Last night over a few drinks, my friends and I were discussing our entrepreneurial aspirations (What can we say, we want to help out in tough times by creating a few jobs).  The conversation quickly led to the question, how would you change your spending habits if you started a company that turned into a billion dollar business overnight.  We realized that none of us really knew simply because having that much money is almost unfathomable.  We decided it was time to break out the calculators and figure out what it means to be a billionaire.

Lets pretend for a minute that I just sold my new company and now I have one billion dollars.  I’m smart so I decide to invest my money in a very diverse portfolio.  We are going to assume that my average return is an entirely reasonable 10% (Warren Buffet’s Berkshire Hathaway averages 21%).  This means that I earn 100 million dollars per year on my investment.

Now its important to take taxes into consideration.  It’s impossible to be 100% accurate here because spending this much money in a year is almost impossible which means some of these earnings are likely to be reinvested which would mean less taxes.  Also, taxes can be different on the state and local level, and I don’t feel like doing more math than I have to.  Lets pretend that I don’t plan on reinvesting anything.  I definitely qualify for the highest tax bracket, which means that I pay $37,669,395 in federal taxes including medicare and social security.  Lets assume that local taxes bring my total tax bill up to $50,000,000 simply for the sake of having a nice round number.

In tough economic times, even billionaires have to be responsible so I decide to create a monthly budget.  My $50,000,000 income after taxes means that I can spend $4,166,666 per month.  Per day, my income is $138,888.  I earn $96 dollars every minute, even while I sleep.

So now that we have some figures to work with, lets answer the all important question.  How much stuff can I buy without even touching my principal?

First, lets talk about housing.  Lets pretend that I want to buy 10 apartments in major cities around the world.  They are nice and each costs an average of five million dollars.  That means if I take out a 30 year fixed rate mortgage at 6% my payment will be $300,000 a month.

I still have $3,866,666 a month to spend and no way to travel between my 10 houses so I decide to buy a $40,000,000 jet.  I have no idea how long one takes to pay off a jet, but lets assume 20 years, which equates to about another $300,000 a month.  We will assume operating costs are another 100,000 a month.  400 grand is a small price to pay for one of these.

Now that I can get to all of my houses, it’s time to decide what to drive.  I still have $3,466,666 to spend.  Looking at my budget, I decide that I want to see nice round numbers, so I decide to allocate 466,666 a month to car payments.  I personally like driving so I decide not to go with the limo service.  I decide its a good idea to have two vehicles at each of my ten places.  That leaves me 23,000 per month to spend on each car.  I decide that it’s reasonable to replace all of my cars every two years while also keeping the old ones for sentimental value.  These budget requirements allow each vehicle to cost up to $500,000.  Get used to this angle because its all you will see of me when I am driving my 200 mph Pagani Zonda.

I haven’t included the cost of a personal chef, tons of gadgets, a butler, what I plan to give to charity and all the other things I could buy that I can’t even think of, but I still have three million dollars a month in disposable income.

I’m going to stop now because all of this is crazy to think about.  This blog exists primarily to help small business owners and entrepreneurs, so I hope this slightly off topic post was motivating.  I also want to ask anybody who would feel guilty about wanting to have alot of money to stop and think for a minute.  Billionaires spend alot (which is good for the economy and creates jobs) and anything they don’t spend is invested, which helps the economy and creates jobs.  It’s easy to hate on Bill Gates but Microsoft pays the salaries of over 89,000 employees.  Wealth is a crazy thing isn’t it?