The Money Mustache Community
General Discussion => Welcome and General Discussion => Topic started by: 4tify on July 23, 2020, 09:50:02 AM
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I have a friend who is highly paid and has no problem spending lots of the money she earns. I can’t imagine spending what she does but it got me wondering about why not? If you’re making lots why not enjoy it? Is it still worth being frugal after a certain level of income?
If you were making, say $500k/yr, would you still save the same percentage of your salary or would you allow for lifestyle inflation? How would you think differently about money or not?
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Personally, I have everything I want, and I pretty much buy whatever I want, and for the most part I travel as much as I want (pre-Covid, that is).
If I made $500k a year, I would probably move into a slightly nicer house in a slightly nicer neighborhood. And maybe spend a little more when we traveled. But for the most part, my day to day life wouldn't be all that much different.
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Over the past ~decade, we've increased our HH income from $120k to close to $300k. Not spending any more, really, if you allow for some understandable increases due to two new people coming into existence during that time. We perhaps do spend a bit more on vacations overall, but our spending there is still pretty tame.
At this point, if we were making a substantial amount more, I'm not really sure, since our focus is truly on FIRE (we're hopefully in the home stretch). Earlier in the journey? I'd like to say no, but that's probably untrue.
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I have a friend who is highly paid and has no problem spending lots of the money she earns. I can’t imagine spending what she does but it got me wondering about why not? If you’re making lots why not enjoy it? Is it still worth being frugal after a certain level of income?
If you were making, say $500k/yr, would you still save the same percentage of your salary or would you allow for lifestyle inflation? How would you think differently about money or not?
Emphasis mine.
Your question confuses me. If I saved the same percentage of my salary, it would still allow for lifestyle inflation. That's what percentages do.
And yes- we have increased spending as we increased income. We save about 50% of our income. So we spend a hell of a lot more now that we are high earners than we did when our combined income was $40k.
I have many frugal habits. I also like international travel, scuba diving, photography, and wasting way too much money on nail polish. We are FI. I have no interest in RE.
But if your income increases and your spending does not, your percentage saved should be increasing, not staying the same.
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I’m sure at some income level I would spend more because I wouldn’t be shopping around for the lowest price for something I wanted.
For instance, I was in Williams Sonoma the other day and saw a nice cast iron Dutch oven, they wanted ~$300, that’s a little high for me, so I settled on a $50 lodge branded version.
At a high enough income level I think I would just buy the one in the store and not think about it. I’m not sure how high my income would have to be though.
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We used to make a lot and spent about the same as we do now that we're down to less than half of that income.
We live exactly the lifestyle we want to.
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Over the past ~decade, we've increased our HH income from $120k to close to $300k. Not spending any more, really, if you allow for some understandable increases due to two new people coming into existence during that time. We perhaps do spend a bit more on vacations overall, but our spending there is still pretty tame.
At this point, if we were making a substantial amount more, I'm not really sure, since our focus is truly on FIRE (we're hopefully in the home stretch). Earlier in the journey? I'd like to say no, but that's probably untrue.
Same.
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Our income has more than doubled over the last 10 years but our spending has only approximately increased with inflation. More income would change little.
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I would absolutely spend more!
I have an over-active security gland which is why we save so much, but I also have champagne tastes and would 100% indulge if I could feel safe and pampered.
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If I made 10x what I currently make I would definitely spend more. I wouldn't spend 10x what I currently spend or anything but it would influence a lot of my choices. I'd buy my favorite gin instead of the acceptable mid tier version. I'd pick pineapples over bananas when I shop for fruit, etc. I would also pay someone to mow and to clean the house once a month. I'd still be saving a great % of my income than currently and retire sooner.
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Over the last few years i spend right around 12% of my income and don't feel burdened in the least but this is due to the goal of saving for retirement. Once that goal is accomplished I might spend more, but then again I would probably have a tendency to work less--which of course is spending more in terms of capital (time) reallocation.
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If I hated my job, or even if I liked it but it involved really long hours or was unstable (could get fired), then not really because I would prefer to just pay off my mortgage and stuff my kids' college funds silly.
If I really liked the job and it was stable and the hours were reasonable and I just happened to make a killing (rare but it happens), then probably.
If I blew past my FIRE number to the point where the end result was going to be having a ton left over, then I would start giving money away BUT I would also start spending more liberally. Why not? I would try to watch my carbon footprint in my expanded spending though.
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Short answer:
Yes. Yes I would.
Longer answer with some explanation:
The extra amount we spend would depend on where we stand in relation to our FI goal. If, today, I suddenly went from making $150,000/year to $500,000/year I think that I would simply feed the taxable brokerage account until FI. From there I would continue accumulating cash and then pay off the mortgage (gasp!!!). Then, if I was still inclined to work, I would accumulate enough cash to purchase either the place in the White Mountains or on the coast of Maine that I've been lusting after. Of course at this point our cost of living would increase having the 2nd home, so we'd either sell our current residence and make the vacation home the primary residence (quitting the high paying job along the way...) or continue to grow the stach 'til it's big enough to account for the increased cost of living.
PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
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Well, looking at our historical evidence in the Ver household, once we got out of the really low incomes (where we could afford for DH to eat named brand Cheerios) every time we had an increase in income we increase our investments to shorten our working years. Every time. Every-single-time. Usually by more than the increase in income too. Usually up to the next five or tens place percent of income. It was ridiculous, but that is what we did. We kept our dollar amount mostly the same, or even dropped it a little as we got more efficient or paid of student loans, but kept hiking up the investing. I really should complain to the person in charge of the budget, but I'm that person and I don't take criticism well :D.
So if we were unFIRED and starting over making 500k/yr, we would be done in like two or three years instead of 14.
I could say we would increase our spending, and maybe we would, but based on our history, that might not be the case. We have an aversion to things that have high reoccurring costs, and that keeps overall costs pretty low.
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Short answer:
Yes. Yes I would.
Longer answer with some explanation:
The extra amount we spend would depend on where we stand in relation to our FI goal. If, today, I suddenly went from making $150,000/year to $500,000/year I think that I would simply feed the taxable brokerage account until FI. From there I would continue accumulating cash and then pay off the mortgage (gasp!!!). Then, if I was still inclined to work, I would accumulate enough cash to purchase either the place in the White Mountains or on the coast of Maine that I've been lusting after. Of course at this point our cost of living would increase having the 2nd home, so we'd either sell our current residence and make the vacation home the primary residence (quitting the high paying job along the way...) or continue to grow the stach 'til it's big enough to account for the increased cost of living.
PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
There are specialized job in tech that pay this much, particularly if you have significant experience & leadership to go with it. Of course, many of those jobs are in the bay area, which is $$$$
To answer the bigger question, we moved to a VHCOL (bay area) for two very lucrative jobs. We are now paying: state income tax, crazy property tax, and crazy bay area housing prices. So, we certainly spend more than we did when we lived in Seattle. But, we're making more than double, so the math plays out. We didn't double our spending, and our saving rate has gone up substantially.
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Money is a tool to achieve goals, so it depends entirely on what your goals are. The difference when you earn more money is that goals are less often in conflict. For example, we want to raise our kids in a house with a yard, and we also want to retire early. Because of our high incomes, we will be able to do both.
That said, above a certain threshold, 100% of our increases in income have gone into investments. Everyone defines "enough" for themselves, but once you are there, the happiness return to additional spending is just not there.
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I would want to increase my generosity.
I would like to buy more ethically sourced clothing and food. I do a lot of second hand shopping to make that happen now, and I would want to continue that regardless of income, but I would also increase my budget in the “must buy new” areas.
Might spend more on travel as well. We’ve done a lot of cheap short term rentals. I wouldn’t want to go luxury, but I’m ready for some not quite as cheap lodging.
As another poster suggested, I’d work less. Maybe not right away. We still have a lot of saving we need to do, but I’d look forward to working less, having more safety net, and providing more safety net to others as well.
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Short answer:
Yes. Yes I would.
Longer answer with some explanation:
The extra amount we spend would depend on where we stand in relation to our FI goal. If, today, I suddenly went from making $150,000/year to $500,000/year I think that I would simply feed the taxable brokerage account until FI. From there I would continue accumulating cash and then pay off the mortgage (gasp!!!). Then, if I was still inclined to work, I would accumulate enough cash to purchase either the place in the White Mountains or on the coast of Maine that I've been lusting after. Of course at this point our cost of living would increase having the 2nd home, so we'd either sell our current residence and make the vacation home the primary residence (quitting the high paying job along the way...) or continue to grow the stach 'til it's big enough to account for the increased cost of living.
PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
There are specialized job in tech that pay this much, particularly if you have significant experience & leadership to go with it. Of course, many of those jobs are in the bay area, which is $$$$
To answer the bigger question, we moved to a VHCOL (bay area) for two very lucrative jobs. We are now paying: state income tax, crazy property tax, and crazy bay area housing prices. So, we certainly spend more than we did when we lived in Seattle. But, we're making more than double, so the math plays out. We didn't double our spending, and our saving rate has gone up substantially.
Ah yes, I guess that makes sense. I'm afraid that I've pretty much hit the pinnacle in medical sales while still keeping a decent quality of life in Connecticut. Moving to San Fran is not an option and I don't have specialized tech experience.
That thought experiment was fun...guess I gotta just keep up with my original plan!
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PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
I work in commercial real estate and there are a ton of people who make that. I probably talk to someone that makes that at some point every day. Attorneys, brokers, developers, high-level accountants, contractors, insurance, etc. (We are talking big insurance policies.)
I do not though. The much trickier part, at least as an attorney, is finding a job that pays $500k that is not soul-suckingly awful. They exist, and if I get one I'll be over the moon, but I'll pick my current non-awful normal job over one of those awful ones. (See, e.g., that I have the time to post this at 3:15pm on a Thursday and that I'll be shutting down my computer shortly after 5pm).
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PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
I work in commercial real estate and there are a ton of people who make that. I probably talk to someone that makes that at some point every day. Attorneys, brokers, developers, high-level accountants, contractors, insurance, etc. (We are talking big insurance policies.)
I do not though. The much trickier part, at least as an attorney, is finding a job that pays $500k that is not soul-suckingly awful. They exist, and if I get one I'll be over the moon, but I'll pick my current non-awful normal job over one of those awful ones. (See, e.g., that I have the time to post this at 3:15pm on a Thursday and that I'll be shutting down my computer shortly after 5pm).
I have some distant relatives that worked as commercial real estate brokers in California and they made a ton of money..."they had the kind of house God would live in if he had the money" as the saying goes. They donated money to a hospital and have a wing named after them... that kind of thing.
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I'm sure I would -- I'd do a lot of my house projects faster instead of trickling them out over a couple of years.
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PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
I work in commercial real estate and there are a ton of people who make that. I probably talk to someone that makes that at some point every day. Attorneys, brokers, developers, high-level accountants, contractors, insurance, etc. (We are talking big insurance policies.)
I do not though. The much trickier part, at least as an attorney, is finding a job that pays $500k that is not soul-suckingly awful. They exist, and if I get one I'll be over the moon, but I'll pick my current non-awful normal job over one of those awful ones. (See, e.g., that I have the time to post this at 3:15pm on a Thursday and that I'll be shutting down my computer shortly after 5pm).
I have some distant relatives that worked as commercial real estate brokers in California and they made a ton of money..."they had the kind of house God would live in if he had the money" as the saying goes. They donated money to a hospital and have a wing named after them... that kind of thing.
I have never seen people make so much money so easily as high-end commercial real estate brokers. From my standpoint as an attorney, they don't actually seem to ... know anything. But yet they make multiples of me with less education, so whose the idiot now, lol.
I think it's intensely competitive and you need the right personality. You need to have 100 people slam a door in your face and still go out with a big shit eating grin and knock on 100 more (really rich people's) doors.
I don't think it's easy to do or to be good at. But if you have a certain personality, man can you make a killing (and without being a rocket scientist or even appearing to work too hard).
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PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
I work in commercial real estate and there are a ton of people who make that. I probably talk to someone that makes that at some point every day. Attorneys, brokers, developers, high-level accountants, contractors, insurance, etc. (We are talking big insurance policies.)
I do not though. The much trickier part, at least as an attorney, is finding a job that pays $500k that is not soul-suckingly awful. They exist, and if I get one I'll be over the moon, but I'll pick my current non-awful normal job over one of those awful ones. (See, e.g., that I have the time to post this at 3:15pm on a Thursday and that I'll be shutting down my computer shortly after 5pm).
I have some distant relatives that worked as commercial real estate brokers in California and they made a ton of money..."they had the kind of house God would live in if he had the money" as the saying goes. They donated money to a hospital and have a wing named after them... that kind of thing.
I have never seen people make so much money so easily as high-end commercial real estate brokers. From my standpoint as an attorney, they don't actually seem to ... know anything. But yet they make multiples of me with less education, so whose the idiot now, lol.
I think it's intensely competitive and you need the right personality. You need to have 100 people slam a door in your face and still go out with a big shit eating grin and knock on 100 more (really rich people's) doors.
I don't think it's easy to do or to be good at. But if you have a certain personality, man can you make a killing (and without being a rocket scientist or even appearing to work too hard).
It's fascinating really... when you're a kid "you don't know what you don't know" have no idea of the opportunities out there that could be a good fit... unless you're the exception and seek out info on your own or have a family member or mentor guiding you along... you're left to the influence of high school guidance counselors who funnel kids into the industrial university system complex and into the cycle of student loan/wage slavery.
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If I ignore college costs, my wife and I have spent about $50k a year for decades. For 2020, we'll probably make $225k or so. We started out graduating from college and going to work and for a full decade, we lived like we did as students paying their way through college, which we both did. As much as I'd love to go order a yellow Porsche 718 Cayman GT4 with a proper manual transmission, it would hurt and I would not be happy paying out a hundred grand to do it. Even though at the low of Corona, my investments were down three times that amount.
I've projected my retirement spending for someday when I retire and assuming no job, the total comes to $63k, assuming health insurance costs skyrocket and that we spend thousands more on travel.
If I received a several hundred thousand dollar windfall, sure, I'd consider diverting a hundred k over to buy the Porsche. With the occasional 3% raise that comes every few years? Nope.
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I wouldn't spend more. I switched jobs earlier in my career and within short order, I was making double what I had been. I had to move, and my new house was more expensive, but that's about it. I even kept the same car for another 5 1/2 years. No change in dining out or other discretionary spending. In fact, my discretionary has probbly never been lower than the last few years, when my wages and savings are at their peak.
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We've seen our HH income grow from ~85k to ~$285k since 2013 and we probably spend about as much as we did then, between $55-$70k/yr. Of course we switched car payments and student loans with daycare for 2 :) Now I will say I'm starting to get a little more lenient in expenses,now that we are about a year from our lean FI goal and ~4 years from our FI goal and we have no plans to actually RE, but like others have said we just don't really see the need to spend more money. We're largely happy with what we have.
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Funnily, I make a ton more than I used to and spend a ton less. The reason? I used to be like OP’s friend and spend everything I made (with nothing to show from it). Now I’m budgeting, saving and investing. If I was making double what I make now, what would I do differently? Well, I’d probably pull the trigger and buy property and probably get a car (which I would use maybe for 4 hours a week max). Or I would just keep doing what I’m doing and reach FIRE faster. I can afford a lot more right now but have worked out, I really don’t need those things, cause if I did, I’d have them.
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I spend much more freely when I make a lot more (I’m a contractor), however I do aim to keep my fixed expenses very similar to if I was FIRE’d or unemployed.
5 years ago when I was making around $130k/yr, I was spending about $5k/mo on a good month.
The last couple years I’ve made around $300k-$320k, and this year will be closer to $350k. Right now, I can survive just fine off around $6000-$6500.
Of course, right now at my income I do spend way more. Not on items that add higher fixed payments, but more on discretionary stuff. We have a couple newer cars. We don’t hesitate buying top of the line items that should “last forever.” I.e. a Vitamix blender, luggage with a lifetime warranty, nice tools, home gym equipment, travel, nicer clothes, etc. I’m buying things now that should last well into FIRE. The expensive things I want to buy aren’t conducive to the amount I move for work i.e. items I don’t want to move a lot (high end stereo, guitar/amp, high end welding machine). Those will be purchased whenever we someday buy a home.
I do keep myself in a position where if my income was even cut and half, I could still save 50% of that amount if I wanted to.
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If you were making, say $500k/yr, would you still save the same percentage of your salary or would you allow for lifestyle inflation? How would you think differently about money or not?
Yes, both. If I made that much I could afford to pay for my kids to go to fancy colleges and increase my savings rate. I could also feel comfortable buying more real-estate which I view less as an investment and more as a hedge or indulgence.
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I would selectively spend more in a few categories. Right now I make $40k a year, so my spending is really low to keep the savings rate that I want. If I made say...$80k+ a year, I would spend more on food...I would buy all organic and local produce and meat, and shop at the small co-op in my city instead of the big chain grocery stores. Right now I spend $250 a month on food, and I would probably increase it to $400-$500 because I love cooking and it would be so fun to just buy all of the ingredients I want, without worrying about a tight budget.
I would also buy more new ethical clothing, like a few pieces a year...instead of thrifting for 100% of my clothing.
I would keep my old used car, and my cheap apartment...but I'd probably not defer every single small purchase I want to make, and just get things as I need them (household supplies, kitchen tools, etc).
I imagine this would increase my monthly spending from $1350 a month to about $1800 a month, which sounds pretty nice to me!
ETA: I forgot a big one for me...I would totally hire someone to clean my apartment. I have chronic back pain, and if I never have to mop/scrub the floor again it would be the biggest gift. To have someone scrub my apartment twice a month would be totally worth the lifestyle inflation.
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For a few years I made north of $250k, topping off around $400k. I did spend a lot more (but I also saved a lot more, both in absolute dollars and percentage).
It just felt like I was more than hitting my savings and donating benchmarks, and there were things I would enjoy to have and do (but could be cut out if it wasn't easy to pay for them). Mostly related to travel, dining, clothing, and some electronics and furniture. But, I tried not to get used to them as the new normal, which mainly meant not baking them into my lifestyle long term via a mortgage/expensive lease/car payment. When I switched to a lower-paying job I cut those things out of my spending and it's been fine. I don't regret it.
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I might spend a little more, but when I think about it, $500K a year isn't enough to make a difference,when the government would be getting 53-54% of every one of those extra $. Sad to think but $500K isn't enough to have a room full of accountants figuring out how to keep the money. That taxation rate would snuff out my OMY tendancy. We're very close to pulling the plug now. Now, if you asked DH, he'd have me work an extra couple of years for extra toys.
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I think the only spending category I would change would be my food budget.
I love to cook, it's a big hobby for me. I also like to eat healthy. I'm rather frugal with my food purchasing because having a high savings rate is important to me.
If I made more I would be more likely to buy organic (I don't now), and some expensive ingredients that I typically avoid now.
I'd also eat out more. Restaurants are my one spending category that I feel guilty about at times. I like going out, but I know it's not worth $15-30+ dollars a person for a meal when I can make an equally good meal at home for a couple bucks. I'd like to eat out more but I limit how much I do on the path to FI.
Everything else would stay the same.
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As much as I'd love to go order a yellow Porsche 718 Cayman GT4 with a proper manual transmission
Unless you're tracking it the 718 Cayman GTS 4.0 is the way to go. It's $13k cheaper and more comfortable but still has the same engine (slightly detuned) and manual transmission.
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The only significant thing that I've allowed to increase in spending as my earnings increase is my car choice. My next car will be a 540C/570S (used, 3 years old-ish)
Otherwise I live quite frugally.
Even if you include my car cost (averaged over time), I still spend less than the average Australian household, which I find to be astounding, given how little the average household earns and saves.
This is why I'm not impressed by "stimulus" measures which rely on middle-class families spending it all. I could never live with such lavish, profligate waste. Sure, if you're poor, you have to spend every penny you earn. I can't envision how or why the middle class does the same.
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PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
I have a friend who went from $100k/year to $1-2M/year. Started working for a hedge fund as a quant. Just takes some coding skills, smarts, and a heckuva lot of luck.
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As my income has risen, so has my spending - but not at the same rate as my income, and hence my savings rate has gone up. I see no reason why this would not continue to be the case with further gains in income. Another $1000-$1500 a month in spending would allow me quite a bit more luxury in my day-to-day life, but beyond that the return on additional spending would rapidly taper off.
Sure, I'd live in a nicer place, probably drive a newer, nicer car and take fancier vacations. But fundamentally I'm already at the point where buying time/freedom/flexibility outweighs most of the material stuff that I could buy in terms of happiness, and with a relatively moderate further increase in income I'd reach the point of little to no happiness return on additional spending.
*obviously this trend might break at super-high income/wealth. At some point you reach the "I/my family have everything I need, might as well send the rest on charity/trying to make the world a better place" point.
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In the last 10 years, my income has tripled but my expenses are the same. I am at a level of spending that I am comfortable with - all necessities covered plus some treats - and after that point there is nothing I want more than being able to opt out.
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I am very impressed by you guys who wouldn't change your lifestyles at all. While I am thankful for the willpower to be frugal, I guess I am just naturally not that way.
I would pay someone to prep meals for me for at least a year and eat out!
We would take vacations to places that were more luxurious. We have found that places that are better fits for our very intense kids tend to pricier. So we just don't go on vacation as much now. And by luxurious I mean a few hundred a night vs. the cheapest we can find.
I would landscape my yard exactly how I wanted.
I would probably upgrade my house to have a nice separate guest suite for family (or an au pair in the current climate).
We would get hotels instead of staying with family when we visit them across the country.
I would update my car to something not slightly rusted and something that is hybrid or electric.
I'd put in a pool for my kids!
I would get weekly massages for at least a year.
I would get my hair done every 12 weeks. And get facials a few times a year.
I would buy clothes - I love clothes! And I would get a personal trainer.
All right - y'all can face punch me all over the place. But that is absolutely what I would do if I was making major bucks every year :) I found this very fun to think about actually.
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LOL, @StarBright, I won't judge you. All those things sound great to me. I just want to hit certain savings goals first. If I hit them, then I am free to decide whether or not I want to continue working and pay for luxuries or not.
I expect I will decide to work a little longer and indulge in some luxuries once the base is established. I also expect I'll hang up my cleats before 65.
It's all about balancing priorities to make it work for you.
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PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
While I don’t make $500k, I took home $152k the first 6 months this year, and got a raise in April so my second 6 months will probably be more.
I work in Oil & Gas and only have an associates degree. Most of my coworkers make pretty similar and also don’t have 4 year degrees. It’s a fast paced and stressful environments. Most people aren’t willing to make the quality of life sacrifices that it takes to get here. I spent 5 years living in a 5th wheel. Have often lived in crap hole towns, have lived in about 8 states the last 10 years and probably 15+ cities.
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PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
Get really lucky on Youtube?
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@StarBright it's no judgement from me! We have tried some pricier things and learned where we will actually get an increase in joy from an increase in spend. So we cook almost all our food, not because we are frugal but because it tastes better. It being cheaper and healthier is a nice side effect. I recently spent a week consideringl buying an Hermés handbag and then realised I would rather spend that money on getting a local tailor to make me a bunch of clothes that were crafted to me AND a local leather worker to make me a nice bag. Staying at super ritzy hotels in the UAE wasn't worth it, flying business class for long haul trips? Absolutely worth it.
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I spend much more freely when I make a lot more (I’m a contractor), however I do aim to keep my fixed expenses very similar to if I was FIRE’d or unemployed.
5 years ago when I was making around $130k/yr, I was spending about $5k/mo on a good month.
The last couple years I’ve made around $300k-$320k, and this year will be closer to $350k. Right now, I can survive just fine off around $6000-$6500.
Of course, right now at my income I do spend way more. Not on items that add higher fixed payments, but more on discretionary stuff. We have a couple newer cars. We don’t hesitate buying top of the line items that should “last forever.” I.e. a Vitamix blender, luggage with a lifetime warranty, nice tools, home gym equipment, travel, nicer clothes, etc. I’m buying things now that should last well into FIRE. The expensive things I want to buy aren’t conducive to the amount I move for work i.e. items I don’t want to move a lot (high end stereo, guitar/amp, high end welding machine). Those will be purchased whenever we someday buy a home.
I do keep myself in a position where if my income was even cut and half, I could still save 50% of that amount if I wanted to.
Same. We didn't hesitate to spend money on whatever home gym equipment we could find and fit when COVID hit (namely: kettlebells. Our house is small.)
Still paying for the YMCA though...
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I would spend more. I am not sure how much, but I would have some nicer things than I do now. I would probably get manicures and more restaurant meals.
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LOL, @StarBright, I won't judge you. All those things sound great to me. I just want to hit certain savings goals first. If I hit them, then I am free to decide whether or not I want to continue working and pay for luxuries or not.
I expect I will decide to work a little longer and indulge in some luxuries once the base is established. I also expect I'll hang up my cleats before 65.
It's all about balancing priorities to make it work for you.
Yeah - we actually do none of these things - but I would love to do them!
I think because I am a person who knows I like luxuries (from a previous, richer, pre-great recession life) - I'm always shocked when people on this board are legitimately not into that sort of stuff.
I would spend more. I am not sure how much, but I would have some nicer things than I do now. I would probably get manicures and more restaurant meals.
I totally forgot pedicures! Yes - on the regular! And I would pay good money so that I knew the person giving them was not being exploited.
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I'd probably spend more on more durable things. I'd build a slightly larger and fancier house with my dream kitchen. I'd probably buy newer cars from a dealership instead of 10 year old ones. And I'd probably replace my electronics at the first sign of breaking down instead of limping them along for as long as I can. And I'd probably travel more, though still simply. I enjoy staying in hostels/convents since I feel like I meet more people that way. But I can't see my day to day spending increasing that much. I feel pretty content as is.
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PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
Get really lucky on Youtube?
And as the old saying goes, if you have to ask...
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<checks spending this year>
I guess that yes I would spend more if I got a big raise. Then again, we bought a new house, so it's hard to know how much of the new spending was directly correlated to a new house vs just general increased spending.
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Our household income has gone way up in recent years as both my wife (especially) and I have been given big raises. Our spending however has definitely not gone up significantly. Neither of us can think of anything big that we really want or need. If anything, we have been getting rid of stuff as we try to declutter our house.
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I would slightly increase our travel budget and also buy slightly better wine than I do now.
I would spend more on investments and retire earlier though!
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When our household gross income was $37200 per year, we definitely thought about money differently than we do now, when our household gross income is a lot higher. While the principles of frugality still hold true (how can we optimize this expense? Is this something we really need or that will truly bring value and joy to our lives?), we find ourselves more willing to spend on slightly nicer items. We’ve increased our savings rate though, from 25% of net income ($500/month) to 75-80% of net income. If we were at the $500k range, I don’t think our spending would go much higher because we already have everything we could want or need.
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I am very impressed by you guys who wouldn't change your lifestyles at all. While I am thankful for the willpower to be frugal, I guess I am just naturally not that way.
------------------- (list of spending)
All right - y'all can face punch me all over the place. But that is absolutely what I would do if I was making major bucks every year :) I found this very fun to think about actually.
I don't see your list as odd at all, if you were making a ton of money. I think nearly all of us would increase our spending - it's more of a question of how quickly we'd increase our spending relative to our income. At some point a fancier car/house/business class plane tickets/hired help for cooking/cleaning become easy decisions for people because they have so much money and the expense is a trivial fraction of their income - it's just that the threshold at which people feel this way varies a lot from person to person. Some people(generally not on this forum) are content with a 10-20% savings rate, even at high incomes. Some people (severely over-represented on this forum) don't want to increase their spending at all until they exceed a 50%, or even a 75% savings rate.
It's merely a question of how heavily you weight those additional luxuries relative to early retirement/occupational flexibility/etc. that you get from having a lot of savings. Different strokes for different folks.
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I have actually been thinking about something similar lately. If the ACA is repealed and I have to work until I qualify for Medicare, I have vastly over saved for traditional retirement age. So I could stop all saving and still have about three times my current spending available at 67yo. That would leave me with some serious cash each paycheck to spend and yes I will spend it. I would build my dream net zero home with a home gym and knitting nook. Vacations will be at nice hotels or home rentals. I will pay for a meal planning service to eliminate my most hated chore. I'd also hire a cleaning service to eliminate my second most hated chore.
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I am very impressed by you guys who wouldn't change your lifestyles at all. While I am thankful for the willpower to be frugal, I guess I am just naturally not that way.
------------------- (list of spending)
All right - y'all can face punch me all over the place. But that is absolutely what I would do if I was making major bucks every year :) I found this very fun to think about actually.
I don't see your list as odd at all, if you were making a ton of money. I think nearly all of us would increase our spending - it's more of a question of how quickly we'd increase our spending relative to our income. At some point a fancier car/house/business class plane tickets/hired help for cooking/cleaning become easy decisions for people because they have so much money and the expense is a trivial fraction of their income - it's just that the threshold at which people feel this way varies a lot from person to person. Some people(generally not on this forum) are content with a 10-20% savings rate, even at high incomes. Some people (severely over-represented on this forum) don't want to increase their spending at all until they exceed a 50%, or even a 75% savings rate.
It's merely a question of how heavily you weight those additional luxuries relative to early retirement/occupational flexibility/etc. that you get from having a lot of savings. Different strokes for different folks.
I agree. And the responses might also vary based on the respondent’s current income and how far along they are on the FI journey. I answered that I wouldn’t do much differently, but I’m already FI, my husband is retired, our house is paid off, and we basically already buy whatever we want, if we really want it. So, if we made a lot more money, buying more things would just mean impulse buying crap we didn’t truly want.
My response to this question would have been a lot different if I had answered it in my early thirties instead of at fifty-three.
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@StarBright it's no judgement from me! We have tried some pricier things and learned where we will actually get an increase in joy from an increase in spend. So we cook almost all our food, not because we are frugal but because it tastes better. It being cheaper and healthier is a nice side effect. I recently spent a week consideringl buying an Hermés handbag and then realised I would rather spend that money on getting a local tailor to make me a bunch of clothes that were crafted to me AND a local leather worker to make me a nice bag. Staying at super ritzy hotels in the UAE wasn't worth it, flying business class for long haul trips? Absolutely worth it.
How much IS a Hermes bag?
I can't even imagine what using a tailor to make clothes for me would BE like...I like the idea though... my whole life I have felt like my clothes never fit me all that well and I always look schleppy. I'm 5'10'', 170lbs...not grossly fat or skinny... How does one find a tailor? And how expensive is it? Do they only do things like business suits? Or could they make casual clothes? Would the clothes look that much better than stuff bought off the rack? PS, I haven't gone clothes shopping in a long time...
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PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
Get really lucky on Youtube?
And as the old saying goes, if you have to ask...
??? I don't get it...
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@StarBright it's no judgement from me! We have tried some pricier things and learned where we will actually get an increase in joy from an increase in spend. So we cook almost all our food, not because we are frugal but because it tastes better. It being cheaper and healthier is a nice side effect. I recently spent a week consideringl buying an Hermés handbag and then realised I would rather spend that money on getting a local tailor to make me a bunch of clothes that were crafted to me AND a local leather worker to make me a nice bag. Staying at super ritzy hotels in the UAE wasn't worth it, flying business class for long haul trips? Absolutely worth it.
How much IS a Hermes bag?
I can't even imagine what using a tailor to make clothes for me would BE like...I like the idea though... my whole life I have felt like my clothes never fit me all that well and I always look schleppy. I'm 5'10'', 170lbs...not grossly fat or skinny... How does one find a tailor? And how expensive is it? Do they only do things like business suits? Or could they make casual clothes? Would the clothes look that much better than stuff bought off the rack? PS, I haven't gone clothes shopping in a long time...
Depends on the bag and the leather. But used Kelly and Birkin styles go for thousands. Several years ago a new Birkin had a couple year waitlist and can be tens of thousands.
I actually sold my Kelly to finish paying off my grad school loans in one chunk.
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@StarBright it's no judgement from me! We have tried some pricier things and learned where we will actually get an increase in joy from an increase in spend. So we cook almost all our food, not because we are frugal but because it tastes better. It being cheaper and healthier is a nice side effect. I recently spent a week consideringl buying an Hermés handbag and then realised I would rather spend that money on getting a local tailor to make me a bunch of clothes that were crafted to me AND a local leather worker to make me a nice bag. Staying at super ritzy hotels in the UAE wasn't worth it, flying business class for long haul trips? Absolutely worth it.
How much IS a Hermes bag?
I can't even imagine what using a tailor to make clothes for me would BE like...I like the idea though... my whole life I have felt like my clothes never fit me all that well and I always look schleppy. I'm 5'10'', 170lbs...not grossly fat or skinny... How does one find a tailor? And how expensive is it? Do they only do things like business suits? Or could they make casual clothes? Would the clothes look that much better than stuff bought off the rack? PS, I haven't gone clothes shopping in a long time...
When I was wearing suits/pantsuits to work, the last few years I would buy off the rack and have them altered. Wasn't that expensive, but boy did they fit better. I am very short waisted with broad shoulders, to get a jacket to fit my shoulders/bust, it was always baggy around my waist. Most slacks would be very baggy at the waist to hang the way I wanted around the hips and thighs. I even had a few shirts tailored. I found it alot cheaper to buy clothes off the rack and have them tailored than to have them tailored from scratch (same place - made no sense)
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I am very impressed by you guys who wouldn't change your lifestyles at all. While I am thankful for the willpower to be frugal, I guess I am just naturally not that way.
I would pay someone to prep meals for me for at least a year and eat out!
We would take vacations to places that were more luxurious. We have found that places that are better fits for our very intense kids tend to pricier. So we just don't go on vacation as much now. And by luxurious I mean a few hundred a night vs. the cheapest we can find.
I would landscape my yard exactly how I wanted.
I would probably upgrade my house to have a nice separate guest suite for family (or an au pair in the current climate).
We would get hotels instead of staying with family when we visit them across the country.
I would update my car to something not slightly rusted and something that is hybrid or electric.
I'd put in a pool for my kids!
I would get weekly massages for at least a year.
I would get my hair done every 12 weeks. And get facials a few times a year.
I would buy clothes - I love clothes! And I would get a personal trainer.
All right - y'all can face punch me all over the place. But that is absolutely what I would do if I was making major bucks every year :) I found this very fun to think about actually.
My response to this question would have been a lot different if I had answered it in my early thirties instead of at fifty-three.
This is possibly the case for me too. Maybe. In my early 30s, I didn't have kids though.
I guess:
- I like cooking
- My kids hate travel. So, luxury travel? Sort of a waste (although we had planned a pretty sweet trip to Hawaii before COVID snatched it away).
- We need to landscape our yard, but are kinda just the DIY kind.
- I could upgrade my house but...well this is where the age thing comes in. We are in our 50s, so I just can't imagine buying a $1.3M house that would be bigger with a possible second unit - and end up paying $15k+ a year for property taxes forever and ever. Not to mention a 30 year mortgage at $6000 a month when I've got kids to put through college, and soon. Because, while $500k would be nice, we are old enough to not be able to rely on having that income for even 15 years, much less 30. Does that make any sense?
- We like staying with family, although next time we go, if we take the dog, we will need to get our own place.
- I can afford a new car, but why? My car functions.
- We have no room for a pool
- Massages, hair, facials...just not my thing
- I used to have 3 gym memberships. One of them a smaller expensive gym. It closed, but I loved it.
I think the fact that we make quite a bit of money already (and don't spend it) and are in our 50s - this probably shapes our decisions about what we'd do if we made more. I'd still save it, and I'd still try to talk my kids into going to state schools.
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I would spend more, mostly to make my life and surroundings more sustainable and eco-friendly. I'm already FIRE and get most of my stuff secondhand. Pre-pandemic, I even got most of my food for free. I don't want a car or a bigger house, and I don't need to upgrade my air travel because I'm not flying for environmental reasons.
* Funnel way more into my donor-advised fund
* Buy groceries from more sustainable sources
* Pay someone to meal prep
* Buy high-quality compost and native seeds and plants to speed up my pollinator strip (https://pollinatorparkways.weebly.com/) (I'm trying to slowly cobble together free supplies now)
* Allow my bf to go part-time so he has more time to hang out in the garden with me
* If there's no pandemic, then probably a climbing gym membership and dance lessons
I'd still be picking berries on my walks, though. Free berries!
This isn't all academic for me - my investments increased so much after quitting my job that I set a high charity goal and switched some spending to the grocery co-op, and I felt comfortable buying a pandemic bike.
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I'm retired now, but when I was working, as soon as our house was paid off and my husband was making more money, I switched to part-time work. So thinking about this question, I would not spend more, I would work less. I was in the healthcare field and it's easy to work part-time. If I was in a highly paid job that I couldn't work part-time, I would just sock all the money away to retire early. I would maybe let my lifestyle creep up a bit, but as my husband used to say, "you can't beat the cheap out of me"!
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PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
Get really lucky on Youtube?
And as the old saying goes, if you have to ask...
??? I don't get it...
QED. Probably something like over a couple decades learning how to create immense value in a particular industry, e.g., working your way up to VP and beyond. Old Munger said one time that the best way to get a corner office is to deserve one. This means developing one's own competence so you can Price's Law it up in an area where you have a comparative advantage.
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@StarBright it's no judgement from me! We have tried some pricier things and learned where we will actually get an increase in joy from an increase in spend. So we cook almost all our food, not because we are frugal but because it tastes better. It being cheaper and healthier is a nice side effect. I recently spent a week considering buying an Hermés handbag and then realised I would rather spend that money on getting a local tailor to make me a bunch of clothes that were crafted to me AND a local leather worker to make me a nice bag. Staying at super ritzy hotels in the UAE wasn't worth it, flying business class for long haul trips? Absolutely worth it.
How much IS a Hermes bag?
I can't even imagine what using a tailor to make clothes for me would BE like...I like the idea though... my whole life I have felt like my clothes never fit me all that well and I always look schleppy. I'm 5'10'', 170lbs...not grossly fat or skinny... How does one find a tailor? And how expensive is it? Do they only do things like business suits? Or could they make casual clothes? Would the clothes look that much better than stuff bought off the rack? PS, I haven't gone clothes shopping in a long time...
An Hermés bag of the sort I am looking at -> $7-12k AUD, secondhand. I posted it in the Stupidest Things You are Lusting Over thread. You can get a lot of clothes for that sort of money.
It is definitely worth getting things tailored or at least adjusted at a tailor. I get clothes that fit at the critical points (pants-> seat & rise, jacket -> shoulders and ability to button it up, tops -> shoulder & bustline) and then have the waist, sleeve length, trouser length etc adjusted. Everything just looks smarter and feels more comfortable.
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I would totally spend more. I'd buy more real estate, flip or BRRR a couple more houses, and add a zero to the Donor Advised Fund. Except, there's no way in hell I'm going back to work. Still, a fun thought exercise.
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I am very impressed by you guys who wouldn't change your lifestyles at all. While I am thankful for the willpower to be frugal, I guess I am just naturally not that way.
------------------- (list of spending)
All right - y'all can face punch me all over the place. But that is absolutely what I would do if I was making major bucks every year :) I found this very fun to think about actually.
I don't see your list as odd at all, if you were making a ton of money. I think nearly all of us would increase our spending - it's more of a question of how quickly we'd increase our spending relative to our income. At some point a fancier car/house/business class plane tickets/hired help for cooking/cleaning become easy decisions for people because they have so much money and the expense is a trivial fraction of their income - it's just that the threshold at which people feel this way varies a lot from person to person. Some people(generally not on this forum) are content with a 10-20% savings rate, even at high incomes. Some people (severely over-represented on this forum) don't want to increase their spending at all until they exceed a 50%, or even a 75% savings rate.
It's merely a question of how heavily you weight those additional luxuries relative to early retirement/occupational flexibility/etc. that you get from having a lot of savings. Different strokes for different folks.
Not all of us.
In past lives, I've lived very luxuriously and I don't miss it.
Hedonic adaptation is a very real thing. At a certain point, few luxuries feel luxurious anymore and everything not luxurious feels like shit. So basically, it's a great way to make a lot of life uncomfortable by comparison.
I found that lifestyle tedious and depressing, but also morbidly addictive. Not my thing anymore.
Not all of us want more. Some of us really are happy with our current spend because that's exactly the lifestyle we chose. We just downsized dramatically a year ago and are so much happier.
Don't get me wrong, we have plenty of luxuries, and don't hesitate to spend on them, but we're a lot like Pete. We live the way we do because that's our best life, which we've spent years figuring out and working towards.
It's not at all what we pictured when we started out, but as time has gone on, we've pared away more and more and been happier and happier.
That's not everyone's path, and I totally understand why PP wants landscaping and facials and a guest house. Everyone needs to figure out their own ideal life. I just think it's a little weird to generalize that we would *all* choose to spend more if we could on a forum that has a lot of people who find happiness in spending a lot less than we can afford to.
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@StarBright it's no judgement from me! We have tried some pricier things and learned where we will actually get an increase in joy from an increase in spend. So we cook almost all our food, not because we are frugal but because it tastes better. It being cheaper and healthier is a nice side effect. I recently spent a week considering buying an Hermés handbag and then realised I would rather spend that money on getting a local tailor to make me a bunch of clothes that were crafted to me AND a local leather worker to make me a nice bag. Staying at super ritzy hotels in the UAE wasn't worth it, flying business class for long haul trips? Absolutely worth it.
How much IS a Hermes bag?
I can't even imagine what using a tailor to make clothes for me would BE like...I like the idea though... my whole life I have felt like my clothes never fit me all that well and I always look schleppy. I'm 5'10'', 170lbs...not grossly fat or skinny... How does one find a tailor? And how expensive is it? Do they only do things like business suits? Or could they make casual clothes? Would the clothes look that much better than stuff bought off the rack? PS, I haven't gone clothes shopping in a long time...
An Hermés bag of the sort I am looking at -> $7-12k AUD, secondhand. I posted it in the Stupidest Things You are Lusting Over thread. You can get a lot of clothes for that sort of money.
It is definitely worth getting things tailored or at least adjusted at a tailor. I get clothes that fit at the critical points (pants-> seat & rise, jacket -> shoulders and ability to button it up, tops -> shoulder & bustline) and then have the waist, sleeve length, trouser length etc adjusted. Everything just looks smarter and feels more comfortable.
Re: tailoring clothes, yeah, I honestly don't get why more people don't do this. It really does make a huge difference, and it's really not expensive. I even tailored my scrubs in school. It cost $20 and made them much more comfortable/less terrible.
I pretty much stopped wearing the kind of clothes that need tailoring though, and stopped carrying handbags. I'm a running shoes and backpack kind of lady now.
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@StarBright it's no judgement from me! We have tried some pricier things and learned where we will actually get an increase in joy from an increase in spend. So we cook almost all our food, not because we are frugal but because it tastes better. It being cheaper and healthier is a nice side effect. I recently spent a week considering buying an Hermés handbag and then realised I would rather spend that money on getting a local tailor to make me a bunch of clothes that were crafted to me AND a local leather worker to make me a nice bag. Staying at super ritzy hotels in the UAE wasn't worth it, flying business class for long haul trips? Absolutely worth it.
How much IS a Hermes bag?
I can't even imagine what using a tailor to make clothes for me would BE like...I like the idea though... my whole life I have felt like my clothes never fit me all that well and I always look schleppy. I'm 5'10'', 170lbs...not grossly fat or skinny... How does one find a tailor? And how expensive is it? Do they only do things like business suits? Or could they make casual clothes? Would the clothes look that much better than stuff bought off the rack? PS, I haven't gone clothes shopping in a long time...
An Hermés bag of the sort I am looking at -> $7-12k AUD, secondhand. I posted it in the Stupidest Things You are Lusting Over thread. You can get a lot of clothes for that sort of money.
It is definitely worth getting things tailored or at least adjusted at a tailor. I get clothes that fit at the critical points (pants-> seat & rise, jacket -> shoulders and ability to button it up, tops -> shoulder & bustline) and then have the waist, sleeve length, trouser length etc adjusted. Everything just looks smarter and feels more comfortable.
Considering that private schools in Australia cost $30k per child per year, I'd say an Hermes bag is one of the more productive and higher-returning investments you could make in this day and age.
The average aspirational Australian family could buy 3 or 4 such bags a year, send their kids to a public school down the road and everyone would be better off.
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My income has almost doubled in the last 4 years through a series of promotions. In that time my expenses have dropped slightly.
Now I can afford anything I want (within reason) I realize there isn't really anything I want
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Short answer: yes.
My income has roughly tripled over the past five years, and this has allowed us to spend more on things that make life more enjoyable. I'm not running out to lease a new BMW, but we have done things like dine out more and move into the city to eliminate our commute. At some point, there is a diminishing return, though. I don't get a lot of joy from simply spending on luxury goods, but for something that will eliminate a chore or leave us with a happy memory? Count me in.
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1 year ago i was at a job that worked me too hard and paid me too little. I didn’t think there was much better out there, which in part drove me to save a high percentage of our income.
Last November I unexpectedly found a new job that gave me a large raise, with great future potential. The job is more enjoyable and less hours. My wife stays home with the kids but works 10 hours/week to keep her designation active and take advantage of our country’s progressive tax rates. We’re saving ~28.5% of our income and comfortable with our lifestyle. The increased income has lead to some silly purchases but it’s been fun. Our travel budget has been cut this year due to COVID so it kind of washes out.
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I wouldn't buy MORE, but I'd buy BETTER.
I don't like having stuff. But for the stuff that I do already have, there are better versions that I could upgrade to.
For example:
Airpods instead of knockoff earbuds.
A nice Tuft & Needle bed, instead of our Costco mattress.
Nice, sturdy furniture instead of all of our current IKEA furniture that we got when we first got married.
Peloton bike instead of the squeaky Sunny Fitness bike we got for ~$150
Nice wooden clothes hangers rather than the flimsy plastic ones
I'm content with the things we have now, but if we were already FI and had more money than we knew what to do with, I'd start upgrading things.
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I would have definitely been saving/investing a huge proportion of that 500k, and have retired earlier.
I would spend more, but not proportionally to that huge salary.
I probably would increase spending by being more willing to spend on ethical purchases that cost more eg ethical clothing, locally sourced organic food and supporting smaller artisanal makers of quality goods. I wouldn't buy more food/cloths/stuff.
I would increase charitable donations.
Overseas travel is not high on my priorities ( especially now) but if I were to travel on flights of >10 hours I'd pay for business class.
I'd pay a bit more upfront to get my garden setup properly, rather than doing it in small steps, using free stuff and things on specials, like I have done until now.
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FIRED at end of February. With this in mind, starting early retirement at the beginning of world pandemic and all of the potential economic fallout of such an event, we are watching our spending closer than usual. One of the greatest risks to the 4% rule, is starting retirement at the beginning of a bear market. We are spending less 4% and we will have various income streams kick in over the next 5 yrs, but this is not how we envisioned our start to FIRE. Furthermore, using Obamacare requires us to stay within a MAGI range, which automatically limits our spending.
I left a secure higher than average paying career. We saved/invested a significant portion of our income while employed. Even so, I think I would be lying to myself if I claimed that I wouldn't spend more if I was still employed. It wouldn't be significantly more, but I suspect we would spend a little more.
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lifestyle creep is something to be wary of. Putting less consideration into what, why and when you make purchases can quickly grow into a problem
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To some extent, you have to. High earning tends to come with greater demands on your time, an expectation to travel, expensive locations, a requirement to entertain, maintenance of a personal brand, etc. Supporting all of that requires infrastructure. Growing from that point, even more. Were I down that path, I'd absolutely use the extra money as a tool. Burnout is the other option.
I'm saving 60-75% of my household income. I've been able to sustain my job by having groceries delivered, building a home gym, hiring someone to clean, etc. I'll occasionally indulge myself with an expensive bottle of alcohol or video game when work stress is getting the better of me. Those patterns would definitely escalate.
Free, magic money? I'd move to a house with indoor/outdoor swimming options and pay someone else to take care of it. I'd buy top of the line X when I had a need and if it sucked give it away.
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Yes, I would.
A few years back my income doubled unexpectedly.
I used the extra income to fix my financial life and at the same time slowly check-marked everything off my long list of all the things I wanted to do.
I'm done - I'm content.
It isn't 500K territory but I would have treated it the same.
Our lifestyle isn't changing but the quality of our things has and we do indulge ourselves off and on.
I guess we upgraded across the board and we enjoy that we can without diminishing our stash.
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Yes, we'd probably spend up to $20k or so more than the $55k we currently spend.
We don't deprive ourselves, but we also say no to some things that we want in order to maintain a 50% savings rate.
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Short answer:
Yes. Yes I would.
Longer answer with some explanation:
The extra amount we spend would depend on where we stand in relation to our FI goal. If, today, I suddenly went from making $150,000/year to $500,000/year I think that I would simply feed the taxable brokerage account until FI. From there I would continue accumulating cash and then pay off the mortgage (gasp!!!). Then, if I was still inclined to work, I would accumulate enough cash to purchase either the place in the White Mountains or on the coast of Maine that I've been lusting after. Of course at this point our cost of living would increase having the 2nd home, so we'd either sell our current residence and make the vacation home the primary residence (quitting the high paying job along the way...) or continue to grow the stach 'til it's big enough to account for the increased cost of living.
PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
Plenty of people in finance make over 500k. My husband makes about 450k but there are plenty of people in his company who make more than that. I would guess at least 5% of the company.
To answer the question - we do spend more than most people on this board but we don’t spend as much as lot people we know. We do live in a large house, pay someone to clean it and pay landscapers. We travel a lot (at least we did pre-covid) and we prefer nicer hotels. We also do a lot of things people consider frugal because they aren’t important to us. We drive our cars for 12-15 years, we don’t buy much “stuff”, we don’t buy designer clothes and we don’t eat at fancy restaurants. We have determined what things we believe add value to our life and are willing to spend money on those things.
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I am old, retired, FI, and spending a shocking amount of money. In this Trump economy the money just keeps rolling in.
However, old habits die hard. I cannot bring myself to spend money on new clothes when Goodwill will provide all the Work clothes we need. I’m looking out for a new crockpot at Goodwill and will find one eventually. I haven’t shopped in an actual mall for decades, but I do hit the thrift stores pretty often. That is,When Covid measures are allowing us to shop.
But given the fact that I could spend a whole lot more, there are many brakes on my spending, developed after decades of frugality. Every once in a while I get a wild hair and think to myself “why don’t you take a first class fare to Europe? “. And then I can’t believe the price! I’m not spending that kind of money and I could easily afford it.
Another example is the cost of Roman shades for windows for a house we’re renovating. I cannot believe people actually spend this much money on these commercially made Roman shades! For one window it’s about $800. One window! Good God. And yes, I have seen them cheaper, I think around $400 or $500 but the fabric choices at those low end places limited. I think I’m going to sew our Roman shades and DH can figure out the hardware, that’s too complicated for me.
So yeah, I have internal blocks to spending shit tons of money on things not terrifically beautiful or necessary.
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I wouldn't buy MORE, but I'd buy BETTER.
I don't like having stuff. But for the stuff that I do already have, there are better versions that I could upgrade to.
For example:
Airpods instead of knockoff earbuds.
A nice Tuft & Needle bed, instead of our Costco mattress.
Nice, sturdy furniture instead of all of our current IKEA furniture that we got when we first got married.
Peloton bike instead of the squeaky Sunny Fitness bike we got for ~$150
Nice wooden clothes hangers rather than the flimsy plastic ones
I'm content with the things we have now, but if we were already FI and had more money than we knew what to do with, I'd start upgrading things.
This Focus on quality becomes more important as you get older, too. And sometimes that’s why I prefer to buy used stuff at the thrift stores because it’s more solid, although that is quickly changing and that stuff is being replaced by IKEA level stuff at thrift stores. Ick.
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I am very impressed by you guys who wouldn't change your lifestyles at all. While I am thankful for the willpower to be frugal, I guess I am just naturally not that way.
------------------- (list of spending)
All right - y'all can face punch me all over the place. But that is absolutely what I would do if I was making major bucks every year :) I found this very fun to think about actually.
I don't see your list as odd at all, if you were making a ton of money. I think nearly all of us would increase our spending - it's more of a question of how quickly we'd increase our spending relative to our income. At some point a fancier car/house/business class plane tickets/hired help for cooking/cleaning become easy decisions for people because they have so much money and the expense is a trivial fraction of their income - it's just that the threshold at which people feel this way varies a lot from person to person. Some people(generally not on this forum) are content with a 10-20% savings rate, even at high incomes. Some people (severely over-represented on this forum) don't want to increase their spending at all until they exceed a 50%, or even a 75% savings rate.
It's merely a question of how heavily you weight those additional luxuries relative to early retirement/occupational flexibility/etc. that you get from having a lot of savings. Different strokes for different folks.
Not all of us.
In past lives, I've lived very luxuriously and I don't miss it.
Hedonic adaptation is a very real thing. At a certain point, few luxuries feel luxurious anymore and everything not luxurious feels like shit. So basically, it's a great way to make a lot of life uncomfortable by comparison.
I found that lifestyle tedious and depressing, but also morbidly addictive. Not my thing anymore.
Not all of us want more. Some of us really are happy with our current spend because that's exactly the lifestyle we chose. We just downsized dramatically a year ago and are so much happier.
Don't get me wrong, we have plenty of luxuries, and don't hesitate to spend on them, but we're a lot like Pete. We live the way we do because that's our best life, which we've spent years figuring out and working towards.
It's not at all what we pictured when we started out, but as time has gone on, we've pared away more and more and been happier and happier.
That's not everyone's path, and I totally understand why PP wants landscaping and facials and a guest house. Everyone needs to figure out their own ideal life. I just think it's a little weird to generalize that we would *all* choose to spend more if we could on a forum that has a lot of people who find happiness in spending a lot less than we can afford to.
FWIW - I don't actually know if I would spend more for the rest of my life, or for a year or two. I definitely think my "spend all the moneeeyz" comes from wanting things to be easier during this covid craziness. I would spend a lot of money for a break right now, if I had that money, and I think that might be skewing my response.
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If I enjoyed my work and found it meaningful, I would definitely spend more. So fun to consider the possibilities in terms of wealth-building, charitable giving, and quality of life upgrades (like the tuft and needle mattress someone mentioned) related to earning $500k/yr over a 25 year span. If I didn't enjoy the work, I would spend about the same as now and take 5 years to put away enough money to retire early, but at 2.5x our present income.
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Re: expensive bedding.
After I retired, and after we had stayed a couple times in hotels with nice mattresses, I decided I would get a nice mattress. We needed a new one. But I couldn’t really tell the difference between expensive ones and mid range ones, so we ended up spending about $500 each mattress. Then, I added on fluffyMattress topper. Then, I added on expensive sheets that were expensive because they have corners that never come off the mattress, guaranteed.I said top it all off with a wonderful soft but light comforter that I got at the thrift store for a couple of bucks.
And I consider this to be the most luxurious bedding I would ever want, but it is acres cheaper than what some people spend. And that’s OK, because it makes me happy I got to the level of satisfaction at a reasonable cost.
I remember the most luxurious car I ever had was a 1997 Ford Taurus. It had plush velveteen seats, electronic sear adjustment, electric windows, cruise control. I did not have any of that in my prior cars.
To this day I’ve not had anything so luxe.
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I have been fortunate to earn around $500K for the past four years and have also seen our income grow from $70K to this level over a course of 10 years. Our lifestyle has definitely creeped up even though we have been saving and investing 45-50% of our gross (no state income tax). This level of income has helped us to pay off our mortgage for an expensive house, now worth $1.5M, in a desirable US city and also save more than $2M in taxable and retirement funds. The power of compounding is starting to kick in and we have seen our networth grew by $500K on average for the past four years. We might be still saving the same percentage of the income, but we have more income to spend on vacations, restaurants, household help and family activities. We only spend money on experiences and things that we feel are giving us value. As an example, we don't have any luxury cars and use Japanese vehicles. As our networth is growing and income has been good, it is hard to be very frugal and justify it. If our income reduces, it is not that hard for us to slow down our spending as we still have a good life. However, it is hard to make a strong case on why we need to live frugally right now although we might be already living cheaper than my peers in the same income group. We are still saving a big percentage of our income, but our life style has definitely increased with higher income and networth.
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PS...How does one get a job that pays $500K/year? I've heard that it's possible, but I just don't know who makes that kind of money without a medical degree. I'm in medical sales...where do I go from here?!
Get really lucky on Youtube?
And as the old saying goes, if you have to ask...
??? I don't get it...
QED. Probably something like over a couple decades learning how to create immense value in a particular industry, e.g., working your way up to VP and beyond. Old Munger said one time that the best way to get a corner office is to deserve one. This means developing one's own competence so you can Price's Law it up in an area where you have a comparative advantage.
And come to think of it, if all else fails just listen to Weird Al's Mission Statement, make it your new bible and follow it religiously for the next couple decades and you'll hit your max salary without fail.
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Yes, I'd spend more. But probably less proportionally than the extra I was bringing in, so saving rate would increase.
Ultimately when you are a very high earner time becomes the most precious resource you have, and having a lot of money allows you to trade income for time when the marginal utility of extra time is worth a lot more than an extra dollar.
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I am very impressed by you guys who wouldn't change your lifestyles at all. While I am thankful for the willpower to be frugal, I guess I am just naturally not that way.
------------------- (list of spending)
All right - y'all can face punch me all over the place. But that is absolutely what I would do if I was making major bucks every year :) I found this very fun to think about actually.
I don't see your list as odd at all, if you were making a ton of money. I think nearly all of us would increase our spending - it's more of a question of how quickly we'd increase our spending relative to our income. At some point a fancier car/house/business class plane tickets/hired help for cooking/cleaning become easy decisions for people because they have so much money and the expense is a trivial fraction of their income - it's just that the threshold at which people feel this way varies a lot from person to person. Some people(generally not on this forum) are content with a 10-20% savings rate, even at high incomes. Some people (severely over-represented on this forum) don't want to increase their spending at all until they exceed a 50%, or even a 75% savings rate.
It's merely a question of how heavily you weight those additional luxuries relative to early retirement/occupational flexibility/etc. that you get from having a lot of savings. Different strokes for different folks.
Not all of us.
In past lives, I've lived very luxuriously and I don't miss it.
Hedonic adaptation is a very real thing. At a certain point, few luxuries feel luxurious anymore and everything not luxurious feels like shit. So basically, it's a great way to make a lot of life uncomfortable by comparison.
I found that lifestyle tedious and depressing, but also morbidly addictive. Not my thing anymore.
Not all of us want more. Some of us really are happy with our current spend because that's exactly the lifestyle we chose. We just downsized dramatically a year ago and are so much happier.
Don't get me wrong, we have plenty of luxuries, and don't hesitate to spend on them, but we're a lot like Pete. We live the way we do because that's our best life, which we've spent years figuring out and working towards.
It's not at all what we pictured when we started out, but as time has gone on, we've pared away more and more and been happier and happier.
That's not everyone's path, and I totally understand why PP wants landscaping and facials and a guest house. Everyone needs to figure out their own ideal life. I just think it's a little weird to generalize that we would *all* choose to spend more if we could on a forum that has a lot of people who find happiness in spending a lot less than we can afford to.
FWIW - I don't actually know if I would spend more for the rest of my life, or for a year or two. I definitely think my "spend all the moneeeyz" comes from wanting things to be easier during this covid craziness. I would spend a lot of money for a break right now, if I had that money, and I think that might be skewing my response.
That's kind of my point.
I don't feel the urge to spend more because my life is set up the way I want it to be. I don't take any issue with what people want to spend on, I take issue with the assumption that we would all spend more if we had more to spend.
That said, I will admit that I've just been made to realize that there's a certain threshold where my opinion changes. I have a certain ceiling of wealth where accumulating more just seems pointless, especially as we have no kids. I am, however, pretty hard pressed to figure out what I would spend on.
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Hedonic adaptation is a very real thing. At a certain point, few luxuries feel luxurious anymore and everything not luxurious feels like shit. So basically, it's a great way to make a lot of life uncomfortable by comparison.
This may seem silly, be we hit that with COVID. We rarely eat out - maybe 1-2x a month. During COVID, we increased that to weekly, sometimes 2x a week, simply to help the local economy.
It got old real fast. The kids hit the hedonistic adaptation point, and wanted more and more. Hubby and I, yeah no.
We are back to once every 2 weeks.
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Hedonic adaptation is a very real thing. At a certain point, few luxuries feel luxurious anymore and everything not luxurious feels like shit. So basically, it's a great way to make a lot of life uncomfortable by comparison.
This may seem silly, be we hit that with COVID. We rarely eat out - maybe 1-2x a month. During COVID, we increased that to weekly, sometimes 2x a week, simply to help the local economy.
It got old real fast. The kids hit the hedonistic adaptation point, and wanted more and more. Hubby and I, yeah no.
We are back to once every 2 weeks.
For me it was luxury experiences that brought the worst out in life. Luxury items and experiences cost sooooo much more than the additional value that they add in general, that they often tend to feel like a subpar value for their cost.
That's why so many wealthy people bitch about what seems like little details. If I'm going to be paying several times the basic cost, then I expect it to be several times as nice! In reality, you pay several times as much for 20-150% nicer. As a result, luxury almost always falls short, unless you are getting it for free.
I had VIP Cirque de Soleil tickets last year, and they had an enormous premium for perks like VIP parking, access to a luxury private VIP tent, open bar, food, and a gift. I ended up pretty underwhelmed.
The parking wasn't valet, wasn't very close to the entrance, and was on gravel and hard to find. The tent in the photos looked magnificent, but was really just a little tent with some small sofas. There were a few little snacks, nothing special, and not enough to offset the over pouring by the bar staff. The open bar had mediocre wine, I would have preferred a cash bar with better options. The gift was a branded umbrella...weird.
I left the whole experience thinking "I'm pretty grateful I didn't pay for that". And that's what living in wealth felt like for me, a whole lot of failure to live up to expectations, but also getting so used to that level of luxury anyway that less-than-luxury feels even worse.
It's pretty lose-lose IMO.
Out of curiosity, in my recent contemplation of earning more than I could possibly spend, I looked up what I would have to spend to find an apartment that I like substantially more than my own. It looks like I would have to spend more than *TEN TIMES* in order to get an apartment with a better view, bigger windows, and a bigger balcony or terrace. Oh, but the kitchen would be smaller and the indoor pool less than half the size...so...I guess I'm not upgrading anytime soon, even if I do come into millions.
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I'm sure I would -- I'd do a lot of my house projects faster instead of trickling them out over a couple of years.
This is a big part of it for me, I'd do more projects now which would seem like more spending but it's money I'd eventually be spending anyway.
Depending on how much more I earned, it gets into the territory of my lottery fantasy - which definitely coincides with more spending.
https://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/do-you-have-a-lottery-fantasy-post-it-here/
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Definitely yes!
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Out of curiosity, in my recent contemplation of earning more than I could possibly spend, I looked up what I would have to spend to find an apartment that I like substantially more than my own. It looks like I would have to spend more than *TEN TIMES* in order to get an apartment with a better view, bigger windows, and a bigger balcony or terrace. Oh, but the kitchen would be smaller and the indoor pool less than half the size...so...I guess I'm not upgrading anytime soon, even if I do come into millions.
For fun I decided to look up zillow to see what it would cost me right now to buy a house that would be tempting to actually move.
Requirements: a garage, a nice kitchen (not a small old kitchen), 3 BR and 1.5 BA, a decent sized lot.
A good school district (but meh...I'd prob just keep my kids where they are anyway).
Air conditioning
I set the sq footage to 1250 to 1750.
So...the answer is $1.25M.
The Zestimate on my house is $890k, though prob $850k is more reasonable considering COVID.
So...50% more.
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Hedonic adaptation is a very real thing. At a certain point, few luxuries feel luxurious anymore and everything not luxurious feels like shit. So basically, it's a great way to make a lot of life uncomfortable by comparison.
This may seem silly, be we hit that with COVID. We rarely eat out - maybe 1-2x a month. During COVID, we increased that to weekly, sometimes 2x a week, simply to help the local economy.
It got old real fast. The kids hit the hedonistic adaptation point, and wanted more and more. Hubby and I, yeah no.
We are back to once every 2 weeks.
For me it was luxury experiences that brought the worst out in life. Luxury items and experiences cost sooooo much more than the additional value that they add in general, that they often tend to feel like a subpar value for their cost.
That's why so many wealthy people bitch about what seems like little details. If I'm going to be paying several times the basic cost, then I expect it to be several times as nice! In reality, you pay several times as much for 20-150% nicer. As a result, luxury almost always falls short, unless you are getting it for free.
I had VIP Cirque de Soleil tickets last year, and they had an enormous premium for perks like VIP parking, access to a luxury private VIP tent, open bar, food, and a gift. I ended up pretty underwhelmed.
The parking wasn't valet, wasn't very close to the entrance, and was on gravel and hard to find. The tent in the photos looked magnificent, but was really just a little tent with some small sofas. There were a few little snacks, nothing special, and not enough to offset the over pouring by the bar staff. The open bar had mediocre wine, I would have preferred a cash bar with better options. The gift was a branded umbrella...weird.
I left the whole experience thinking "I'm pretty grateful I didn't pay for that". And that's what living in wealth felt like for me, a whole lot of failure to live up to expectations, but also getting so used to that level of luxury anyway that less-than-luxury feels even worse.
It's pretty lose-lose IMO.
Out of curiosity, in my recent contemplation of earning more than I could possibly spend, I looked up what I would have to spend to find an apartment that I like substantially more than my own. It looks like I would have to spend more than *TEN TIMES* in order to get an apartment with a better view, bigger windows, and a bigger balcony or terrace. Oh, but the kitchen would be smaller and the indoor pool less than half the size...so...I guess I'm not upgrading anytime soon, even if I do come into millions.
I'd say this is spot on. Particularly when it comes to 'luxury experiences'. I know the common wisdom is that experiences make you happier than possessions. But I think luxury experiences are a unique brand of rip-off.
At the end of the day, unless you're paying for Giselle Bundchen to give you a hand job in a hot air balloon, most 'luxury' experiences don't offer anything more than their regular counterparts except a cheap delusion of exclusiveness. Concierge services are just a google web search dressed in a $300 suit. Business class flights offer fewer amenities than your living room at home, so why pay $8000 for the privilege of 24 hours' amenity? Valet parking involves putting your nice car into the hands of an underpaid teenager. Etc.
I'll never understand why people service their expensive cars at expensive dealerships, for example. You're paying a 200% mark-up just so the dealer can get the cheaply paid receptionist to make you a coffee, hand you a croissant, call you 'sir' and then wash your car on returning it. You can save $500-$1000 every time by going to an independent. It doesn't even void your warranty.
For all these reasons, the more I get paid, the more I recoil from most luxury experiences. If you think about it, they're actually unspeakably vulgar.
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I answered earlier in this thread but it just occurred to me that there is one thing which does seem to be worth the cost (for me at least) - traveling in business class for overnight long-distance flights. If you're careful, you can often find business-class fares which are no more than twice that of economy. I don't care much about the lounge, food and drinks but I do really like being able to sleep comfortably in a lie-flat seat. Before Covid, I traveled very long distances overseas to help look after aged relatives several times a year and this really made a big difference.
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Yeah, I agree, having a lie flat bed and having the access to a shower, massage and hot food in the lounge (particularly if you have a connecting flight) can be very helpful, although I don't know if it's several thousand dollars helpful.
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We are happily FIREd (lean FIRED, by the current standards of the forum). If we had more money the only thing that we’d be tempted to spend it on would be more travel. Not luxury stuff, just more slow-travel type trips.
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I answered earlier in this thread but it just occurred to me that there is one thing which does seem to be worth the cost (for me at least) - traveling in business class for overnight long-distance flights. If you're careful, you can often find business-class fares which are no more than twice that of economy. I don't care much about the lounge, food and drinks but I do really like being able to sleep comfortably in a lie-flat seat. Before Covid, I traveled very long distances overseas to help look after aged relatives several times a year and this really made a big difference.
There are a number of things that are worth the cost, and those things vary depending on the person. I was not saying that no luxury is worth the cost.
It's really individual, which luxuries are worth it and which aren't, but the generalization stands that getting sucked into a life where you become accustom to premium luxury in virtually all aspects is likely to be perpetually disappointing and the hedonic adaptation is brutal.
I indulge in plenty of luxuries, the ones that I've decided add value. I'm just very judicious about letting luxury creep in, even if it's readily "affordable".
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Given more income, we’d make one specific costly purchase: a plug in hybrid electric car.
But the whole fun and motivation of frugality, for me, is to have great quality of life while costing The Earth way less. So increasing consumption cause “I can afford it” in dollar terms makes no sense, since i can’t afford it in environmental terms.
That said we have a ways to go yet....
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Out of curiosity, in my recent contemplation of earning more than I could possibly spend, I looked up what I would have to spend to find an apartment that I like substantially more than my own. It looks like I would have to spend more than *TEN TIMES* in order to get an apartment with a better view, bigger windows, and a bigger balcony or terrace. Oh, but the kitchen would be smaller and the indoor pool less than half the size...so...I guess I'm not upgrading anytime soon, even if I do come into millions.
For fun I decided to look up zillow to see what it would cost me right now to buy a house that would be tempting to actually move.
Requirements: a garage, a nice kitchen (not a small old kitchen), 3 BR and 1.5 BA, a decent sized lot.
A good school district (but meh...I'd prob just keep my kids where they are anyway).
Air conditioning
I set the sq footage to 1250 to 1750.
So...the answer is $1.25M.
The Zestimate on my house is $890k, though prob $850k is more reasonable considering COVID.
So...50% more.
When I hit FI and started considering RE, I was making enough $ I knew a year or two or three more of working now could make a huge difference versus what I could make if I decided to return to work later. The only thing I could think of that would really cost that much would be a house, so I asked my wife to find the best one in the area for sale (knowing we would never want to move far) to see if I had a reason to plan to work longer than I was already planning. We walked thru a $800k home and compared it to the $300k paid off home we live in in our MCOL area. We just weren't that impressed, and not knowing if you'll actually like your neighbors as much as your current ones kinda made it a non-starter.
Unlike other mustachians we seem to have no problem finding things to spend money on and do let our spending increase annually to whatever 25x our investments are worth, but I can't think of anything we don't have that would make us any happier.
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When I hit FI and started considering RE, I was making enough $ I knew a year or two or three more of working now could make a huge difference versus what I could make if I decided to return to work later. The only thing I could think of that would really cost that much would be a house, so I asked my wife to find the best one in the area for sale (knowing we would never want to move far) to see if I had a reason to plan to work longer than I was already planning. We walked thru a $800k home and compared it to the $300k paid off home we live in in our MCOL area. We just weren't that impressed, and not knowing if you'll actually like your neighbors as much as your current ones kinda made it a non-starter.
Unlike other mustachians we seem to have no problem finding things to spend money on and do let our spending increase annually to whatever 25x our investments are worth, but I can't think of anything we don't have that would make us any happier.
Neighbors. Neighbors are key. My best friend bought at a better time than us. So for $88k less than we paid for our house, she has a 4 BR, 3BA house (city next door) with a garage. Fantastic kitchen.
Her neighbors are TERRIBLE and mine are awesome.
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Probably? Some?
I mean, we certainly spent more money when we stopped being broke all the time. And we’re looking to move and more money makes that a lot easier.
But I actually don’t care for eating out or travel or fancy purses and I don’t drive. I couldn’t even think of anything I wanted for my birthday this summer. LOL
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We would spend more on vacations, eating out and entertainment. I would have someone clean twice a month. Since we are older and retired this won’t be happening:))
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I have, and I do.
The deeper answer is for me it's more about NW than salary. When my retirement accounts go up and down by thousands (or tens or hundreds! of thousands) a day, buying a $75 pair of shoes is not is really not a very big question any more.
I try not to be an over-consumer, but when I decide I want something, I just buy it.
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As much as I'd love to go order a yellow Porsche 718 Cayman GT4 with a proper manual transmission, it would hurt and I would not be happy paying out a hundred grand to do it.
Sorry bud, but just posted on R&T!!
https://www.roadandtrack.com/new-cars/road-tests/a32718027/2020-porsche-cayman-gt4-review/ (https://www.roadandtrack.com/new-cars/road-tests/a32718027/2020-porsche-cayman-gt4-review/)
DOOOEEEET!!! /evil
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I'm jealous of everyone who can make more without spending more on taxes.
;-)
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After investing the increased fire hose of cash for a few years, we might upgrade to a nicer home - provided the home is priced right (preferably in a real estate downturn).
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I'm jealous of everyone who can make more without spending more on taxes.
;-)
I could if I incorporated, if you want to be a pain in the ass about it ;)
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After investing the increased fire hose of cash for a few years, we might upgrade to a nicer home - provided the home is priced right (preferably in a real estate downturn).
Haha, this is me exactly. I keep looking at the nicer houses in my area and thinking about which one we would be willing to buy if the price was right. If we see a real estate downturn similar to 2008, we will certainly have decisions to make. Prices have come up quite a bit in my area since I bought my house, so my anchor is pretty low.
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This. I think our vacation budget would probably double from 5k to 10k a year, plus we would probably hire someone to clean our house and maintain our yard. This is if our incomes went from 200k to 500k like the original post stated. Eventually we would buy a bigger house, when we had kids, but not right now. Obviously we'd be spending more but our savings % and total would greatly increase.
We would spend more on vacations, eating out and entertainment. I would have someone clean twice a month. Since we are older and retired this won’t be happening:))
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Yep. Not sure how much as I haven't found the sweet spot yet 😉
Examples of things we have spent more on recently (as we recently went from one person working to two, and increased incomes):
More travel, prioritization of flight times rather than cheapest option
Bought new car when old one died, didn't have intereat in trying to keep the old one running
Meal delivery service (kit that you cook at home).
Things on my list for someday:
Cleaner
Sunroom addition
Even more travel (someday....)
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Yes, you absolutely spend more when you earn more...and you should! It drives me crazy when people arbitrarily set a budget for life before they've really experienced life and what their real earning potential is. (i.e. MMM)
I've always saved over 70% of my income, but I went from making $70k/year out of college and living with a bunch of roommates in an apartment to save money, to making well over $1,000,000 a year in a with fat financial independence long in the rearview mirror. Yes, I routinely by the $18 bottle of wine vs. the $8 bottle. Yes, I now live in an amazing waterfront home with a sunset across the water between two 100 year old oak trees that looks like a postcard. Yes, I spend money traveling to exotic destinations and living an amazing life, yes this is all done on at the same time as continuing to live way below my means.
Money is meant to be spent, it is only units, you only live so long. Once you've saved 50X your annual burn, spending a little more money to enjoy the time you have left on this planet to make you and your loved ones life enjoyable is smart. Hell if MMM would have followed the same path maybe he would still be married and not have a broken family.
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ol1970 - can i ask what you do for work?
we have spent more as we made more - i see no reason not to enjoy life and spend more as you make more as long as you are planning for the future properly.
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When I hit FI and started considering RE, I was making enough $ I knew a year or two or three more of working now could make a huge difference versus what I could make if I decided to return to work later. The only thing I could think of that would really cost that much would be a house, so I asked my wife to find the best one in the area for sale (knowing we would never want to move far) to see if I had a reason to plan to work longer than I was already planning. We walked thru a $800k home and compared it to the $300k paid off home we live in in our MCOL area. We just weren't that impressed, and not knowing if you'll actually like your neighbors as much as your current ones kinda made it a non-starter.
Unlike other mustachians we seem to have no problem finding things to spend money on and do let our spending increase annually to whatever 25x our investments are worth, but I can't think of anything we don't have that would make us any happier.
Neighbors. Neighbors are key. My best friend bought at a better time than us. So for $88k less than we paid for our house, she has a 4 BR, 3BA house (city next door) with a garage. Fantastic kitchen.
Her neighbors are TERRIBLE and mine are awesome.
This is not mentioned enough. This is likely a good reason to keep housing costs under control so it is not devastating to the 'stache if you just need to move for sanity sake.
We recently moved, and chatted with the old neighbor as the moving truck departed. He was a perfect neighbor, we talked maybe three times in four years. After some storm damage in the area, after some construction work, and as the movers left. He was very concerned with who may be moving in, since neither of us had kids, and our house is perfect for a huge family.
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When I hit FI and started considering RE, I was making enough $ I knew a year or two or three more of working now could make a huge difference versus what I could make if I decided to return to work later. The only thing I could think of that would really cost that much would be a house, so I asked my wife to find the best one in the area for sale (knowing we would never want to move far) to see if I had a reason to plan to work longer than I was already planning. We walked thru a $800k home and compared it to the $300k paid off home we live in in our MCOL area. We just weren't that impressed, and not knowing if you'll actually like your neighbors as much as your current ones kinda made it a non-starter.
Unlike other mustachians we seem to have no problem finding things to spend money on and do let our spending increase annually to whatever 25x our investments are worth, but I can't think of anything we don't have that would make us any happier.
Neighbors. Neighbors are key. My best friend bought at a better time than us. So for $88k less than we paid for our house, she has a 4 BR, 3BA house (city next door) with a garage. Fantastic kitchen.
Her neighbors are TERRIBLE and mine are awesome.
This is not mentioned enough. This is likely a good reason to keep housing costs under control so it is not devastating to the 'stache if you just need to move for sanity sake.
We recently moved, and chatted with the old neighbor as the moving truck departed. He was a perfect neighbor, we talked maybe three times in four years. After some storm damage in the area, after some construction work, and as the movers left. He was very concerned with who may be moving in, since neither of us had kids, and our house is perfect for a huge family.
Your neighbor doesn't want a family to be his new neighbor?
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For all your detailed questions, looks like you've got plenty of good, informative responses.
Re:
"IRA contributions: 6000/year which I haven't made this year. Can I contribute this $6000 over the last 4 months of the year and reduce my MAGI by $1500/month?"
Don't forget, not unlike other tax shelters (eg HSA), you can contribute into next year for this. For example, for 2019 IRAs (because of the tax date pushback due to COIVD), you could contribute funds up until July 15, 2020 towards your 2019 IRA deduction.
So far as your bigger question:
"Would you spend more if highly paid?"
Not really. Jenni and I have spent about $40-45K US (as a pair) per year for several years. Our income has varied widely in that period, enough that our savings rate has cracked 75% for years at a time. We built a life we wanted, then started saving for it. We've been fortunate to be happy with that, and fortunate to have increased incomes along with that -- and never feeling like we needed more.
In fact, at one point, I turned down a $175K salary (https://www.tictoclife.com/negotiating-pay/) at just 28 years old.
The thing I value is time.
These days, we're long past FI and transitioning into RE with both of us switching to part-time work.
Our spending really hasn't changed through any of this.
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ol1970 - can i ask what you do for work?
we have spent more as we made more - i see no reason not to enjoy life and spend more as you make more as long as you are planning for the future properly.
I started life as an engineer. Saved my butt off, instead of leanfiring at 28 years old to sit around and play video games I invested it all in a small business in plastics. Turns out I bit off nearly more than I could chew, and really had to work hard to save it. (like average 100 hour a week hard for 4-5 years). Only then did I turn the corner and start to make real money. When I was able to take big bonuses and distributions I plowed them back into investments (commercial real estate, residential, index funds, other small businesses). After $3M liquid I started to relax a bit spending wise. Sold it all to take a break 6 years ago at 43, but because I'm sort of an expert in my field, I can now do part time consulting for fun between traveling that earns into the mid six figures even in retirement. Still only spend maybe $200k/year in a big year even though being worth into the 8 figures.
Point is people who've never experienced hiking the Napali coast trail in Hawaii, but then say it is stupid and unnecessary to spend more than what you thought was the perfect amount when you were 30 years old are just plain silly. I suppose ignorance is bliss, but money is a tool, you don't get to keep it when you are gone. I suppose I look at it this way, me taking my wife to French Polynesia every year is the financial equivalent of a leanfire person taking their wife to Appleby's for their anniversary. There are a lot of people who rationalize that experiences they cannot have are not worth doing or just wasteful spending...don't listen to them.
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ol1970 - can i ask what you do for work?
we have spent more as we made more - i see no reason not to enjoy life and spend more as you make more as long as you are planning for the future properly.
I started life as an engineer. Saved my butt off, instead of leanfiring at 28 years old to sit around and play video games I invested it all in a small business in plastics. Turns out I bit off nearly more than I could chew, and really had to work hard to save it. (like average 100 hour a week hard for 4-5 years). Only then did I turn the corner and start to make real money. When I was able to take big bonuses and distributions I plowed them back into investments (commercial real estate, residential, index funds, other small businesses). After $3M liquid I started to relax a bit spending wise. Sold it all to take a break 6 years ago at 43, but because I'm sort of an expert in my field, I can now do part time consulting for fun between traveling that earns into the mid six figures even in retirement. Still only spend maybe $200k/year in a big year even though being worth into the 8 figures.
Point is people who've never experienced hiking the Napali coast trail in Hawaii, but then say it is stupid and unnecessary to spend more than what you thought was the perfect amount when you were 30 years old are just plain silly. I suppose ignorance is bliss, but money is a tool, you don't get to keep it when you are gone. I suppose I look at it this way, me taking my wife to French Polynesia every year is the financial equivalent of a leanfire person taking their wife to Appleby's for their anniversary. There are a lot of people who rationalize that experiences they cannot have are not worth doing or just wasteful spending...don't listen to them.
Impressive.
Also, when you have "enough", I consider it to be helpful to spread the wealth around. Like employing someone to clean my house. Why hoard my money? (Actually, she's still getting paid and we told her we'd let her know when it's safe to come back. Hasn't been here since mid March.)
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ol1970 - can i ask what you do for work?
we have spent more as we made more - i see no reason not to enjoy life and spend more as you make more as long as you are planning for the future properly.
I started life as an engineer. Saved my butt off, instead of leanfiring at 28 years old to sit around and play video games I invested it all in a small business in plastics. Turns out I bit off nearly more than I could chew, and really had to work hard to save it. (like average 100 hour a week hard for 4-5 years). Only then did I turn the corner and start to make real money. When I was able to take big bonuses and distributions I plowed them back into investments (commercial real estate, residential, index funds, other small businesses). After $3M liquid I started to relax a bit spending wise. Sold it all to take a break 6 years ago at 43, but because I'm sort of an expert in my field, I can now do part time consulting for fun between traveling that earns into the mid six figures even in retirement. Still only spend maybe $200k/year in a big year even though being worth into the 8 figures.
Point is people who've never experienced hiking the Napali coast trail in Hawaii, but then say it is stupid and unnecessary to spend more than what you thought was the perfect amount when you were 30 years old are just plain silly. I suppose ignorance is bliss, but money is a tool, you don't get to keep it when you are gone. I suppose I look at it this way, me taking my wife to French Polynesia every year is the financial equivalent of a leanfire person taking their wife to Appleby's for their anniversary. There are a lot of people who rationalize that experiences they cannot have are not worth doing or just wasteful spending...don't listen to them.
Does any real person actually decide a budget for life at 30 and then FIRE based on that? I think that argument is very strange. (I heard it recently on a podcast as well.)
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Kind of? My FIRE number is based on my expenses when I was 29/30.
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ol1970 - can i ask what you do for work?
we have spent more as we made more - i see no reason not to enjoy life and spend more as you make more as long as you are planning for the future properly.
I started life as an engineer. Saved my butt off, instead of leanfiring at 28 years old to sit around and play video games I invested it all in a small business in plastics. Turns out I bit off nearly more than I could chew, and really had to work hard to save it. (like average 100 hour a week hard for 4-5 years). Only then did I turn the corner and start to make real money. When I was able to take big bonuses and distributions I plowed them back into investments (commercial real estate, residential, index funds, other small businesses). After $3M liquid I started to relax a bit spending wise. Sold it all to take a break 6 years ago at 43, but because I'm sort of an expert in my field, I can now do part time consulting for fun between traveling that earns into the mid six figures even in retirement. Still only spend maybe $200k/year in a big year even though being worth into the 8 figures.
Point is people who've never experienced hiking the Napali coast trail in Hawaii, but then say it is stupid and unnecessary to spend more than what you thought was the perfect amount when you were 30 years old are just plain silly. I suppose ignorance is bliss, but money is a tool, you don't get to keep it when you are gone. I suppose I look at it this way, me taking my wife to French Polynesia every year is the financial equivalent of a leanfire person taking their wife to Appleby's for their anniversary. There are a lot of people who rationalize that experiences they cannot have are not worth doing or just wasteful spending...don't listen to them.
Does any real person actually decide a budget for life at 30 and then FIRE based on that? I think that argument is very strange. (I heard it recently on a podcast as well.)
That's my thinking, based on my years here, it's really a false concern.
Most people here are highly focused on maximizing earning and having enough. It's a rare person here who actually lives like Pete, and even fewer who live on less than Pete and don't continue to earn extra income the way he does.
There are a few low spenders here who totally quit working and plan on living on that low spend indefinitely.
Also, as the person who first started ragging on luxury in this thread, I did so from the experience of having lived it, not from some imaginary excuse to avoid trying to make more money. That's my personal taste. Others are entitled to their personal taste.
Some people love living in a post card. I've done it and didn't really like it, to each their own. I spend a fair amount of time with the 7 figure net worth crowd, and know very well what I'm missing. I'm very okay with it.
I think in a world aggressively driven to earn and spend.as much as possible, worrying about the vanishingly few who actually think and live like MMM is a concern that no one really needs.
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ol1970 - can i ask what you do for work?
we have spent more as we made more - i see no reason not to enjoy life and spend more as you make more as long as you are planning for the future properly.
I started life as an engineer. Saved my butt off, instead of leanfiring at 28 years old to sit around and play video games I invested it all in a small business in plastics. Turns out I bit off nearly more than I could chew, and really had to work hard to save it. (like average 100 hour a week hard for 4-5 years). Only then did I turn the corner and start to make real money. When I was able to take big bonuses and distributions I plowed them back into investments (commercial real estate, residential, index funds, other small businesses). After $3M liquid I started to relax a bit spending wise. Sold it all to take a break 6 years ago at 43, but because I'm sort of an expert in my field, I can now do part time consulting for fun between traveling that earns into the mid six figures even in retirement. Still only spend maybe $200k/year in a big year even though being worth into the 8 figures.
Point is people who've never experienced hiking the Napali coast trail in Hawaii, but then say it is stupid and unnecessary to spend more than what you thought was the perfect amount when you were 30 years old are just plain silly. I suppose ignorance is bliss, but money is a tool, you don't get to keep it when you are gone. I suppose I look at it this way, me taking my wife to French Polynesia every year is the financial equivalent of a leanfire person taking their wife to Appleby's for their anniversary. There are a lot of people who rationalize that experiences they cannot have are not worth doing or just wasteful spending...don't listen to them.
Does any real person actually decide a budget for life at 30 and then FIRE based on that? I think that argument is very strange. (I heard it recently on a podcast as well.)
Well, I fired at 31, not 30, but yeah. :P I didn't assume that I would spend the same amount of money forever, but I'm lean fire and did assume I could keep my voluntary expenses in that range long-term.
I budgeted extra for long term healthcare and possible rent increases. I never budgeted for a car or fancy international vacations or $200 tasting menus, because I didn't care about those things. Even when I traveled full time, I stayed with friends and took trains and buses over planes when possible.
I grew up with conspicuous consumption, and I know it's not for me.
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When I hit FI and started considering RE, I was making enough $ I knew a year or two or three more of working now could make a huge difference versus what I could make if I decided to return to work later. The only thing I could think of that would really cost that much would be a house, so I asked my wife to find the best one in the area for sale (knowing we would never want to move far) to see if I had a reason to plan to work longer than I was already planning. We walked thru a $800k home and compared it to the $300k paid off home we live in in our MCOL area. We just weren't that impressed, and not knowing if you'll actually like your neighbors as much as your current ones kinda made it a non-starter.
Unlike other mustachians we seem to have no problem finding things to spend money on and do let our spending increase annually to whatever 25x our investments are worth, but I can't think of anything we don't have that would make us any happier.
Neighbors. Neighbors are key. My best friend bought at a better time than us. So for $88k less than we paid for our house, she has a 4 BR, 3BA house (city next door) with a garage. Fantastic kitchen.
Her neighbors are TERRIBLE and mine are awesome.
This is not mentioned enough. This is likely a good reason to keep housing costs under control so it is not devastating to the 'stache if you just need to move for sanity sake.
We recently moved, and chatted with the old neighbor as the moving truck departed. He was a perfect neighbor, we talked maybe three times in four years. After some storm damage in the area, after some construction work, and as the movers left. He was very concerned with who may be moving in, since neither of us had kids, and our house is perfect for a huge family.
Your neighbor doesn't want a family to be his new neighbor?
Correct. sticky, loud children all over? No thanks is his view, and ours for that matter.
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Does any real person actually decide a budget for life at 30 and then FIRE based on that? I think that argument is very strange. (I heard it recently on a podcast as well.)
We're basically doing that. For the last eight years we've been living as close to our ideal lifestyle as possible while still working, so we have a very good idea what price tag is attached to said lifestyle. I think it's extremely logical to base retirement spending on your own real numbers from 10-15 years of tracking. Particularly if you're fairly "consistent" in terms on consumption/lifestyle, like you're not going to all of a sudden decide you have a buy a bunch of shit you never had before, or suddenly have a bunch of kids you never wanted before, and so on.
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One thing is that as you age you often want more comfort. So tent camping was fun until age 54. Then we got a used motor home. 12 years later it’s gone and we stay in motels. So some costs go up as you age such as healthcare.
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One thing is that as you age you often want more comfort. So tent camping was fun until age 54. Then we got a used motor home. 12 years later it’s gone and we stay in motels. So some costs go up as you age such as healthcare.
I see more posts here about owning luxury cars than I do about tent camping. I think the lifestyles of the majority of our members, who are typically pretty high earning, are already soft enough to be sustainable well into senior years.
I know my lifestyle is softer and cushier than that of my senior citizen parents who spend A LOT more than I do.
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One thing is that as you age you often want more comfort. So tent camping was fun until age 54. Then we got a used motor home. 12 years later it’s gone and we stay in motels. So some costs go up as you age such as healthcare.
I feel like you can predict that to a degree from looking at your own family. I don't sleep in a tent very often (maybe 3-4 nights a year), but my 66 year old dad seems to do fine, so as long as I prioritize my health at least to the extent he does, I should be fine in that regard. We already rent nice apartments when we travel, so I don't see much that would change there. Things that aren't going to work for me tend to become apparent pretty quickly - last summer I slept on the floor in a traditional Japanese apartment to see what it was like, and I was clearly already too old for that at 32, lol. Though it was actually softer than the mattress I slept on in Hong Kong. I don't know how the hell people in HK sleep on those things. Every morning I woke up and my heels hurt.
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One thing is that as you age you often want more comfort. So tent camping was fun until age 54. Then we got a used motor home. 12 years later it’s gone and we stay in motels. So some costs go up as you age such as healthcare.
We are in our early 50s. A few years ago, we bought camping cots. It really made a difference in comfort, so much better than being on the ground, better than an air mattress.
But still, we are soft enough that:
- we probably only camp once a year
- most of our trips we stay in hotels or AirBNBs. ANd we are leaning more towards AirBNBs so we can have kitchens and bedrooms.
Now that we have the dog...we'll see. We haven't taken any kind of vacation since we adopted her right after Thanksgiving. I expect fewer camping trips (maybe every other year), more AirBNBs.
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Does any real person actually decide a budget for life at 30 and then FIRE based on that? I think that argument is very strange. (I heard it recently on a podcast as well.)
We're basically doing that. For the last eight years we've been living as close to our ideal lifestyle as possible while still working, so we have a very good idea what price tag is attached to said lifestyle. I think it's extremely logical to base retirement spending on your own real numbers from 10-15 years of tracking. Particularly if you're fairly "consistent" in terms on consumption/lifestyle, like you're not going to all of a sudden decide you have a buy a bunch of shit you never had before, or suddenly have a bunch of kids you never wanted before, and so on.
I'm in my early 30s and I think I have a great lifestyle. I can't imagine much that I want to spend on that I don't already spend on. I already live a very cushy life. And I don't even spend that much. I have no idea how (non-super-rich) families can spend $100k a year or $150k a year. It astounds me. I mean, to each her own I guess, but some of those families will retire and then demand a government pension....
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I didn’t like sleeping on the floor when I was 30, so my life goals really did aspire to a future budget where I didn’t need to do that. LOL I like my life a million times better now than I was 30yo, so stuff does change.
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One thing is that as you age you often want more comfort. So tent camping was fun until age 54. Then we got a used motor home. 12 years later it’s gone and we stay in motels. So some costs go up as you age such as healthcare.
I see more posts here about owning luxury cars than I do about tent camping. I think the lifestyles of the majority of our members, who are typically pretty high earning, are already soft enough to be sustainable well into senior years.
I know my lifestyle is softer and cushier than that of my senior citizen parents who spend A LOT more than I do.
+1
Not to mention, if you retire at 40, by the time you are in your 60s your FIRE likely dramatically succeeded or you pretty much failed it.
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I’d likely add some additional spending. Going on a few more tours that look interesting during a vacation, staying at slightly higher end small hotels, not thinking for 2 years if I really want to buy a kayak or waiting another few years to build the screened in porch.
But I also have a pretty strong contentment that I have enough in general so from the outside most people wouldn’t see much of a change in my lifestyle if I made the small changes, but I’d know (and likely agonized over them)
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One thing I've found really interesting is how consistent our spending has been over the years, despite how many things have changed. Like, we've taken up new hobbies, dropped old ones, changed our food systems a lot, and gradually shifted from normal trips to some pretty wild ones. Some years we have a bunch of dental expenses, some years very little. Yet like clockwork, every year we end up spending right around 27-28K.
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Our spending in 2010-2014 on a ~$60k/yr household income was almost the same as 2015-2019 where we had a $180k/yr income......but I guess that's why we were able to leanFIRE @33/29 years old......YMMV
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Our income has been creeping up the past couple of years (probably not sustainable) and the biggest change in spending has been an increased willingness to pay people to do stuff for us. Not because I'm too cushy to do things myself, but because making all that money also means my spare time is very precious these days and while I'm totally willing to mow the lawn, spray ant bait around the yard, etc, in a world where I have plenty of spare time, the extra cost is worth being able to put in the time on things I really want even if it delays the FIRE date a bit.
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I think the better question is “would I be willing to work at a job that paid that much” and the answer is probably not. I would much rather work a lower paying job with low stress than the opposite. Nothing I can buy is that important to me. I have learned to live a very fulfilling life on very little so adding complexity to that for no reason makes zero sense.
I often look around me and think how much happier I would probably be with less stuff even when I already require very little, so the thought of more does absolutely nothing for me.
So, obviously I can’t say for sure, but if someone wants to give me that amount of money per year for whatever reason then I’m sure I’d spend more in certain areas because like you said, “why not”, but I am absolutely certain it would have zero effect on my overall happiness and in fact it may hurt it.
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DH would absolutely say yes - he is the spender. He'd probably be happy with XM radio and some sort of live sports subscriptions. Beyond that, he isn't really "wanting" for much. In a perfect world he'd have us traveling the country in an RV because he loves to travel. Unfortunately, I get motion sickness from a rocking chair so that dream isn't happening with me as the co-pilot.
I would spend some more but not a huge amount - I'm the saver. We have a pretty decent savings rate on a relatively low income for a family of 4. I'd love to have a flusher savings account and more socked away for the kids' college and our retirement. We've had to loosen up the grocery budget due to COVID and that was the area most in need of fattening anyway. But as our medical costs continue to rise, I'd love to have more budgeted to that category every month.
Although I don't know if RE will ever really be possible for me. I'm a worrier by nature so always wanting more in savings to help me deal with the earlier/pricier/un- expected things that pop up in life.
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Money is meant to be spent, it is only units, you only live so long. Once you've saved 50X your annual burn, spending a little more money to enjoy the time you have left on this planet to make you and your loved ones life enjoyable is smart. Hell if MMM would have followed the same path maybe he would still be married and not have a broken family.
Harsh (about MMM) - and in all likelihood untrue. There is no evidence that I'm aware of that the MMs were divorced over money, or lack of spending. I'd also posit that, once you have financial security, those who spend large amounts aren't less likely to get divorced, either.
The point of this site is not to reach FIRE as quickly as possible. It's also not just about money - it's also about living responsibly and sustainably. Naturally, not everyone here is going to agree with that, and it's of course possible to live sustainably while spending gobs of cash, but part of the point is to decouple spending from happiness to the greatest extent possible. Maybe your experience is telling you that more spending continues to equal more happiness all the way up the spectrum, but there are plenty who would disagree.
I can't speak from personal experience, but our close friends with 7-figure incomes (and now spending to match after slowly working their way up the spending ladder) aren't really any happier now than when there were living a mere upper-middle-class life.
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I think the better question is “would I be willing to work at a job that paid that much” and the answer is probably not. I would much rather work a lower paying job with low stress than the opposite. Nothing I can buy is that important to me. I have learned to live a very fulfilling life on very little so adding complexity to that for no reason makes zero sense.
I often look around me and think how much happier I would probably be with less stuff even when I already require very little, so the thought of more does absolutely nothing for me.
So, obviously I can’t say for sure, but if someone wants to give me that amount of money per year for whatever reason then I’m sure I’d spend more in certain areas because like you said, “why not”, but I am absolutely certain it would have zero effect on my overall happiness and in fact it may hurt it.
What I've come to understand from the very high net worth folks I talk to is that the work at the very high level of income isn't particularly stressful. It's getting there that sucks.
That said, I'm talking more 1M+/yr comp, not mid 6 figures like a lot of brutally hard working Bay Area folks and doctors make.
The 200-600K range does seem to be a slog range though. I don't know a lot of people with those comps who don't suffer for it. I'm sure there are some out there, but I think those people are the exception.
Meanwhile the 1M+ folks I know are generally going home at 4 and have a bunch of 200-600K staff to handle the long hours and stresses for them.
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I have to admit that I also wondered if money contributed to the divorce of MM. However, it’s nobody’s business.
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Money is meant to be spent, it is only units, you only live so long. Once you've saved 50X your annual burn, spending a little more money to enjoy the time you have left on this planet to make you and your loved ones life enjoyable is smart. Hell if MMM would have followed the same path maybe he would still be married and not have a broken family.
Harsh (about MMM) - and in all likelihood untrue. There is no evidence that I'm aware of that the MMs were divorced over money, or lack of spending. I'd also posit that, once you have financial security, those who spend large amounts aren't less likely to get divorced, either.
The point of this site is not to reach FIRE as quickly as possible. It's also not just about money - it's also about living responsibly and sustainably. Naturally, not everyone here is going to agree with that, and it's of course possible to live sustainably while spending gobs of cash, but part of the point is to decouple spending from happiness to the greatest extent possible. Maybe your experience is telling you that more spending continues to equal more happiness all the way up the spectrum, but there are plenty who would disagree.
I can't speak from personal experience, but our close friends with 7-figure incomes (and now spending to match after slowly working their way up the spending ladder) aren't really any happier now than when there were living a mere upper-middle-class life.
Harsh, and also untrue according to what he himself says. Whether you believe what he says about his own divorce or not, it's pretty rude to come to his own site and basically call the guy a liar about his own divorce.
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Answering OP's question: I don't think DW and I would change much. Our approach to things and life remain mostly the same as when we were in college. Not impressed by mansions or fancy people or their things.
We did buy a larger house with a much larger patch of ground last year. Made for a much nicer pandemic WFH situation just b/c all four of us could spread out a little.
We'd probably pay someone to refresh the house and landscaping but then go right on maintaining it ourselves. Perhaps pay someone to clean it bi-weekly or monthly while continuing our regular cleaning routines.
I could imagine a toy or two like a waterski boat. Slow travel a couple times per year. Month long trips perhaps. Replace our ordinary things with nicer quality things as stuff wears out.
We've arrived at the income level we wanted and needed to save money and still have a comfortable family life here. We could happily have a smaller home like before and may still have that someday when we are older and less interested in mowing acres of grass or cleaning the one we have now. Depends on how many grandkids and how often everyone comes to our house.
A higher income might help us help others by donating more resources. We would definitely retire sooner.
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A lot too depends on where you live. I currently live in a home that I paid $280k for, a comparable home in SFO would be $2 million at least. I don’t need to move up in home if I make more in my current city because my home is great. But if I were in SFO, yeah I’d likely buy a home but that would be the biggest difference if I went from $150k to 500k in a HCOL.
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If I hadn't already FIRED, and I still had my old $100k/yr job, I would splurge on some professionally done landscaping upgrades, such as a french drain, adding some new planting beds, a hedge to screen my view of my neighbor's weedy, unkempt yard. Maybe an insulated garage door, too.
I wouldn't spend more on our day to day lifestyle, though.
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When I hit FI and started considering RE, I was making enough $ I knew a year or two or three more of working now could make a huge difference versus what I could make if I decided to return to work later. The only thing I could think of that would really cost that much would be a house, so I asked my wife to find the best one in the area for sale (knowing we would never want to move far) to see if I had a reason to plan to work longer than I was already planning. We walked thru a $800k home and compared it to the $300k paid off home we live in in our MCOL area. We just weren't that impressed, and not knowing if you'll actually like your neighbors as much as your current ones kinda made it a non-starter.
Unlike other mustachians we seem to have no problem finding things to spend money on and do let our spending increase annually to whatever 25x our investments are worth, but I can't think of anything we don't have that would make us any happier.
Neighbors. Neighbors are key. My best friend bought at a better time than us. So for $88k less than we paid for our house, she has a 4 BR, 3BA house (city next door) with a garage. Fantastic kitchen.
Her neighbors are TERRIBLE and mine are awesome.
This is not mentioned enough. This is likely a good reason to keep housing costs under control so it is not devastating to the 'stache if you just need to move for sanity sake.
We recently moved, and chatted with the old neighbor as the moving truck departed. He was a perfect neighbor, we talked maybe three times in four years. After some storm damage in the area, after some construction work, and as the movers left. He was very concerned with who may be moving in, since neither of us had kids, and our house is perfect for a huge family.
Your neighbor doesn't want a family to be his new neighbor?
Correct. sticky, loud children all over? No thanks is his view, and ours for that matter.
Sticky, loud, and all over, haha! Perfect description!
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Coming at this from a slightly different angle.
I can't imagine a scenario in which a job paying me 500k would be enjoyable enough to stick at. Even if the job itself was ok, the imposter syndrome, guilt and my perceived need to put in the effort to justify that amount of income means that I'd probably need to get a very good therapist just to hold it down. However I'd hazard a guess that no amount of lifestyle inflation would make up for the job itself.
If this job/income magically fell out of the sky starting tomorrow and I kept all my current expenses the exact same (or increased slightly to my pre COVID level) I'd only need to do that job for 1 year in order to be lean FI. At that point I could quit. If I was to increase my spending then I'd be sabotaging all of the security and freedom I'm striving for. My life right now is pretty optimised and sustainable, why spend more?
I've basically doubled my salary in the past 4 years and am not spending more than I was 4 years ago. I currently have trouble visualising how it would be possible to spend my entire salary and for that to bring out an increase in day to day happiness. Let alone one 10x as much.
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I answered the question as if my current job magically gave me a tenfold raise.
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If overnight for no particular reason my income went up $50k I'd buy a few more lunches and take a vacation without worrying about doing credit card miles calculus. Right now I'm mentally going back and forth whether or not to spend $200 upgrading a component of my 10 year old computer or spending $1400 on building a completely new one (with 2 year old parts). If my income was higher I wouldn't hesitate. I'd still own the same car and desire the same sized house. After a couple luxuries like the vacation, the computer, and taxes, I'd invest the rest since I don't actually need it which would make up for this new FIRE number.
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I would no doubt have better stuff in my house. Original art. I was just browsing on Etsy at some very nice handmade home accessories that are little luxuries. I would have more of the very nice stuff if we had more fluff money.
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Money is meant to be spent, it is only units, you only live so long. Once you've saved 50X your annual burn, spending a little more money to enjoy the time you have left on this planet to make you and your loved ones life enjoyable is smart. Hell if MMM would have followed the same path maybe he would still be married and not have a broken family.
Harsh (about MMM) - and in all likelihood untrue. There is no evidence that I'm aware of that the MMs were divorced over money, or lack of spending. I'd also posit that, once you have financial security, those who spend large amounts aren't less likely to get divorced, either.
The point of this site is not to reach FIRE as quickly as possible. It's also not just about money - it's also about living responsibly and sustainably. Naturally, not everyone here is going to agree with that, and it's of course possible to live sustainably while spending gobs of cash, but part of the point is to decouple spending from happiness to the greatest extent possible. Maybe your experience is telling you that more spending continues to equal more happiness all the way up the spectrum, but there are plenty who would disagree.
I can't speak from personal experience, but our close friends with 7-figure incomes (and now spending to match after slowly working their way up the spending ladder) aren't really any happier now than when there were living a mere upper-middle-class life.
Hey I totally agree more money doesn’t equal more happiness. But MMM decided with $800k in the bank at essentially 30 years old, with zero blog income that all he ever needed in the next 80 years of his life was $25k a year of today’s dollars. He subsequently built something great that I admire in this website that dramatically changed his financial situation. He created a persona though that didn’t allow flexibility or growth. I’m just saying I disagree with that. At 30 I was making $70k a year at 40 I was making $1M. I actually didn’t change my spending much at all.
I have no idea if living a $25k a year lifestyle while bringing in $500k a year contributed to MMMs marital issues but I could see how it could. I’m just saying have a freaking cookie once in a while he’s earned it.
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LOL ... I'd say he had plenty of cookies, figuratively, because I don't think he eats actual cookies. He just doesn't live a $25k life, though. He "retired" and then found a bunch of other really hard work that paid off. I'd do practical anything rather than build a house, for instance.
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LOL ... I'd say he had plenty of cookies, figuratively, because I don't think he eats actual cookies. He just doesn't live a $25k life, though. He "retired" and then found a bunch of other really hard work that paid off. I'd do practical anything rather than build a house, for instance.
Agreed, he's lived a pretty rich life and most of his more luxurious lifestyle is paid for by his new line of work. I mean, he built himself a private club catering to exactly his preferred lifestyle, in many tangible ways, he's living a much more luxurious life than most of us. He's the last person who would consider himself in any way deprived.