How much "dough can you blow"?

[NW-Bound]

I have Quicken running throughout the day on my laptop, and hit update every so often.

Something just blew $55K off my stash, compared to its value earlier today. Just like that!

Checked the Web and found out that there's talk of more tariff on Chinese imports, and that caused the market to dive.

There ya go. Saves me the trouble of spending that money myself.

 

[RenoJay]

My burn on discretionary items is ~$200k/year and I have no mortgage. When you add taxes it’s significantly higher, but taxes tend to vary a lot year by year. It’s pretty easy to blow dough with a few Disneyland trips, charitable donations, many meals out, etc. The main thing is to make sure the withdrawals are within your safe sustainable rate.

 

[Car-Guy]

Dawg
Our friends established a million dollar scholarship and got an honourary PhD in return plus many other props.

Are they friends of Lori Loughlin?

 

[WhenIsItTime]

Would help to know your operating costs and what $300k is in terms of withdrawal rate. If 2%, good problem to have - go have fun!!

 

[MarieIG]

Well I just tried to blow some dough: but Vanguard refused to process my order.

 

[teejayevans]

Buy a boat. If that doesn't use up enough cash, buy a bigger boat. Boat = "break out another thousand".

If that doesn’t do it, buy an airplane.

 

[audreyh1]

We didn’t have lofty spending goals.

But our spending has been ramping up as our net worth continues to climb. Mainly by upgrading what we buy.

But we also gift more.

 

[GenXguy]

My goal is to experience more events, and have good memories, rather than blowing that dough on material possessions, I am much more of a minimalist, and believe that simplicity of life clears the mind (and house) of useless clutter.

Same here. More of a minimalist, non-traveler - save the planet, drive an older car, bike, don't waste money type. My discretionary spending is about $75 for the entire year to date, mostly from the occasional drive-through. It was closer to $250 last year. It's been pretty low going back several years.

My FIRE target is less than a year off, and a conservative 3.4% WR will allow me to pay all my regular expenses, including averaged out long term expenses, while also allowing me to spend $25K/yr on discretionary.

I'm not sure how I'll possibly spend $25K/yr on discretionary based on my spending and thought processes in recent years, but that's just what the math tells me I'll have left over to spend on discretionary. With a 4% WR, I could even boost that up to around $34K/yr, which is just ridiculous. So, what will probably happen in reality is that my discretionary spending will be far less than $25K/yr and will end up with a WR below 3%. Also, once SS kicks in in another decade, my WR will drop to 2.1% based on $25K/yr discretionary in "today's dollars", so in reality, that could end up closer to 1% WR due to my lack of discretionary spending.

 

[Dtail]

Would help to know your operating costs and what $300k is in terms of withdrawal rate. If 2%, good problem to have - go have fun!!

4%WR. Worth 7.5mm.

 

[DawgMan]

Great stuff all! Love the energy!

As I stated in my original post, all 1st world problems, so don't interpret my comments in anyway as a complaint. To answer a few questions, my burn number is 3% or less, which again has a significant amount of discretionary. While I have a few vices (i.e. nice cars, nice house, good wine, nice steak diner), I am happy in a T-shirt, shorts and flip flops. Charity is part of my annual program. Funny, when I started my FI quest it was to make sure DW and I were set and never a burden on our 4 kids (I experienced the opposite with my mother). None the less, this along with my conservative nature had me running my models with so many "what ifs" that I felt I needed significant margin to RE. So here I am, fortunate to see the plan play out beyond my expectations, wondering if in a sense I may have over done it? Perhaps, I suppose, I just sleep easier at night. That said, I am sure my kids will have a pot of dough in the end, but increased charity is definitely part of my plan.

We all make our plan, I just find curiosity in how everyone implements their spending and how sustainable it is, especially if it is on the higher side.

 

[DawgMan]

My burn on discretionary items is ~$200k/year and I have no mortgage. When you add taxes it’s significantly higher, but taxes tend to vary a lot year by year. It’s pretty easy to blow dough with a few Disneyland trips, charitable donations, many meals out, etc. The main thing is to make sure the withdrawals are within your safe sustainable rate.

Yep, I see Disney (Again) in my future as the grand kids come out!

 

[DawgMan]

Dawg
I think if you have to ask, you are overthinking it.

My advice:

Spend without regard to costs for a couple of years, then do a lookback and see how you did. Adjust accordingly.

And like others have said, look at contributions that might give you pleasure. Our friends established a million dollar scholarship and got an honourary PhD in return plus many other props.

Good advice.

 

[DawgMan]

Dawgman--Congratulations on your upcoming retirement! If this is significantly above your normal spending, you may have a harder time, especially if you are already wondering.

Set your budget, enjoy your retirement, travel, have fun, donate to charity. You don't have to spend money just to spend it, do what you want because you want too and it brings joy to your life.

Thanks. Below my current spending/income, but but base life expenses are lower now with number 4 recently graduated!

 

[DawgMan]

DawgMan,

I am supposed to be ER now but was asked to stay on a bit longer while they find my replacement. Our numbers support 300+k/yr incl. tax. Yet I am budgeting far less at around 180-200k. I just don't feel comfortable spending that much but perhaps as I gain more confidence that will change.

1-I think my frugal (not cheap) and conservative ways will prevent me from ever hitting 300k/year on a regular basis.

2- Definitely consider a Donor Advised Fund if you are so inclined. I plan to open one this year. It is better if you do it pre-retirement so you can take advantage of being in a higher tax bracket.

3- I plan to splurge by taking the family on epic trips: Galapagos, Bali, Patagonia, African safari, Oceania, etc. I am a big believer in experiences are where it makes the most sense to go big. Memories with loved ones is priceless! The older I get "things" aren't as important to me - probably because I've had many of the fancy things.

4- If you are a Dawg fan as your handle suggests - go for club level seats or trips to away games in first class. (I assume you already have season tickets)

5- Do small, nice gestures for friends and family: pick up the tab, buy them a bigger gift than usual, send someone a nice surprise just because. Spending it on others will likely be very rewarding to you emotionally.

Let us know how you do it!

Feeling you... 2) - 5) in play!

 

[pb4uski]

No, you have that wrong, a boat is a hole in the water that you throw money into.

And I say that as a former boat owner.

I dunno... we have a pontoon boat, a jet ski and a sailboat off the dock in front of the house... average annual costs... including gas and insurance are probably around $500... I change the oil and plugs on the pontoon myself but have the jet ski done by the dealer,

 

[jebmke]

Probably give most of it away. QCDs will take care of some but they are capped. Might buy some farm land once the soybean bankruptcies kick in and start a forest.

 

[pb4uski]

Also not in the OP’s category, but our spending trend was the opposite. We were overly frugal with spending in the first few years, and we’ve gradually loosened the purse strings. Still spending conservatively relative to SWR, but significantly more than the early years in retirement. We just bought a bigger house in a higher COL area, so we’re committed to more spending.

+1 We were pretty conservative the first few years until we became confident that the sky wouldn't fall down and loostened the purse strings... we pretty much spend what we want and do what we want... but we are still interested in getting a good value/bang for the buck. We spend about 2/3 of what FIRECalc says that we could spend at 99% success.

 

[pb4uski]

..... None the less, this along with my conservative nature had me running my models with so many "what ifs" that I felt I needed significant margin to RE. So here I am, fortunate to see the plan play out beyond my expectations, wondering if in a sense I may have over done it? ....

I will say that I have enjoyed your posts over the past year on various RE topics... I think it is fair to say that yours is a very well-planned and well-thought out retirement plan. Congratulations!

Beware of analysis paralysis.

 

[fixedonly]

Dawg,
interesting question.
enjoy all the shared responses.

just another perspective, to possibly offer an answer to your question.
after ER 22 years ago, at age 42, starting at Worth 8.0 M.
- not including buying a second home in france 16 years ago;
WR has slowly drifted down from 2% to 1%,
that was unplanned.

perhaps life is more simple if 2 homes serve mainly as base camps for extensive travel.
it is just more convenient to accumulate less stuff.
over a few decades, ymmv.

 

[kcowan]

Are they friends of Lori Loughlin?

No their kids have all grown. This was pure charity (with benefits).

 

[Moemg]

Once you have Grand kids the money will flow out constantly.

 

[marko]

I dunno... we have a pontoon boat, a jet ski and a sailboat off the dock in front of the house... average annual costs... including gas and insurance are probably around $500...

PLEASE tell me where this magical place might be! We run about $1500 a month year round on just the sailboat, considering storage, maintenance and insurance. And we only get 4 months of use !!!

 

[statsman]

4%WR. Worth 7.5mm.

Damn.

 

[indiajust]

My dad took to buying total tickets for all UAB sporting events with reserved parking. The same for concert series. Plus city projects for things like historic theater renovation, planning and funding a church camp facility, local church renovation supervision.

But yes, a boat is a great way to burn cash, and it seems everyone knows it. I will likely be funding and setting up my own charity.

 

[Gumby]

Just retired, so maybe this will change, but this is our situation.

For many years now, we have spent money as and when we wanted. If we need something, or even just want it, we buy it. We eat out several times a week, rent a summer house in Maine, and travel overseas almost every year. If you've ever read a report of my vacations and where we stayed and ate, you'll know that we don't travel on the cheap. We also spend a boatload on food and drink at home. Although we never "waste" money, we have not needed to scrimp in many years.

Now, our retirement budget will permit us to spend over double our historical average annual spending. The problem is that I can't see us ever reaching that amount of spending. We already live a pretty sweet life and have basically everything we want or need. Sure, we'll travel more, but there is only so long that we want to stay away from home. So I don't have any good ideas for you.

I know, a crushing problem to have