Originally posted by E36M3
It is tough to manage money when you didn't have to earn it.. it is literally death by a thousand cuts.
Even take the 27 million scenario:
Most people with financial competence would throw it into a revenue generating scenario and live off of the fruits of the capital. 100k/month should be fine for most people to live off of, assuming they are disciplined. It is hard to understand, but as soon as it becomes available, most people's lifestyles adjust to spend what is available (I've seen it quite a few times personally).
What happens, unfortunately, is that someone who is not financially sophisticated and/or disciplined starts to eat away at the principle. Once you buy three or four houses, a private jet and a yacht, your principle is already down to 10 million. Maintenance on this lifestyle soon balloons to 200k a month, and you end up each month with less principle, and pretty soon you are selling off assets to keep up with your burn rate. Blow out a couple cars and a divorce, and your principle disappears pretty quick.
Its an extreme example, but it happens all the time, both to lottery winners and others who have acquired a great deal of wealth quickly and without the proper education/discipline.. trustafarians (people who inherit a great deal of wealth), lottery winners and people who hit it big early on in business all often fall into this category.
Perfectly said. This is your textbook pro-football/basketball player story as well. Gets his first signing bonus, buys houses and cars for every relative, and before he knows it, 90% of every cheque is used to cashflow shit like that.
George likes his Kung Pao spicy!