
Both full time all inclusive living and full time cruise living define for me the upper end of what I would expect to spend during a normal year if I had unlimited funds. In a world where I had unlimited funds all I would ask is to travel as I please and perhaps have a one time expenditure on an expensive exotic old car to drive around. Beyond that my frugal mindset is so engrained I cannot picture what I would do with more money. This is probably a good thing, as it also limits my lifestyle inflation outside of retirement. After all, how could I spend more working than I could gallivanting around the world?
What would you do if you had tens of millions of dollars? Have you considered retiring to a cruise ship or all-inclusive? What is your definition of extreme spending?