2 Mil in cash or 75% off everything for life?

In My Humble Opinion (IMHO)
#1

I’ve been tossing around this question at the office:

Would you rather have:

**a) 2 million dollars in cash, tax free, right now

OR

b) pay 25 cents on the dollar for everything (bills, purchases, etc) for the rest of your life?**

Some factors:

*If you choose option b, you can sell them for profit. The other 75% of cost is paid by some anonymous, imaginary source (so someone selling you a house would get all the $$, but only 25% would be charged you).
*Age
*Income

To me, this seems like an easy choice - but I am amazed how many people feel differently. Which would you rather have?

p.s. Feel free to ask me questions to shed more light on the hypothetical.

#2

I’ll take the 75% off everything from here on out … that would effectively put my salary well into six-figures, and I could live quite comfortably off of that, especially if I’m only being taxed for the “actual” salary and not the “buying power.” If I can buy things and sell them for profit, my effective salary goes even higher. Anything above and beyond what I need can be invested for the long haul.

Two million dollars, while nice, really isn’t all that much to live off of for the long-term.

#3

super_head got my feelings exactly. I can spend a hell of a lot more than $2 million over the course of my life.

#4

(B) seems like it would be the obvious choice unless the person is very old.

Plus, beers at happy hour for a buck? Sign me up.

#5

Tiburon, if you don’t mind me taking this a step further –

For those of you who choose B, what would the dollar amount in choice A have to be for you to change your mind? I’d have to think for a long while about that.

#6

I agree entirely with taking the second option. I believe that within a year, I could make the 2 million dollars. Which would I rather have - the gold egg or the goose that laid it? Door #2, please.

However, mouthbreather brings up a good point - what if we fiddle with the numbers a little?

How about this -

  1. 2 million or pay 50%?

  2. 2 million or pay 75%?

  3. X million or pay 25% What would X have to be for you to take it?

I waver already at paying 50% but would probably do it and make my full time job buying and selling for profit. I’d have to do some serious thinking about paying 75% for things.

As for #3, to get me to pass up paying 25% on things, I’d like, hmm…about 15-20 million.

Tibs.
p.s. There are people in my office around my age (I am 29) who want the 2 million - I think that is short sighted, at our age.

#7

I’d take the 2 million as I don’t spend a lot of money on big ticket items, and seldom buy anything new. In other words, for a good chunk of things I buy, I’m already paying 75% less than someone paid for it the first time. If I usually paid $50 for a pair of jeans, and found out I could get them for $12.50 then yes, I’d be excited, but I usually only pay $5 for a pair of jeans, and a savings of $3.75 is sorta “whoop-de-do.” I don’t buy most stuff at the grocery store until it’s on “Buy on get one free” sale, so I’m already getting 50% off there (damn liquor NEVER goes on sale that much, hahaha.) My major splurges are on Dopefests and eating out, and $2 million invested wisely should more than cover that. (And you cannot resell food or booze that you’ve bought at a discount and already eaten/drank.) Those of you planning to make a killing on buying and reselling things aren’t considering the massive hassle of doing so. I’d rather have the extra money and keep my life pretty much the same than have the opportunity to make more but change my life considerably to do so.

#8

“B” is the obvious choice.

Jesus, Mouthbreather! Where the hell do you drink? They are ripping you off, man!

#9
      • Well, you could buy anything for 25%, and probably easily sell it for 50% of its regular price, so the amount (for me) would have to exceed the principal required to generate interest equal to more than double my income. Two million dollars would probably generate more interest per year than double what I earn right now, so I’d take the two million and sit on my butt all day long. Ta heck with that “DC’s Used Goods” business. - DougC
#10

I think I’d take the 75% off. Then I’d go to town at the quarter stores.

#11

Is this one of them hypodermical questions?

#12

You know, I was thinking about something similar the other day. Up here in Canada, all the members of the “Treaty 8” first nations just received tax-free status due to a treaty signed in the late 19th century. I’d think that with either the 75% off everything or tax-free status, it would sure be nice and quite profitable to set up a business to take advantage of those benefits. With that, I was thinking about what sum of money per person might make the affected members reconsider – since it might be prudent for the government to offer one (although it probably wouldn’t be accepted) because, regardless of the revenue lost from that, there would be the huge administration costs.

Anyways, put me in the 75% off crowd. Since it can be used for business, the alternative would have to be really high. There still would be the slight problem of intial capital, but it wouldn’t be that hard to overcome with a few days on the stock market.

#13

The salient point here is that if you choose option b, you can re-sell the items. That means you can build up a nifty little business buying things and re-selling them.

If you weren’t allowed to re-sell them at a profit, then option a might be a better choice.

#14

Choice b would be great if I could resell at full value. I’d have the $2 million after only a few hours of day trading. I could then get out of paying most of my capital gains taxes by buying stuff, giving them to charities, then deducting the full value.

I’m thinking about this way too much, aren’t I?

#15
      • Yea, but there’s actual work involved in that, and I’ve got cartoons to watch.
  • Would it matter? If you resell it for half price, it lost half its worth, but if you buy it and keep it, you saved 75% of its worth. If you took the 75% off and invested it, how long would it take to reach two milion dollars? Would it be better for you not to sell stuff either way? - DougC
#16

In option B, would you be able pay $100,000 cash for a $400,000 house, then immediately sell the house $400,000?

If so, then consider this: Take the $400,000, pay off your $100,000 mortgage you used to get it, use the $300,000 to buy a $1.2 mill house. (remember, after this point, you are paying cash). Sell that house for $1.2 million, then buy a $4.8 million house. Sell that for $4.8, then buy a $19 mill house and quicly resell. Your only mortgage was the first one. Everything else was bought at %25 off using the cash you got in hand from th previous sale. After agency and lawyer fees, figure on having $17 million left over. This could take a year to do.

You then take that $17 million, divide by 80 which gives you $212,500. Find 20 people to work for you (I’m assuming that I can do this). Give them $212,000 for each house. (each of the 20 is doing this 4 times, so that’s 80 repitions of the exercise) Four times they each buy a $850,000 house, sell it right away for $850,000. Then they buy a $3.4 million house for $850,000 and sell it again for 3.4. Using the 3.4, they buy a $13.6 million house and sell it for the same. This could take a year. I’m a little drunk right now so maybe I’m missing something here but my calculations come to $1,088,000,000 in sales after two years.

Coming soon to an email near you “How to turn $212,000 into a billion dollars”

I have no idea what the rules are on capital gains from ahouse. I was told that as long as you apply the gain to a more expensive house you don’t have to pay taxes on it, but then for some reason the number $250,000 sticks out.

Anyway, it was fun…

#17

I’d definitely take the 75% off. Think about it, you could go into business acting as a middleman for other peoples purchases. If they purchase through you, they get 50% to 70% off anything they want to buy and you keep the difference. Everybody in the country (maybe the world) would want to purchase at least their big ticket items through you. Imagine getting a percentage of every auto purchase, every real estate transaction, all monthly rent, every phone bill, etc. etc. etc…

#18

The part about allowing you to sell stuff bought at discount for a profit takes away any real choice in this poll - anyone could make $2 million quickly if they could buy stuff at 25% it’s usual price. The question would be more interesting if you weren’t allowed to sell your purchases for a profit, I’d have to think more about it then…I would still have to work, just not as much. I could live on minimum wage, but most minimum wage jobs are less pleasant than the one I am working in now. If I continued to make what I do now I COULD afford a lot more, but I wouldn’t be millionaire-rich, just upper-class rich. If I lost my job there would be a chance I would have to give up a lot of the nice stuff I got used to having.

I think I would take the $2 million. If I invested it very conservatively (CDs, bonds, even savings accounts) I should still be able to get at least $100,000 a year without touching the principal. That would be somewhat less than what my effective income would be working with a 75% discount, but I wouldn’t have to work.

#19

Took the words right off my fingertips, Badtz.

#20

At 25%, the $2 million gives you a spending equivelant of only $10 million. Most people could spend that in 3 to 4 years easy.

The 25% would probably work out to over $100 million for life.