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How to switch gears to spending
Old 04-16-2007, 03:05 PM   #1
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How to switch gears to spending

I tried a search and even though I'm sure this topic is out there, I couldn't find it.

I have a friend's Mom who has asked me about lots of topics. She(thanks to me repeating what you guys and books have taught me) finally understands the 4% SWR. She has about 1 million in accounts, mostly Traditional IRA's. She works 1 day a week for social reasons. Collects pension and SS from late husband. In the past two years her net worth went from 850k ish to just over 1 million. She is in mostly conservative investments. The past two years she has given her kids each 10k (40k-one time deal) total and bought a brand new car for cash. Her withdrawal rate is at most 2.5%.

She has been invited to go on cruises this year and next w/ friends. She could easily afford a cruise or two a year and not go near 4% WR. But- and here's the issue- Psychologically she and her late husband have been savers. She is having a hard time believing she could afford some of the luxuries in life. What advice would you give or books would you rec. to her to psychologically switch from saving mode to spending mode?

Sorry if this is wordy. I can provide a few more details if needed.

Mudd
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Re: How to switch gears to spending
Old 04-16-2007, 03:09 PM   #2
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Re: How to switch gears to spending

Why not suggest to her that she join this board to see how others are doing it. Exposing her to real people rather than words might do the trick.
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Re: How to switch gears to spending
Old 04-16-2007, 03:22 PM   #3
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Re: How to switch gears to spending

Quote:
Originally Posted by Mudd
But- and here's the issue- Psychologically she and her late husband have been savers. She is having a hard time believing she could afford some of the luxuries in life. What advice would you give or books would you rec. to her to psychologically switch from saving mode to spending mode?

Mudd
America is full of folks that can't balance life. Either they are Alcoholics or Teetotalers. Savers or Spenders......etc. etc...

Once you have lived your whole life as a saver, it's very difficult to change. I know some of these people and when they did take a vaction when someone talked them into it, they didn't have a good time anyway. They were adding up the money they were spending PER HOUR!

Most likely they are too old change and there is probably very little you can do.

Not what you wanted to hear I know. But spending money is probably painful to them.
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Re: How to switch gears to spending
Old 04-16-2007, 03:53 PM   #4
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Re: How to switch gears to spending

It's hard to switch gears when you've always been a saver .Plus she may feel guilty because her husband's dead and she'd be spending money .Maybe she could just test the waters with a little get away and if that goes okay to slowly upgrade until she 's cruising ..
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Re: How to switch gears to spending
Old 04-16-2007, 03:54 PM   #5
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Re: How to switch gears to spending

Mudd,

You did not say how old the lady is but if she was raised by parents that survived the Great Depression (most of us older folks were) there is a deeply ingrained avoidance of spending in those folks that is very hard to break. My mother was born in 1922 and remembers quite clearly the loss of the family farm and moving from one family member's house to another while the whole family had to find some kind of work to buy food. Those are experiences that shape your whole life.

To this day, my mother will pinch a penny hard enough to bend it. We have a weekly discussion about where she stands financially and while I give her the numbers she still cannot come to grips with the fact that she will not outlive her cashflow. Spending on "personal" items is still hard for many of them to grasp even 70 years later.

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Re: How to switch gears to spending
Old 04-16-2007, 03:58 PM   #6
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Re: How to switch gears to spending

Quote:
Originally Posted by DangerMouse
Why not suggest to her that she join this board to see how others are doing it. Exposing her to real people rather than words might do the trick.
No! Don't do that. Once on board, she might change her mind and lower the swr to less than 2% Leave her alone, let her enjoy her money!
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Re: How to switch gears to spending
Old 04-16-2007, 04:28 PM   #7
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Re: How to switch gears to spending

Quote:
Originally Posted by Moemg
It's hard to switch gears when you've always been a saver .Plus she may feel guilty because her husband's dead and she'd be spending money .Maybe she could just test the waters with a little get away and if that goes okay to slowly upgrade until she 's cruising ..
I agree with Moemg. There could be quite a bit of guilt associated with extra spending. It is quite a shock to find yourself with the entire nest egg that both your husband and yourself built.
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Re: How to switch gears to spending
Old 04-16-2007, 05:04 PM   #8
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Re: How to switch gears to spending

I don't know whether this will be helpful, but has she ever participated in any kind of grief counseling group? My MIL was recently widowed and found an informal group at her church for people who've recently lost loved ones (mostly spouses). One of the things they talk about (not revealing personal details, necessarily) is money and how to deal with changed finances or, along the same lines, how to start enjoying yourself again if you've been a longtime caregiver.
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Re: How to switch gears to spending
Old 04-16-2007, 06:36 PM   #9
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Re: How to switch gears to spending

Be real careful about talking about finances at grief groups .There are actually people who go to these groups to hit on the newly grieving widows with some money.
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Re: How to switch gears to spending
Old 04-16-2007, 07:21 PM   #10
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Re: How to switch gears to spending

It sounds like she may be feeling guilty that both of them saved for all those years, and now he isn't there to enjoy it, so maybe she shouldn't enjoy it either.

Maybe helping her to see that her husband would want to see her enjoying herself, that being the reason they saved so faithfully. Her going and enjoying some cruises is nothing more than recognition of how well he (and she) did their job. Her husband would be proud of that.

It's probably much less fear that she can't afford it than feeling that somehow she doesn't deserve to enjoy it.

Hope you can help her loosen up a little. Life is short.

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Re: How to switch gears to spending
Old 04-16-2007, 07:50 PM   #11
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Re: How to switch gears to spending

Does she really WANT to go on a cruise? The reason I say this, is that some of us would really rather stay home.
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Re: How to switch gears to spending
Old 04-16-2007, 07:58 PM   #12
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Re: How to switch gears to spending

Quote:
Originally Posted by Moemg
Be real careful about talking about finances at grief groups .There are actually people who go to these groups to hit on the newly grieving widows with some money.
Yes, but wouldn't that solve the original problem brought up by the OP?

Quote:
Originally Posted by Want2retire
Does she really WANT to go on a cruise? The reason I say this, is that some of us would really rather stay home.
I'd go on another interisland cruise in a shot-- all the comforts of home, someone else does the cooking, and I'm not doing the chores.

And if she's doing it with Elderhostel or some other travel group then there'll be plenty of extra daily activities to choose from. Not that the cruise line will be boring everyone.

Our problem is usually aligning everyone's schedules.
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Re: How to switch gears to spending
Old 04-17-2007, 04:40 AM   #13
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Re: How to switch gears to spending

Not sure of the underlying motivations of the cruise... But if she does not enjoy it (i.e., spend it), someone else will... whoever inherits it. Chances are that they will spend it without regard to feelings of guilt or indecision.

I have seen several people inherit windfalls from parents. The parents were from the depression generation and lived frugally all their lives. A few have p%$$ed it away on repeated new cars, vacations, fancy restaurants... One was smart enough to pay off thier mortgage with a portion of the money... only to get a Home Equity Loan later (after they spent the rest) to pay for more frivolous stuff.

Moral of the story: Enjoy it or somebody else will!

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