Author Topic: Is there ever an excuse to break the rules and splurge?  (Read 11198 times)

phxguy23

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Is there ever an excuse to break the rules and splurge?
« on: December 14, 2014, 02:12:55 AM »
Hi all,

I've posted here before, and as I mentioned then, I'm not someone who generally wants for much. As things have been panning out, I'm well on my way to FI (if I'm not already there) at the ripe old age of 35.

I've had an interesting surprise arise, in that I received a substantial bonus I did not at all expect. (On the order of over $10K post-tax.)

There's a frugal side of me that says this is just like any other income, and hence should just go in the "pile." There's another part, though, that says that this is truly extra and as such deserves different treatment.

Have you been in a similar situation? Should I do something uncharacteristic and completely anti-Mustachian?

deborah

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #1 on: December 14, 2014, 02:24:57 AM »
When I had a house that needed renovating, I received a sum of money that I used to replace the front fence. I also invested another sum in something  bit different than my normal set of investments. But no, I have not done something completely unmustashian with extra money.

MikeBear

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #2 on: December 14, 2014, 02:27:19 AM »
Hi all,

I've posted here before, and as I mentioned then, I'm not someone who generally wants for much. As things have been panning out, I'm well on my way to FI (if I'm not already there) at the ripe old age of 35.

I've had an interesting surprise arise, in that I received a substantial bonus I did not at all expect. (On the order of over $10K post-tax.)

There's a frugal side of me that says this is just like any other income, and hence should just go in the "pile." There's another part, though, that says that this is truly extra and as such deserves different treatment.

Have you been in a similar situation? Should I do something uncharacteristic and completely anti-Mustachian?

If this is basically "found money", all your FI goals for the year are taken care of, and it won't "hurt" anything relating to them, why not treat yourself a little bit?

Nobody says you have to spend the whole amount, and if you don't "treat yourself" now and again, what's the point in living at all?

Go buy a toy or something, if you won't make you feel guilty!

NumberJohnny5

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #3 on: December 14, 2014, 03:41:34 AM »
There's a frugal side of me that says this is just like any other income, and hence should just go in the "pile." There's another part, though, that says that this is truly extra and as such deserves different treatment.

I never understood the idea of treating money differently based on where it came from. I kid you not, the cashier at McDonald's didn't care that the five $1 bills I gave her came from a hard day of stripping. All she cared about was the fact I owed $8.75, a sum which unfortunately was more than $5.

How long would it take you to save an extra $10k? I'll pull a number out of my...er...place I store $1 bills. Let's say it'd take you three months to save another $10k. If you didn't get this bonus, you'd have the same $10k in three months time. What would you spend it on? Why treat this $10k differently?

The way I look at it, you've accelerated your financial timeline by three months. Feel free to splurge on some vacation travel a few months early. Get your heat pump replaced before summer instead of during (might get some cheap quotes now that it's the off season). But if you're asking "Should I spend all my money on wild parties and illicit drugs?" the answer is...well I hesitate to say no...how about, spend no more than $1k on recreational substances*, and invite your friends over for a pot-luck party.

* For legal purposes, by "recreational substances" I of course mean substances you can use for recreational purposes, such as bubble solution.
« Last Edit: December 14, 2014, 12:14:28 PM by NumberJohnny5 »

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #4 on: December 14, 2014, 06:15:24 AM »
In your place, I would just ask myself whether I wanted to accelerate my FI date by the amount of time it would have taken me to accrue that windfall.  If the answer is yes, then stash the money.  If the amount of time that windfall would cut from your wait to reach FI doesn't really resonate with you, then act accordingly.

mak1277

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #5 on: December 14, 2014, 06:31:04 AM »
You are your own master, beholden to nobody. Unless you're looking for face punches to make you change your mind, just be a grownup and do what you think is right.

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #6 on: December 14, 2014, 07:25:41 AM »
This isn't a cult you will get kicked out of if you don't follow all the"requirements". Enjoy life.  But,  if it's a toy,  get a good deal on it and know you can get most of your money back.   I've had a Suzuki Hayabusa for $500 a year. Purchased for $7K , sold for $6k two years later.  Searay 185 that cost me $500 for a summer.   These were "frugal" splurges, IMHO.  ;)

Davids

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #7 on: December 14, 2014, 08:27:17 AM »
There is nothing wrong with splurging when it makes sense. Based on everything you have told I say go ahead and spend a part of that unexpected bonus. Perhaps there is a nice vacation you have always wanted to take...

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #8 on: December 14, 2014, 09:06:05 AM »
You mentioned your well on your way at 35 then keep doing what your doing and to that point its like dieting , if you don't allow yourself a cheat day you probably wont keep the weight off. Not sure if thats a good analogy or not BUT hell yea reward yourself once in awhile ....and its better with money you didn't know you were getting. Again as long as your keeping your other plan intact!

arebelspy

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #9 on: December 14, 2014, 10:07:15 AM »
You mentioned your well on your way at 35 then keep doing what your doing and to that point its like dieting , if you don't allow yourself a cheat day you probably wont keep the weight off. Not sure if thats a good analogy or not BUT hell yea reward yourself once in awhile ....and its better with money you didn't know you were getting. Again as long as your keeping your other plan intact!

"Cheat days" are for people who are trying to make a change without the right mindset.  That's really hard to do.

Get your priorities and motivations in line and you won't feel the need to cheat on a diet, splurge spending money, etc.

I agree with NumberJohnny5; there is no difference in where income comes from.

That being said, all of the above - my post, and the other replies - are completely irrelevant, IMO, because you're asking a nonsensical question.

"Is there ever an excuse to break the rules and splurge?"

What you are missing is that there are no rules.
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iamadummy

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #10 on: December 14, 2014, 12:05:00 PM »
If you can afford it, then go for it.  But eventually, an MMM link will be referenced

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #11 on: December 14, 2014, 01:17:26 PM »
"Excuse" ... "Rules" ... Look for your answer in your question.

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #12 on: December 14, 2014, 01:20:48 PM »
Ok. So you buy $240 worth of pudding with your windfall. Then what? You're not seriously considering buying another $9.760 worth of pudding, are you?

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #13 on: December 14, 2014, 02:12:28 PM »
I wouldn't blow 10K just because I can...

However, if you have been thinking of a purchase/vacation/whatever for some time now but were putting it off b/c it didn't gibe w/your FI goals...well then sure...go for it.

Shit man, I sold a rental property last year, and on closing day the bank handed me a check for $200K. My FI goals were all in place at that point, but I didn't go out and blow it just because I could.

According to my calculations, that 10K invested today @ 7% return will be worth  ~$14,000 in five years & likely doubled to $20K in 10 years.

mustachianteacher

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #14 on: December 14, 2014, 03:14:52 PM »
With an unexpected windfall, I usually treat myself to something small, and then just save the rest. "Treat" doesn't necessarily mean "spend," though. Last year, my mom sent me some money she had received from my grandfather's estate, and I treated myself to paying off my student loan 5 months ahead of schedule. Not having that payment every month was great! That being said, I have also been known to treat myself to a nice sweater or something like that. Whether it's the student loan or the sweater, they're things I would have done eventually anyway; the treat was being able to do them unexpectedly early.

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #15 on: December 14, 2014, 03:23:49 PM »
Money's money. I wouldn't consider it differently than other income

frugalecon

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #16 on: December 14, 2014, 03:55:44 PM »
The cool thing about this game is that you get to set your own rules. I bought a $50 bottle of Scotch yesterday, and I didn't bat an eye. Some on this forum would probably excommunicate me for doing so, but some would probably enjoy dropping by for a wee dram. (I won't crack it open until we have a really good snowstorm, in all likelihood.)

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #17 on: December 14, 2014, 04:20:22 PM »
The beauty of not living paycheck to paycheck is you can treat yourself whenever you want, not just when you have extra money.  Because you always have extra money. 

Every dollar that you get should be going towards maximizing your lifetime happiness.  I agree with others that if you want to do something different because your cash flow is different that there is probably something off in your current way of allocating money.

You say that you're either FI or nearly there.  I may be misreading you, but it sounds like FI isn't a big deal goal for you.  I would take some time to decide what you really want from money; this might help you make rational spending choices.

Calvawt

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #18 on: December 14, 2014, 05:09:46 PM »
Allocate some to both savings and fun money.  Just use most of it for savings!  You could also fund a project you have been meaning to do or pay off any lingering debts.


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southern granny

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #19 on: December 14, 2014, 07:55:10 PM »
Apparently my excuse is Christmas.  At least it only comes once a year.

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #20 on: December 14, 2014, 08:01:26 PM »
Well now I'm just curious about what you might want to splurge on.

Since you allude to already being at or near FI, it might be worth considering if this money could be invested differently, such as making improvements to your home that will bring the utility costs down, or some other thing that can reduce your expenses over the long term, like getting a more efficient car or a better bike or something.  That would feel like a splurge, but also have a long-term payout.

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #21 on: December 14, 2014, 08:55:32 PM »
The typical advice for non-mustachians is to use no more than 10% of an unexpected windfall to treat yourself.  That's bad advice.

How would you feel if you had received an unexpected raise at work, worth an equivalent annual amount?  Would you increase your expenses in response to your new income?  Because that's all your'e doing by "treating" yourself, you're choosing to spend more rather than save more.

I think there's something about sudden influxes of cash that triggers a poor person's spending impulses.  Like if you've not yet mastered your money, then every payday is an excuse to take the whole family out for dinner because you already "know" you'll be broke-as-hell before next payday rolls around anyway, so why not live it up now while you can?  See the fallacy?

That sort of poverty mentality is hard to get over, but once you finally control your money, rather than letting it control you, you quickly realize that your spending and your income are no longer related.  You spend what you want, and you save everything else.  It's not like you go buy a new car because the stock market had a good month.  Your current windfall is no different.  Save it all, and if that's not totally obvious to you by now then you should probably reread every MMM post before making any other financial decisions.

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #22 on: December 14, 2014, 10:19:04 PM »
once you finally control your money, rather than letting it control you, you quickly realize that your spending and your income are no longer related.  You spend what you want, and you save everything else.

Bravo!

(With the caveat that this applies during your accumulation phase, and changes when you FIRE - assuming you FIRE'd as soon as you could, and didn't build up a bunch of excess.. then your income and spending will be related, because you will have saved 25x your expenses, and so your 4% income will = your expenses at that point.)
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Re: Is there ever an excuse to break the rules and splurge?
« Reply #23 on: December 14, 2014, 10:53:02 PM »
I'd say the answer is yes:  Break the rules and splurge if that's what it takes for you to stay frugal the rest of the time.

It's like this:  If you are on a diet, and you're at your best friend's wedding, and you decide you want to have the wedding cake and you'll really resent the diet if you don't, then have the wedding cake.  Then the moment you leave, you're back on the diet. It's better than leaving and stewing over what the diet is making you miss.

You sound like you want to splurge.  Ask yourself why, on what, and then give yourself a waiting period.   

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #24 on: December 15, 2014, 06:36:10 AM »
I agree with those who say that the money's source is unimportant in this context.  It's yours to do with what you choose.

It's fine to splurge on something once in a while.  If you can't, what's the point of working?  If you can't, you're essentially living your life completely for the future, which is just as big a mistake as never considering the future at all.

I'd suggest a couple "rules" for splurges:
- Don't make them too frequent.
- Don't splurge impulsively; wait a couple weeks (or longer) to be sure this is something you really want.
- Be sure your splurge is in keeping with your income and savings.
- Don't splurge at all if your hair is on fire.
- Don't lie to yourself to justify a splurge.   

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #25 on: December 15, 2014, 06:43:29 AM »
I thought that "the rule" was to spend mindfully and according to what you really value. So OP if you wish to spend money on that which you value, go for it.

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #26 on: December 15, 2014, 06:48:47 AM »
The cool thing about this game is that you get to set your own rules. I bought a $50 bottle of Scotch yesterday, and I didn't bat an eye. Some on this forum would probably excommunicate me for doing so, but some would probably enjoy dropping by for a wee dram. (I won't crack it open until we have a really good snowstorm, in all likelihood.)

What kind of Scotch? I'm partial to Balvenie 12 year Double Wood, myself, which is right in the same ballpark.

To the OP: No, never. In fact twenty lashes and a hair shirt for even asking the question! ;)

frugalecon

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #27 on: December 15, 2014, 07:05:02 AM »
The cool thing about this game is that you get to set your own rules. I bought a $50 bottle of Scotch yesterday, and I didn't bat an eye. Some on this forum would probably excommunicate me for doing so, but some would probably enjoy dropping by for a wee dram. (I won't crack it open until we have a really good snowstorm, in all likelihood.)

What kind of Scotch? I'm partial to Balvenie 12 year Double Wood, myself, which is right in the same ballpark.

To the OP: No, never. In fact twenty lashes and a hair shirt for even asking the question! ;)

I love the Double Wood also, but this is a Bruichladdich Port Charlotte Heavily Peated. Sometimes I'm in the mood for that style. I haven't tried this particular one, so it should be interesting.

tyd450

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #28 on: December 15, 2014, 09:23:25 AM »
I've been breaking the rules a bit lately.  I have been trying to buy some "forever" type wardrobe items which tend to be a little pricey.  We did really good this year with our savings goals so I think it is fine for us to splurge a bit. 

However, the items I am purchasing are used/new at a discount on Ebay so that makes me feel a little better.  And I am also selling a lot of my current items to declutter a bit and be a little more minimalistic

GuitarStv

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #29 on: December 15, 2014, 10:09:25 AM »
No.


My rule is to think things over first and then buy things I want and can afford for a fair price.  There is never a reason to break this rule.

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #30 on: December 15, 2014, 10:54:56 PM »
I think this is a very personal question..

I mean we have about $1.5M plus a paid off house and rental property that brings in about $15k annually. Our living expenses we think are about $30k.

so 1.5M * 0.04 = $60k plus $15 = $75k.

Currently the wife still works and I have taken a part time job.. together this year we'll make about $100k income without touching the stash

All that to say is I THINK we might be FI..:)

As a life long saver I'm afraid it would be very difficult indeed for me to simply blow $10k on a wild party.. even though the idea has a wild appeal..:).. Heck even though the little hobby job brings in some significant coin I still save it!

I am thinking of doing something crazy.. like buying a new Dodge Charger when we hit $2m in liquid assets.. just because why not?..:)

Frank

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #31 on: December 15, 2014, 11:19:57 PM »
If there is something you've been wanting, but putting off the purchase, then I would say that this is a good time to go for it.

If you don't have anything specific in mind, and would have to come up with a splurge, then maybe not.

That's how I would approach it, anyway - do what you want, but don't spend for the sake of spending.  YMMV.

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #32 on: December 15, 2014, 11:26:07 PM »
I thought that "the rule" was to spend mindfully and according to what you really value. So OP if you wish to spend money on that which you value, go for it.

+1

The fact is that we live in a place of such abundance that a middle class salary means you can still accumulate wealth while spending somewhat lavishly on things one values.  MMM himself admits a weakness for splurges on fine foods, tools, bikes, house and travel.

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #33 on: December 16, 2014, 02:39:02 PM »
There's a frugal side of me that says this is just like any other income, and hence should just go in the "pile." There's another part, though, that says that this is truly extra and as such deserves different treatment.

I never understood the idea of treating money differently based on where it came from. I kid you not, the cashier at McDonald's didn't care that the five $1 bills I gave her came from a hard day of stripping. All she cared about was the fact I owed $8.75, a sum which unfortunately was more than $5.

How long would it take you to save an extra $10k? I'll pull a number out of my...er...place I store $1 bills. Let's say it'd take you three months to save another $10k. If you didn't get this bonus, you'd have the same $10k in three months time. What would you spend it on? Why treat this $10k differently?

The way I look at it, you've accelerated your financial timeline by three months. Feel free to splurge on some vacation travel a few months early. Get your heat pump replaced before summer instead of during (might get some cheap quotes now that it's the off season). But if you're asking "Should I spend all my money on wild parties and illicit drugs?" the answer is...well I hesitate to say no...how about, spend no more than $1k on recreational substances*, and invite your friends over for a pot-luck party.

* For legal purposes, by "recreational substances" I of course mean substances you can use for recreational purposes, such as bubble solution.

Yes! It drives me crazy sometimes how many people do this. The worst is when people get a big fat tax refund - that's money they should have been paid last year if they got their tax withholdings right! And then they go out and spend it like it's "free money."

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #34 on: December 16, 2014, 07:50:52 PM »
Every dollar you have coming in, you invest.  You may invest it in food or shelter, you may invest it in a material item or experience that makes you happy, or you may invest it in the stock market.  Be sure that you understand where you're investing your money and that the investment's return, whether in happiness or dollars, is worth it to you. 

You don't need an excuse to break the rules because there are no rules.  If you have everything you need and want to get to FI faster, save it.  If you're willing to move FI incrementally farther away to get whatever splurge item you're thinking about, go for it.  If you're thinking about the journey to FI as strict adherence to rules, you'll likely cheat occasionally.  If you think about it as making decisions that maximize your happiness with an accurate understanding of short-term and long-term returns, you'll be more likely to make wise decisions and the worst case is that you'll find you made a sub-optimal decision.  If that happens, learn from it and make a better decision next time.

ShortInSeattle

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #35 on: December 21, 2014, 12:10:39 PM »
The typical advice for non-mustachians is to use no more than 10% of an unexpected windfall to treat yourself.  That's bad advice.

How would you feel if you had received an unexpected raise at work, worth an equivalent annual amount?  Would you increase your expenses in response to your new income?  Because that's all your'e doing by "treating" yourself, you're choosing to spend more rather than save more.

I think there's something about sudden influxes of cash that triggers a poor person's spending impulses.  Like if you've not yet mastered your money, then every payday is an excuse to take the whole family out for dinner because you already "know" you'll be broke-as-hell before next payday rolls around anyway, so why not live it up now while you can?  See the fallacy?

That sort of poverty mentality is hard to get over, but once you finally control your money, rather than letting it control you, you quickly realize that your spending and your income are no longer related.  You spend what you want, and you save everything else.  It's not like you go buy a new car because the stock market had a good month.  Your current windfall is no different.  Save it all, and if that's not totally obvious to you by now then you should probably reread every MMM post before making any other financial decisions.

As someone who has advocated (in the past) a "little splurge" when getting a bonus, I think this is a wiser way of thinking about it. Thanks! Besides, at a certain point the splurges seem unnecessary. When you already have what you need, spending just to spend... it's pointless.

Cheers.



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Re: Is there ever an excuse to break the rules and splurge?
« Reply #36 on: December 21, 2014, 12:14:22 PM »
I guess it all depends on your definition of a "splurge".  I can't really think of anything that's really expensive that I really want.  If I was going to splurge, I might buy a new bicycle with more gears than my cheapo Walmart 7-speed, but, honestly, my bicycle is just fine for my needs, so I don't even know if I'd do that.  What is important to you?

stlbrah

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #37 on: December 21, 2014, 12:15:09 PM »
there are a lot of things you can do w/ 10k to where you can enjoy it and still have a lot left over


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Re: Is there ever an excuse to break the rules and splurge?
« Reply #38 on: December 21, 2014, 01:01:15 PM »
I always set aside a little fun money from windfalls. It has been a huge help to me because otherwise I've been known to blow through windfalls without noticing it. I'm glad I adopted this policy before I ever got anything over $1k! I got a windfall of about $10k this year and because I let myself have a little fun and buy something on one of my Pintrest boards the rest of that money is still sitting snug and cozy in investments.

AlanStache

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Re: Is there ever an excuse to break the rules and splurge?
« Reply #39 on: December 21, 2014, 07:59:32 PM »
Agree with the others that there are no rules (or spoons), the challenge is getting to live that.  Once you have a given level of savings a windfall is nothing special to be looked at differently.  Would you sell 10k of stock to go splurge?  Dollars are dollars.  Little Green Employees are Little Green Employees.

Quote
once you finally control your money, rather than letting it control you, you quickly realize that your spending and your income are no longer related.  You spend what you want, and you save everything else.
+1

The trick is getting past the mindset of having to spend money whenever you get it.  Or just thinking you can easily replace the money with the next paycheck-all you have to do is wait two weeks.  This mind set gets you no where.  Seems like you are past the worst of it.