Every year, Forbes magazine publishes their Cost of Living Extremely Well Index. It lists the cost change from year to year to lead a truly affluent billionaire lifestyle.
Still, most people are never going to have to make the choice between buying a Gulfstream, Lear, or other personal jet. For most people, the cost of living extremely comfortably can be reached for far less.
I’m not a big fan of Advice Guru Tony Robbins. Something he said in a YouTube video, however, caught my attention. He asked the audience at a seminar what it would take to live the lifestyle of their dreams. Several people said they would have to be a billionaire to enjoy everything they thought they needed.
Robbins followed up with one of the participants and asked what, in particular, the man wanted. The answer was a private island and a personal jet. Robbins then asked if the man truly needed a private plane and island, or if he just wanted the use of those items.
Robbins’ point is a valid one. There is a big difference between having to own and maintain something and getting the use of it whenever it is wanted. In the case of a private aircraft, the purchase price could go into the millions of dollars. It gets more expensive from there because most people would have to hire a pilot and crew. The cost of renting or chartering a private jet by the hour is more along the lines of $2500 per hour. That is still a lot. Commercial airfare is much cheaper. On the other hand, if you wanted to fly to New York with 10 or so of your best friends, you could charter that flight for less than $10,000.
A private island comes with a price tag of several million dollars. It also comes with fairly heavy maintenance costs, as well as often overlooked staffing costs. An island anywhere in the world will fall under the jurisdiction of some nation that will expect taxes to be paid. There may be environmental regulations to contend with as well. You would probably have to generate your own electricity and water supply.
The list is almost endless.
On the other hand, the use of a private island complete with staff might cost a few thousand dollars to tens of thousands of dollars per day, but it does not require the financial responsibility of maintenance, payroll, or local laws and taxes. It lets you have the fun without the day-to-day responsibilities.
Robin suggested to the audience the cost of living well was often much less than people expected. I can tell you from nearly 30 years of doing bankruptcy work, one of the first things people want to get out from under are vacation properties. Usually the person has a rarely used timeshare or other property that comes with crushing costs each month and year.
Lots of people might like the idea of owning a house overlooking the sparkling white sands in a tropical paradise like Destin, Florida or somewhere in the Bahamas. The day-to-day realities of owning such a place may be much less glamorous.
Many years ago, I was interested in buying a beachfront property in Perdido Key, Florida. The realtor sent me a fax (I said this was many years ago.) listing available properties. I asked him what my prospects were for renting out the condo and recouping my costs. He assured me he could certainly rent out the location and guaranteed me occupancy for Memorial Day, July 4th, Labor Day and most weekends from May through September.
My excitement level began to rise. This looked like a good deal. He then told me about the cost of cleanup, maid service, maintenance, and the 20% he would take off the top of any rental. He let me know I was welcome to stay in my unit anytime he could not find a renter. He did, however, expect 20% any weekend or holiday he could get a booking and I was there, since it would cost him a potential commission.
After everything was included, the realtor told me the best I could expect was to come a little short of breaking even. Winter rentals were possible, he admitted, but they few and far between. Furniture would get broken. Walls would need to be repaired. Much like Tony Robbins, he asked whether I really wanted to be an owner or just have a nice place to stay whenever the mood struck.
I have been a renter ever since.
Written by Greg Gouner