Larger net worth vs smaller expenses

[doneby35]

Curious as to where people stand, if it matters at all. I would probably go with $1,000,000 net worth & $40,000 annual expenses since there might be more room to cut on expenses if need be. But then again, that requires more years of your life in the workplace.

[Dave1442397]

I prefer a higher net worth, assuming that the money is compounding and working for you.

Our expenses are running at around $125k per year (with a kid in college) but we still have a 35% (of gross) savings rate, and our net worth is going up nicely.

[mistymoney]

Curious as to where people stand, if it matters at all. I would probably go with $1,000,000 net worth & $40,000 annual expenses since there might be more room to cut on expenses if need be. But then again, that requires more years of your life in the workplace.

I don't think your options are really getting to the point.

1M/40k
1.5M/60k
2M/80k
3M/120k

250k is so little money these days, and keeping expenses super low would be a hardship at least at some points in the future.

I really don't even know what kind of life 10k can buy you. That's my property tax bill. :P

Find a cute stray you really fall for - forget it! no way you could even consider a little mouth to feed. No flexibility whatsoever.

[Telecaster]

I can't swing $10,000 in spending.  I'd rather work. 

[GilesMM]

D. Neither.

[solon]

I don't understand the question. Obviously $1M is better than $250k.

[doneby35]

Completely understand that 10k spending is not feasible for the majority of people. Just wanted to see if prefer would prefer working less if they had the option of spending less vs working more to spend a little more. The numbers were just random and based on the 4% rule, but maybe 1mil net worth & 40k expenses vs 2mil net worth & 80k expenses would’ve been more reasonable.

[Tasse]

Even if we assume that the listed expenses are magically possible for you, the higher numbers suggest more wiggle room. Cutting from $40k to $35k (a 3.5% WR) in a pinch sounds more feasible than cutting from $10k to $8.75k, even though the latter is a smaller reduction in dollars. Similarly, cutting spending from $80k to $70k sounds a bit more doable. More wiggle room = better safety net.

[Laura33]

Just wanted to see if prefer would prefer working less if they had the option of spending less vs working more to spend a little more.

I am FatFIRE for sure.  Reasons:

1.  I don't hate my job -- in fact, am SWAMI and have been for years.  And when I was younger I was ambitious and wanted to Do Things.  So all that time I was building my 'stache, I actively did not want to quit.  And by the time I started to get tired of the grind, I was basically already FI.

2.  I grew up poor and have certain things I will never do again, ever.  Like clean my own house (I do also have allergies, and dusting/vacuuming will set me off for two days, but really, I hire someone because I want to and I can).  Given that my job doesn't suck, there's no reason not to work a bit longer to pay for those things.

3.  I am determined never to be poor again, so a very large safety net is a necessity for me to be able to relax.  The value I'd get from bare-bones FIRE isn't worth the anxiety it would entail (particularly given the whole "don't hate my job" thing).  My plan has always been to keep mandatory expenses well below what my income can "afford," so when the shit hits the fan, I have lots of room to cut. 

4.  I am so fucking spoiled it's ridiculous.  DH is a spendypants with zero interest in FIRE, and I never saw the point of quitting my job while he was still working, because our post-retirement dreams involve lots of travel.  And it turns out I like some of the nice things that dual-income gets us.  Like a historic house that is bigger than we need, expensive to run, and way too impractical.  I don't care, I love it, and I can afford it, so I'm gonna keep it.  ;-)

[Morning Glory]

It depends on a lot of factors like family size, location,  rent vs own, and social safety net. 40k might be exteme overkill in some areas for a single person with a paid off house in an area with good public infrastructure who is expecting social security to kick in in 10 years, but nowhere near enough for renters with multiple dependents in a high cost city in a state that hasn't expanded Medicaid.

[SweatingInAR]

1M/40k
1.5M/60k
2M/80k
3M/120k

Agreed! This would be a more interesting poll. It would also be interesting to see a correlation between how close you are to FIRE and how much that target moves. 4 years ago I thought that $1M was a good target, and now I'm closer to $2M and only planning to downshift a little bit at work in 2025.

I think the $250k/$10k only makes sense for geo-arbitrage to some LCOL country if you have no reason to visit a HCOL country by air travel for the rest of your life. A single inter-continental trip via air travel could blow $2k in travel expenses.

[Paper Chaser]

Timeline would matter to me. If I'm planning a 60 year retirement, then I want more flexibility (and earning power) provided by the larger stash. If I'm planning a 10 year retirement, I probably have a much better idea of what my expenses might be, and there's less time for unexpected expenses that would negatively impact my plans to occur.

[Kwill]

It's an interesting thought exercise. Could you find a way to just FIRE at your current number instead of waiting until a number that could support your actual spending? Maybe through geo-arbitrage as someone suggested or maybe by going off somewhere remote to live off the land or maybe by camping in a car. Probably whatever lifestyle you could come up with at $10,000 per year wouldn't be very nice, but there are people in the world who survive on that.

[doneby35]

It's an interesting thought exercise. Could you find a way to just FIRE at your current number instead of waiting until a number that could support your actual spending? Maybe through geo-arbitrage as someone suggested or maybe by going off somewhere remote to live off the land or maybe by camping in a car. Probably whatever lifestyle you could come up with at $10,000 per year wouldn't be very nice, but there are people in the world who survive on that.

Doesn’t the early retirement extreme blogger live on 10k or below? Challenging of course, but this option if available would mean you’ll need much less time to satisfy the 4% rule criteria. As others have mentioned though it could’ve been much realistic with 1m/40k vs 2m/80k…

[spartana]

1M/40k
1.5M/60k
2M/80k
3M/120k

Agreed! This would be a more interesting poll. It would also be interesting to see a correlation between how close you are to FIRE and how much that target moves. 4 years ago I thought that $1M was a good target, and now I'm closer to $2M and only planning to downshift a little bit at work in 2025.

I think the $250k/$10k only makes sense for geo-arbitrage to some LCOL country if you have no reason to visit a HCOL country by air travel for the rest of your life. A single inter-continental trip via air travel could blow $2k in travel expenses.

Not really as it all depends on how well you are set up before you FIRE and how low your "non-discretionary" expenses are.

When I FIREed I had a paid off house that had very low expenses - prop tax, insurance, utilities, etc - most big upgradeds were pre-FIRE and I could most things myself, low cost hobbies, no debt, no kids or other dependants, low car insurance and reg fees,  mostly could walk or bike everywhere, no income taxes, and free/low cost medical. So my "non-discretionary" basic expenses including food were around $6000/year. Just having that with the ability to do whatever non-expensive things I wanted everyday made for a nice life.

Of course I had more money so could spend more on "fun stuff" like travel etc beyond the approx $4k I would have left if I lived on $10k. But still wasn't living in a cardboard box under a bridge in some 3rd world country and often didn't spend much more than that $6k - $10k.

I FIREd fairly young (also single) and somewhat lean but with plans to sell my (coastal Calif) house at some point to go from lean to chubby FIRE. While I wouldn't FIRE with ONLY $250k I could see FIREing with $250k with either a higher total NW you c9uld tap if ever needed or wanted, or  future money that would pad the stash in the future.  I basicly did that and now am more in the "has a million and lives on $10k" club. Well maybe $15k because of hedonistic adaptation ;-)

[Zikoris]

I think single vs couple/family is key here. As a couple we pretty much bottom out at about 24K/year spending for living comfortably (but without overseas travel) - we spent that for a few years during Covid when we were banned from travelling. Our normal spending is in the ballpark of 30K. Getting down to 10K/person would involve fairly major lifestyle changes, though I can definitely see what the cuts would be to get there. Though increasing our spending to 80K (assuming we're talking about expenses/person) would also be a drastic change and total upheaval, probably much more dramatic.

[spartana]

I think single vs couple/family is key here. As a couple we pretty much bottom out at about 24K/year spending for living comfortably (but without overseas travel) - we spent that for a few years during Covid when we were banned from travelling. Our normal spending is in the ballpark of 30K. Getting down to 10K/person would involve fairly major lifestyle changes, though I can definitely see what the cuts would be to get there. Though increasing our spending to 80K (assuming we're talking about expenses/person) would also be a drastic change and total upheaval, probably much more dramatic.

The single (living alone) verses couple thing can go both ways. Single pays $2000/month to rent a one bedroom apt (or a mortgage on a one bedroom condo) where as a couple can split that saving 50% on housing costs as individuals. Same with most other needed shared things. So DINK-FIREees ftw!

But on the other hand you're often at the spending whim of your partner who may have a lot higher expenses then you would alone which could impact your own annual expenses in a negative way. But more likely in a positive way. When BF sold his house and moved in with me in my place both of our expenses dropped a lot just due to splitting most things. So my hypothetical $10k annual expenses and his hypothetical $10k expenses both would drop by about a third. Of course we spend more but hypothetically a couple could live on less of their individual stash than a single person living alone. Until the divorce/breakup that is ;-).

ETA: I was assuming the OP was asking per person but if so does that kean a couple would need $500k at $20k annual expenses or $2 million at $80k annual expenses? Those numbers are pretty different from a $10k or $40k spend.

[bluecollarmusician]

ETA: I was assuming the OP was asking per person but if so does that kean a couple would need $500k at $20k annual expenses or $2 million at $80k annual expenses? Those numbers are pretty different from a $10k or $40k spend.

Agree this is an often unstated "assumption" even in reporting about the difference between individual vs. household spending.

Also, based on comments feel like I am on a different planet here these days.  Thanks for keeping it real @spartana

Probably whatever lifestyle you could come up with at $10,000 per year wouldn't be very nice, but there are people in the world who survive on that.

Hey @Kwill on the one hand, I don't disagree that there are many people who may live on 10k per year not by choice or design who might wish for a different life, but I think it's a faulty assumption that someone doing that doesn't have a "nice" life.  There is enormous inefficiency built into modern American life.  The default premise of the blog this forum is attached to is that you can live the same (or better) quality of life by optimizing your spending.  For many years, the default spending here (lower other places) was 25k/household of 2 adults one child- not wildly off the 10k/individual mark.  This was living a lifestyle indistinguishable from the "typical" modern household.
Just to say- it requires a change in mindset, but as @spartana astutely points out there are plenty of people doing it who are living great lives.

I think the $250k/$10k only makes sense for geo-arbitrage to some LCOL country if you have no reason to visit a HCOL country by air travel for the rest of your life. A single inter-continental trip via air travel could blow $2k in travel expenses.

There are plenty of places within the CONUS with very low cost of living- when we lived in middle GA our costs were on par with living in many of the commonly cited places for LCOL RE. 

Even if we assume that the listed expenses are magically possible for you, the higher numbers suggest more wiggle room. Cutting from $40k to $35k (a 3.5% WR) in a pinch sounds more feasible than cutting from $10k to $8.75k, even though the latter is a smaller reduction in dollars. Similarly, cutting spending from $80k to $70k sounds a bit more doable. More wiggle room = better safety net.

This may be true, @Tass but an alternative view is that someone who is only spending 10k by choice obviously understands and has a better comprehension of handling yields and flows, i.e. money isn't the most important thing in their life to solve problems.  The "curse" of money is that when it is the only tool you have for addressing issues/problems that arise it is much more painful.  What I mean, if you only have a hammer (money) then you try to solve every problem with the hammer, even if a different tool is more efficient/better.  Living on less requires development of other "tools" or another set of living "skills"- which you might have underdeveloped if you have " a whole lotta money."

[Kwill]

Hey @Kwill on the one hand, I don't disagree that there are many people who may live on 10k per year not by choice or design who might wish for a different life, but I think it's a faulty assumption that someone doing that doesn't have a "nice" life.  There is enormous inefficiency built into modern American life.  The default premise of the blog this forum is attached to is that you can live the same (or better) quality of life by optimizing your spending.  For many years, the default spending here (lower other places) was 25k/household of 2 adults one child- not wildly off the 10k/individual mark.  This was living a lifestyle indistinguishable from the "typical" modern household.
Just to say- it requires a change in mindset, but as @spartana astutely points out there are plenty of people doing it who are living great lives.

Thank you for bringing this up. I was assuming that the $250,000 / $10,000 per year included everything, but if it's $10,000 plus a paid-off home, then that is a bit easier to imagine in the context of the US today. You might want to factor in some inflation since the blog started. $25,000 today is less than it was in 2012 or so. I don't have a house, and my apartment lease ends at the end of August. If I could reduce my spending to about $12,000 per year, I could FIRE in September, but assuming I wanted to maintain health insurance and car insurance, that would leave less than $500 per month for food and shelter. . . . I have a hard time imagining that working out well in the US, but I suppose it's possible.

[GuitarStv]

Higher net worth.  The more you spend the easier it is to pare back if stuff goes wrong - the safety net is just much bigger.

[Laura33]

This may be true, @Tass but an alternative view is that someone who is only spending 10k by choice obviously understands and has a better comprehension of handling yields and flows, i.e. money isn't the most important thing in their life to solve problems.  The "curse" of money is that when it is the only tool you have for addressing issues/problems that arise it is much more painful.  What I mean, if you only have a hammer (money) then you try to solve every problem with the hammer, even if a different tool is more efficient/better.  Living on less requires development of other "tools" or another set of living "skills"- which you might have underdeveloped if you have " a whole lotta money."

This is true.  OTOH, if you own your home and you need a new roof, the shingles are going to cost the same regardless of whether you're living on $10K/yr or $100K.  If you're living on $10K, you can save a lot of money by doing the labor yourself, but the raw materials will cost the same (or more, if you don't get a contractor discount).  And even if the raw materials are only $2K, that's a huge chunk of the budget if you're the $10K/yr guy, but an "oh well" if you're the $100K/yr guy.

I lived on a very tight budget for a lot of years and absolutely had that ingrained "figure out yourself how to Macgyver a solution" mindset.  I truly had no idea how much less stressful it was to have a big pot of money around until I actually had one.  Knowing I can solve a problem by throwing money at it is a giant weight off my shoulders, even when I do not choose to solve my problem in that manner. 

Of course, it's also easy to get super-lazy and start relying on your money to solve all your problems for you (I've admittedly gone too far in this direction).  I think the key is to find that balance point where you still do most things yourself so you maintain your habits/competence/confidence, but also know that you can hire out stuff when you need to.  Like, I have zero desire whatsoever to send either myself or my DH up onto our 45-degree pitched roof, you know?  Seems like the potential downsides of that outweigh the few thousand dollars we'd save in labor costs.

[spartana]

This may be true, @Tass but an alternative view is that someone who is only spending 10k by choice obviously understands and has a better comprehension of handling yields and flows, i.e. money isn't the most important thing in their life to solve problems.  The "curse" of money is that when it is the only tool you have for addressing issues/problems that arise it is much more painful.  What I mean, if you only have a hammer (money) then you try to solve every problem with the hammer, even if a different tool is more efficient/better.  Living on less requires development of other "tools" or another set of living "skills"- which you might have underdeveloped if you have " a whole lotta money."

This is true.  OTOH, if you own your home and you need a new roof, the shingles are going to cost the same regardless of whether you're living on $10K/yr or $100K.  If you're living on $10K, you can save a lot of money by doing the labor yourself, but the raw materials will cost the same (or more, if you don't get a contractor discount).  And even if the raw materials are only $2K, that's a huge chunk of the budget if you're the $10K/yr guy, but an "oh well" if you're the $100K/yr guy.

I lived on a very tight budget for a lot of years and absolutely had that ingrained "figure out yourself how to Macgyver a solution" mindset.  I truly had no idea how much less stressful it was to have a big pot of money around until I actually had one.  Knowing I can solve a problem by throwing money at it is a giant weight off my shoulders, even when I do not choose to solve my problem in that manner. 

Of course, it's also easy to get super-lazy and start relying on your money to solve all your problems for you (I've admittedly gone too far in this direction).  I think the key is to find that balance point where you still do most things yourself so you maintain your habits/competence/confidence, but also know that you can hire out stuff when you need to.  Like, I have zero desire whatsoever to send either myself or my DH up onto our 45-degree pitched roof, you know?  Seems like the potential downsides of that outweigh the few thousand dollars we'd save in labor costs.

I think that's where a lot of the lean FIRE crowd turn into the temporary  barista FIRE crowd. Going back to work for a couple of months will often times cover those occasional unexpected costs.

So I guess in that case the question they have to ask themselves is am I willing to work longer so I can save to cover all future "maybe" expenses or do I FIRE now and deal with the maybe expenses when (and if) they ever arrive?  But then if the "maybe" expense is a medical issue that means you can't work then you're likely SOL. That's why I'd never FIRE ONLY on $250k investment and nothing else. Way to risky for me even if I could happily live on $10k a year. I need back ups for my back ups because Im a scardy cat.

[bluecollarmusician]

  Knowing I can solve a problem by throwing money at it is a giant weight off my shoulders, even when I do not choose to solve my problem in that manner. 

Hi, @Laura33 - I understand what you are saying, but in our hypothetical example, our 10k year spender is not broke and spending 10k a year to barely get by- he has a 250k in investible assets.  This person can absolutely "throw money around" to solve a problem. 

The ability to handle lumpy spending is well handled by this. Because you don't replace your roof every year- but every 20-30 years.  2k worth of shingles amortized over 30 years is different to a 20% increase in budget permanently.

The more you spend the easier it is to pare back if stuff goes wrong - the safety net is just much bigger.

Hi @GuitarStv  I actually find this to be be counterintuitively untrue:  The "more you spend" the more you expect money solve "all your problems." It actually makes it very difficult to pare back: expensive house, expensive car, expensive hobbies all explain how friends I have who make many multiples of what I do from earned have less in investments and can't even begin to understand how to "pare" back and spend less.  If they could, the would have instant wealth.  It's the same reason we so many broke athletes and other high earners.  Lots of money, but unable to pare back easily when stuff goes wrong.

[ assuming I wanted to maintain health insurance and car insurance, that would leave less than $500 per month for food and shelter. . . . I have a hard time imagining that working out well in the US, but I suppose it's possible.

Agree, on that amount of money it would be a challenge. Most solutions at this level of spend would eliminate care costs mostly all together. It would double your budget for other stuff.

The Health insurance dilemma is a tough one, I wish I had a better answer.  Although at very low income levels, there are cheap options available- but that is a different topic.

I think the bottom line answer, is that a very low level spend for most people would require a different mindset- and overcoming that idea that all who choose a low spend are living "not very nice lives."  @spartana has put that to rest very well.

Also- cost of housing (like household size) is also one that gets glossed over/skipped over and is definitely a salient/critical point in determining spend level. 10k a year and a paid for house vs. without is a big difference.  Def makes @Zikoris BA in their HCOL city.

[spartana]

^^^ Well you know I don't actually spend any money lol! Not true but my annual basic expenses and even my discretionary expenses are so low - especially since living with someone - they are not even worth tracking or budgeting for. And the fact that people spend huge sums of money to vacation where I live and to do what I do daily  is pretty wild.  But getting into the housing market when it was at the bottom of the crash, and the ability to pay cash, was key to being able to live on less in my case. That and not really being on the normal consumer bandwagon.

[bluecollarmusician]

^^^ Well you know I don't actually spend any money lol! Not true but my annual basic expenses and even my discretionary expenses are so low - especially since living with someone - they are not even worth tracking or budgeting for. And the fact that people spend huge sums of money to vacation where I live and to do what I do daily is pretty is pretty wild.

A life lived well! :-) You were the first person I thought I of when the comment was made about low spending=not nice life.

Once money is removed as the proxy for value, it's a whole different ballgame!

[spartana]

^^^ Well you know I don't actually spend any money lol! Not true but my annual basic expenses and even my discretionary expenses are so low - especially since living with someone - they are not even worth tracking or budgeting for. And the fact that people spend huge sums of money to vacation where I live and to do what I do daily is pretty is pretty wild.

A life lived well! :-) You were the first person I thought I of when the comment was made about low spending=not nice life.

Once money is removed as the proxy for value, it's a whole different ballgame!

I think many people wouldn't enjoy my lifestyle (or I theirs) simply because of personal choice and interests rather then money. I'm just lucky that my interests align more with things that don't cost much so it's easier to take money out of the equation and never feel deprived or that you're not living your life to the fullest. I just seem to lack any desire for more luxury things and activities. Although I don't have a problem paying extra for things that matter to me.

I'd be fun to see a poll where everyone disregarded their basic expenses like housing and medical, and just listed what they'd spend in discretionary expenses if they were single, childless, zero debt, and starting without anything. What would be their FI number and their post-FIRE spending look like.

[doneby35]

^^^ Well you know I don't actually spend any money lol! Not true but my annual basic expenses and even my discretionary expenses are so low - especially since living with someone - they are not even worth tracking or budgeting for. And the fact that people spend huge sums of money to vacation where I live and to do what I do daily is pretty is pretty wild.

A life lived well! :-) You were the first person I thought I of when the comment was made about low spending=not nice life.

Once money is removed as the proxy for value, it's a whole different ballgame!

I think many people wouldn't enjoy my lifestyle (or I theirs) simply because of personal choice and interests rather then money. I'm just lucky that my interests align more with things that don't cost much so it's easier to take money out of the equation and never feel deprived or that you're not living your life to the fullest. I just seem to lack any desire for more luxury things and activities. Although I don't have a problem paying extra for things that matter to me.

I'd be fun to see a poll where everyone disregarded their basic expenses like housing and medical, and just listed what they'd spend in discretionary expenses if they were single, childless, zero debt, and starting without anything. What would be their FI number and their post-FIRE spending look like.

You and I might be in the same boat. It seems that anything that my wife and I actually value doing has no cost associated to it, financially speaking. We currently spend about 25k/year for the necessities, including rent! And rent alone is 15k/year so if there was a paid off house, 10k/year would be possible for us. I still made it to 1mil though, just to be safe!

[Metalcat]

Completely understand that 10k spending is not feasible for the majority of people. Just wanted to see if prefer would prefer working less if they had the option of spending less vs working more to spend a little more. The numbers were just random and based on the 4% rule, but maybe 1mil net worth & 40k expenses vs 2mil net worth & 80k expenses would’ve been more reasonable.

This is all relative though.

Would I rather working less than what? More net worth than what??

Who is setting the baseline to which I'm comparing things?

It's a meaningless question without a sense of what more or less even refer to.

[doneby35]

Completely understand that 10k spending is not feasible for the majority of people. Just wanted to see if prefer would prefer working less if they had the option of spending less vs working more to spend a little more. The numbers were just random and based on the 4% rule, but maybe 1mil net worth & 40k expenses vs 2mil net worth & 80k expenses would’ve been more reasonable.

This is all relative though.

Would I rather working less than what? More net worth than what??

Who is setting the baseline to which I'm comparing things?

It's a meaningless question without a sense of what more or less even refer to.

Not sure I understand your question. You would need less time working to get to 250k vs 1mil, so the advantage of choosing 250k net worth while having 10k annual expenses instead of 1mil net worth and 40k annual expenses would be much less time to FI.

[Metalcat]

Completely understand that 10k spending is not feasible for the majority of people. Just wanted to see if prefer would prefer working less if they had the option of spending less vs working more to spend a little more. The numbers were just random and based on the 4% rule, but maybe 1mil net worth & 40k expenses vs 2mil net worth & 80k expenses would’ve been more reasonable.

This is all relative though.

Would I rather working less than what? More net worth than what??

Who is setting the baseline to which I'm comparing things?

It's a meaningless question without a sense of what more or less even refer to.

Not sure I understand your question. You would need less time working to get to 250k vs 1mil, so the advantage of choosing 250k net worth while having 10k annual expenses instead of 1mil net worth and 40k annual expenses would be much less time to FI.

Okay, now I'm confused.

At first you seemed to be asking if people would literally prefer 250K or 1M, and virtually everyone will prefer 1M. 250K is incredibly high risk to retire on indefinitely.

Then you seemed to say that it was more of a conceptual question, in that you're asking if people would rather have less and work less or have more and work more.

That's what I'm saying is entirely relative.

I don't think anyone here will answer that they would rather retire on 250K, I've never, ever, ever seen an FI target anywhere near that low. So setting the number that low doesn't in any way get at the meaning of your question of whether people would rather work less and retire on less. Because "less" has to be relative to a realistic FI number for anyone to answer reasonably for the lower number.

If you compared, say, 1M to 2.5M on the other hand, that would produce a decent spread of responses from the folks here.

This is not an extreme frugality community. Most folks here are pretty high earning, many making more than 250K annually.

[doneby35]

Completely understand that 10k spending is not feasible for the majority of people. Just wanted to see if prefer would prefer working less if they had the option of spending less vs working more to spend a little more. The numbers were just random and based on the 4% rule, but maybe 1mil net worth & 40k expenses vs 2mil net worth & 80k expenses would’ve been more reasonable.

This is all relative though.

Would I rather working less than what? More net worth than what??

Who is setting the baseline to which I'm comparing things?

It's a meaningless question without a sense of what more or less even refer to.

Not sure I understand your question. You would need less time working to get to 250k vs 1mil, so the advantage of choosing 250k net worth while having 10k annual expenses instead of 1mil net worth and 40k annual expenses would be much less time to FI.

Okay, now I'm confused.

At first you seemed to be asking if people would literally prefer 250K or 1M, and virtually everyone will prefer 1M. 250K is incredibly high risk to retire on indefinitely.

Then you seemed to say that it was more of a conceptual question, in that you're asking if people would rather have less and work less or have more and work more.

That's what I'm saying is entirely relative.

I don't think anyone here will answer that they would rather retire on 250K, I've never, ever, ever seen an FI target anywhere near that low. So setting the number that low doesn't in any way get at the meaning of your question of whether people would rather work less and retire on less. Because "less" has to be relative to a realistic FI number for anyone to answer reasonably for the lower number.

If you compared, say, 1M to 2.5M on the other hand, that would produce a decent spread of responses from the folks here.

This is not an extreme frugality community. Most folks here are pretty high earning, many making more than 250K annually.

Well now I’m confused too lol. Maybe I’m misunderstanding. All good!

[Metalcat]

Well now I’m confused too lol. Maybe I’m misunderstanding. All good!

You seem to be asking what seems like a simple question : would you rather save less and retire earlier or save more and retire later?

But this isn't actually a binary question unless you set a clear value as to what constitutes "more" and "less" money.

We all have our goals, and they are usually expressed in ranges, from our minimum amounts that we could live on to our "fat" amounts where we really couldn't see needing more money.

Then you also have the biggest factor, which is how much the person likes or dislikes working. There's little motivation to save less and stop working when you get paid really well to do work you enjoy. But if your job is killing you, cutting luxuries from your spending starts looking pretty appealing.

So I come back to the fact that you're not really asking an answerable question unless you actually provide some kind of binary.

Otherwise there's a number where I would rather keep working to make more money and there's a number where I wouldn't bother working anymore unless I absolutely loved my work and would do it for free.

Both of those numbers are well.abobe 250K, they're both above 1M, actually.

[spartana]

^^^ Well you know I don't actually spend any money lol! Not true but my annual basic expenses and even my discretionary expenses are so low - especially since living with someone - they are not even worth tracking or budgeting for. And the fact that people spend huge sums of money to vacation where I live and to do what I do daily is pretty is pretty wild.

A life lived well! :-) You were the first person I thought I of when the comment was made about low spending=not nice life.

Once money is removed as the proxy for value, it's a whole different ballgame!

I think many people wouldn't enjoy my lifestyle (or I theirs) simply because of personal choice and interests rather then money. I'm just lucky that my interests align more with things that don't cost much so it's easier to take money out of the equation and never feel deprived or that you're not living your life to the fullest. I just seem to lack any desire for more luxury things and activities. Although I don't have a problem paying extra for things that matter to me.

I'd be fun to see a poll where everyone disregarded their basic expenses like housing and medical, and just listed what they'd spend in discretionary expenses if they were single, childless, zero debt, and starting without anything. What would be their FI number and their post-FIRE spending look like.

You and I might be in the same boat. It seems that anything that my wife and I actually value doing has no cost associated to it, financially speaking. We currently spend about 25k/year for the necessities, including rent! And rent alone is 15k/year so if there was a paid off house, 10k/year would be possible for us. I still made it to 1mil though, just to be safe!

I originally FIREd on around $500k or less and a paid off house and found I averaged around $12k to $18k/year spending - most of it for fun stuff like travel. Locking in low cost housing was a huge benfit and I would not have been comfortable quitting my job forever if I didn't have that in place.

Although I'd definitely do the coast FIRE/FIREbattical thing - which was originally my plan - on $250k.   Take long breaks (several years) between employment to do other things and return to work eventually, rebuild the stash and rinse and repeat.  This is probably easier to do mentally if you're not a high income earner and use to having a big salary. I was had an average income so knew I could easily replace that if I needed to work again. Or if you didn't have some kind of future income source like SS or pension that you'll get when older.

[clarkfan1979]

Curious as to where people stand, if it matters at all. I would probably go with $1,000,000 net worth & $40,000 annual expenses since there might be more room to cut on expenses if need be. But then again, that requires more years of your life in the workplace.

I don't think your options are really getting to the point.

1M/40k
1.5M/60k
2M/80k
3M/120k

250k is so little money these days, and keeping expenses super low would be a hardship at least at some points in the future.

I really don't even know what kind of life 10k can buy you. That's my property tax bill. :P

Find a cute stray you really fall for - forget it! no way you could even consider a little mouth to feed. No flexibility whatsoever.

Overall, I agree with you in that I do not want to live on 10K/year. My fatfire number is probably 10K/month with no mortgage, which  is only $995/month with P&I. My property tax bill is current $2800/year.

However, I did want to mention that I have one friend that lives on less than 10K/year. He bought a piece of land for around 30K with cash on the Big Island of Hawaii around 2013. He grows his own fruits and vegetables and occasionally eats animals on the farm (mostly chickens). He built some shelter, but there is no permitted house yet. I think the property taxes are less than $500/year and he doesn't pay insurance. However, it's worth mentioning that he needs to work at least 20 hours/week to produce his own food. As a result, it's kind of like a job. It's a job that he enjoys, but it's still a job. 

[GuitarStv]

The more you spend the easier it is to pare back if stuff goes wrong - the safety net is just much bigger.

Hi @GuitarStv  I actually find this to be be counterintuitively untrue:  The "more you spend" the more you expect money solve "all your problems." It actually makes it very difficult to pare back: expensive house, expensive car, expensive hobbies all explain how friends I have who make many multiples of what I do from earned have less in investments and can't even begin to understand how to "pare" back and spend less.  If they could, the would have instant wealth.  It's the same reason we so many broke athletes and other high earners.  Lots of money, but unable to pare back easily when stuff goes wrong.

I've spent a little time in my life living within my means, but right on the edge of them - where an unforseen event could easily have dropped me into large amounts of debt.  I'm currently living with a job that provides a firehose of wealth - far, far more than I need or spend.  If I budget 40,000$ to live on in a year, that covers worst case expenses (needing a new roof on the house, having expensive unforseen medical bills, etc.) - I'd consider it a total failure of a budget if I actually spent the full amount.  Having more money sometimes does mean that you'll throw money at problems to solve them - like say you need a new roof on your house and hire a roofer rather than try to do it yourself with a rickety ladder - but it also means that you have a choice.  Being broke means you don't have that choice - you're climbing the damned ladder.

I don't find it terribly difficult to pare back.  We are currently extravagantly spending well under a quarter of our income.  There are no crazy expensive cars or hobbies.  No subscriptions, no cable, no cell phone.  We eat out in restaurants less than once a month.  When I bought my house it wasn't expensive (after nearly tripling in value, it's probably more than I'd buy if I was in the market now though).  At the end of the day, what you choose to do with your money is a reflection of you and your priorities - if this changes when you make more money then I feel that it shows you were never really as frugal as you really thought you were - just too broke to realize it.

[twinstudy]

Obviously the former, since it allows for more flexibility. Anyway, the numbers for the lower net worth scenario seem unrealistic to me - just the cost of health insurance would chew through a lot of that $10k, not to mention other fixed costs - for example council rates for our family home are a few thousand a year.

[spartana]

Curious as to where people stand, if it matters at all. I would probably go with $1,000,000 net worth & $40,000 annual expenses since there might be more room to cut on expenses if need be. But then again, that requires more years of your life in the workplace.

I don't think your options are really getting to the point.

1M/40k
1.5M/60k
2M/80k
3M/120k

250k is so little money these days, and keeping expenses super low would be a hardship at least at some points in the future.

I really don't even know what kind of life 10k can buy you. That's my property tax bill. :P

Find a cute stray you really fall for - forget it! no way you could even consider a little mouth to feed. No flexibility whatsoever.

Overall, I agree with you in that I do not want to live on 10K/year. My fatfire number is probably 10K/month with no mortgage, which  is only $995/month with P&I. My property tax bill is current $2800/year.

However, I did want to mention that I have one friend that lives on less than 10K/year. He bought a piece of land for around 30K with cash on the Big Island of Hawaii around 2013. He grows his own fruits and vegetables and occasionally eats animals on the farm (mostly chickens). He built some shelter, but there is no permitted house yet. I think the property taxes are less than $500/year and he doesn't pay insurance. However, it's worth mentioning that he needs to work at least 20 hours/week to produce his own food. As a result, it's kind of like a job. It's a job that he enjoys, but it's still a job.

Not to be too nosey but what would you spend $10k/ month on? Especially without a mortgage. How many dependents and their expenses (school, hobbies, etc) would that cover? I'd have a seriously hard time spending even a fraction of that month after month after month for years so am curious what others would spend on. Yes yes Im nosey ;-).

[twinstudy]

It depends if the $10k a month is pre-tax or after-tax; here in Australia, we have no way to withdraw tax-free savings till we hit 60, so before that age, any retirement income would be taxed as normal income, so $10k a month would be more like $7k a month after tax - that shrinks it considerably.

Then as others have said, land and property taxes come into play - My total land tax + council rates bill is over $10k a year so that's nearly $1k a month so after that I'd be left with $6k a month.

Then private health insurance, which is mandatory if you earn over $90k a year in Australia even if you don't wish to use it, is $0.5k a month for a family so that's now down to $5.5k a month and suddenly you're well into normal FIRE territory and you haven't spend a cent on anything you actually want to consume.

[spartana]

It depends if the $10k a month is pre-tax or after-tax; here in Australia, we have no way to withdraw tax-free savings till we hit 60, so before that age, any retirement income would be taxed as normal income, so $10k a month would be more like $7k a month after tax - that shrinks it considerably.

Then as others have said, land and property taxes come into play - My total land tax + council rates bill is over $10k a year so that's nearly $1k a month so after that I'd be left with $6k a month.

Then private health insurance, which is mandatory if you earn over $90k a year in Australia even if you don't wish to use it, is $0.5k a month for a family so that's now down to $5.5k a month and suddenly you're well into normal FIRE territory and you haven't spend a cent on anything you actually want to consume.

Much of that seems to be because of a higher income level (minus land tax possibly unless less expensive land/home would lower that). Not sure about AUS but in the US if one reduces their taxable FIRE income (say from the $90k/year you mentioned) to $40k or so that would lower income taxes and healthcare costs substantially. @Clarkfan said his mortgage was under $1000/month (or perhaps gone once he FIREs) and his property tax was approx$2500/year so I was curious why he wanted such a high amount once FIRE. I FIREd with a paid off "normal" 3 bedroom 2 bath house and my prop taxes were also around $2500ish/year so living on $10k/month seems very high to me and not worthwhile working years longer.

[bluecollarmusician]

I don't find it terribly difficult to pare back.  We are currently extravagantly spending well under a quarter of our income.  There are no crazy expensive cars or hobbies.  No subscriptions, no cable, no cell phone.  We eat out in restaurants less than once a month.  When I bought my house it wasn't expensive (after nearly tripling in value, it's probably more than I'd buy if I was in the market now though).  At the end of the day, what you choose to do with your money is a reflection of you and your priorities - if this changes when you make more money then I feel that it shows you were never really as frugal as you really thought you were - just too broke to realize it.

Thanks for the reply, @GuitarStv - Paring back would imply being able to spend less than you currently do- it sounds like you don't have much room to pare back at all.  I don't think I quite understand what you mean. 

You don't find it difficult to pare back, you spend extravagantly (but only 1/4 of your income), and yet it sounds like you have spending pretty well pared back already- (btw no cell phone!!?!? Impressive !!)  But that just leaves me feeling confused about what you mean. 

Btw, i think it's great to have a lot of income, and small expenses.  I think the people who get in trouble are the ones who SPEND a lot.
Also, for the record- someone with 1/4 million or more in the bank is definitely NOT broke!

:-)

[GuitarStv]

I don't find it terribly difficult to pare back.  We are currently extravagantly spending well under a quarter of our income.  There are no crazy expensive cars or hobbies.  No subscriptions, no cable, no cell phone.  We eat out in restaurants less than once a month.  When I bought my house it wasn't expensive (after nearly tripling in value, it's probably more than I'd buy if I was in the market now though).  At the end of the day, what you choose to do with your money is a reflection of you and your priorities - if this changes when you make more money then I feel that it shows you were never really as frugal as you really thought you were - just too broke to realize it.

Thanks for the reply, @GuitarStv - Paring back would imply being able to spend less than you currently do- it sounds like you don't have much room to pare back at all.  I don't think I quite understand what you mean. 

You don't find it difficult to pare back, you spend extravagantly (but only 1/4 of your income), and yet it sounds like you have spending pretty well pared back already- (btw no cell phone!!?!? Impressive !!)  But that just leaves me feeling confused about what you mean. 

Btw, i think it's great to have a lot of income, and small expenses.  I think the people who get in trouble are the ones who SPEND a lot.
Also, for the record- someone with 1/4 million or more in the bank is definitely NOT broke!

:-)

Our spending each year hasn't significantly changed from early on when we were making 40 grand to now making around 240 grand.  I have always considered my life to be pretty extravagant - all the books I can read from our public library, free television from our antenna, free music from spotify, great tasting home cooked meals every night.  We do spend money (sparingly) on things that are important to us - gym memberships for my son and me at a Jiu-Jitsu gym, baking/cake decorating stuff for my wife (who has been making selling stuff on the side for fun), a little gardening stuff, some dog toys and treats, sending our son to summer camps.  Nobody at our house feels deprived.

I don't really 'budget' by setting a certain amount to spend each year.  I look at the numbers and figure out what the minimum necessary to live is, then figure out all the discretionary costs (this is what can be easily pared back if necessary), then come up with an 'Oh shit, stuff has gone terribly wrong and we need cash' additional amount to that.  The sum total of all of those is what I'd consider our 'budget'.

If we're actually spending the full amount of the budget in a year, then we have terribly fucked up or something has gone catastrophically wrong.  I try to build layers upon layers of protection against financial problems.  In the initial question the only way that 10k can work is to have pared back everything 100% and have zero safety net - no 'oh shit' room.  The 40k option is the only choice that makes any kind of sense.

[simonsez]

The more you spend the easier it is to pare back if stuff goes wrong - the safety net is just much bigger.

Hi @GuitarStv  I actually find this to be be counterintuitively untrue:  The "more you spend" the more you expect money solve "all your problems." It actually makes it very difficult to pare back: expensive house, expensive car, expensive hobbies all explain how friends I have who make many multiples of what I do from earned have less in investments and can't even begin to understand how to "pare" back and spend less.  If they could, the would have instant wealth.  It's the same reason we so many broke athletes and other high earners.  Lots of money, but unable to pare back easily when stuff goes wrong.

I also feel like Steve was talking about the universe of Mustachians - a group that can pare back and has more fiscal control, on average, than the larger group of all human adults.  Then BCM is talking about a different set of adults, more "typical" consumer types.  Apples and oranges.  Maybe it's more difficult to pare back in general for adults once they get accustomed to a certain level of income/spending but this is the MMM forum.  Underneath the amazing trappings of modern society, you're still dealing with a group of people who can call on their various superpowers of austerity, determination, asceticism, discipline, stoicism, humility, troubleshooting, independence, hunting/foraging/gardening/homesteading, etc. at will if the situation calls for it.  If you need to cut back, you'll figure it out instead of burying your head in the sand and going into debt like a sucka would.

N=1.  In my own household we voluntarily went from 2 incomes to 1 to better accommodate some upcoming household growth.  It's still early but I feel like it's been pretty easy to cut back across the board while keeping my 401k, Roth IRA, and HSA the same.  And, we're still living like a king and queen with what we still spend.  If we made more money when we had two salaries, it would be even easier.  If I have to do something (like living on less), I just don't see an alternative and will make it work.  We could pare down much further if we really needed to given our location and networks and we've never exactly raked in the money being two public servants (one 4th grade educator, one federal statistician).  I'd imagine other Mustachians in our position would also find it easier, not harder, if they started from a higher income compared to what we used to make.

[Dicey]

The average Social Secruity income in the US is $22,368, as of March, 2024. People who live on "only" SS are generally considered "disadvantaged".

Why would anyone aspire to live on less than that? Mustachianism isn't about how little you can live on, with nothing for extras or emergencies, plus stress over every penny spent.

[Kwill]

I'd be curious to hear from the four people so far who have chosen "No difference." What are your thoughts?

Even though most people are picking the same answer in the poll, the topic has brought out many interesting opinions and stories. It's nice to hear from everyone.

[GuitarStv]

Underneath the amazing trappings of modern society, you're still dealing with a group of people who can call on their various superpowers of austerity, determination, asceticism, discipline, stoicism, humility, troubleshooting, independence, hunting/foraging/gardening/homesteading, etc. at will if the situation calls for it.

By the powers of austerity, determination, asceticism, discipline, stoicism, humility, troubleshooting, independence, and hunting/foraging/gardening/homesteading combined . . . I summon Captain Tightass!



He's here to shame Vitamix owners and piss off people who pay off their mortgage.

[Dicey]

I have a Vitamix and didn't pay off my mortgage. Can we still be friends? If it helps, I have more mortgages than Vitamixes.

[GuitarStv]

I have a Vitamix and didn't pay off my mortgage. Can we still be friends? If it helps, I have more mortgages than Vitamixes.

Only if you feel shame.  :P

[Dicey]

I have a Vitamix and didn't pay off my mortgage. Can we still be friends? If it helps, I have more mortgages than Vitamixes.

Only if you feel shame.  :P

Are you kidding? I didn't pay anywhere near $800 for it. I buy my clothes at thrift stores, I get my shoes on eBay. My car is 12 years old, and DH's is 22 years old; both were purchased with cash. If I see a damn Vitamix on sale at Costco for $299 (less rebate) and I cook every meal at home, I'm okay with that. Oh, and I waited until I was in the "and Beyond" Club to do so. Sorry, zero shame. 🫠

Maybe we'll have to settle for being friends of friends, lol.

[GuitarStv]

I have a Vitamix and didn't pay off my mortgage. Can we still be friends? If it helps, I have more mortgages than Vitamixes.

Only if you feel shame.  :P

Are you kidding? I didn't pay anywhere near $800 for it. I buy my clothes at thrift stores, I get my shoes on eBay. My car is 12 years old, and DH's is 22 years old; both were purchased with cash. If I see a damn Vitamix on sale at Costco for $299 (less rebate) and I cook every meal at home, I'm okay with that. Oh, and I waited until I was in the "and Beyond" Club to do so. Sorry, zero shame. 🫠

Maybe we'll have to settle for being friends of friends, lol.

But yes, in case it was unclear - I was totally kidding.  I've got a three and a half thousand dollar acoustic guitar and am not a working musician.  It's hard for me to seriously judge anyone for the occasional purchase that they've thought out and that brings them joy.

(FWIW - not paying off your mortgage I think puts you in the good books on this forum, it seems to usually work out to be the more financially savvy way to go for people in the US)

[Dicey]

When someone asks if they can be friends, you should take them up on on it. Especially if that person makes killer smoothies.