Fri 29 Jun 2007
If you follow my blog you know I have a goal of having $100,000 in principal put away by the time I reach 30, I have also talked about how I would like to make $100,000 per year by the time I reach 30, I’m currently working out plans for other goals, such as when I should reach $1 million dollars and possibly how much money I need to retire early (in my 40s). This goal however is going to seem somewhat counterintuitive to those goals. In roughly 5 years time I want to have enough money put away so that I can build a house out in the country with a full court outdoor sportcourt basketball/volleyball/tennis/etc court.
(image from sport court of southern california)
I have always been a huge jock and sports have been a huge part of my life. I have one boy now, a girl on the way, and well hopefully plans to have a basketball team or more in the future
I know for some of you this goal may seem like frivolous spending and upwards of $40,000 in my early mid 30s for a basketball court probably isn’t what most people would call a smart financial decision. I mean do you realize how much $40,000 would be worth if it was invested and compounded for 30 years!?!? (Nearly $700,000 @ 10%, but we all know that 10% return is just a myth:-) More on inflation here)
Regardless life is all about balance. What good is all that money if you don’t get to spend it on things that you truly enjoy. I don’t know about you, but I think I will get much more enjoyment out something like this when I am in my 30s and my kids are well kids than I would when I am 65 years old and in need of a new hip and a couple new knees. So even if it costs me a half million dollars in the long-run I think it will be money well spent.
I don’t need to rationalize it, but if I were to here is how I would do it. I will already have well over $100,000 put away for retirement. I have never had and never will have any credit card debt. I drive cars like this, so essentially while a basketball court may seem extravagant to some people, buying a $30,000+ truck\SUV every 5 years does not. Just by driving cars like mine a lone I should be able to come out way head and I’ve already got the solid financial base built so that a major purchase like this will not derail me financially.
Anyway so what do you think? Am I nuts? As I get more and more of my financial saving goals on track and really have sort of put the retirement savings into cruise control I think it’s worth my while to put the same kind of effort into organizing and financing some of these fun goals. I also want to have enough cash stashed away each year so that my family and I can go on a “travel” vacation every year or so. All in all I think this will require me putting an additional $5,000 a year into a “fun” fund.
I know $5,000 x 5 years only equals about $25,000+ and my basketball court could possibly cost double that, but if we will be moving to the country – we will be building a new house so I figure I could borrow some additional capital (ala mortgage) if I needed to. I will probably have about $30-$50k in equity built up in my current house as well. I guess the idea isn’t to entirely save for this basketball court, but to get into the habit of putting away a significant amount of money for enjoyment now instead of entirely deferring it all for when I am retired or financially independent. As I mentioned above life is all about balance (if you haven’t please read this post).
So now to the nitty gritty – in 2008 I will start putting $400 /month into a family fun fund. I still plan on maxing out my and my wife’s Roth IRA’s and my 401k at work. Which means that’s about $34,000 a year I’ve got allocated away. Throwing another grand or two in there for the college savings plans and I’ve already earmarked nearly 50% of my pre-tax salary for the year. It will be a challenge but I’ve had the screws a lot tighter on our finances in the past and my career/income is really starting to take off so hopefully this goal will be easily attainable.
Next up – philanthropy