Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
When/how do you splurge?
Old 08-26-2016, 09:23 AM   #1
Recycles dryer sheets
 
Join Date: Mar 2013
Posts: 224
When/how do you splurge?

Giving lots of thought to financial management post retire (77 more working days....). I have always had this idea of managing an income stream and a budget that includes modest vacations, travel and dining out, something we put a very high value on. But than had this idea if the portfolio grows beyond what I would call a robust rate, then I would allow us to skim the cream off and go blow some money on some other travel or whatever, while we are still young. On top of that, I have a hobby business that produces very sporadic but sometimes good income, and that money has always been "gravy" (ie.: not earmarked for anything in the budget); and on top of that, I will probably actually collect unemployment in 2017 as I am technically getting laid off at the end of the year.... So I am thinking of pushing all of this to a slush fund that I can spend from guilt-free.

Wondering if/how others allow themselves a "When the $$ is there, spend it!" fund. We are thrifty and frugal, but we also have no problem living and spending when there is bonus cash popping up.

Does anyone track the portfolio growth and allow themselves to splurge when it grows beyond some established number?
__________________

__________________
doneat54 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-26-2016, 09:28 AM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,248
I go for experiences, but with no hassles. So if there is a concert, play, or performance or event that I want to see, then I get front row tickets, fly there, have a driver pick me up at the airport, go to dinner, then the concert, and a nice hotel, then fly home the next day after a great breakfast.
__________________

__________________
LOL! is offline   Reply With Quote
Old 08-26-2016, 09:48 AM   #3
Thinks s/he gets paid by the post
ExFlyBoy5's Avatar
 
Join Date: May 2013
Posts: 1,704
For me, it's one good trip a year. We travel fairly often anyway, but once a year, we go all out. Business class flying, the best food we can find and usually rent a house instead of staying in a hotel. I think with our next trip like this, we are going to get a chef for a few of the meals. It's definitely a splurge for me!
__________________
Founder and Head Lounger @ The Life of Leisure Institute
Retired in 2014 at the Ripe Age of 40.
ExFlyBoy5 is offline   Reply With Quote
Old 08-26-2016, 10:08 AM   #4
Recycles dryer sheets
 
Join Date: Mar 2013
Posts: 224
Thanks, but for this thread I was more curious as to how folks funded the splurges, if they skimmed a fast growing portfolio, etc. Or when do you allow yourself to splurge??
__________________
doneat54 is offline   Reply With Quote
Old 08-26-2016, 10:22 AM   #5
Thinks s/he gets paid by the post
ExFlyBoy5's Avatar
 
Join Date: May 2013
Posts: 1,704
Quote:
Originally Posted by doneat58 View Post
Thanks, but for this thread I was more curious as to how folks funded the splurges, if they skimmed a fast growing portfolio, etc. Or when do you allow yourself to splurge??
Ah, gotcha...my bad. Ours is dictated by dividend returns and "left over" funds from the maintenance budget for our primary home/rental property. So far, even with the splurge, there tends to be left over money in that "fund". It's somewhat entertaining to me that I figured that in retirement, my nest egg wouldn't grow very much, but we have been "lucky" in that it's growing MUCH faster than I thought it would.

We have been giving thought to selling the rental property (it has appreciated considerably over the last 4 years) and then using the proceeds to fund these splurges, BUT...the ROI on the house is currently about 8%, so I am having an internal debate if I want to "get out" while it's so good or risk a RE bubble. Sorry....a little off topic...back to your normally scheduled program!
__________________
Founder and Head Lounger @ The Life of Leisure Institute
Retired in 2014 at the Ripe Age of 40.
ExFlyBoy5 is offline   Reply With Quote
Old 08-26-2016, 10:30 AM   #6
Thinks s/he gets paid by the post
gauss's Avatar
 
Join Date: Aug 2011
Posts: 1,618
Quote:
Originally Posted by doneat58 View Post
Giving lots of thought to financial management post retire (77 more working days....). I have always had this idea of managing an income stream and a budget that includes modest vacations, travel and dining out, something we put a very high value on. But than had this idea if the portfolio grows beyond what I would call a robust rate, then I would allow us to skim the cream off and go blow some money on some other travel or whatever, while we are still young. On top of that, I have a hobby business that produces very sporadic but sometimes good income, and that money has always been "gravy" (ie.: not earmarked for anything in the budget); and on top of that, I will probably actually collect unemployment in 2017 as I am technically getting laid off at the end of the year.... So I am thinking of pushing all of this to a slush fund that I can spend from guilt-free.

Wondering if/how others allow themselves a "When the $$ is there, spend it!" fund. We are thrifty and frugal, but we also have no problem living and spending when there is bonus cash popping up.

Does anyone track the portfolio growth and allow themselves to splurge when it grows beyond some established number?
The main differences between my approach to financial management Pre vs Post retirement are as follows:

- Pre-Retirement I was more of a risk taker. Margin/Futures etc..etc. The thinking was that if I lost too much I could always earn it back. On the plus sign I could shorten my time until ER.

- Post-Retirement I knew that this now had to stop. I moved everything into index funds and let the market do its thing. I actually moved into Balanced index funds so that I would no longer need to fret when some event was pending -- my funds were rebalancing themselves daily and I no longer needed to track them closely. This gave me much emotional relief. I had basically won the game (ie ER'd) and just need to live my life now. No longer trying to maximize returns.

-gauss

p.s. To answer your direct question while working I logged my expenses for decades and always spent what I wanted with the caveat that I knew that any extra spending would push out ER. When my income streams exceeded my unconstrained spending I knew that I had enough and pulled the plug when the circumstances were right. I suspect I will continue the same unconstrained spending in retirement but realizing that an excess spending could reduce my plan's robustness. Bottom line is that I track but do not necessarily budget on a continuing basis.
__________________
gauss is offline   Reply With Quote
Old 08-26-2016, 10:50 AM   #7
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,568
"When the $$ is there, spend it!"

What does this mean? If your income is largely from a portfolio of some sort, how do you know the excess $$ are there?

I believe, may be a miss-belief, that the 4% rule is base on some performance of the market over time. FireCalc for instance shows me there are times when I would have come real close to 0 and others when I would have flourish. i.e. I may have a lot of surplus funds this year, but next year my portfolio could be cut in half. So the excess of one year is the protection for another. When is excess, excess?

Now if you excess comes from money budgeted from this years income and not spent, that would be easier. My example there is, I budget $$ for appliance replacement. I now have enough saved to replace all the appliances plus inflation. So those dollars budgeted each year are surplus.
__________________
If it is after 5:00 when I post I reserve the right to disavow anything I posted.
Rustic23 is offline   Reply With Quote
Old 08-26-2016, 11:41 AM   #8
Moderator Emeritus
 
Join Date: May 2007
Posts: 10,834
This how we decided to manage our guilt-free splurges:

We set up three savings accounts, one for DW, one for me, and one joint. The individual savings accounts are used to fund individual splurges (hobbies, shopping, etc...) while the joint account is used for big things like travel and home improvement projects. The money in those accounts has no other purpose than to be spent on fun stuff, so we have no guilt spending it.

All three accounts are funded monthly using whatever is left after paying the bills. It is split between the 3 accounts (25% going to each individual account and 50% going to the joint account). If we do get extra income (not generated by our investments) , it is split the same way between the 3 accounts.

But I do not cash in on investments (beyond my allowed WR) to fund those accounts which are reserved for frivolous spending. The only situation where I might skim off the portfolio (exceed our max allowed WR) is if we are hit with a huge medical or home repair bill. We save for medical expenses and home repairs on an ongoing basis and our savings should be adequate to handle most situations, but maybe not all situations...
__________________
FIREd is offline   Reply With Quote
Old 08-26-2016, 11:44 AM   #9
Thinks s/he gets paid by the post
RobbieB's Avatar
 
Join Date: Mar 2016
Location: Central CA
Posts: 2,048
I love to splurge and do it regularly. No guilt whatsoever. Don't even think about it, not worried. Getting a nice monthly statement makes me especially to eager to order up some exotic food off the internet. And some nice wine to go with it.

More worried about leaving a big unspent "stash-o-cash" that I could have had fun with.
__________________
Retired at 59 in 2014. Should have done it sooner but I worried too much.
RobbieB is online now   Reply With Quote
Old 08-26-2016, 11:44 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
kcowan's Avatar
 
Join Date: Jul 2006
Location: Pacific latitude 20/49
Posts: 5,270
Send a message via Skype™ to kcowan
Yes I think you need to budget for splurges with your SWR. When you actually take them then become moot. You might feel better dipping into that pool during a good year but it is immaterial. You could eat into it through dining and entertainment as easily as taking a trip.
__________________
For the fun of it...Keith
kcowan is online now   Reply With Quote
Old 08-26-2016, 11:56 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Nov 2009
Posts: 3,592
Because I build into my budget a surplus, or cushion, to allow for small, unforeseen expenses, I sometimes use that money to splurge on things. It might be a small spending spree on gifts or going out to eat a few extra times, or to travel once in a while.
__________________
Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.

"I want my money working for me instead of me working for my money!"
scrabbler1 is offline   Reply With Quote
Old 08-26-2016, 12:14 PM   #12
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 37,660
I do like I did before retirement. I mentally set aside unspent income, it piles up, and then eventually I might spend it (like I did last year when I bought my dream house). Of course, in a bull market there is more left over because my WR is a percent of my portfolio value on 12/31 of the previous year. My portfolio is bigger so my withdrawal is bigger too and there is more to set aside.

Sorry if this is not clear but I tried; I'm in a rush at the moment.
__________________
Fairy tales are more than true: not because they tell us that dragons exist, but because they tell us that dragons can be beaten.

― N. Gaiman (2002)








W2R is online now   Reply With Quote
Old 08-26-2016, 12:23 PM   #13
Thinks s/he gets paid by the post
2017ish's Avatar
 
Join Date: Apr 2012
Posts: 1,770
Quote:
Originally Posted by kcowan View Post
Yes I think you need to budget for splurges with your SWR. When you actually take them then become moot. You might feel better dipping into that pool during a good year but it is immaterial. You could eat into it through dining and entertainment as easily as taking a trip.
Quote:
Originally Posted by W2R View Post
I do like I did before retirement. I mentally set aside unspent income, it piles up, and then eventually I might spend it (like I did last year when I bought my dream house). Of course, in a bull market there is more left over because my WR is a percent of my portfolio value on 12/31 of the previous year. My portfolio is bigger so my withdrawal is bigger too and there is more to set aside.

...
We are still in planning stage, but this is what we will do. With a constant percentage withdrawal rate, we will be in a position to spend more on discretionary items when the portfolio is up--in exchange for which we'll have to cut back on discretionary when it is down. Granted, we have a very large share of discretionary built in at the baseline, which makes it easier.
__________________
OMY * 3 2ish
2017ish is offline   Reply With Quote
Old 08-26-2016, 02:45 PM   #14
Recycles dryer sheets
 
Join Date: Mar 2013
Posts: 224
Quote:
Originally Posted by FIREd View Post
This how we decided to manage our guilt-free splurges:

We set up three savings accounts, one for DW, one for me, and one joint. The individual savings accounts are used to fund individual splurges (hobbies, shopping, etc...) while the joint account is used for big things like travel and home improvement projects. The money in those accounts has no other purpose than to be spent on fun stuff, so we have no guilt spending it.

All three accounts are funded monthly using whatever is left after paying the bills. It is split between the 3 accounts (25% going to each individual account and 50% going to the joint account). If we do get extra income (not generated by our investments) , it is split the same way between the 3 accounts.

But I do not cash in on investments (beyond my allowed WR) to fund those accounts which are reserved for frivolous spending. The only situation where I might skim off the portfolio (exceed our max allowed WR) is if we are hit with a huge medical or home repair bill. We save for medical expenses and home repairs on an ongoing basis and our savings should be adequate to handle most situations, but maybe not all situations...

I like that!!
__________________
doneat54 is offline   Reply With Quote
Old 08-26-2016, 02:52 PM   #15
Thinks s/he gets paid by the post
Sunset's Avatar
 
Join Date: Jul 2014
Location: Chicago
Posts: 3,864
Haven't done it yet, although last year I had no trouble spending ~30K on a new vehicle.
We spend below our SWR, so I'm just planning a splurge as simply we do something we want to do, and pay for it. No special pile of $$ to use.
__________________
Sunset is offline   Reply With Quote
Old 08-26-2016, 04:28 PM   #16
Thinks s/he gets paid by the post
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 4,390
No special accounts. I use a variable percentage withdrawal method, so I have a budget amount for the year. If I'm spending less than that, I'm more willing to splurge a bit. At the end of the year I recalculate what I can spend next year, so if I've had good investment returns, the benefit is spread over many years. I like this better than saying I can splurge on the excess, because the next year might be a down year and I might regret splurging and having to cut back on other things more essential to me.


Another thing to watch for is to not get carried away with splurges if I've had a clean year on major repairs or replacements of things like cars. Those expenses will come up at some point and likely put me over budget, so I like to stay under budget other years.


Sometimes I think it would be good to have an account for every day expenses, an account for large irregular expenses, and an account for extras so I could better monitor these things, but that may be overthinking it. Mostly I'm happy to have a good buffer and not have rich tastes, so I don't worry too much.
__________________
RunningBum is online now   Reply With Quote
Old 08-26-2016, 04:45 PM   #17
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 1,450
I do not have a special account or formal system, but I am comfortably FI, and will RE in 7 mo. For a couple years we have been spending much more on travel and other experiences, like concerts. I always comes from income that is beyond what we need for regular expenses and saving.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Old 08-26-2016, 04:48 PM   #18
gone traveling
 
Join Date: Sep 2013
Posts: 1,248
We always splurged on nice red wine and good quality food and we always split one bottle in the evening which comes to arround 7k a year on wine.

Otherwise we are quite frugal given our level of income.
__________________
eta2020 is offline   Reply With Quote
Old 08-26-2016, 05:04 PM   #19
Thinks s/he gets paid by the post
2017ish's Avatar
 
Join Date: Apr 2012
Posts: 1,770
Quote:
Originally Posted by eta2020 View Post
We always splurged on nice red wine and good quality food and we always split one bottle in the evening which comes to arround 7k a year on wine.

...
Splurge? Nah, necessity of life at our house. (Envy that 7K a year on wine, we have good intentions, but DW has inched along up the pinot curve and the cellar is constantly needing to be fed....)
__________________
OMY * 3 2ish
2017ish is offline   Reply With Quote
Old 08-26-2016, 05:08 PM   #20
gone traveling
 
Join Date: Sep 2013
Posts: 1,248
Quote:
Originally Posted by 2017ish View Post
Splurge? Nah, necessity of life at our house. (Envy that 7K a year on wine, we have good intentions, but DW has inched along up the pinot curve and the cellar is constantly needing to be fed....)
You could make a good friend
__________________

__________________
eta2020 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
LBYMs what do you splurge on? eta2020 FIRE and Money 177 08-01-2014 04:57 PM
Is it time to splurge on a new car? KMyer Other topics 25 04-14-2012 11:21 PM
Your biggest splurge of all time bank5 Other topics 69 06-24-2009 03:55 PM
Fighting the Urge to Splurge ProspectiveBum Other topics 34 01-23-2009 10:42 AM
If I splurge, what do you recommend? firewhen Other topics 10 04-04-2007 01:18 AM

 

 
All times are GMT -6. The time now is 10:28 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.