Can You Blow Through $100,000 Like A Rock Star?

Jacob over at I Heart Budgets blew through $100,000 before he was 21 like a rock star.  I remember having jack shit between the ages of 18-21 as I drove around in a beat up Toyota Corolla with one shiny driver’s side door because my friend had bashed into it by mistake.  That door was the only thing new on my beater with 160,000 miles, a broken muffler, and a wrongly calibrated gear box!

Despite my beater car and having only a couple of thousand dollars saved up from gifts and slave labor, I still had a ridiculously good time in college (don’t tell my parents)! It might sound ridiculous to spend $100,000 before the age of 21, but if you read Jacob’s post, you’ll see that he actually got a lot of value for his money, contrary to what it might seem!

I’d like to think that if I got a nice $100,000 inheritance at that age, I would have invested $95,000 of it in Yahoo and watch it become a 10 bagger before I sold out. With the $800,000 in after tax proceeds I would then use $500,000 to leverage up and buy two, $1,000,000, two bedroom, two bathroom condos in New York City which are now worth north of $2,500,000. I wouldn’t sell the condos despite the 150% return in 10 years because income producing assets is now KING in this low interest rate environment. Instead, I’d just collect rent so I can focus my efforts elsewhere.

Of course, hindsight is always 20-20 and obviously my scenario is a fantasy.  The real question Jacob’s post asks is, “Will you be able to resist not blowing yourself up if you received $100,000 at such a young age?”  I’d like to think that I would be disciplined, but I doubt it.

WHAT I WOULD HAVE BOUGHT WITH $100,000

* Fancy car.  At the age of 18, I was already infatuated with nice cars. The problem is, it takes a damn long time at $3.25 an hour to buy anything but a heap of junk! I would use $11,000 of the $100,000 to buy a sweet 1989 Mustang 5.0 GT.  I’d rumble the six year old car to college and go for joy rides every evening.

* Nice watch.  I’ve appreciated a nice watch since I was 8 years old interestingly enough. I loved the old black Casios.  The interest grew to the Seiko Kinetic watches by middle school.  In high school, I always longed from a Tag Heuer watch but could never afford the one I like for $1,500.  I’d buy that one for sure, and hopefully nothing more expensive.

* Retro Kicks.  I’m a shoe fanatic and love all the old Air Jordans and Andre Agassis. The shoes cost $120 at the time, so I could hardly ever afford to buy one new.  I bought hand me downs for 1/3rd the price from my wealthier friends!  I’d probably spend $500 and buy me the AJ5 and AJ6, and the hot lava Agassis.

* Tuition.  Tuition back then was amazingly cheap at only $2,890 a year!  If you take on General Fees, Room, and Board, the total comes out to around $10,000. Not bad at all!  Even my parents back in the late 90’s thought that was a good deal.  I’d use my remaining $87,000 to pay for all my expenses for the next four years.

* Seeing the world.  Back then, going on Eurotrips was all the rage.  With my remaining $40,000, I’d probably take two trips to Europe for a month each at a total cost of $5,000. I’d take another two trips to Asia for a similar amount of time for the same amount of money.  Nothing is more educational than seeing the world!

* Gift to my parents.  I would spend $5,000 and buy them a two week cruise anywhere in the world, airfare included.  Knowing them, they would probably encourage me to save my money and just thank me for the gesture, but I would insist.  I remember purposefully NOT going to a private college with a total annual cost of $28,000 a year because I felt really bad about the cost.  Besides, the state school I attended was one of my target schools.

* Invest.  I had very little concept of investing up until my junior year in college. There was no way I’d invest more than $5,000 in the market at the time because I didn’t know the first thing about the markets. I’d punt around, but keep the remaining $20,000 safe.

NOT MUCH MONEY LEFT!

In four short years I just blew through $80,000 of my $100,000 inheritance!  It’s evident the reason why I did is because I was a student with no real income.  So in that sense, spending $100,000 from the between the ages of 18-21 is really not that big of a deal.  With new income upon graduation, I’d have a $20,000 buffer to help get an apartment in NYC and be on my way.

Regards,

Sam

Sam started Financial Samurai in 2009 during the depths of the financial crisis as a way to make sense of chaos. After 13 years working on Wall Street, Sam decided to retire in 2012 to utilize everything he learned in business school to focus on online entrepreneurship.

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Comments

  1. says

    If I had $100,000 at the age of 18 I’d buy a sweet truck and pick up a hot chick. Oh wait…I did that. You what’s funny, Sam, before I picked up my sweet rig my first car was a 1981 mustang with the Shelby Cobra body kit. Unfortunately it was the V6 model so it didn’t rumble it was kind of a weird whine. I wish it was a 5.0.
    I like your plan, especially the retro kicks. Thanks for making me feel a little better about blowing through so much cash. ;)

  2. says

    I’ve been very frugal with my money from young age. It’s partly due to my upbringing in a very conservative family, but also due to my natural instinct for simplicity since very young age. But again, I didn’t have 100K at that age anyways. If I have to guess, I’d say that I’d have invested in real estate with 100K.

  3. says

    I never really had a desire to buy things. I still don’t. I would have probably purchased a Lincoln Navigator, threw a $1000 CD or Microdisk sound system in it, and took a few trips around Europe. I lived in Naples, Italy at that time. Oh, there was this one girl that I was still madly in love with. I probably would have rescued her from off the streets of Detroit and brought her to Naples with me.

  4. Darwin's Money says

    I could easily burn through $100K. I’d like to think we wouldn’t because we the discipline now to spend less than we make, but if there were $100K free can clear that I didn’t feel guilty about spending, there are some very seemingly reasonable expenses that we’ve had outstanding for some time:
    – Finish lanscaping the pool $5k
    – Shed I’ve been putting off $5k
    – New Windows we’ve been putting off $12K
    – New roof we’lll need within a few years $12K
    – New HVAC system since ours is 15 yrs old $12K
    and the list goes on. We could easily spend it on the house alone without seeming unreasonable.

    – Replace HVAC system which will go before too long $12K
    – Kitchen Floors we’ve been putting off $6K
    – New Car $25K
    – Nice family vacation in Hawaii or Europe $12K

  5. says

    This is a good example of why you should not give that much money to an 18 year old. I received a smaller inheritance and so did my wife when we were teenagers. We hung onto it. It became our down payment on our fir house and we used the other savings to fix up our second house. I recognized a long time ago that when you have a chunk of money you can make it grow or blow it easily. I would have invested it in real estate (income property) when I was young and more energetic. I did more with less many years ago. With home values and interest rates so low, I could make a killing.

  6. says

    I honestly don’t think I wanted that much from 18-21 other than to get the heck out of my small town. I’m sure I would have bought a car, but probably something like a Mitsubishi Eclipse. I went to a state school that was close to home because I received a scholarship. I might have gone further away if I’d had the money, maybe even to California. That really seemed like something when you grew up in Podunk, KY. Going around the world would have been such a foreign concept to me at that time. Maybe I’d have just stuck it all in the bank and gone down the same path anyway. Hard to say.

  7. says

    I’d tithe 15% first…then although I loved my neon because it was so little and easy to park, I’d probably upgrade to a nicer but used car (~$15k). I’d pay off my student loans ($30k) and if I got the money when I was 21, I would put the rest toward a fat down payment on a home for my husband-to-be and myself!

  8. says

    Before 21, I think I would have saved much of the money. Maybe $50k. But I would have splurged $40k on some great car, and $10 for a few nice vacations. Looking back, that’s what I think I would have done.

    Now, as I’m older, I would save the whole thing. All $100k. Locked away, not to see the light of day for decades :)

  9. Mike Hunt says

    I think you would have to be 21- 22. Then you could easily blow through this on a junket in Las Vegas… all in one trip… with the possibility of doubling up thrown in!

    -Mike

  10. says

    I was surprisingly practical at that age. I so would have spent the money to see the world. And tuition. I’d like to think I’d invest some of it, or at least set some aside for my then future children’s college. But who knows.

  11. Chan says

    Hi Sam! Tonight is my first time surfing through your blog. I actually came across this blog when I typed in Google, “what is considered upper class”, and lost story short, I read more of your postings and came upon this one! I am 19 and I actually just won a lawsuit so I am expecting a nice payout of about 140k after lawyers fees, etc. Now, I’ve grown up relatively lower-mid to mid-mid class. I am more interested in investing my money now, rather than spending it on nice things which can wait later. Advice?

    • says

      Best advice is to not do anything with the proceeds for at least 3 months. I fear you might go crazy with a sudden influx of money. Sit on it and contemplate. At your age, I’d do everythig possible to get your college degree and start life off without debt.

      Good Luck and welcome!

      • Chan says

        Instead of letting the money sit, I was thinking of putting it into Real Estate! Thanks for the advice, I’ll be sure to update you on how everything goes.

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