Once you are FI how do you learn to spend it?

Questions on how we spend our money and our time - consumer goods and services, home and vehicle, leisure and recreational activities
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TheTimeLord
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Once you are FI how do you learn to spend it?

Post by TheTimeLord »

I suspect many people will have some form of the issue I am about to describe, especially after the last decade or so. You saved your money, lived below your means and now have a stack meaningfully in excess of what you planned for or will likely need so how do you convince yourself to start spending this windfall. I have never been what you describe as frugal, but like most people I have what I perceive as the value of an item and really have a difficult time spending above that (again not even close to frugal). Recently, I have decided to buy a new car, the standard model is very nice and within what I would expect to pay, but the model I want has enhanced styling and more performance features which I don't need but I definitely appreciate. The problem is while the difference is not really significant as a percentage of my portfolio, it is big enough to make me stop and ask if I should buy it. So I can afford it, I want it and the difference will definitely make the vehicle more enjoyable for me to drive day in and day out but I just can't pull the trigger. Any advice on how best to start enjoying what we all work so hard to achieve? Seems making money and watching your balance go ever higher is very additive and makes it very hard to spend it at the risk of watching your balance decrease.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
barnaclebob
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Re: Once you are FI how do you learn to spend it?

Post by barnaclebob »

I'll probably have a burn down curve on a spreadsheet with a few different spending rates and rates of return (min, max, normal, etc). As long as I'm where I want to be on that curve things will be good. My game plan has been to assume things will go well but have a plan if they don't. That backup plan doesn't mean zero impact to my living situation, in means bearable discomfort.
wolf359
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Re: Once you are FI how do you learn to spend it?

Post by wolf359 »

This is the reason that people with pensions, annuities, social security, and other fixed payments that they cannot outlive have a tendency to spend closer to their retirement budget. If the money is coming in without affecting the overall portfolio, you can feel comfortable spending it.

This implies that the solution is to have a mix of guaranteed and variable sources of income. The guaranteed income will cover all essential spending. This may allow you to be more confident in the ability not to run out of money, so you're more willing to spend on discretionary items without fear.
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Re: Once you are FI how do you learn to spend it?

Post by Jack FFR1846 »

Hi, I'm Jack and I have a problem spending my money.

I've always been a car guy but even at the peak of my track days, I was an instructor, so got free track time. I did spend money on good trailers (all aluminum, always) but the car was low budget, low wear, cheap expendables. Lately, I've thought about buying a fun car to drive into retirement. I drove a Cadillac CT4-V Blackwing to this end. Available with a 6 speed manual. Tons of power. Called "Better than an M3" by Matt Farah. The dealer didn't have a manual available, so I drove the 10 speed, paddle shift automatic and it was quite fun. But spending $75k and up for a car just runs into a wall for me. I go to "my Crosstrek cost $22k and has the manual and looks fine and is great in the snow and uses cheaper regular gas".

If I look at my retirement expense spread sheet, with extras for travel and such, I've got well over 50 times expenses. I own everything with no debt. If I add social security at 70, I'll be at 120 times expenses and when DW takes SS, I'll be who knows were.

So I could use some hints how to let go and spend. Or is it even possible? By the way, DW is even more frugal than me. She hates here job but won't quit. We bring in too much to do Roths. College costs are behind us.
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9-5 Suited
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Re: Once you are FI how do you learn to spend it?

Post by 9-5 Suited »

First, there's probably a degree to which people are just wired a certain way, and accepting some of that as reality is better than fighting it everyday of your life. You might be a Toyota Camry kind of person even though you can afford a fully decked out BMW. That's not really a problem so long as you're happy.

I will say I've heard from people who had serious medical scares who were snapped out of the type of frugality you describe and made clear changes to their lives and spending habits. Probably a lesson in that: if you can visualize yourself at 80 years old, being diagnosed with a terrible illness, and really get into your future mind, that might help tremendously. Imagine you get the bad news, and you see $5M in your portfolio later that day. How might you feel? There's no right answer, but I think that's helpful to put the very real downside into clearer view.

More practically, my wife and I agree on a spending budget each year, and it is NOT just a maximum amount. It's also a minimum amount - it's going to be spent on something. That's a pretty freeing mental space, as you know that buying a great car that you really want is totally fine, it just means something else won't be bought. (In the case of big lumpy things like cars, we amortize the expense over the expected life of the car).
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Re: Once you are FI how do you learn to spend it?

Post by AnnetteLouisan »

Once I decided not to be pressured anymore to spend or to live up to my childhood (and magazine) notions of material success, I found a lot of thing became easier. I had a career milestone about 8 years ago and considered buying a fancy handbag or other significant prestige item to celebrate.

And I just found myself saying, you know what, what do *I* really want and need to buy right now? Yeah I can afford all this other stuff and yes it’s an important moment worth celebrating, but I’ve done almost everything I wanted anyway - travel, degrees, certain types of work, dining out, etc.

And the answer was kind of modest and silly - I’d recently started cooking after 20 years of working crazy hours, so I wanted some fancy oils and spices. So I got myself some LaTourangelle avocado oil, some pumpkin seed oil and some fresh spices for like $65 total and — it was great!

So my point is, just because you have more doesn’t mean you have to buy more. You can really own it and decide based on what you want not on other peoples perceptions or what would be impressive. And you can separate yourself from people who are pressuring you to spend - I had many of these, and not dimwits either.

(And last year, after not seeing what I wanted in a new bag, I bought an extremely nice, high quality handbag off a resale site for $65 and I love it and will use it for ten years if not longer, like I did my last one, which cost $45 and is also very nice and high quality).
Last edited by AnnetteLouisan on Thu Mar 31, 2022 4:29 pm, edited 8 times in total.
Mike Scott
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Re: Once you are FI how do you learn to spend it?

Post by Mike Scott »

If you are really concerned, maybe you should talk to a behavior based therapist. If you are humble bragging, just continue. I don't expect to ever have a problem spending money. My "buy" list is much bigger than my money bucket will ever be.
MoonOrb
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Re: Once you are FI how do you learn to spend it?

Post by MoonOrb »

I would start by making a list of the things you value and love and then committing to make a really small increase in spending each month on one or more of those items.

Do this for a few months and see how you feel.

If you find you like it, keep doing it!

If you find you don't like, then either:

(A) Feel great about yourself--you have enough money to be financially independent and you're happy. This is great! Maybe making a giving plan and start donating excess to others and see how you feel about that.

(B) Consider working through this via therapy if you're finding you're in a place where you're unhappy if you spend money and still unhappy if you don't.

But the point is you can experiment with small financial commitments and learn from that how you're feeling about those spending choices. :sharebeer
H-Town
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Re: Once you are FI how do you learn to spend it?

Post by H-Town »

TheTimeLord wrote: Thu Mar 31, 2022 9:35 am I suspect many people will have some form of the issue I am about to describe, especially after the last decade or so. You saved your money, lived below your means and now have a stack meaningfully in excess of what you planned for or will likely need so how do you convince yourself to start spending this windfall. I have never been what you describe as frugal, but like most people I have what I perceive as the value of an item and really have a difficult time spending above that (again not even close to frugal). Recently, I have decided to buy a new car, the standard model is very nice and within what I would expect to pay, but the model I want has enhanced styling and more performance features which I don't need but I definitely appreciate. The problem is while the difference is not really significant as a percentage of my portfolio, it is big enough to make me stop and ask if I should buy it. So I can afford it, I want it and the difference will definitely make the vehicle more enjoyable for me to drive day in and day out but I just can't pull the trigger. Any advice on how best to start enjoying what we all work so hard to achieve? Seems making money and watching your balance go ever higher is very additive and makes it very hard to spend it at the risk of watching your balance decrease.
It's difficult for us as well. It's not like a switch that we can turn on and off. What we found that works for us: I encourage her to spend more on items she wants; and then she encourages me to spend more on items I want. A little nudge from her make my spending decision much easier.
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rocket354
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Re: Once you are FI how do you learn to spend it?

Post by rocket354 »

TheTimeLord wrote: Thu Mar 31, 2022 9:35 am I suspect many people will have some form of the issue I am about to describe, especially after the last decade or so. You saved your money, lived below your means and now have a stack meaningfully in excess of what you planned for or will likely need so how do you convince yourself to start spending this windfall. I have never been what you describe as frugal, but like most people I have what I perceive as the value of an item and really have a difficult time spending above that (again not even close to frugal). Recently, I have decided to buy a new car, the standard model is very nice and within what I would expect to pay, but the model I want has enhanced styling and more performance features which I don't need but I definitely appreciate. The problem is while the difference is not really significant as a percentage of my portfolio, it is big enough to make me stop and ask if I should buy it. So I can afford it, I want it and the difference will definitely make the vehicle more enjoyable for me to drive day in and day out but I just can't pull the trigger. Any advice on how best to start enjoying what we all work so hard to achieve? Seems making money and watching your balance go ever higher is very additive and makes it very hard to spend it at the risk of watching your balance decrease.
I think one thing to remember is that it's your relative frugality that got you where you are. Increasing spending is what keeps people from becoming FI, and could turn an FI person into a non-FI person. If you start spending it because you have it, you might find yourself over-spending. One decision isn't going to make a difference. But if you buy the more expensive car because you can...do you also go to more expensive restaurants because you can? Go on more expensive vacations because you can? Pay for more subscriptions? Spending habits are a mindset and if you disrupt that mindset you might start habits that end up hurting you.

I'm FI (although not RE, yet), and my solutions is to limit my spending increases to what my portfolio could support based on my own preferred SWR. So as my investments grow (or not) I have a self-imposed limit to what I can spend and I'm always guaranteed that if I were to lose my job tomorrow I would still be comfortably FI--ie, I ensured my spending habits never outpaced my portfolio. So if I were in your situation I would determine if the car could fit into my spending limit, and, of course, have to weigh the opportunity cost of other spending I might want to do.
Last edited by rocket354 on Thu Mar 31, 2022 10:15 am, edited 2 times in total.
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TheTimeLord
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Re: Once you are FI how do you learn to spend it?

Post by TheTimeLord »

9-5 Suited wrote: Thu Mar 31, 2022 10:01 am First, there's probably a degree to which people are just wired a certain way, and accepting some of that as reality is better than fighting it everyday of your life. You might be a Toyota Camry kind of person even though you can afford a fully decked out BMW. That's not really a problem so long as you're happy.

I will say I've heard from people who had serious medical scares who were snapped out of the type of frugality you describe and made clear changes to their lives and spending habits. Probably a lesson in that: if you can visualize yourself at 80 years old, being diagnosed with a terrible illness, and really get into your future mind, that might help tremendously. Imagine you get the bad news, and you see $5M in your portfolio later that day. How might you feel? There's no right answer, but I think that's helpful to put the very real downside into clearer view.

More practically, my wife and I agree on a spending budget each year, and it is NOT just a maximum amount. It's also a minimum amount - it's going to be spent on something. That's a pretty freeing mental space, as you know that buying a great car that you really want is totally fine, it just means something else won't be bought. (In the case of big lumpy things like cars, we amortize the expense over the expected life of the car).
Actually I watched my parents, driven by my mom, refuse to spend in their later years no matter how hard I pushed them and swore I was going to be different. Adjusting for the difference in resources, I am not sure I am any different at all, which is very frustrating because I have seen the movie and know the plot.
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TheTimeLord
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Re: Once you are FI how do you learn to spend it?

Post by TheTimeLord »

H-Town wrote: Thu Mar 31, 2022 10:11 am
TheTimeLord wrote: Thu Mar 31, 2022 9:35 am I suspect many people will have some form of the issue I am about to describe, especially after the last decade or so. You saved your money, lived below your means and now have a stack meaningfully in excess of what you planned for or will likely need so how do you convince yourself to start spending this windfall. I have never been what you describe as frugal, but like most people I have what I perceive as the value of an item and really have a difficult time spending above that (again not even close to frugal). Recently, I have decided to buy a new car, the standard model is very nice and within what I would expect to pay, but the model I want has enhanced styling and more performance features which I don't need but I definitely appreciate. The problem is while the difference is not really significant as a percentage of my portfolio, it is big enough to make me stop and ask if I should buy it. So I can afford it, I want it and the difference will definitely make the vehicle more enjoyable for me to drive day in and day out but I just can't pull the trigger. Any advice on how best to start enjoying what we all work so hard to achieve? Seems making money and watching your balance go ever higher is very additive and makes it very hard to spend it at the risk of watching your balance decrease.
It's difficult for us as well. It's not like a switch that we can turn on and off. What we found that works for us: I encourage her to spend more on items she wants; and then she encourages me to spend more on items I want. A little nudge from her make my spending decision much easier.
The DW is very supportive in my spending more of myself, but like a lot of guys I know it is easier to spend on others.
IMHO, Investing should be about living the life you want, not avoiding the life you fear. | Run, You Clever Boy! [9085]
sailaway
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Re: Once you are FI how do you learn to spend it?

Post by sailaway »

I find that my issue is directly related to cash flow. I can spend what I have ready to spend, but get anxious when I have to move extra around for spending. Might it help if you go ahead and move the full cost of the bells and whistles now, so that the money is at the ready? Even financing can help: I am currently taking advantage of a 0% APR on purchases deal so that I can spread payments out until our next cash influx. I could just sell $X of stocks, but for some reason this made it easier to go ahead and pay for that cruise.
tedgeorge
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Re: Once you are FI how do you learn to spend it?

Post by tedgeorge »

I like this idea of having a spending amount per year. Seems way better to have that budgeted than to wander throughout the year questioning everything.

This is why those home improvement shows always look good. They have a budget and they are going to spend it all versus the homeowner nickeling and diming over cabinet knobs.
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Ray_McKigney
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Re: Once you are FI how do you learn to spend it?

Post by Ray_McKigney »

Same way I try to spend my time - on experiences* that I value.

*material items are also experiences - it's the only way we relate to them
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Re: Once you are FI how do you learn to spend it?

Post by AerialWombat »

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For entertainment purposes only.
Marseille07
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Re: Once you are FI how do you learn to spend it?

Post by Marseille07 »

FI does not change your spending. You could perhaps spend up to your planned WR% if you want. But I personally wouldn't even do that, I'll keep saving until I'm actually RE.
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Jags4186
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Re: Once you are FI how do you learn to spend it?

Post by Jags4186 »

Annuitize a part of your portfolio and make a commitment to spend that amount every year no matter what on fun stuff. If you have more than enough, which it sounds like you do, you don't need to perfectly draw down. Your goal should be to maximize your enjoyment while avoiding ruin.
MathWizard
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Re: Once you are FI how do you learn to spend it?

Post by MathWizard »

I am the same way, and just about to transition into retirement.

My plan is to have 2 accounts which mimic my current checking and savings accounts.

1) My checking with a regular "paycheck" coming into it,
2) a Roth account acting as my "savings account" which also gets regular "paychecks" from other retirement accounts.

I'll feel free to spend these two accounts as needed, as these are already
accounted for as withdrawals in my plan. 2 is for those lumpy expenses
like house repair, car replacement, travel splurges, and for unexpected expenses.

Of course, I will also be spending any income from outside my retirement accounts,
like SS benefits.
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goingup
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Re: Once you are FI how do you learn to spend it?

Post by goingup »

We have been retired several years now. It's clear we have plenty to last us for the duration. Recognizing that we no longer need to save and that it is fine to spend has been a process.

A few things that have helped with the transition include not obsessing over the portfolio. No rebalancing. Drifting is fine. We also have a pretty big cash balance in the bank and in MM funds. It's easier to spend when you don't have to sell something first. Monthly and quarterly dividends sent to checking also provide peace of mind and permission to spend.

I feel very fortunate that we have no money worries and am determined to not mess that up by manufacturing problems that aren't important. :wink:
Silk McCue
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Re: Once you are FI how do you learn to spend it?

Post by Silk McCue »

TheTimeLord wrote: Thu Mar 31, 2022 9:35 am Recently, I have decided to buy a new car, the standard model is very nice and within what I would expect to pay, but the model I want has enhanced styling and more performance features which I don't need but I definitely appreciate. The problem is while the difference is not really significant as a percentage of my portfolio, it is big enough to make me stop and ask if I should buy it. So I can afford it, I want it and the difference will definitely make the vehicle more enjoyable for me to drive day in and day out but I just can't pull the trigger.
Imagine this purchase is for someone you love and appreciate and you want to get them exactly what they want so that they can enjoy the car tomorrow and for many years to come. Now treat yourself the same with this modest splurge that you know you can afford. You deserve it for being a good steward of your finances.

I hope that I hear soon that you have bought this premium version of the car that you want and are enjoying it.

Cheers
JenniferW
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Re: Once you are FI how do you learn to spend it?

Post by JenniferW »

I am content with the frugal life while saving. Buying stuff doesn't make me happy, it often burdens me. I'll probably continue what I have been doing until I pass. Then all the money will go to people who need it (heirs & charity).

One way to spend if you have excess is to donate to your favorite charity regularly.

I know if I spend on hobbies, I am going to try and choose hobbies where I buy used assets at fair market rate or below, with a high probability they will not depreciate any further. That way I can use the item for a while and resell for what I paid for it. I can't stand depreciation, especially instant depreciation. e.g. if I was into cars (I'm not), it'd be collectable cars.. I'd never buy a new car which would depreciate 90% over a few years.
Marseille07
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Re: Once you are FI how do you learn to spend it?

Post by Marseille07 »

Silk McCue wrote: Thu Mar 31, 2022 11:03 am Imagine this purchase is for someone you love and appreciate and you want to get them exactly what they want so that they can enjoy the car tomorrow and for many years to come. Now treat yourself the same with this modest splurge that you know you can afford. You deserve it for being a good steward of your finances.

I hope that I hear soon that you have bought this premium version of the car that you want and are enjoying it.

Cheers
Why do you start splashing at FI not RE or R? As another poster said, "Increasing spending is what keeps people from becoming FI, and could turn an FI person into a non-FI person."

If they have enough to retire altogether, they should do so. But even then, you can't just buy an expensive car right off the bat unless they're FatFIRing.
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CletusCaddy
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Re: Once you are FI how do you learn to spend it?

Post by CletusCaddy »

TheTimeLord wrote: Thu Mar 31, 2022 9:35 am The problem is while the difference is not really significant as a percentage of my portfolio, it is big enough to make me stop and ask if I should buy it.
The difference is even less than you think. The cost of a car is not its upfront price, it’s mostly the annual depreciation. Which is very similar across trims of the same model.

Buy the nicer trim.
Joylush
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Re: Once you are FI how do you learn to spend it?

Post by Joylush »

And if you get to the point of knowing your estate will be subject to the estate tax then remember everything you are spending on for yourself, or giving as gifts is discounted by 40%. So either spend it and control where it goes, or plan on the government seizing a big chunk of it to waste somewhere else.
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Re: Once you are FI how do you learn to spend it?

Post by Stoic9 »

I started on my own at 17 with $10 I borrowed. When I retired I still didn't believe I had the Income (pensions, rents, dividends) and investment accounts. I didn't sleep the night before my first pension check was due to arrive. Starting my 3rd year of retirement I finally became more comfortable and told my spouse that we weren't spending to our potential. We are minimalist so its more than just my 'upbringing' that makes it hard to spend. The only real change we have made is all travel is now first class. That was something we could quantify as spending what we saved and we could stop if we ever had to. Of course that was the same year the pandemic started so it was a bust. But this year we are enjoying boarding a plane and having the attendant say 'sir would you like a drink?'! Why yes a double please!
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Re: Once you are FI how do you learn to spend it?

Post by DSBH »

TheTimeLord wrote: Thu Mar 31, 2022 9:35 am Any advice on how best to start enjoying what we all work so hard to achieve? Seems making money and watching your balance go ever higher is very additive and makes it very hard to spend it at the risk of watching your balance decrease.
My 0.02: do the same things that get you here today, there is no need to change yourself. Just set a higher spending limit than the one before FI, and make sure you can stay FI with the new higher limit.
John C. Bogle: "Never confuse genius with luck and a bull market".
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Re: Once you are FI how do you learn to spend it?

Post by mptfan »

9-5 Suited wrote: Thu Mar 31, 2022 10:01 am First, there's probably a degree to which people are just wired a certain way, and accepting some of that as reality is better than fighting it everyday of your life.
Exactly. Accept who you are. If you don't want to spend more money, and you are happy, then don't.
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Re: Once you are FI how do you learn to spend it?

Post by smitcat »

Jack FFR1846 wrote: Thu Mar 31, 2022 9:58 am Hi, I'm Jack and I have a problem spending my money.

I've always been a car guy but even at the peak of my track days, I was an instructor, so got free track time. I did spend money on good trailers (all aluminum, always) but the car was low budget, low wear, cheap expendables. Lately, I've thought about buying a fun car to drive into retirement. I drove a Cadillac CT4-V Blackwing to this end. Available with a 6 speed manual. Tons of power. Called "Better than an M3" by Matt Farah. The dealer didn't have a manual available, so I drove the 10 speed, paddle shift automatic and it was quite fun. But spending $75k and up for a car just runs into a wall for me. I go to "my Crosstrek cost $22k and has the manual and looks fine and is great in the snow and uses cheaper regular gas".

If I look at my retirement expense spread sheet, with extras for travel and such, I've got well over 50 times expenses. I own everything with no debt. If I add social security at 70, I'll be at 120 times expenses and when DW takes SS, I'll be who knows were.

So I could use some hints how to let go and spend. Or is it even possible? By the way, DW is even more frugal than me. She hates here job but won't quit. We bring in too much to do Roths. College costs are behind us.
"Lately, I've thought about buying a fun car to drive into retirement. I drove a Cadillac CT4-V Blackwing to this end. Available with a 6 speed manual. Tons of power."
Over the past months I have been reading your "fun car' posts and eagerly awaiting which one(s) you will choose first to own and enjoy.
As each year goes by the opportunity to enjoy activities diminishes.
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Re: Once you are FI how do you learn to spend it?

Post by Silk McCue »

Marseille07 wrote: Thu Mar 31, 2022 11:13 am
Silk McCue wrote: Thu Mar 31, 2022 11:03 am Imagine this purchase is for someone you love and appreciate and you want to get them exactly what they want so that they can enjoy the car tomorrow and for many years to come. Now treat yourself the same with this modest splurge that you know you can afford. You deserve it for being a good steward of your finances.

I hope that I hear soon that you have bought this premium version of the car that you want and are enjoying it.

Cheers
Why do you start splashing at FI not RE or R? As another poster said, "Increasing spending is what keeps people from becoming FI, and could turn an FI person into a non-FI person."

If they have enough to retire altogether, they should do so. But even then, you can't just buy an expensive car right off the bat unless they're FatFIRing.
Thanks for chiming in. My advice stands.

TimeLord is not some wet behind the ears uneducated noob. I have no doubt that they will do what is right for them. We already know that the difference in the price of the two models isn’t going to impact their retirement. In fact the whole point of their post is asking how to loosen up a bit and enjoy the fruit of their labors.

Cheers
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langelgjm
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Re: Once you are FI how do you learn to spend it?

Post by langelgjm »

"Once you are FI how do you learn to spend it?" Perhaps you don't.

As KlangFool likes to say, if you ask the wrong question, you'll never get the right answer. :happy

If you achieved FI through working, saving, investing, and living beneath your means, it likely took enough time to ingrain certain habits and values into you. You can't turn off years of living beneath your means and avoiding frivolous spending overnight. And arguably you shouldn't, since you presumably want to preserve FI. The mentality of flipping a switch from work/save to play/spend mode is not generally a recipe for FI.

Personally, I've come to the conclusion that in the vast majority of cases, spending beyond basic necessities does not and cannot make me happy, as it cannot directly provide the things I value most (time, energy, freedom). It turns out this is a helpful mentality to have for achieving FI. I'm less certain what will happen when we RE, but when I took a sabbatical a few years ago, I used the time/energy/freedom in ways that were fulfilling but still didn't require much spending.

But, we're all different, and we've all developed (intentionally or not) different preferences. So if you'll really enjoy that extra trim over the next several years, you have my permission!
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Re: Once you are FI how do you learn to spend it?

Post by smitcat »

TheTimeLord wrote: Thu Mar 31, 2022 9:35 am I suspect many people will have some form of the issue I am about to describe, especially after the last decade or so. You saved your money, lived below your means and now have a stack meaningfully in excess of what you planned for or will likely need so how do you convince yourself to start spending this windfall. I have never been what you describe as frugal, but like most people I have what I perceive as the value of an item and really have a difficult time spending above that (again not even close to frugal). Recently, I have decided to buy a new car, the standard model is very nice and within what I would expect to pay, but the model I want has enhanced styling and more performance features which I don't need but I definitely appreciate. The problem is while the difference is not really significant as a percentage of my portfolio, it is big enough to make me stop and ask if I should buy it. So I can afford it, I want it and the difference will definitely make the vehicle more enjoyable for me to drive day in and day out but I just can't pull the trigger. Any advice on how best to start enjoying what we all work so hard to achieve? Seems making money and watching your balance go ever higher is very additive and makes it very hard to spend it at the risk of watching your balance decrease.
"So I can afford it, I want it and the difference will definitely make the vehicle more enjoyable for me to drive day in and day out but I just can't pull the trigger."
The more times you take no action and decide spending 'extra' funds is too expensive and difficult the more likely it is that the pattern will never be broken.
We occasionally see a couple of folks currently that have fallen into this pattern and there appears to be no escape for them - hopefully there will be one in your case.
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Re: Once you are FI how do you learn to spend it?

Post by 9-5 Suited »

TheTimeLord wrote: Thu Mar 31, 2022 10:13 am Actually I watched my parents, driven by my mom, refuse to spend in their later years no matter how hard I pushed them and swore I was going to be different. Adjusting for the difference in resources, I am not sure I am any different at all, which is very frustrating because I have seen the movie and know the plot.
I know people have mixed feelings about Dave Ramsey to say the least (please lord don't let this comment spiral into that debate :)), but he had a caller who asked about this exact thing. I thought his advice was really good. He asked the caller what he thought constituted a painful amount of money to spend on something for himself. The guy said something like $1,000. Dave told OK, your task after we hang up is to spend $8,000 on a cruise. The guy was shocked. And Dave told him in order to let go of the fussing over little things, he needs to take a big action that proves to himself things are still OK after making large single purchases.

Relatedly, large single purchases are not going to be what kills you. They amortize to such small amounts. It's monthly recurring lifestyle creep that will bite you in the butt. So maybe a $100,000 car should be your Dave Ramsey assignment ;)
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Re: Once you are FI how do you learn to spend it?

Post by smitcat »

TheTimeLord wrote: Thu Mar 31, 2022 10:13 am
9-5 Suited wrote: Thu Mar 31, 2022 10:01 am First, there's probably a degree to which people are just wired a certain way, and accepting some of that as reality is better than fighting it everyday of your life. You might be a Toyota Camry kind of person even though you can afford a fully decked out BMW. That's not really a problem so long as you're happy.

I will say I've heard from people who had serious medical scares who were snapped out of the type of frugality you describe and made clear changes to their lives and spending habits. Probably a lesson in that: if you can visualize yourself at 80 years old, being diagnosed with a terrible illness, and really get into your future mind, that might help tremendously. Imagine you get the bad news, and you see $5M in your portfolio later that day. How might you feel? There's no right answer, but I think that's helpful to put the very real downside into clearer view.

More practically, my wife and I agree on a spending budget each year, and it is NOT just a maximum amount. It's also a minimum amount - it's going to be spent on something. That's a pretty freeing mental space, as you know that buying a great car that you really want is totally fine, it just means something else won't be bought. (In the case of big lumpy things like cars, we amortize the expense over the expected life of the car).
Actually I watched my parents, driven by my mom, refuse to spend in their later years no matter how hard I pushed them and swore I was going to be different. Adjusting for the difference in resources, I am not sure I am any different at all, which is very frustrating because I have seen the movie and know the plot.
"I am not sure I am any different at all, which is very frustrating because I have seen the movie and know the plot."
Many of your posts on various topics are repetitive in nature but likely seeking a different response.
It appears very clear that you already know the answers to the questions.
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Re: Once you are FI how do you learn to spend it?

Post by TomatoTomahto »

TheTimeLord wrote: Thu Mar 31, 2022 10:15 am
H-Town wrote: Thu Mar 31, 2022 10:11 am
TheTimeLord wrote: Thu Mar 31, 2022 9:35 am I suspect many people will have some form of the issue I am about to describe, especially after the last decade or so. You saved your money, lived below your means and now have a stack meaningfully in excess of what you planned for or will likely need so how do you convince yourself to start spending this windfall. I have never been what you describe as frugal, but like most people I have what I perceive as the value of an item and really have a difficult time spending above that (again not even close to frugal). Recently, I have decided to buy a new car, the standard model is very nice and within what I would expect to pay, but the model I want has enhanced styling and more performance features which I don't need but I definitely appreciate. The problem is while the difference is not really significant as a percentage of my portfolio, it is big enough to make me stop and ask if I should buy it. So I can afford it, I want it and the difference will definitely make the vehicle more enjoyable for me to drive day in and day out but I just can't pull the trigger. Any advice on how best to start enjoying what we all work so hard to achieve? Seems making money and watching your balance go ever higher is very additive and makes it very hard to spend it at the risk of watching your balance decrease.
It's difficult for us as well. It's not like a switch that we can turn on and off. What we found that works for us: I encourage her to spend more on items she wants; and then she encourages me to spend more on items I want. A little nudge from her make my spending decision much easier.
The DW is very supportive in my spending more of myself, but like a lot of guys I know it is easier to spend on others.
I am not spending on something I would like but don’t need. If I could give an exceptional pair of speakers, and/or TV, and/or Audio Video processor to one of my kids, I’d upgrade my current version. Unfortunately, my kids are set. Dang!

We can afford the upgrade, but it just seems wasteful and I’m not sure that the expenditure would result in a sufficient improvement. I probably will upgrade the TV, but later. The rest of it, probably not.
I get the FI part but not the RE part of FIRE.
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Re: Once you are FI how do you learn to spend it?

Post by Marseille07 »

Silk McCue wrote: Thu Mar 31, 2022 11:49 am Thanks for chiming in. My advice stands.

TimeLord is not some wet behind the ears uneducated noob. I have no doubt that they will do what is right for them. We already know that the difference in the price of the two models isn’t going to impact their retirement. In fact the whole point of their post is asking how to loosen up a bit and enjoy the fruit of their labors.

Cheers
I wasn't calling names on you or TimeLord.

However, going above your budget *will* impact their retirement, just that you don't feel the impact immediately or even never, because when your portfolio runs into trouble 25 years later, you don't necessarily think that the cause was your car purchase 25 years ago.

This is the danger of splashing now, though.
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Re: Once you are FI how do you learn to spend it?

Post by Normchad »

It’s a good question. And many here struggle with it.

My approach, which I started a few years back, was to force myself to do it. And start at a young enough age so that it could become comfortable behavior for me.

So here is what I did recently. (If you’re delicate, stop reading now.). I’ve always wanted some of those “ratcheting wrenches”. But never bought one because it was like $20, and I already own wrenches that are plenty good enough. This year I forced myself to buy them. I paid over $400 and bought an entire set.

It’s not about the money. It’s about giving myself permission to use the money without regret.
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Re: Once you are FI how do you learn to spend it?

Post by H-Town »

Marseille07 wrote: Thu Mar 31, 2022 1:14 pm
Silk McCue wrote: Thu Mar 31, 2022 11:49 am Thanks for chiming in. My advice stands.

TimeLord is not some wet behind the ears uneducated noob. I have no doubt that they will do what is right for them. We already know that the difference in the price of the two models isn’t going to impact their retirement. In fact the whole point of their post is asking how to loosen up a bit and enjoy the fruit of their labors.

Cheers
I wasn't calling names on you or TimeLord.

However, going above your budget *will* impact their retirement, just that you don't feel the impact immediately or even never, because when your portfolio runs into trouble 25 years later, you don't necessarily think that the cause was your car purchase 25 years ago.

This is the danger of splashing now, though.
Do you mean spending more 4% (or a variation of the SWR) will impact their retirement?

It depends. More likely than not, you will end up very rich if you just limit your spending to 4% (or whatever SWR you're using). Not good, nor bad. It's just that a purchase of a new car is *unlikely* to impact your retirement. The odds is with you.
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Re: Once you are FI how do you learn to spend it?

Post by TheTimeLord »

sailaway wrote: Thu Mar 31, 2022 10:15 am I find that my issue is directly related to cash flow. I can spend what I have ready to spend, but get anxious when I have to move extra around for spending. Might it help if you go ahead and move the full cost of the bells and whistles now, so that the money is at the ready? Even financing can help: I am currently taking advantage of a 0% APR on purchases deal so that I can spread payments out until our next cash influx. I could just sell $X of stocks, but for some reason this made it easier to go ahead and pay for that cruise.
A good suggestion but I already have the money set aside for this and a couple other items in a Money Market account.
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Re: Once you are FI how do you learn to spend it?

Post by TheTimeLord »

Marseille07 wrote: Thu Mar 31, 2022 11:13 am
Silk McCue wrote: Thu Mar 31, 2022 11:03 am Imagine this purchase is for someone you love and appreciate and you want to get them exactly what they want so that they can enjoy the car tomorrow and for many years to come. Now treat yourself the same with this modest splurge that you know you can afford. You deserve it for being a good steward of your finances.

I hope that I hear soon that you have bought this premium version of the car that you want and are enjoying it.

Cheers
Why do you start splashing at FI not RE or R? As another poster said, "Increasing spending is what keeps people from becoming FI, and could turn an FI person into a non-FI person."

If they have enough to retire altogether, they should do so. But even then, you can't just buy an expensive car right off the bat unless they're FatFIRing.
FI gives you the option to RE but that is an individual choice IMO. If you can't RE then you aren't FI by my definition. That said I have chosen to retire my DW prefers to continue working, In all honesty, if not for the pandemic it is very likely I would still be working also.
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Re: Once you are FI how do you learn to spend it?

Post by TheTimeLord »

smitcat wrote: Thu Mar 31, 2022 11:56 am
TheTimeLord wrote: Thu Mar 31, 2022 10:13 am
9-5 Suited wrote: Thu Mar 31, 2022 10:01 am First, there's probably a degree to which people are just wired a certain way, and accepting some of that as reality is better than fighting it everyday of your life. You might be a Toyota Camry kind of person even though you can afford a fully decked out BMW. That's not really a problem so long as you're happy.

I will say I've heard from people who had serious medical scares who were snapped out of the type of frugality you describe and made clear changes to their lives and spending habits. Probably a lesson in that: if you can visualize yourself at 80 years old, being diagnosed with a terrible illness, and really get into your future mind, that might help tremendously. Imagine you get the bad news, and you see $5M in your portfolio later that day. How might you feel? There's no right answer, but I think that's helpful to put the very real downside into clearer view.

More practically, my wife and I agree on a spending budget each year, and it is NOT just a maximum amount. It's also a minimum amount - it's going to be spent on something. That's a pretty freeing mental space, as you know that buying a great car that you really want is totally fine, it just means something else won't be bought. (In the case of big lumpy things like cars, we amortize the expense over the expected life of the car).
Actually I watched my parents, driven by my mom, refuse to spend in their later years no matter how hard I pushed them and swore I was going to be different. Adjusting for the difference in resources, I am not sure I am any different at all, which is very frustrating because I have seen the movie and know the plot.
"I am not sure I am any different at all, which is very frustrating because I have seen the movie and know the plot."
Many of your posts on various topics are repetitive in nature but likely seeking a different response.
It appears very clear that you already know the answers to the questions.
Or reflect the fact I feel stuck in a loop or pattern I find extremely frustrating. Probably sort of a what's next or is this all there is thing where you work to achieve a goal for a very long period of time only to achieve it and find yourself a bit adrift. I really shouldn't be surprised, considering my experience the first time I gave retirement a shot, but I was hoping I would adjust better this time.
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Re: Once you are FI how do you learn to spend it?

Post by TheTimeLord »

Normchad wrote: Thu Mar 31, 2022 1:17 pm It’s a good question. And many here struggle with it.

My approach, which I started a few years back, was to force myself to do it. And start at a young enough age so that it could become comfortable behavior for me.

So here is what I did recently. (If you’re delicate, stop reading now.). I’ve always wanted some of those “ratcheting wrenches”. But never bought one because it was like $20, and I already own wrenches that are plenty good enough. This year I forced myself to buy them. I paid over $400 and bought an entire set.

It’s not about the money. It’s about giving myself permission to use the money without regret.
I agree, I have never believed money in and of itself should be your goal, it needs to be utilized. But strangely the more money I have the harder it has become to spend. This tells me I am way too attached to the money and the size of my stack. On the other hand I have loosen up spending on some items (TMI warning) replacing my old cotton underwear with very stretchy, comfortable and colorful high tech stuff.
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Re: Once you are FI how do you learn to spend it?

Post by TheTimeLord »

CletusCaddy wrote: Thu Mar 31, 2022 11:19 am
TheTimeLord wrote: Thu Mar 31, 2022 9:35 am The problem is while the difference is not really significant as a percentage of my portfolio, it is big enough to make me stop and ask if I should buy it.
The difference is even less than you think. The cost of a car is not its upfront price, it’s mostly the annual depreciation. Which is very similar across trims of the same model.

Buy the nicer trim.
That is a good point.
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Re: Once you are FI how do you learn to spend it?

Post by Marseille07 »

H-Town wrote: Thu Mar 31, 2022 1:17 pm Do you mean spending more 4% (or a variation of the SWR) will impact their retirement?

It depends. More likely than not, you will end up very rich if you just limit your spending to 4% (or whatever SWR you're using). Not good, nor bad. It's just that a purchase of a new car is *unlikely* to impact your retirement. The odds is with you.
Yes. Or, even if you're still below 4%, you now have to tighten the purse for the rest of the year because 4% is 100K/year but you bought a 50K car, leaving you with 50K until 12/31. I just don't see a compelling case to go splashin' just because one just hit FI.
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Re: Once you are FI how do you learn to spend it?

Post by Normchad »

TheTimeLord wrote: Thu Mar 31, 2022 1:52 pm
Normchad wrote: Thu Mar 31, 2022 1:17 pm It’s a good question. And many here struggle with it.

My approach, which I started a few years back, was to force myself to do it. And start at a young enough age so that it could become comfortable behavior for me.

So here is what I did recently. (If you’re delicate, stop reading now.). I’ve always wanted some of those “ratcheting wrenches”. But never bought one because it was like $20, and I already own wrenches that are plenty good enough. This year I forced myself to buy them. I paid over $400 and bought an entire set.

It’s not about the money. It’s about giving myself permission to use the money without regret.
I agree, I have never believed money in and of itself should be your goal, it needs to be utilized. But strangely the more money I have the harder it has become to spend. This tells me I am way too attached to the money and the size of my stack. On the other hand I have loosen up spending on some items (TMI warning) replacing my old cotton underwear with very stretchy, comfortable and colorful high tech stuff.
Good on you! I completely understand.

You spent all these decades building this money pile so you could enjoy it later. But after 3 decades, it’s habitual. You can’t just flip a switch. It has to be hard to see that pile that you’ve been nurturing for decades, is suddenly shrinking. (Or not growing). Somewhere along the way we’ve inadvertently programmed ourselves to preserve the pile. Even though we started with every intention of spending it and perhaps even indulging ourselves.

I worry about this. I don’t adapt well to change.
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Re: Once you are FI how do you learn to spend it?

Post by TheTimeLord »

Marseille07 wrote: Thu Mar 31, 2022 1:59 pm
H-Town wrote: Thu Mar 31, 2022 1:17 pm Do you mean spending more 4% (or a variation of the SWR) will impact their retirement?

It depends. More likely than not, you will end up very rich if you just limit your spending to 4% (or whatever SWR you're using). Not good, nor bad. It's just that a purchase of a new car is *unlikely* to impact your retirement. The odds is with you.
Yes. Or, even if you're still below 4%, you now have to tighten the purse for the rest of the year because 4% is 100K/year but you bought a 50K car, leaving you with 50K until 12/31. I just don't see a compelling case to go splashin' just because one just hit FI.
Just so we are clear I can afford the vehicle, it is more than I had expected to pay for my next car but this has nothing to do with financial ability. This is for me about the difficulty I am experiencing transitioning from accumulating assets to enjoying those assets. Sounds dumb and maybe it is.
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Re: Once you are FI how do you learn to spend it?

Post by fposte »

wolf359 wrote: Thu Mar 31, 2022 9:50 am This is the reason that people with pensions, annuities, social security, and other fixed payments that they cannot outlive have a tendency to spend closer to their retirement budget. If the money is coming in without affecting the overall portfolio, you can feel comfortable spending it.
That definitely applies to me, and I can agree with what you're saying. But spending is still also a learning curve. For me a key part has been making a budget that I seem to stick to reasonably well and also increasing my awareness of the value of my time and my quality of life. The first year of retirement has been an exploration of what I want when I loosen my purse strings, and it turns out I don't seem to want things that'll blow my budget anyway. (I will note that I got a more expensive car because it was the one in the lot and I didn't want to wait while driving around a car with no A/C. No regrets, and since I got one of the last manufacturers' rebates I probably ended up breaking even anyway.)

I do think the OP is stuck in a loop, as he says, and I don't know if a thread here will be enough to finally break him out of it. But even if it doesn't solve his problem, reading threads like this one has helped me a lot in transitioning to the decumulation phase. Time Lord, have you ever talked about this with a therapist? Especially because it sounds like you're following in parental footsteps, that might be a useful way to attack the issue. In the mean time, think about how much you wanted your parents to spend more and enjoy it and imagine how your family feels about you. It meant so much to me when my father, a Depression-raised child of poverty who'd had his nose to the grindstone for probably sixty years, finally spent some money to do the travel he'd dreamed of ever since he was a kid. Would it make your kids happy to see their dad finding more enjoyment in the fruits of his labor? Is that a model you'd like to start setting for them?
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Re: Once you are FI how do you learn to spend it?

Post by Taylor Larimore »

Bogleheads:

Whenever I am faced with a decision to spend or not, I often say to myself: "Would I rather buy this or would I rather give the money to my heirs or charity?" The result is my modest lifestyle (and happiness).

Best wishes.
Taylor
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Re: Once you are FI how do you learn to spend it?

Post by freckles01 »

TheTimeLord wrote: Thu Mar 31, 2022 9:35 am I suspect many people will have some form of the issue I am about to describe, especially after the last decade or so. You saved your money, lived below your means and now have a stack meaningfully in excess of what you planned for or will likely need so how do you convince yourself to start spending this windfall. I have never been what you describe as frugal, but like most people I have what I perceive as the value of an item and really have a difficult time spending above that (again not even close to frugal). Recently, I have decided to buy a new car, the standard model is very nice and within what I would expect to pay, but the model I want has enhanced styling and more performance features which I don't need but I definitely appreciate. The problem is while the difference is not really significant as a percentage of my portfolio, it is big enough to make me stop and ask if I should buy it. So I can afford it, I want it and the difference will definitely make the vehicle more enjoyable for me to drive day in and day out but I just can't pull the trigger. Any advice on how best to start enjoying what we all work so hard to achieve? Seems making money and watching your balance go ever higher is very additive and makes it very hard to spend it at the risk of watching your balance decrease.
OP, I am not-a-car-person living in Nobody Walks in LA city, where the superficial attitude- you are what you drive rules. As a mostly pedestrian/biking commuter, I see cars as a potentially deadly (to people walking/biking) polluting, motorized box to get from point A to B, stuck in traffic more than half the time. Car makers sell nothing but a fantasy- no traffic, wide smooth open roads, 0-100 in a nanosecond to stroke your ego- sexy! virile! fast! fun! wind in your hair or fear to sell you more than you need just to get to point A to B.

So with that said, you have the funds to buy whatever level of status car you want. You attained FI by saving and spending with your eyes open. How does the extra styling and performance added into the same car model make it more enjoyable? And will you enjoy paying to fix all the extra add ons when it breaks down?

One way to spend your large stash meaningfully is to support organizations or causes that you believe in. Again, as a not-a-car-person, that kind of spending is definitely money well spent and a worthwhile upgrade! :beer
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Re: Once you are FI how do you learn to spend it?

Post by Marseille07 »

TheTimeLord wrote: Thu Mar 31, 2022 2:19 pm Just so we are clear I can afford the vehicle, it is more than I had expected to pay for my next car but this has nothing to do with financial ability. This is for me about the difficulty I am experiencing transitioning from accumulating assets to enjoying those assets. Sounds dumb and maybe it is.
If you have enough budget (4% SWR or whatever WR% you plan to use) even after buying a car, then you can buy the car.

I personally wouldn't, but I'm not here to heckle at others responsibly spending their $.
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