We're saying "Spend all you want now! Enjoy yourself!" and then if you get a raise, don't bother spending more, because it won't make you happier; you're already spending to maximal enjoyment, so spending more just because you make more makes no sense.
So based on what you're saying, if someone made $25k a year but thrived on a life of spending $35k (meaning they derived maximum happiness from a $35k spend, no more and no less) then they should go into debt to do it.
I'm okay with that scenario. Sometimes that is the right thing to do. As you point out, hard and fast rules are usually absurd, and a hard and fast rule of "never go into debt" would be equally so.
But if you had a positive savings rate before your income rose, there's no reason why your spending should necessarily rise.
I think we're basically in agreement though. There's a difference in saying "Ideally your spending and income should be completely decoupled" (which I fully agree with) and "income has nothing to do with spending" as a steadfast rule.
Exactly.
This post in particular though was about "loosening up a bit as income level rises." In that scenario, I'd say, no, your income rising should be irrelevant for your spending.
If the topic was "I can't afford all I want to do, where do I make trade offs?" the discussion likely goes in a different direction. But advising that income and spending should ideally be decoupled seems like a reasonable response to the idea of "loosening up."
If any of you haven't read it yet, Jeremy's latest post at GoCurryCracker.com discusses the concept of "enough."
Once you have enough saved and invested to fund your desired lifestyle, the relationship between time and money is completely transformed. More money changes life very little at that point, while time and freedom change everything. Economic concepts like opportunity cost become little more than philosophical musings, with the same price tag.
Good link, thanks! Jeremy has a lot of good posts, and that one was fun. His ER costing him 5MM already is a big potential opportunity cost--but an irrelevant one when you have enough money, and not enough time.
For various reasons, I have pretty much a fixed point retirement in 5 and a bit years time. So in my spreadsheets, I have assumptions that my investments will grow at their historical rate, and that my core expenses will grow with inflation. That then leaves an additional sum of money that becomes available each year - growing a couple of percentage points above inflation. At the moment it goes into what we call our EXTRA fund - which goes on whatever.. furniture, travel, it might even go to pay for a holiday house - in my wildest dreams, it'll pay for me to at least take a suborbital trip into space.
And the question is - what else should I do with this EXTRA fund - bury it in a hole in the ground, leave it to my kids so they can spend it? Some of it will go to charity, some now and quite a lot when we pass away - but I certainly don't intend to use it all in that way.
That's a whole other discussion. For me, it's all going to charity. None to descendants (except in the case that one of them is unable to provide for themselves, in some sort of mentally handicapped situation or something like that, in which case a trust would be set up).
None of it will go to frivolous spending though, as that won't make me happier. I expect my income and stache to keep rising and rising. Great--that's more good I can do.
Everyone will have their own answers for what to do with the excess, but I'm doubtful that, for most, excess spending beyond their happiness level and what's in line with their values will add any extra utility to their lives.
Warren Buffet, for example, spends like a millionaire. Not a billionaire. Would spending an extra billion dollars a year on frivilous spending for himself make him any happier? I don't personally think so, and I'm pretty confident he doesn't either. So he gives it away, which I think is great.
