What's life like with 100K/year or more?

[Sam]

I was at the bottom when I came to this country 26 years ago. Now I'm ok. Now I'm not poor, but not rich. My family annual expense is around 60K, excluding taxes and kids' tuition. There are material things that I'd love to have, such as driving a 50K Lexus instead of my Maxima, having a brand new Lazy Daze in the big garage, fly first class all the times. If I did get those, would I be much happier? I think I would more proud of my financial success, but not sure about being happier.

So, for those who live the high life, with 100K, 200K, or even more a year, how do you manage to spend that money?

Every now and then, I fantasize of having $1,000/day to spend. It's great for the first few days, few weeks, then I got stuck, unable to find ways to spend after that. Very pathetic, I know.

 

[kjpliny]

I think the old saying that "the more you make, the more you spend" rings true here and people take advantage of more disposable income like the good, media-conditioned consumers that they are without really thinking about it. I think at some point, depending on where you live and what your bottom-line (i.e. daily necessities) expenses are, there is definitely an income "comfort zone" that everyone would like to be above. The question is, what do you do with the extra money...spend it on high end consumer goods and other luxury items, or get what you need at the best value (taking into account price, quality and convenience) and save the rest.

For my area (Long Island, NY), $100k is going to get you a middle class lifestyle at best, probably more like lower-middle class due to the cost of living here. The comfort zone level here is more like $150k-$200k at least...above $200k and you should have more breathing room for fulfilling a few of your luxury desires. When I see a young person driving a new Lexus or Mercedes, I don't say to myself, "Wow, I wish that were me." I say to myself, "It's a shame that person feels the need to waste money on a status symbol to make them feel better about themselves." Funny thing is, they're probably leasing it.

 

[modhatter]

Well, for me Sam. I didn't think much about it. When you have a larger income at your disposal, some people tend to find means to spend it, and still not have much left over at the end of the month. You tend to buy a much more expensive house in the best area around you, perhaps a more expensive car. Some fun trinkets like haveing a boat and paying an arm and leg for it's maintenance and storage. So at the end of the month, you don't really have much left to spend. That's one type of person, and it was me at one time.

It did not make me happy, nor did it make me sad. The only advantage I can say is it gave me was peace of mind in not having to worry about paying the bills.

That said, if I had it to do over again, I would have not bought the most expensive house, and spend all I had to spend. As now those things do not matter so much to me. I would not want to live in a bad area of town, that is for sure. However, there is a middle ground. I never spent more than I had like many young people today, I just spent more than I had to. (If that makes any sence to you)

If I was smarter, I would have curbed my spending more, and saved more. I did save, but I could have done much better, because now I realize those things don't really mean much, and don't make you happy.

No better proff of that than Christina Onasis. She was one of the richest woman in the world at one time and was miserable. Several times attempted suicide and died at 37. So my advice to you if you are smart is FORGET ABOUT IT.

Live BELOW your means (with limits) and save for a free and worry-free retirement. You will be just as happy driving a Maxima (nice car) or a Ford Ranger truck, as a Lexus. (after fir first week anyway)

 

[free4now]

I've been living FIRE for 7 months now, and I spent the last month travelling. This has been the most expensive month for me by far, way exceeding my usual spending. What might be surprising is the reason why: a lot of my spending was trading money for time. With the time constraints of my travel there were often situations I decided to trade money for time. For instance:

- I didn't bother looking carefully at street parking signs on my trip, and ended up getting two parking tickets.

- I paid for hotel rooms sometimes instead of taking the time to camp.

- I paid to have my car washed instead of doing it myself

- I paid full price for an oil change rather than shopping for the lowest price

- I paid for restaurant meals rather than preparing my own.

- I would often buy items in convenience stores that could be purchased more cheaply elsewhere.

I suspect that a lot of people earning $100k or more have very little time because they are working so hard for that money. So a lot of their spending is on things that save them time. For instance, shopping at Bed Bath and Beyond, you pay high prices for the convenience of having a huge selection in one place. You can get the same products cheaper elsewhere, but the success of BBB shows that people are interested in trading money for time. Another way people trade money for time is by buying expensive automobiles with bells and whistles that supposedly "make life easier". Or home upgrades designed to reduce maintenance (e.g. seamless corian counters so you don't have to wipe the seams down).

Sadly it's not just the rich that end up spending on these timesaving measures. In my travels across the USA I was amazed at how even in the most poverty-stricken areas there were plenty of people driving late model cars, shopping primarily at convenience stores (because there weren't any supermarkets), etc. Another surprise was that motel rooms were often more expensive in poor areas (where presumably people trash hotel rooms) than in richer areas.

 

[scrubradio]

If I ever make it to 100k/year or more I'll tell ya. I suspect it won't be
much different than it is today. The amounts that get spent/saved would
change but the %'s would remain the same.

 

[uncledrz]

When I was working hard I was making some big money, but I was working all the time, and when I wasn't working I was worried about work, so it didn't really matter.

 

[poyet]

I did not change anything to my lifestyle, still have a 16 years old car, etc. But I do invest a lot more than I could years ago. Investing is much more rewarding than consuming as you can see the pile grow instead of depreciate. Furthermore, the game is extremely interesting as you always try to stay aware of news deals, ideas, methods, etc. to put money at work...

 

[lifeisgood]

Finally, a topic I know something about.

It's quite easy to spend it unless you have your eye firmly fixed on saving for a goal, such as ER. Look at the Wall Street Journal Saturday edition and you'll feel poor even if you make $500K.

It's all about sales-resistance. One of the most effective groups that go after the visible high=income types are non-profits. If you have a soft heart, or like the status of having your name in the program, you ER experience could be short.

 

[kcowan]

When I FIRED from a $225k/yr CEO job, we continued to spend $100k/yr. But that number has declined since 2002 because:
1) We no longer buy business clothes.
2) We avoid employment expenses like travel to work and lunches.
3) We still drive the same cars (BMW and Explorer) because the annual mileage is now minimal (We usually fly when we travel).
4) Our eating is healthier and cheaper because there is less processed food and takeout. We can also shop for bargains because it is more convenient.
5) We do some home swaps which drastically reduces vacation costs and improves their quality.
6) We get savings in paid travel accomodation because we rent by the month or week rather than the day. Also we eat in more often because of the longer stays.

The Lexus was part of one swap we did. Very nice but expensive on gas.

Many of the rich CEOs I know are constantly struggling to enjoy their yachts. Because the first part of every trip covers the same territory out of their marinas, some hire a captain to take it further afield, then fly up to meet them. Most are aghast at the cost of fuels and some have sold just because they could not enjoy them anymore.

They tend to own multiple homes in various destinations. We get some of that benefit with swaps. If we had $20 million, much of it would probably be invested in destination real estate.

 

[ladelfina]

Sam, what an excellent question! While I never had that much income, I did see lots of ways that money can easily walk out the door. I used to buy a lot of fancy colorful shoes.. (mostly mark-downs but many more pairs than I needed; my best friend called me "Imelda"). Lots of nice silk jackets and blouses that needed dry-cleaning. All these I wore to work so that kind of expense for me now is near-zero. Also, lots of eating out and even takeout food can cost megabucks.. easily an extra $10k/year, or even $20k.. [another money for time issue]. I, too, would wonder about the bottles of wine for $100 and up on restaurant wine lists (and who bought these wines), even though I know they aren't 10x as good as a $10 bottle. Big houses mean paying a maid, lawn service/gardener, pool cleaner, etc. in addition to big property taxes and big heating/electric bills, even if you can swing the big mortage payments. I can see a McMansion sucking up $100k easy, all on its own..

I think the only thing I regret never paying for (that I would find it hard to justify splurging on) is first-class plane tickets. I'll let you know when that happens and how happy it makes me. I can take a guess: VERY.

Let's see.. $5000/(12 hr. flight x 2) =... convince me, guys, that it's not worth $208/hour...

 

[Nords]

I was at the bottom when I came to this country 26 years ago. Now I'm ok. Now I'm not poor, but not rich. My family annual expense is around 60K, excluding taxes and kids' tuition. There are material things that I'd love to have, such as driving a 50K Lexus instead of my Maxima, having a brand new Lazy Daze in the big garage, fly first class all the times. If I did get those, would I be much happier? I think I would more proud of my financial success, but not sure about being happier.

Intriguing question, Sam, and one that's been getting a lot of airtime around the Nords household. We like to think that our values are reflected in our net worth instead of in our cars but we're trying to loosen up the purse strings a little. Frugal reflexes are very strong.

While I'd probably quickly become accustomed to driving a Lexus, I wouldn't enjoy the "overhead"-- the theft risk, the parking-lot dings, and the higher carrying costs of insurance & maintenance. I don't have to worry a bit about those issues in a 13-year-old beater. (In fact, lemme know when you ditch the Maxima!) Same with a McMansion, jewelry, and nicer clothing. Too much responsibility & extra work.

I think I could handle flying first class by myself or with spouse. But if we did that with our kid then I'd worry about spoiling her by developing a sense of entitlement.

So, for those who live the high life, with 100K, 200K, or even more a year, how do you manage to spend that money?

I don't think we'll ever qualify to answer this question.

Every now and then, I fantasize of having $1,000/day to spend. It's great for the first few days, few weeks, then I got stuck, unable to find ways to spend after that. Very pathetic, I know.

Our version is "You can't spend it fast enough." I'll tell spouse that the portfolio has risen 0.5% over the amount we'll need this year. (Yeah, we may need it later, but the goal of this exercise is to raise the SWR from 3.5% to 4%.) Then she has to pick a project or a purchase that's been on our list for a while.

The latest example was the dining room table. Ours was nearly 20 years old and needed its top sanded down & varnished. We could do it ourselves for the cost of the supplies but we don't enjoy that particular task and it's tough to get it perfect. We could buy a new table but it's hard to find value for less than $3000, which seems to be ridiculously expensive to our tastes. So we were going to spend a few hundred to have the local furniture repair company do the varnish.

Then spouse found the exact same table & six chairs on Craigslist, in pristine condition, for a ridiculously undervalued $650. We picked it up the next day. Now we're cleaning up the old table & chairs to sell for $800 (retailed for $2100 in 1988) and we're buying a glass top for the new table. Net cost will probably be under $100, so she's still not spending it fast enough.

Even our home improvement projects tend to save more than they spend. Our kid has to enter the Science Fair in her biology class, so she chose soil remediation with drought-tolerant `akulikuli. As she planned the project we realized that it could take over our entire downhill slope, stabilizing the soil while fixing nitrogen. We'd be able to stop watering the entire backyard, save $50/month in water bills, and stop pruning the jungle. But we're not spending it fast enough.

Letting go of frugal habits can be hard. Spouse pointed out that I'd been fixing my old one-cup coffeemaker for several years (it's about 10 years old) and that I should consider a new one. We found a nice Mr. Coffee model at the store but reflexively decided to return when it's on sale. Then we realized that we're talking about a 30-minute drive for a $20 coffeepot and we just bought the darn thing. It's very nice, but we're still not spending it fast enough!

Maybe it takes baby steps, starting with forcing ourselves to find at least one charity every year worthy of our $500 donation...

I used to buy a lot of fancy colorful shoes.. (mostly mark-downs but many more pairs than I needed; my best friend called me "Imelda").

FWIW her flamboyant defense lawyer, Gerry Spence (put down your beverage and back off from your monitor before you click the link!), claims that most of her footwear was donated by friends, grateful beneficiaries, & jokers.

 

[riskadverse]

I think the only thing I regret never paying for (that I would find it hard to justify splurging on) is first-class plane tickets. I'll let you know when that happens and how happy it makes me. I can take a guess: VERY.

Let's see.. $5000/(12 hr. flight x 2) =... convince me, guys, that it's not worth $208/hour...

I've flown first class a couple of times (once someone treated me to it via frequent flyer miles, and once as standby they gave me first class). If I had to pay $208 per hour additional to fly first class, I would be miserable thinking about the waste of money. I'd feel better better flying coach and throwing the money up in the air in the baggage area.

 

[donheff]

When I FIRED from a $225k/yr CEO job, we continued to spend $100k/yr. But that number has declined since 2002 because:
1) We no longer buy business clothes.
2) We avoid employment expenses like travel to work and lunches.
3) We still drive the same cars (BMW and Explorer) because the annual mileage is now minimal (We usually fly when we travel).
4) Our eating is healthier and cheaper because there is less processed food and takeout. We can also shop for bargains because it is more convenient.
5) We do some home swaps which drastically reduces vacation costs and improves their quality.
6) We get savings in paid travel accomodation because we rent by the month or week rather than the day. Also we eat in more often because of the longer stays.

I am hoping to do some of the same in FIRE. Home swaps appeal to me since I think our Capitol Hill, DC location would be attractive.

In the meantime with DW still working we are spending way over $100K. We eat out frequently. We travel quite a bit and don't skimp on vacations. We have a weekend house on the water. And we have a daughter at NYU ($50K/yr there alone). On the other hand, we have always kept our cars for years. Our primary house is modest. My clothes are modest (not so DW's). In short, we don't live an ostentatious life. But we save a boatload so we can live well in retirement.

I suspect people with incomes like ours who are not saving don't live as different from you and me as you might think. Sure, they might have a McMansion but how many rooms do you really use? A top of the line Mercedes is nice but how much difference from an Acura or a Toyota? It is easy to fritter away a lot of money on things that don't matter at all.

 

[Rich_by_the_Bay]

Maybe this isn't applicable for everyone, but I'm a strong believer in the "diminishing returns" theory. That is, there is an amount of spending money that we need under which we clearly would be happier with more. Better house, neighborhood, car, more toys that we really enjoy, whatever. If we are a little below that, that's fine but money really will by more happiness.

Above that point, more money may improve our quality of life a little bit, but not that much and even alot more money buys only a little improvement.

The hard part is figuring out the "reassurance" or "sense of security" thing. I am fortunate to have a good income and want for little. But I feel much more secure (same lifestyle, mind you) if I had twice as much. Suppose the market crashed... suppose DW or I needed a nursing home... suppose one of the kids or grandkids hit a major crisis, on and on.

LBYM isn't just about accumulating millions, it's about feeling secure with whatever assets you may end up with.

 

[Outtahere]

I went from a $40k a year job to one that is well over the $100k, was I any happier? Do I spend more on everyday living? No and No. What I did get from it was the relief of not worrying about paying bills, it gave me the chance to pay off the mortage and any other outstanding bills I thought I'd never see the end of. I didn't upsize my home, I didn't run out and buy an expensive car. What we did do is all the home improvements that needed doing but would have meant an equity loan. We've done siding, windows, insulation, added a small sunroom, tore down the old garage and put up a new one. We plan to retire in this house and we want all those things done before that time comes. Now that those things are out of the way we are socking it away for an early retirement, now that will REALLY make me happy.

 

[modlair]

I have read the entire thread. Good stuff. The OP worded the question carefully as spending $100K, not making it. A lot of folks translated that to making 100K because I think folks on this board have an instinctive frugality and they presume that 100K coming in, for themselves, would vector right to the portfolio.

But that wasn't the question. It was 100K of spending.

A few tidbits. I'm a 6 figure guy who spends a lot of time in airplanes. I sweated the airline bankruptcies because part of my "nestegg" is my FF mile accounts. A lot of the guys talking about flying first class as a worthy way to spend extra money ARE RIGHT. It has nothing to do with the food or the legroom or the cachet. It's about sleep. Any time you go across the ocean the jetlag is brutal.

Well, when it comes to this know what you're doing. Do not spend your miles on First Class tickets and do not pay the $5000 First Class fare. Buy your usual vacation coach ticket and then use miles to upgrade it in the same phone call. The difference in price and miles burned is huge AND you earn more miles with the coach ticket. A lot of folks have trouble getting FC tix with miles, but that is because they are not retired. If you're retired you have date flexibility. You can find the award seat that is available.

But yeah, the theme of the thread is right. See how we instinctively find ways to save money? Spending 100K is hard, even flying first class.

 

[LOL!]

There is a lot of misconceptions above about the $100K spending a year lifestyle.

Let me start by saying when someone broadsided me in my Maxima, I bought a used Lexus. The car cost less than most of the pickup trucks in the parking lot at work. It cost even less if you figure I paid cash and did not finance it.

Next I want to write that even with the $100K+ expenses a year, the McMansion, the eating out alot, and the maids we still live well below our means. The fixed rate mortage is about $1000 a month. The home is reasonably energy efficient, so gas and electricity average under $150 a month. The maids keep the house clean and the relationship with the spouse in great shape.

The biggest expense is taxes. If you count FICA, medicare and income taxes, that's about 33% of expenses. The other expenses are pretty much what you spend. Next biggest expense is vacations. Then eating out. We like to practice for when we retire. Way down on the list are utilities, clothes.

Other things we don't spend money on:
No work clothes -- maybe $200 a year for new clothes. Maybe $120 a year on new shoes.
No country club membership
No weekend getaways (we are too busy coaching youth sports to get away)
No electronics (one new item every 5 years or so)
No jewelry (I do not own a watch, but we do have wedding rings)
No vacation homes, we prefer to rent condos rather than own them.
No going out to entertainment (library has lots of free stuff)
No private schools for the kids, the public schools are outstanding where we live
No big gasoline bills, we commute a few minutes to work
No interest, finance or debt charges, except the sub-5% fixed rate mortgage
No manly man toys: no motorbikes, no boats, no surfboards, but we have old bikes
No girly-girl manicures, pedicures, etc.
No lawn service
No first class flights unless bumped up for free
No cable TV
No gym membership
No pool
No accountant to do my taxes when TurboTax is more than sufficient
No personal financial advisor
No home improvements (of dubious value anyways)

When my computer stops working, I figure out I need a new power supply and get one for $30 and install it myself. Or if the dryer doesn't work, I replace the motor myself. Or when the icemachine starts leaking, I can fix that.

I won't paint my own house. I won't clean my own chimney. I've overhauled car engines before, but now I won't change my own oil. But I will replace my own car battery.

 

[Sam]

rodmail,

Thank you very much for the clarification. Thanks also for the tip on First Class Fare. I will do it someday.

 

[Sam]

Thank you all for your inputs. I apolozige for not being explicit. What I was alluding to was how to spend 100K, 200K, or more annually, excluding taxes, and saving. I was not referring to income.

kjpliny: I had no idea it was that expensive in Long Island.

modhatter: Congrats on your new self. Yes, it makes sense to me.

free4now: I agree with you about poorer people wasting more money. I'm still wondering why? I can think of 2 factors. Lack of knowledge, and the need of feeling richer. What you do think?

scrubradio: The important thing is that you now have a plan. Stick to your plan, and things will get better. Best of luck.

poyet, outtahere: It did change my lifestyle a lot, but only up to a certain point. After that, additional money makes very little difference.

Lifeisgood: Agreed about the WSJ Saturday Ed. OTOH, travelling to Mexico, Central America, Africa, most of Asia, and you feel rich even if you're only making 30K a year.

kcowan, donheff, and Rich_In_Tampa: So you guys make a lot, save a lot, but spend within reason (a relative term, I'm sure). In the mean time, you net worth/saving/investment grows and grows, way beyond your need. Don't you worry about what to do with it as you get closer to end of life? I have an idea.... Never mind.

ladelfina: You only live once. Give that first class ticket a try, even if it cost $208/hr. I have to do too, someday.

Nords: I think I need to loosen up the purse string a little too. As soon the Hawaii - Los Angeles highway is complete, I will deliver my Maxima to you. No cost in exchange for a few surfing lessons. It's funny you mention charity. For the past 15 or so years, our annual charity budget plus our "parents's allowance" budget exceed our annual clothing budget (not the kids) by a factor of "many". Please don't ask now much I spend on clothing, I will never tell. And I still do maintenance in all of our cars, and still fixing them when I can. I need a life.

 

[unclemick]

No idea - but 70/80 k per year is nose bleed territory for me given my el cheapo first 12 years of ER. Post Katrina - new location, new vehicle, house with mortgage and health insurance. Single- no heirs, I'm in the you're not gonna take it with you mode.

I take the barbell view - get the core budget under control and so one can max the frivolous - shop at Salvation Army so you 'feel' better booking the balcony suite on the next cruise so to speak.

Best guess right now: 40/50k including taxes allows 30/40k travel/entertainment/all other frivolous catagories.

heh heh heh heh heh heh - using Firecalc/Bernicke option and 25 yr span - 80k is still 100% with pension and SS included.

 

[mb]

I think that I could easily spend $100k/year and more on travel. But since I'm still working to do that I would need more time.

More stuff such as cars, clothes, etc. is of little value. The closets and garage are already full. (Now a new mountain bike is a different story!)

MB

 

[AltaRed]

DW and I are about in the middle of y'all spending ~$50k/yr (outside the 2 new vehicle purchases we made this year). So far, the spending numbers have not changed much since retirement earlier this year from a 6 figure executive position.
- We are not consciously budgeting given our consistency of spending in the $50k range for some time. A quarterly or annual check via Quicken is all we need to validate that we are consistent and on track.
- We do the little projects around the house, but contract out anything requiring substantial work or skill, e.g. plumbing, heavy duty yard work
- I don't do any car maintainance myself any more - been there, done that
- We each bought ourselves a new vehicle this year as 'retirement' gifts (DW - loaded '06 Toyota RAV4, me - loaded '07 Infiniti M35X). No qualms about spending that cash while we are young enough (57) to enjoy travelling and our new vehicles.
- We enjoy eating out a few times a week, but do not go to expensive restaurants or buy expensive wine ($35-60 tabs at most).
- We have yet to do extensive travelling since retirement. That could add $10-20k/yr to the annual bill.

Could DW and I bump up the spending to $100k/yr per Sam's original post? Maybe, but anything beyond ~$75k would probably get us real uncomfortable. We would at least subconsciously feel we are simply thowing money away for no value.

 

[mb]

A lot of the guys talking about flying first class as a worthy way to spend extra money ARE RIGHT. It has nothing to do with the food or the legroom or the cachet. It's about sleep. Any time you go across the ocean the jetlag is brutal.

EXACTLY !!!

Flew first class to Australia a couple of years ago. (It was on the company.) Left SFO around mid-night. Got up in the middle of the night and walked through the coach section. Everyone in first class looked like they were sleeping comfortably. In coach they all looked miserable. Arrived in Sydney about 8AM with a good night's sleep and fully adjusted to local time. I suspect that it took the coach passengers a couple of days to adjust.

One took a (coach) red-eye from LA to MD, got off the plane and went directly to work. Boss walked in that afternoon took one look and told me to go home because "You're not doing me anygood, anyway."

MB

 

[Spanky]

There are material things that I'd love to have, such as driving a 50K Lexus instead of my Maxima, having a brand new Lazy Daze in the big garage, fly first class all the times. If I did get those, would I be much happier?

External things, such as money, fame, power, financial success and material possessions, will only make you wanting more. Happiness is when you realize that you already have enough and be glad with whatever you have.

So, for those who live the high life, with 100K, 200K, or even more a year, how do you manage to spend that money?

The amount of money that you spend is relative to the amount of money that you make. If your income is over $1 million, for example, $100K spending is insignificant. It's easy to spend even $1 million. Just look at the rich and famous on TV and magazine. Some of the celebrities spend that much just on one wedding or a vacation. They rent the entire resort or an island, hire top chefs, bands, drink expensive wine ....... Are they happier? I am not sure - only they can answer that.

I personally do not see how an extravangant life style can make me feel any happier. Happiness, after all, is a state of mind - which is internal. You cannot fill an inner void with external things.

 

[dmpi]

I can think of a few things I would buy if I had an extra 100K/year.

1. Classic Muscle cars
2. Original Painting or Prints
3. Rare Pottery or Vases
4. Original American Furniture

oh, and I'll also need some Hi-End Real Estate to store my collection.