# What is the value of Fuck you Money?

I was thinking today about the concept of “Fuck You Money.” This is the value of dollars that you need as a minimum to be able to say “Fuck you” to anybody, or any situation and not sweat it.

It means you can live where you want, and do what you want without counting pennies.

Necessarily, the value of “fuck you money” will depend upon your apirations. A single man whose biggest desire is to be a beach bum, surfing, drinking beer, and eating chicken wings down in some secluded epat locale like Costa Rica will have a lower value of FYM than someone who wants to be a first class world traveller.

When I was young I simply desired a deep ocean yacht to sail around the world or whatever (though I don’t know how to sail) I did a back of the envelope calculation and decided arbitrarily I’d need 250k for the boat and another 250k for sundry expenses for the rest of my life.

This was naive.

So, clearly we need a median value for reasonable FYM. Single? Married? Want kids? Have kids want a divorce and an 18 year old Ukrainian model? Our Median value must encompass all of these things.

I’ve decided that a minimum value for FYM that encompasses all of these possibilities and anything else within reason is a sum of money which reasonably invested can provide 250k cash in hand per year after taxes with an annual adjustment for inflation.

We will need a secure investment. Somewhat arbitrarily I have chosen the American Balanced Fund:

http://www.americanfunds.com/funds/details.htm?fundGroupNumber=11&fundClassNumber=0

I see that it has been around since 1929 or so, has multiple managers for continuity, and averaged about 11% over its lifetime with a diversified portfolio.

Since I need certainty for FYM not probability I’m going to reduce that return to 8% for my expected performance. I am going to decide that taxes will reduce that return to 5%. I am going to decide that inflation will reduce that return to 2%, which is what I will be able to withdraw per annum in perpetuity.

But nobody lives forever! Fuck you. Maybe I will. If it runs out, than it’s not “Fuck You” money. It’s “Fuck me” money.

Of course, I won’t actually put all the money in one fund. I will use highly sophisticated arbitrage techiques, modern portfolio, and other economic tools to build an efficient portfolio on the capital market line and generally display due diligence and prudence. It’s just an example of the kind of return I can hopefully get.
This puts the value of “Fuck You Money” at precisely \$5,000,000 in today’s dollars.

That’s how much you need to cover all your bases and relax, because you’re gonna be just fine and everybody else can just fuck off.
Anybody disagree?

If all goes well with our investments and current employment, Hubby and I will have our FYM at age 55. Our standard is relatively comfortable: we want to be able to travel whenever and wherever we please, have a paid-off house and be able to keep me in books. (Which is no small sum in of itself!)

Hubby’s very eager for that day. If you asked him right now, he could tell you how many years, months and weeks until retirement. Me? I’ll probably keep doing what I’m doing, job wise, because I enjoy it, but I’ll be taking a lot of time off.

What sum do you calculate you will need?

It’s in the general vicinity of what you mentioned.

One of the computer geniuses in Neal Stephenson’s novel Cryptonomicon discovers that fuck-you money is “not a fixed constant, but rather a cell in a spreadsheet linked to any number of continually fluctuating economic indicators.” Make of that what you will.

A bit of coincidence here since I just read that passage today.

I can’t help but point out that in James Clavell’s Noble House, it’s said many times that “drop dead” money always costs more than it’s worth.

Great minds think alike.

It kind of inspired this thread. I read that too, and it got me thinking about what the value would be and what would go into it.

Wow! Scylla has independently come up with the same figure that I did via a completely arbitrary unscientific process that involved pulling numbers out of my rear.
Married with two kids - \$5 million (after taxes).

Myself, I’m looking at a figure of between \$4-5 million in diversified investments to retire. I’m HOPING I can sell my business in about 10 years for about that much again, but I have 401K, stocks and mutual funds that ought to get me there as well if the business thing falls through or doesn’t make what I hope.

I am basing that on an estimated anual return of between 6-8% (this is probably conservative as most of my investments are currently doing better than that…averaged over the last decade, which wasn’t the best). The sale of the business will give me enough liquid capital (in theory) to be able to purchase the various things my wife and I would like for our retirement (you know, well stocked bunker up in the mountains for when the world goes tits up, a few tanks, plenty of guns and ammo, self sufficient power supply, minions to do my bidding…stuff like that ), with a bit left over to plow back into our current portfolio of investments.

Our investments SHOULD be able to provide us with a nice anual ‘salary’ of between \$350-500k depending on how they do. I probably won’t take all that but plow 1/3 back into the portfolio…it will be our buffer for the possibility of inflation. If my wife and I can’t live on, say, \$250k/year then we are doing something wrong.

And at that point it will be time to do some travel (for fun instead of what I currently do), see the world and have some fun.

-XT

Isn’t this talk of ‘Fuck You’ money just a little undignified? I see the appeal of being thoroughly financially independent, but a part of me wants anyone whose ambition is to be able to tell everybody else to Fuck You, to retire/die lonely.

I forecast a two word riposte to my comments…

I did this exercise a coupla months ago. Being 27 and thinking about attempting to buy a house, and wondering where my career’s going and so forth, I do this every few months.

FWIW I came up with a figure of £1 million (~ \$1.7m) , where I’d be living off the returns from any half-way decent share index-tracking fund. (Yeah I’ve done a little stock market analysis, and maybe I could beat the market a little if I really worked it out carefully, but the tracker would be my first port of call.)

This figure is lower than the others people have come up with, because I am a modest-living antisocial quasi-hermit with no intention of getting married, having kids, or buying a yacht or even a car. Of course at only 27 it’s entirely possible I change my mind next week. But 1 mill is nice and round.

I have not run the figures lately, but the last time I did I was looking at 3.5 mill in US.

Did I read this wrong? If you withdraw 2% per year against \$5mil, you get \$100k. \$250k is 5% per year.

That said, I would be happy with \$250k/yr before taxes. I’m not the ostentatious type, that kind of money would do me just fine. My dream lottery win is the \$5,000/week for life. No worries about investments or savings or any of that crap, cause the money just keeps a comin’.

Dunno. Varies a lot depending on the number of people butchered in oil-producing countries.

I’m looking forward to it, actually. Never been a “people person.”

Do you currently earn 250K after taxes? :dubious: Look, what “fuck you” money is= how much you need to live on, which hopefully is a little less than what you are earning now (there are always job related expeses you won’t have) after blowing a bit to pay off the Credit cards. Thus, you can tell your boss to 'fuck you" and just sit home in your jammies playing video games, sucking Mountain Dew.

2% of \$5,000,000.= \$100,000 not \$250,000.

And, of course, withdrawing money from an investment fund is a silly way for a long term income. What you need is an Annuity. With an Annuity, you get a fixed check every month for the rest of your life. In fact, if you have a 401K plan, and you’re NOT yet 59+, one of the best ways of taking money out is to roll the 401K over into an Annuity. No penalties if done right.

Generally an Annuity (at around 50yo) will pay 5% monthly. In other words, a \$100,000 annuity will pay \$500/month. It’s usually taxable, but not FICA, just FIT. So, let’s say you now earn \$60,000 a year or \$5000 a month (which is more or less Cheesesteak’s desired “\$5000 a month for life”). To replace that, you’d need a fixed income of around \$4000/mo (no FICA or FUTA, less expenses). That’s \$800,000. So, “FUM” = \$800K + whatever you currently owe on credit cards. You needn’t worry about payng off the Mortgage, as I assume you can currently pay that.

Your equity in a house can be converted to a reverse mort, also, but you have to be older. However, for couples without kids, it’s something to think about.

But wait! There’s also the value of your tradition pensions and Social Security. Let’s skip SS for now, with all the arguments that entails. But you’d need to see how much you could collect now from your pension, or how much you will be able to collect, assuming your “FUM” is *really * your retirement savings goal. If we are being reasonably optimistic, and assuming even minimal Soc Sec and Pension, that “Retirement savings goal” might now be as little as \$400K.

My point is that “FUM” isn’t having enough cash to spend a dream life sailing the Carribean in a 50’ yacht, it is having enough income to quit your job and/or stop worrying about losing your job. Many of us live in fear of losing their job. With FUM, you no longer have that fear. If the boss calls you in, you no longer have a feeling of dread. Sure, maybe getting fired means that the yacht is no longer a possibilty- but maybe also you’ll find a bigger better job and buy that damn boat. FUM = “freedom from worry and care”.

Ah, fuck you.

I don’t want to stop doing the thing I do for money.

Yeah, a whole lot more money would be nice, but I still want to keep doing what I am doing. I took a fifty percent pay cut when I originally got the job I have now.

Fuck you is an attitude, not a price tag. If you can’t leave it all in a pile, then it’s a pile of chains and bars, and you are fettered. If you need to own stuff, then stuff owns you, and you will never in your life be free of the need for stuff.

The beach bum was right, all along. Useless to mankind, but right.

Tris

Actually what Cheesesteak said was \$5000 a week. (I can’t speak to what he meant, but that’s what he said. Cheesesteak, if you are female, I apologize in advance.) That would be \$260,000 a year, which is a bit different.

This is a story we learned in business school just to keep things in perspective (try to ignore the obvious cultural stereotyping) :

An American businessman was standing at the pier of a small coastal Mexican village when a small boat with just one fisherman docked. Inside the small boat were several large yellowfin tuna. The American complimented the Mexican on the quality of his fish.

“How long it took you to catch them?” The American asked.

“Only a little while.” The Mexican replied.

“Why don’t you stay out longer and catch more fish?” The American then asked.

“I have enough to support my family’s immediate needs.” The Mexican said.

“But,” The American then asked, “What do you do with the rest of your time?”

The Mexican fisherman said, “I sleep late, fish a little, play with my children, take a siesta with my wife, Maria, stroll into the village each evening where I sip wine and play guitar with my amigos, I have a full and busy life, senor.”

The American scoffed, “I am a Harvard MBA and could help you. You should spend more time fishing and with the proceeds you buy a bigger boat, and with the proceeds from the bigger boat you could buy several boats, eventually you would have a fleet of fishing boats.”

“Instead of selling your catch to a middleman you would sell directly to the consumers, eventually opening your own can factory. You would control the product, processing and distribution. You would need to leave this small coastal fishing village and move to Mexico City, then LA and eventually NYC where you will run your expanding enterprise.”

The Mexican fisherman asked, “But senor, how long will this all take?”

To which the American replied, “15-20 years.”

“But what then, senor?”

The American laughed and said, “That’s the best part. When the time is right you would announce an IPO (Initial Public Offering) and sell your company stock to the public and become very rich, you would make millions.”

“Millions, senor? Then what?”

The American said slowly, “Then you would retire. Move to a small coastal fishing village where you would sleep late, fish a little, play with your kids, take a siesta with your wife, stroll to the village in the evenings where you could sip wine and play your guitar with your amigos…”