Has the wealth effect changed your spending?

[sheldon cornped]

As a recently transplanted fellow Georgian, I'll help you in your quest to keep pace with the Colonoscopy thread.
No change in spending with the bump in portfolio. For me, it's just a feel good exercise to look at the FIDO planner and see how much more we'll theoretically have (underperforming market) when the lights go out. It's always good to have ample wiggle room.

 

[GrayHare]

New car, caviar, four fish day dream,
Think I'll buy me a colonoscopy team?

Been running below SWR so if I can't blow more dough during a Roaring 20Ks Market, when can I?

 

[Dog]

Just updated monthly budget and net worth spreadsheets today. We are under budget, but feel like we are spending when and where we want to. LBYM is a very hard habit to break. The stock market seems too good to be true and I have fresh memories of dot.com bubble and real estate collapse, so proceeding with caution. But, it is fun to watch our net worth grow without any effort on our part [emoji854]

 

[ejman]

Hum, add this thread to the Déjà vu feeling the party is about to end...

 

[audreyh1]

I’m not spending more in this bull market, but I’ll spend less when the bear market hits.

That’s depressing.

 

[Cayman]

Not spending more 'cause we have a comfortable budget and enjoy LBYM. We're 50, and will loosen up the purse strings a bit in a decade or so if things look good.

 

[Danmar]

If people don’t spend more when times are good, and certainly won’t spend more when the bear hits, why be in equities at all? Why not just annuitize? Why take the risk for no reward?

 

[6miths]

No

 

[DrRoy]

The rise in value and a tiny increase in my low WR has me spending about $10K more this year.

 

[flintnational]

Forgot to add, my expenses this year are the lowest since I started to keep track closely, back from 2010 or so. No more college tuition, no recent major home repairs or updates, no major medical, dental bills, major purchases, no daughter wedding. This year's expenses are about 65% of the past highest year.

I think I am sliding down Bernicke's curve.

We were hit with a lot of car repairs and needed replacement appliances. But, travel was way down this year. So the overall budget was flat compared to past years expect for the DAF and Roth contributions mentioned in the opening post.

 

[flintnational]

New car, caviar, four fish day dream,
Think I'll buy me a colonoscopy team?

Nice

 

[flintnational]

Hum, add this thread to the Déjà vu feeling the party is about to end...

By inference, are you implying bitcoin will not continue to double weekly? Man, there are going to be a lot of disappointed first time investors.

 

[DEC-1982]

If I can maintain the status quo, it's already plenty good for me. In order for me to spend significantly more, I need to see my stash doubled. Fat chance of that in the years ahead.

+1

 

[marko]

A few things have changed for us.

First of all, my brother's devastating stroke was the 2X4 across the head that we should live life while we can.
The growing realization that in 14.5 short years I'll be 80 years old. (if I'm lucky)
Increases to my trust fund benefits (via death of other heirs) also pushed us ahead a bit.
The market has performed admirably of late.
Disappointments in a few of our future heirs makes us less inclined to leave them a nice chunk.

 

[Another Reader]

The only thing I'm spending significantly more money on is capital improvements to the rentals. Enriching the roofing and flooring companies and the big box appliance departments, plus keeping the handy people employed. Cashflowing what I can, pulling from cash savings here and there to do roofs.

The mortgages are being paid down/off, but that's through cash flow and that early Social Security check exclusively.

Along with a drop in the paper asset markets, I expect a drop in rents and an increase in vacancy when the party ends. Lean times ahead at some point.

 

[bclover]

The market giveth, the market taketh away...

ding ding ding.

 

[bclover]

Actually I'm thinking about taking a few extra trips next year.

I've been wanting to take my sons to London for a few years, they are getting older and starting first careers so I think soon the days of family travels maybe over......

Then of course my youngest son does something supremely stupid and the feeling goes away...

 

[donheff]

Our spending is actually way down because we sold our weekend house cutting out substantial expenses and adding the capital to our portfolio. We have noted that if something comes up that we want we can go for it but our habits haven't changed. That said, we have never been tight fisted. We live quite well.

 

[sanfanciscotreat]

NEXT year will be the peak.
One month in FL; summer vacation in AK; add a four season sun room.
Recent financial review says we are in good shape even with a repeat of 09 mess.

 

[kcowan]

It is part of an ongoing evolution. In 2002, our first year of retirement, we put together a plan that would take us out to age 100. It required close management of our equities and a measure of trading efficiency.

By 2007, we were doing well enough to purchase a snowbird property and that turned out to reduce our burn rate substantially, making the downturn in equities fully contained. Then when the markets recovered, we increased our annual transfer to the kids by 30% and increased our charitable giving. We also upgraded our quality of wine and liquor. We added a vehicle.

Our VPW is still under 2% so we are nowhere near having to cut back in a market correction. DW does not like seafood nor cognac, so the wine is for her. And she got the newer car. She is due for another one NOTB next year.

 

[NW-Bound]

If people don’t spend more when times are good, and certainly won’t spend more when the bear hits, why be in equities at all? Why not just annuitize? Why take the risk for no reward?

I took the reward early. I spent on more things in the last few years, and so have less need to spend now. If I feel like a new car, I will get one. But cars do not turn us on, and we can only travel so much. And I can only eat and drink so much.

Can't see myself upgrading to bigger houses. A lot of work!

I could give my children more money, but they already feel bad receiving so much from us. My son told me "Dad, you should get a decent car", because he felt bad driving his Audi S4 (bought with his money) while we still have clunkers.

My older sister and her husband have more than we do. They do not care about cars either. And she enjoys her work so much, she has not quit her job. And they have traveled plenty too.

 

[Amethyst]

I see it differently. I'd rather spend now, than wait till I'm older and not able to enjoy it as much.

I still think old school and lived frugal and saved all my life so NO. My spending won't increase for now. If I were in my middle 70's I might think about it different but not at 60.

 

[street]

I see it differently. I'd rather spend now, than wait till I'm older and not able to enjoy it as much.

Yes I see it your way also and actually makes more sense. My thinking is I need a little more confidence being a newly retire I need to get down the road a little more before I spend more. You have made a great point though.

 

[flintnational]

It is part of an ongoing evolution. In 2002, our first year of retirement, we put together a plan that would take us out to age 100. It required close management of our equities and a measure of trading efficiency.

By 2007, we were doing well enough to purchase a snowbird property and that turned out to reduce our burn rate substantially, making the downturn in equities fully contained. Then when the markets recovered, we increased our annual transfer to the kids by 30% and increased our charitable giving. We also upgraded our quality of wine and liquor. We added a vehicle.

Our VPW is still under 2% so we are nowhere near having to cut back in a market correction. DW does not like seafood nor cognac, so the wine is for her. And she got the newer car. She is due for another one NOTB next year.

With our 3rd rebalance a few days ago, we are up to about 9 - 10 years cash/short term. At that point, SS and pensions will kick in and we will loosen our giving/kids transfer. We already spend about what we want. Hard to drop those LBYM tendencies.

 

[pb4uski]

From Wikipedia, "The wealth effect is the change in spending that accompanies a change in perceived wealth"

Has the rising stock market changed your spending? We have not altered our basic budget, but we set up a Donor Advised Fund for charitable giving and will gift the DS and DD money for their Roth IRAs. Okay, I also bought a few nice bottles of wine and the whole Serrano ham mentioned in the Costco thread.

How about you?

Yes. Since we have retired 6 years ago, our retirement portfolio is 25% higher despite buying a winter condo, a new truck and building a 2 car garage... all for cash. Our targeted spending is about 25% higher as well. But we still like the thrill of finding a good deal.

Some of the increase is due to more confidence with the increase in our nestegg and some is due to more comfort with living off of our savings... I think in the first couple years of retirement that I was unduly conservative due to fear of the unknown.

That said, if the SHTF there is a lot of leeway to adjust... we have a fair amount of discretionary spending that could be belt tightened... we could apply for SS.... etc. but even now our WR is only about 3% so I'm sleeping well.

I actually fear "depriving" ourselves of good experiences now while we are young and can do things, travel, etc and end up dying rich and leaving large inheritances to our kids and charities than I fear running out of money.

(and I do now buy prosciutto rather than ham and sopresetta rather than salami.... so I'm trying :>)