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Inflation Or "Tastes"???
Old 07-27-2004, 10:40 AM   #1
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Inflation Or "Tastes"???

Current and future wealthy....

What % of annual cost of living increases (i.e. needs), do you think are actually attributed to the numbing of Americans' mentality around personal finance?

For example, cell phones to me are largely a waste. I get mine free through work so....

It amazes me how all of the bells and whistles are added to a phone and people go after it. Walkie talkie phones? Ring tones? Camera? Color? Internet access?

LMAO....sad it is to me...

I actually have a friend that was recently complaining that "times were hard". He then rattled off his living expenses...

Satellite
Cell phone
Gym membership
Hi-speed internet

Catch my drift?

TD
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Re: Inflation Or "Tastes"???
Old 07-27-2004, 11:21 AM   #2
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Re: Inflation Or "Tastes"???

Quote:
....sad it is to me...
Yoda?

You're noticing that our whole culture is built around increasing consumption and creating an inexorable feeling that you need to "keep up with the joneses".

There are entire armies of people specially trained to know which buttons to push to create desire and fear. Couple that with our inherent desire to compete, and you have people making six figures, spending it, and living a life not significantly better than someone at 1/10th the income and spending level.

But they sure think they're sumthin'...

Figuring that out and getting off that hampster wheel is step one...
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Re: Inflation Or "Tastes"???
Old 07-27-2004, 03:43 PM   #3
 
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Re: Inflation Or "Tastes"???

I probbably will regret this but can't resist opening this can of worms. How many of you will make some 'improvements' to your spendings if you receive an incremental 1 - 2 millions boost in your porffolio (lucky in love, lottery, inheritance, 5-10 more years of working life etc....).

The unvarnished truth is that I (not presuming to speak for anyone else) traded financial consumption for personal freedom. Is it worth it? Well, to be honest, I can and sure would do alot of consumption with a X millions windfall. Other than that, I enjoy waking up at 8:00 a.m. in the morming and going back to sleep.

At the end of the day, nothing is free and you just need to be sure that you're going to be o.k. with the path that you've chosen.
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Re: Inflation Or "Tastes"???
Old 07-27-2004, 04:51 PM   #4
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Re: Inflation Or "Tastes"???

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I probbably will regret this but can't resist opening this can of worms. *How many of you will *make some 'improvements' to your spendings if you receive an incremental 1 - 2 millions boost in your porffolio (lucky in love, lottery, inheritance, 5-10 more years of working life etc....).
I don't think I am typical of early retirees. I would opt for better security, but after that there is along list of things I wouild love to buy. An H-K P7 for starters. A Tama maple Classic drum kit. A whole set of Bosphorus cymbals. A couple of Armani suits. A load of the worlds's sexiest clothing for my wife.

Hey, I am just warming up. A nice apartment in the Pike Place Market. Pounds of salmon every day all summer long. A Porsche Twin Turbo- wait, make that a yellow Ferrari!

I don't particulary like frugality at all. It's just that I have a bad personality for work. When the man said "My way or the highway", I stuck out my thumb.

But I have a plan. See Investment section.

Mikey
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Re: Inflation Or "Tastes"???
Old 07-27-2004, 05:28 PM   #5
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Re: Inflation Or "Tastes"???

I am such a cheap F&^#ing bastard (er long time aggresively frugal) that spending 'excess' would just
tick me off. We're - thru a variety off unusual circumstances underunning our spend line by 10-15k/yr - which I hope to put in hobby stocks along with looking ahead to SS next july for more play investment money.

However, with faith in the SO and the relentless march of inflation, our spending will continue to drift up.

Mikey? - I've heard bad things about Pike Place - got itself urban renewed over the decades. In 1963, they barely looked at our bad ID's, police always walked in pairs with a dog, one dollar haircuts, and the vendor stalls actually had decent prices for Seattle.

It took a while but after the 1984 New Orlean's world's fair - the riverfront/wharehouse area is 'the' high rent district.
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Re: Inflation Or "Tastes"???
Old 07-27-2004, 05:51 PM   #6
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Re: Inflation Or "Tastes"???

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Mikey? - I've heard bad things about Pike Place - got itself urban renewed over the decades. In 1963, they barely looked at our bad ID's, police always walked in pairs with a dog, one dollar haircuts, and the vendor stalls actually had decent prices for Seattle.
Unclemick, you are right. It isn't old Seattle anymore. More like Fisherman's Wharf North. Still, pretty nice place to spend time.

Mikey
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Re: Inflation Or "Tastes"???
Old 07-27-2004, 07:23 PM   #7
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Re: Inflation Or "Tastes"???

Quote:
I probbably will regret this but can't resist opening this can of worms. *How many of you will *make some 'improvements' to your spendings if you receive an incremental 1 - 2 millions boost in your porffolio (lucky in love, lottery, inheritance, 5-10 more years of working life etc....)..
With a significantly sizeable windfall, I think I might finally buy a car (used)
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Re: Inflation Or "Tastes"???
Old 07-27-2004, 09:03 PM   #8
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Re: Inflation Or "Tastes"???

Quote:
I would opt for better security, but after that there is along list of things I wouild love to buy.
Better financial security, or would you be buying bullet-proof underwear?

Quote:
An H-K P7 for starters.
OK, I'll bite. A what?!

Quote:
A nice apartment in the Pike Place Market.
I used to have an apartment in Belltown. It was really nice to be able to walk anywhere downtown, but now I prefer living on an island and taking a ferry when I get the urge to walk around downtown again (which isn't very often).

Quote:
Pounds of salmon every day all summer long.
Mmmm, mercury and PCBs. But at least an alder plank makes them taste good.

Quote:
A Porsche Twin Turbo- wait, make that a yellow Ferrari!
And you're going to drive this around downtown Seattle, are you? You might hit 10mph tops.

With an extra $2M, I'd probably blow it on home improvements. James Bond style.
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Re: Inflation Or "Tastes"???
Old 07-27-2004, 10:36 PM   #9
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Re: Inflation Or "Tastes"???

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I probbably will regret this but can't resist opening this can of worms.
. . .
At the end of the day, nothing is free and you just need to be sure that you're going to be o.k. with the path that you've chosen.
I think this is a good point to make. By choosing to ER, you choose a path of delayed gratification (not spending everything you earn on immediate whims) and different long-term gratification (trading a higher ultimate financial standard of living for other rewards). The ER does this while most around them choose to spend as fast as they earn. So ERs sometimes become a little defensive and self-riteous about our path. It shows in a lot of posts.

In reality, ER is just our path. It is not inherently "better" than choosing to work for as long as you are able. Of course if working makes you miserable (or even less than what you would like to be) then ER is the right path for you. I suspect that is the case for many of us. But some people really aren't happy unless they are working for a wage. For them, ER would be wrong. We may find that sad or disapointing, but that says as much about us as about the happy workaholic.

So now I've taken the open can of worms and spilled them out all over. If anyone needs them to help rehabilitate injured birds, you are free to all of them.
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If I wanted an extra $2M...
Old 07-27-2004, 11:25 PM   #10
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If I wanted an extra $2M...

... I'd still be working.

I can't think of anything that I'd want to buy with $2M that we're not planning to buy eventually anyway with the money we have.

Cell phones? Hated the life that "entitled" us to them. We haven't had one since spouse got rid of her 24/7 job.

Fast cars? Not on these highways. I can always go pay someone at Campbell Race Track for lessons if I want to get that out of my system.

Luxurious cars? Not responsible enough. I'd sweat parking & insurance every time I picked up the keys.

Getting off the electrical grid? Well, we're planning to do that eventually. With rising fuel prices, that'll probably be this decade rather than next.

High-speed internet? I'm dumping cable for DSL (and saving $15/month). Can't tell the speed difference (although a number of speedometer websites claim that DSL is slower).

A horse for the kid? Again, too much responsibility added to not enough time. Besides, buying a horse is the cheapest part of being a horse owner.

More cool furniture & electronics? Well, I just don't have enough infrastructure & stuff to take care of yet.

Another longboard? Now you're talking! But we identified this "need" six months ago and still haven't gotten around to shopping...

So that $2M would probably establish a heckuva personal charitable foundation. I'd keep it in a stock index fund and whatever's left after my/spouse's long-term care would be disbursed (dispersed?) as our kid (the trustee) sees fit.
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Re: Inflation Or "Tastes"???
Old 07-28-2004, 05:15 AM   #11
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Re: Inflation Or "Tastes"???

Quote:
Fast cars?
This is the one that might get me; fighting the urge almost daily. It isnt the driving fast I want (any car can do that given enough time to get to speed), its the acceleration. I used to live in (congested) Miami, and even there, you can accelerate fast in plenty of places.
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Re: Inflation Or "Tastes"???
Old 07-28-2004, 05:24 AM   #12
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Re: Inflation Or "Tastes"???

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I probbably will regret this but can't resist opening this can of worms. *How many of you will *make some 'improvements' to your spendings if you receive an incremental 1 - 2 millions boost in your porffolio (lucky in love, lottery, inheritance, 5-10 more years of working life etc....)..
As a younger person (32), i'm debating where the max happiness factor might be. *I'm suspicious that it might lie somewhere in the middle (savings rate of 10-15% gross). *The reason I say that is because though compounding is exponential, there is also a conversely exponential negative ROI for every year earlier that you retire. *Does that make sense?

Example: *If one wants to be an extreme ER, then they hoarde money at excessive rates. *The downside is this person wont have the massive power that excessive time normally brings to long-term investment. *Anyone that's seen a compounding chart over 30-40 years is well aware the bulk of the earnings occurs in that last decade. *And this is to say nothing of, that ER will have more years of post retirement to fund prior to death.

So what i'm getting at is that after you pass an arbitrary savings point, the added pain/suffering in reduced lifestyle of saving beyond that buys you less and less years of early retirement to the eventual point that the ROI for doing so, so to speak, becomes illogical.

My normal retirement age as a federal employee will be 58, where i will get a pension and SS suppliment. *Its probably most logical for me to time my retirement with that date, which is probably still relatively early on a national comparison. I would probably have to save an illogically excessive amount to justify retiring prior to my eligibility for those other two retirement ingredients.

Azanon
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Re: Inflation Or "Tastes"???
Old 07-28-2004, 06:11 AM   #13
 
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Re: Inflation Or "Tastes"???

Excellent posts! Although I had little trouble adjusting
to frugality and racheting down my "livin' large"
lifetsyle, I suspect that with a big windfall I would slip
right back into it. Or maybe not. Maybe I would just spend more on stuff I am planning anyway?
In any case, I mostly enjoyed my previous life and I mostly enjoy my ER life. They are just quite different.

BTW, I do own a cell phone but may drop it when the yr.
contract is up. Kind of a waste.

John Galt
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You're absolutely right, azanon.
Old 07-28-2004, 06:36 AM   #14
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You're absolutely right, azanon.

You have to save early to ER. If that's perceived to be too much pain & deprivation, then you'll never make the ER goal.

Others don't see it as pain & deprivation-- just the price of freedom. To me it's become priceless.

Run the numbers all you can so that you can tell when you have a choice. When you have a choice, then you'll know when it's time to go... and that's the motivation, not pain & deprivation.
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Re: Inflation Or "Tastes"???
Old 07-28-2004, 07:18 AM   #15
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Re: Inflation Or "Tastes"???

Quote:

So what i'm getting at is that after you pass an arbitrary savings point, the added pain/suffering in reduced lifestyle of saving beyond that buys you less and less years of early retirement to the eventual point that the ROI for doing so, so to speak, becomes illogical.
This is an interesting idea. I decided to bring out the old REHP spreadsheet and try some numbers.

At first I tried using different savings rates and noticing a huge jump in how many years I had to work until retirement. However, this is assuming that when retired, I'll live on exactly how much money I'm living on now; practical considering I'm saving almost half of my income, but if I was saving less, I could also live on less of my pre-retirement income too. Does that make sense? So it wasn't as easy to calculate as I hoped.

The end result is that saving less does put a kink into your nest egg and will mean that you have to work longer, but this may or may not be worth it. In my case, if I changed my savings rate down to 40%, it would take twelve years to reach the nest egg that a 50% savings rate could get me in ten years. 30% would extend it to fourteen years.

It seems, then, that reducing your savings by 20% means you will be working 20% more time, and the correlary may be true as well.

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Re: Inflation Or "Tastes"???
Old 07-28-2004, 09:38 AM   #16
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Re: Inflation Or "Tastes"???

Quote:
I probbably will regret this but can't resist opening this can of worms. *How many of you will *make some 'improvements' to your spendings if you receive an incremental 1 - 2 millions boost in your porffolio (lucky in love, lottery, inheritance, 5-10 more years of working life etc....).
I try to think of what will be different if I get a windfall, and I find it to be quite hard. I don't really want an expensive car (I would be afraid that it would get stolen or something), or a bigger house. I used to want nice furniture, clothes etc but now sitting here I think, "I am really quite happy with what I have".

Maybe I'll blow a little of it for some nice, expensive vacation (maybe I'll fly first class instead of economy ).

Another possibility is to quit work today but at 30, I STILL like my work. I have to deal with some awful managers but my work overall is quite interesting (I design control systems for power plants). My work may not sound too glamourous to people (people's eyes usually start to glaze over when I tell them about work) but to me, it is technically challenging and I like to think that I am making a difference in many people's lives.

Most likely the windfall will probably be invested for future ER (when I decide I can't take it anymore).

Jane

P.S. I have no cellphone, no gym membership, no satellite (but do have cable), and I have "lite" hi-speed internet from my cable company.
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Today's luxuries are tomorrow's necessities
Old 07-28-2004, 11:08 AM   #17
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Today's luxuries are tomorrow's necessities

As I approached ER, I swapped e-mail with a college alumni who's still on Oahu. I was curious why so many Navy retirees started in the islands but ended up on the Mainland. (Short answer-- grandchildren!)

He started a small business with his wife when he retired from the Navy. They turned out to be naturals, and as his buddies left the service he hired them on as contractors. At one point the office staffed over 25 people and could still barely keep up with the customers. 30 years later he's worth at least eight figures.

He's probably in his early 70s now. He's turned over the daily routine to the next generation (so his grandkids are staying on Oahu) but he's still in charge. When I asked him about monitoring his retirement portfolio, he said that he's turned it over to a Mainland firm and he only looks at it for an hour or two a year. Even with his statements in front of him it'd take him a while to determine "his" stock/bond allocation, the portfolio's investments, its performance, etc.

I noted that must make it hard to decide whether or not he's ready to retire, and he says that he's already made that decision-- he never will. He and his wife still drop by the office to meet with big clients but they spend most of their time flying to business conventions, running training seminars, and attending college reunions. They're traveling 25-30 weeks/year on a perpetual world victory tour.

He says that he can't imagine a better life and that his retirement would get more expensive every year. He made that comment in my subject line, and I get the feeling that we're not just upgrading to business class. For him I think it's going from first class to a NetJets charter share, garaging the Jag for a chauffeured limo, dropping hotels for residence suites, equipping the home front with a gourmet cook & maid, etc.

Must be a tough life, but I wonder if he still knows how to throw a longboard in his beater and find a quiet beach. (Of course his house is probably BUILT next to a quiet beach.) I think that even a seven-figure net worth would overwhelm me with its responsibilities!
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Re: Inflation Or "Tastes"???
Old 07-28-2004, 01:33 PM   #18
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Re: Inflation Or "Tastes"???

Hmmm, interesting posts. I'm still working, so much of this is academic for me, but with a windfall, I would obviusly retire right now. If I was already retired and living on a tight budget I would simply loosen it. The car would be tough, I do like Ferraris.....
I'm not sure, b/c in general my tastes are rather quite simple. Retire early for me is something I see as very possible because of the way I live, but I don't live this way for the purpose of retiring early. I spend what I want without really thinking about it, and when I look back at what I've spent, it simply never been very much. I keep getting new jobs and more money, but I just don't spend any of it. I had to do something so I learned how to invest a little bit. So, as for cell phone, not only do I have a cell phone, but I cancelled my home phone, I'm only on cell, of course the company pays for it. Gym membership ? I will be getting another one shortly. Cars/motorcycles ? You don't want to know, too many to discuss, but its my hobby, as discussed in another post, I usually make money at this. High speed cable internet, and yes, the company pays. In retirement, I plan on keeping a high speed internet connection, but I will do a better job of researching costs, and I plan on keeping my cell phone. Geez,
tho, I am going to miss all these company paid benefits !

Oh yeah, Mikey, H-K P7, I like your style !! Not my first choice, but then I haven't "test drove" one yet either ! I'm kinda partial to a Sig....

-pan
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Re: Inflation Or "Tastes"???
Old 07-28-2004, 02:03 PM   #19
 
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Re: Inflation Or "Tastes"???

Hey, are Mikey and panhead talking guns and
motorcycles? I love it! Let the testoserone flow

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Worms RIP
Old 07-28-2004, 02:04 PM   #20
 
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Worms RIP

Quote:

I think this is a good point to make. By choosing to ER, you choose a path of delayed gratification (not spending everything you earn on immediate whims) and different long-term gratification (trading a higher ultimate financial standard of living for other rewards). The ER does this while most around them choose to spend as fast as they earn. So ERs sometimes become a little defensive and self-riteous about our path. It shows in a lot of posts.

In reality, ER is just our path. It is not inherently "better" than choosing to work for as long as you are able. Of course if working makes you miserable (or even less than what you would like to be) then ER is the right path for you. I suspect that is the case for many of us. But some people really aren't happy unless they are working for a wage. For them, ER would be wrong. We may find that sad or disapointing, but that says as much about us as about the happy workaholic.
Umh... that's what I was trying to say...
In the spirit of the worms, I would do the following with the 1 - 2 millions windfall:
1. If I'm still employed, I would start to plan my ER exit so that I'm ready when I stop liking my job. Speaking from experience, you don't know what you don't know.

2. If I'm ER, I'll just spend less time worrying about a bear market, have more peace of mind - I've learned not to underestimate this commodity.

As long as the worms are all out on the ground, I have to say that as a retiree living with a planned budget, I often thought about all the charities/causes that I could support if I have the funds to do so. I'm not so naive as to think that these organizations should not be thoroughtly researched in order to be vested but to accord this option no thought or in jest is worth some reflection. JMHO.
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