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How to Buy a Lifetime Subscription to Anything

One of the biggest comments I get is “I couldn’t live like you do, because I enjoy the little luxuries too much.”

Well, I do too. But money is something much more sacred to me than little luxuries. Money represents freedom. I want to make as much money as anyone, I just want to do completely different things with it once I get it.

I think about every dollar I earn or spend in terms of lifetime subscriptions. I would use Starbucks Lattes to ilustrate, but that horse has been beaten to death. Let’s use… getting a bagel instead.

Let’s say you really enjoy bagels, and want to get one every morning. Maybe you go every day, but you miss a few, so you go 25 times a month, and each bagel costs $4 after taxes.

  • Regular people would say $4 a day is not a big deal for a high earner.
  • Smarter people would say it’s $100 a month, which is kind of a lot.
  • Some might think that over 10 years it costs $12,000, which is also a lot.

A lifetime subscription for these bagels actually costs precisely $30,000.

What if your bagel place offered a lifetime subscription, or 25 bagels a month for life? What would you pay for that (assuming you’ll live there forever and the bagel place stays open, your tastes don’t change, etc.)? There is a rule, called the 4% rule, which states that any recurring expense requires invested assets such that only 4% of the initial invested amount will be withdrawn each year. Over the long haul, inflation will hurt you and investment returns will help you, and in most cases, you’ll be able to withdraw enough to cover the expense each year forever. There are critics of this method, but if you want to simply adjust it, just make it the 3% rule for conservatism, or whatever withdrawal rate you ultimately feel comfortable about.

Using the 4% rule, you need 1/.04 or 25 times any annual expense to cover it, forever. Since there are 12 months in a year, a lifetime subscription costs about 12 x 25 the monthly cost, or 300x. So a $100 a month bagel habit costs $30,000 today for a lifetime subscription.

Maybe you’re fine with that, but it’s going to cost you. In particular, let’s say you manage to invest $2000 a month after expenses, which is pretty good by today’s standards. Well, in that case, you will have to work 15 months extra before retirement ($30,000/$2000) to buy your lifetime bagel subscription.

A $4 a day expense can be bought out by gathering and investing $30,000.

Note that I’m in no way making a value judgement about your daily bagel. Maybe $30K is completely worth it, and you’d gladly work an extra 15 months before retirement to buy that subscription. So the question becomes not do you like bagels, or do you deserve bagels, but do you love a daily café bagel enough to work 1.25 years longer in your job than you otherwise would have to work to buy a lifetime subscription? Your numbers, of course will vary, but are easily calculated.

If you love café bagels and love your job, 15 months of working may not be a big sacrifice. For most people I know, however, they would do untoward, unsavory, possibly illegal things to have a free year of their life away from their job- things much less impactful than ditching a $4 a day habit! The standard substitute is straightforward bulk rolled oats from Costco, at cents per serving rather thandollars.

This rule can be extended to any recurring expense, such as:

  • Your power bill
  • Your cleaning lady
  • Your car payments
  • Netflix
  • Going to the movies
  • Eating out
  • YMCA/Crossfit/Yoga classes
  • Dog grooming

Try listing all your expected expenses, calculate the cost to “buy them out” as lifetime subscriptions. Total those subscription costs up. That’s how much you need to retire! Then, divide that by how much you save per year, and that’s how many years you need to work before you achieve financial independence.

In one direction, there is an unfortunate feedback loop which develops. “I work hard, so I deserve the little luxuries. By the time I’m 75 and retire, I’ll have plenty of money from my 10% savings rate to live a permavacation so I better do what I can to make these working years more palatable.”

In the other direction, there is a virtuous cycle which develops. “I work hard, so that I can save up money which represents freedom. I’ll be financially independent in the next decade, so I’ll have decades to learn how to appreciate all sorts of things, including becoming an expert bagel baker/boiler with the vast oceans of free time I’ll have if I decide to quit my 8-5 salaryjob. As recurring expenses are cut, less money is needed for retirement AND more money is invested each period, meaning less work is required before retirement… and so on.

Everything in this world can be bought as a lifetime subscription. But each lifetime subscription you buy increases time until retirement.

If you abandon a lot of things that ultimately prove irrelevant to you, your retirement date will be shockingly few years away.

Gene blogs semi-anonymously at www.solexist.com

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