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A question for you folks: when you spend money on goods and services that you know represent conspicuous consumption, and on ones that represent luxury, and pro

A question for you folks: when you spend money on goods and services that you know represent conspicuous consumption, and on ones that represent luxury, and provide little practical utility, how does it make you feel? Using a 3.5% safe withdrawal rate, I've recently crossed the threshold where I could retire indefinitely at my current spending rate. Each day I continue working is now essentially only so I can spend more on a more luxurious lifestyle in the future. I'm fairly frugal, and it's been changing my perspective on work a bit. The first place I've been loosening up on is food.

deleted 7y ago
[deleted]
SolaceQuantum 7y ago
One of the important things I find to try and understand is what it means to not be in the financial situation I'm in right now. It means being stressed all the time, and therefore the stress would affect my capacity to make long term decisions. Also, lowering my current heightened stress would become a higher priority. Therefore I would assume that (due to a combination of lowered decision making and a need to reduce stress) the spending of money to consume would actually be a very reasonable decision to make- it reduces friction on decision making and also temporarily reduces stress.
- challenger22 7y ago
  Are you living a bare bones lifestyle? If so, and you're still stressed out of your mind, it's a tough battle. You have my empathy.
mikestew 7y ago
only so I can spend more on a more luxurious lifestyle in the future Or, you know, maybe allowing more philanthropy and leaving a charitable legacy for the future. There are many ways to utilize our high-tech ability to generate large incomes that don't involve spending every dime on ourselves.
- challenger22 7y ago
  Yeah, I think I will become more philanthropic soon, I can feel the limits of my hedonism kicking in, in a weird way. Currently my only philanthropy is volunteering at Habitat for Humanity every once in a blue moon. The crossover point where I feel like I will actively enjoy giving to charity is once my portfolio reaches $2MM ($70k annual spend).
spraak 7y ago
Do you have or plan to have children? What about current or unexpected medical expenses?
- challenger22 7y ago
  Yep, married now, probably 1 or 2 kids eventually. To add a bit of nuance to my first post, growth assumptions of 6% per year on the portfolio mean that the eventual expense associated with children is probably already baked into the plan, given how conservative a 3.5% withdrawal rate is. Not too bad to worry about financially. Reasonable insurance means anticipated medical expenses are limited to out-of-pocket maximums per year, which is reasonable.
  - rb808 7y ago
    > growth assumptions of 6% per Wow that is optimistic. Edit: Yes I know US markets have done very well the last 100 years, but they were unusual circumstances. The next 100 are very likely to be different. Take a look Germany/France/Italy/UK/Japan, for more normal returns. Yes they are less capitalist - but US could be too given the way the main US parties are going. Its just scary whenever I see people extrapolate recent returns. FIRE guys are generally dreaming -esp if they have no children.
    - challenger22 7y ago
      U.S. stocks have appreciated at 7% (after inflation), on average, for over 100 years. And even if they don't, the 3.5% withdrawal rate has a 99% success rate if backtested on websites such as firecalc.com. Most of the time, this withdrawal rate leaves the investor with a portfolio worth several multiples of its starting value after 30 years.
    - Djvacto 7y ago
      In my reading, this seems like a pretty common assumption for the average annual return (looking at a period of multiple years averaged together), used often by people in the FIRE community (places like /r/FinancialIndependence, or bloggers like MMM).
sokoloff 7y ago
Once our house is paid off (about 8 more years), the same would be true for us and we are not living a Spartan lifestyle even now (I'm also using the 3.5% SWR for planning). Even if I could shorten the time-to-full-retirement by a couple years, it wouldn't do me any particular good. I generally like my field and my job. I'm tied to the area (can't freely travel 25+% of the time) by virtue of having kids in 2nd and 4th grade. So, there's no mathematical/financial reason to pursue a more Spartan early-retirement-extreme or MMM-approved spending plan. With that in mind, I find I'm able to enjoy the luxury expenditures, because they aren't taking us off our plan. We travel for a week each winter to "someplace warm". We travel to visit family quite freely. The kids engage in whatever activities they want to try, without worrying about the costs. We own an airplane. We have cleaners that come by every other week. We buy quality food. We give to charities that are meaningful to us (many with money, some with significant amounts of our time as well). On the other hand, we cut our own grass, do 95+% of our own car maintenance, almost all of our home maintenance, and cook most of our own meals, because we value the savings and example it sets for our kids (especially around charity and talking through the value of money).
- theNJR 7y ago
  >We own an airplane. That escalated quickly!
  - sokoloff 7y ago
    They're a lot less expensive than most people first think. (think "price of a fairly nice car" not "price of a nice house"; though obviously they go up in price to "whatever number you have in mind", most are in the 5-figure or just barely-6-figure range.)
    - astura 7y ago
      What about the upkeep, insurance, storage, and maintenance? I suspect(?) those would be substantial.
      - 7y ago
54635124gddd 7y ago
Hahaha... what luxury? I drive a used car. I cook my own food. I get my clothes from walmart. I make 40k a year. Most of it goes to rent (the cheapest 1 bedroom I could find in my area) and paying down my wife's student loans. She also works, but her degree is useless (museum studies?) so she works in retail. College is the only conspicuous consumption she's done. She should have never went. But how can I blame her for making a dumb decision over a decade ago, when everyone from her family and friends to her teachers and counselors told her it was the right move? I don't care fox luxury anyways. My hobbies are cheap. But I'd like to stop working some day. I've been putting whatever I can into an IRA since I graduated school. I have more retirement savings than others in my age group, but I'm still behind where I should be.
commandlinefan 7y ago
> I could retire indefinitely at my current spending rate. I'm guessing you're not married, then...?
- challenger22 7y ago
  I'm married. My wife is pretty much just as frugal as I am.
milesvp 7y ago
Food is a good place to start. I was once very frugal, doing things like adding a can of corn to a can of soup to lower it’s cost basis (later cooking the soup myself to get even lower cost basis). Good food doesn’t have to be expensive, but quality ingredients will cost more than most frozen food. After food, spending money on communal activities is a good place to open your wallet. Being around good friends will really make you feel good about life. I’m reluctant to suggest money on physical goods. But I’ve noticed for certain things, quality really makes a difference. I bought an REI backpack 10 years ago that to this day brings me joy just looking at it. Also a good bed made a ton of difference 5 years ago. Word of warning though. It is really hard to go back once you raise the bar in a given area. I am currently hemorrhaging money due to children expenses, and going back to only drinking tap water sort of feels bad in ways that are hard to describe. Also keep in mind that significant others can really change your spending habits. Most of my fire fantasies flew out the window when I moved in with my girlfriend. And again once I got married. And again once I had kids...
- souprock 7y ago
  Me too pretty much, "currently hemorrhaging money due to children expenses, and going back to only drinking tap water sort of feels bad in ways that are hard to describe." In my case, it will soon be 12 kids, and I hadn't personally purchased bottled water for normal home use. The water situation is weird. I could never bring myself to buy bottled water, since it feels wasteful, but I got used to it being provided at work. This got me viewing the tap water as contaminated, but not having any alternate water at home. I end up dehydrated. I also drink lots of juice and milk, which isn't saving any money but it somehow feels less wasteful.
JohnFen 7y ago
> when you spend money on goods and services that you know represent conspicuous consumption, and on ones that represent luxury, and provide little practical utility, how does it make you feel? To be entirely honest, I don't really do this. I guy goods and services if they are fun or stimulating, make my life easier for me, or solve a problem that I have. I can't remember ever buying something because it was luxurious, except for the occasional meal. If I did, then I think I'd feel like I was wasting my money.
mrguyorama 7y ago
I grew up dirt poor, and was heavily exposed to financial hardship. I don't live frugally, but cheaply, and every single penny I spend on things that aren't "necessary" causes me mental anguish. Any purchase above 10-50 dollars requires actual effort to "psych" myself up for. I am underpaid for my industry and position. I have a years salary in the bank. This is what poverty does to a human. The destruction caused by such anxiety cannot truly be fixed. Every day we don't strive to help our fellow man is a day we condemn thousands to a life of anguish. Remember that next time you vote
faissaloo 7y ago
>how does it make you feel? Like part of the problem.

deleted 7y ago

[deleted]

SolaceQuantum 7y ago

One of the important things I find to try and understand is what it means to not be in the financial situation I'm in right now. It means being stressed all the time, and therefore the stress would affect my capacity to make long term decisions. Also, lowering my current heightened stress would become a higher priority. Therefore I would assume that (due to a combination of lowered decision making and a need to reduce stress) the spending of money to consume would actually be a very reasonable decision to make- it reduces friction on decision making and also temporarily reduces stress.

challenger22 7y ago
Are you living a bare bones lifestyle? If so, and you're still stressed out of your mind, it's a tough battle. You have my empathy.

mikestew 7y ago

only so I can spend more on a more luxurious lifestyle in the future Or, you know, maybe allowing more philanthropy and leaving a charitable legacy for the future. There are many ways to utilize our high-tech ability to generate large incomes that don't involve spending every dime on ourselves.

challenger22 7y ago
Yeah, I think I will become more philanthropic soon, I can feel the limits of my hedonism kicking in, in a weird way. Currently my only philanthropy is volunteering at Habitat for Humanity every once in a blue moon. The crossover point where I feel like I will actively enjoy giving to charity is once my portfolio reaches $2MM ($70k annual spend).

spraak 7y ago

Do you have or plan to have children? What about current or unexpected medical expenses?

challenger22 7y ago
Yep, married now, probably 1 or 2 kids eventually. To add a bit of nuance to my first post, growth assumptions of 6% per year on the portfolio mean that the eventual expense associated with children is probably already baked into the plan, given how conservative a 3.5% withdrawal rate is. Not too bad to worry about financially. Reasonable insurance means anticipated medical expenses are limited to out-of-pocket maximums per year, which is reasonable.
- rb808 7y ago
  > growth assumptions of 6% per Wow that is optimistic. Edit: Yes I know US markets have done very well the last 100 years, but they were unusual circumstances. The next 100 are very likely to be different. Take a look Germany/France/Italy/UK/Japan, for more normal returns. Yes they are less capitalist - but US could be too given the way the main US parties are going. Its just scary whenever I see people extrapolate recent returns. FIRE guys are generally dreaming -esp if they have no children.
  - challenger22 7y ago
    U.S. stocks have appreciated at 7% (after inflation), on average, for over 100 years. And even if they don't, the 3.5% withdrawal rate has a 99% success rate if backtested on websites such as firecalc.com. Most of the time, this withdrawal rate leaves the investor with a portfolio worth several multiples of its starting value after 30 years.
  - Djvacto 7y ago
    In my reading, this seems like a pretty common assumption for the average annual return (looking at a period of multiple years averaged together), used often by people in the FIRE community (places like /r/FinancialIndependence, or bloggers like MMM).

sokoloff 7y ago

Once our house is paid off (about 8 more years), the same would be true for us and we are not living a Spartan lifestyle even now (I'm also using the 3.5% SWR for planning). Even if I could shorten the time-to-full-retirement by a couple years, it wouldn't do me any particular good. I generally like my field and my job. I'm tied to the area (can't freely travel 25+% of the time) by virtue of having kids in 2nd and 4th grade. So, there's no mathematical/financial reason to pursue a more Spartan early-retirement-extreme or MMM-approved spending plan. With that in mind, I find I'm able to enjoy the luxury expenditures, because they aren't taking us off our plan. We travel for a week each winter to "someplace warm". We travel to visit family quite freely. The kids engage in whatever activities they want to try, without worrying about the costs. We own an airplane. We have cleaners that come by every other week. We buy quality food. We give to charities that are meaningful to us (many with money, some with significant amounts of our time as well). On the other hand, we cut our own grass, do 95+% of our own car maintenance, almost all of our home maintenance, and cook most of our own meals, because we value the savings and example it sets for our kids (especially around charity and talking through the value of money).

theNJR 7y ago
>We own an airplane. That escalated quickly!
- sokoloff 7y ago
  They're a lot less expensive than most people first think. (think "price of a fairly nice car" not "price of a nice house"; though obviously they go up in price to "whatever number you have in mind", most are in the 5-figure or just barely-6-figure range.)
  - astura 7y ago
    What about the upkeep, insurance, storage, and maintenance? I suspect(?) those would be substantial.
    - 7y ago

54635124gddd 7y ago

Hahaha... what luxury? I drive a used car. I cook my own food. I get my clothes from walmart. I make 40k a year. Most of it goes to rent (the cheapest 1 bedroom I could find in my area) and paying down my wife's student loans. She also works, but her degree is useless (museum studies?) so she works in retail. College is the only conspicuous consumption she's done. She should have never went. But how can I blame her for making a dumb decision over a decade ago, when everyone from her family and friends to her teachers and counselors told her it was the right move? I don't care fox luxury anyways. My hobbies are cheap. But I'd like to stop working some day. I've been putting whatever I can into an IRA since I graduated school. I have more retirement savings than others in my age group, but I'm still behind where I should be.

commandlinefan 7y ago

> I could retire indefinitely at my current spending rate. I'm guessing you're not married, then...?

challenger22 7y ago
I'm married. My wife is pretty much just as frugal as I am.

milesvp 7y ago

Food is a good place to start. I was once very frugal, doing things like adding a can of corn to a can of soup to lower it’s cost basis (later cooking the soup myself to get even lower cost basis). Good food doesn’t have to be expensive, but quality ingredients will cost more than most frozen food. After food, spending money on communal activities is a good place to open your wallet. Being around good friends will really make you feel good about life. I’m reluctant to suggest money on physical goods. But I’ve noticed for certain things, quality really makes a difference. I bought an REI backpack 10 years ago that to this day brings me joy just looking at it. Also a good bed made a ton of difference 5 years ago. Word of warning though. It is really hard to go back once you raise the bar in a given area. I am currently hemorrhaging money due to children expenses, and going back to only drinking tap water sort of feels bad in ways that are hard to describe. Also keep in mind that significant others can really change your spending habits. Most of my fire fantasies flew out the window when I moved in with my girlfriend. And again once I got married. And again once I had kids...

souprock 7y ago
Me too pretty much, "currently hemorrhaging money due to children expenses, and going back to only drinking tap water sort of feels bad in ways that are hard to describe." In my case, it will soon be 12 kids, and I hadn't personally purchased bottled water for normal home use. The water situation is weird. I could never bring myself to buy bottled water, since it feels wasteful, but I got used to it being provided at work. This got me viewing the tap water as contaminated, but not having any alternate water at home. I end up dehydrated. I also drink lots of juice and milk, which isn't saving any money but it somehow feels less wasteful.

JohnFen 7y ago

> when you spend money on goods and services that you know represent conspicuous consumption, and on ones that represent luxury, and provide little practical utility, how does it make you feel? To be entirely honest, I don't really do this. I guy goods and services if they are fun or stimulating, make my life easier for me, or solve a problem that I have. I can't remember ever buying something because it was luxurious, except for the occasional meal. If I did, then I think I'd feel like I was wasting my money.

mrguyorama 7y ago

I grew up dirt poor, and was heavily exposed to financial hardship. I don't live frugally, but cheaply, and every single penny I spend on things that aren't "necessary" causes me mental anguish. Any purchase above 10-50 dollars requires actual effort to "psych" myself up for. I am underpaid for my industry and position. I have a years salary in the bank. This is what poverty does to a human. The destruction caused by such anxiety cannot truly be fixed. Every day we don't strive to help our fellow man is a day we condemn thousands to a life of anguish. Remember that next time you vote

faissaloo 7y ago

>how does it make you feel? Like part of the problem.