I seem to be living above my means again...

[82-T/A]

So, I'm a little financially frustrated with myself.



I started a new job about 14 months ago where I effectively doubled my income. I have no debt except for a mortgage, have a rental property, two pensions, and lots of 401k savings... so I'm not struggling to be sure. But with my new income, I quickly fell into the trap of living a lifestyle much higher than what I have normally accustomed myself to.


2 years ago, I wouldn't buy something if I hadn't budgeted for it, and I was good about making sure that I didn't impulse-buy. But lately, over the past year, I've been really "off the wagon" (or on it, or however that phrase goes). Now, I don't even look at prices, I just hand over my credit card. I don't think about it at the time, since I enjoy being able to provide a lifestyle for my family... but my daughter made a comment the other day that really snapped me into reality.


She's 14 and she said... "You know daddy, this is a lot of money, you should be saving."


Now, granted... she's saying this because she remembers the other 13 years of our life where we lived well, but financially responsibly. But her comments really hit home.


How is it that I've allowed myself to become so irresponsible with money? Again, I have no debt, I'm still maxing out 401k contributions, dumping a ton into my daughter's 529 every month, and even saving a little bit beyond that... but I'm trying to think about where it all went (I have Quicken), and I'm just shocked. Eating out, subscriptions, gym memberships, charity (which isn't bad of course), and just "stuff."



I know inflation has gone up considerably over the past two years, but if I had lived as if I was still making what I made 2 years ago, the doubling of my income would have allowed me to literally HALVE my mortgage, or add considerably to my savings.



I'm supposedly getting a promotion / pay increase, and a bonus next month... which will be substantial (to be clear, I work very hard), but it frustrates me how loose and irresponsible I've been. While I consider myself really lucky, I wonder what the best way to approach this with my family is.


I try to read "Debt - A Love Story" once a year to get me re-motivated (like watching Hoarders on A&E before you do a deep "spring cleaning"), but I'm just frustrated by lost opportunity. Like, I was literally getting ready to pay cash for a 1966 Mustang GT, and then was like... I work from home, I barely drive the cars I have. I already have two classic cars in storage units, what the hell is wrong with me?





I guess I'm looking for some admonishment, encouragement, and similar experiences / advice to get back on the right track. I'm 44 if that makes any difference. Oh yeah, I'm in Tampa, haven't lived in Fort Lauderdale for 8 years (I need to update my signature).



Thanks!

 

[Amethyst]

Sounds like you needed to lighten up and let go for a while. It doesn't sound as if you are truly LAYM, just having fun with your money. With your long track record of responsible spending and saving, it shouldn't be that hard to get back on track.

Since you have 401K and 529 contributions on auto-save, why not do the same with your mortgage principal (since you mentioned wanting to cut that down more quickly) and regular contributions to your investment of choice, such as an index fund?

Then look at what's left every month, and see if you actually do need to cut back spending anywhere.

For me, cutting back on eating out would be low-hanging fruit. Eating out, with the additional tax and tip, is such a money suck, and the food usually isn't that good for you, either.

Good luck! And congratulations on raising a financially-aware teen,

So, I'm a little financially frustrated with myself.



I started a new job about 14 months ago where I effectively doubled my income. I have no debt except for a mortgage, have a rental property, two pensions, and lots of 401k savings... so I'm not struggling to be sure. But with my new income, I quickly fell into the trap of living a lifestyle much higher than what I have normally accustomed myself to.


2 years ago, I wouldn't buy something if I hadn't budgeted for it, and I was good about making sure that I didn't impulse-buy. But lately, over the past year, I've been really "off the wagon" (or on it, or however that phrase goes). Now, I don't even look at prices, I just hand over my credit card. I don't think about it at the time, since I enjoy being able to provide a lifestyle for my family... but my daughter made a comment the other day that really snapped me into reality.


She's 14 and she said... "You know daddy, this is a lot of money, you should be saving."


Now, granted... she's saying this because she remembers the other 13 years of our life where we lived well, but financially responsibly. But her comments really hit home.


How is it that I've allowed myself to become so irresponsible with money? Again, I have no debt, I'm still maxing out 401k contributions, dumping a ton into my daughter's 529 every month, and even saving a little bit beyond that... but I'm trying to think about where it all went (I have Quicken), and I'm just shocked. Eating out, subscriptions, gym memberships, charity (which isn't bad of course), and just "stuff."



I know inflation has gone up considerably over the past two years, but if I had lived as if I was still making what I made 2 years ago, the doubling of my income would have allowed me to literally HALVE my mortgage, or add considerably to my savings.



I'm supposedly getting a promotion / pay increase, and a bonus next month... which will be substantial (to be clear, I work very hard), but it frustrates me how loose and irresponsible I've been. While I consider myself really lucky, I wonder what the best way to approach this with my family is.


I try to read "Debt - A Love Story" once a year to get me re-motivated (like watching Hoarders on A&E before you do a deep "spring cleaning"), but I'm just frustrated by lost opportunity. Like, I was literally getting ready to pay cash for a 1966 Mustang GT, and then was like... I work from home, I barely drive the cars I have. I already have two classic cars in storage units, what the hell is wrong with me?





I guess I'm looking for some admonishment, encouragement, and similar experiences / advice to get back on the right track. I'm 44 if that makes any difference. Oh yeah, I'm in Tampa, haven't lived in Fort Lauderdale for 8 years (I need to update my signature).



Thanks!

 

[Aerides]

When I got serious in savings mode, a couple of mantras kept me on the wagon:

Every $1k saved now means about another month I can retire earlier in a few years
Every non-discretionary purchase - would I rather see my savings increase by that amount instead?

I stopped buying new clothes for every trip, stopped myself looking at shoes, chunky things like that.

If your 14 year old has noticed, put her in charge for a while?

 

[MarieIG]

Think about setting an example of fiscal responsibility for you daughter/ children . . .

You mentioned that had you continue to live on your old salary, you could have halved your mortgage. Why don't you start by cutting down on the eating out and "stuff," and putting an additional payment towards your mortgage each month, and a percentage of the recouped funds into savings.

Re the going out to eat - you can cut down on that, i.e. keep Friday, and eat at home on Saturday- but help DW with the meal prep/ barbeque. Obviously, get DW on board - you can't tell her that you're trying to save money but having her cook more, while BTD on toys for yourself.

 

[82-T/A]

Sounds like you needed to lighten up and let go for a while. It doesn't sound as if you are truly LAYM, just having fun with your money. With your long track record of responsible spending and saving, it shouldn't be that hard to get back on track.

Since you have 401K and 529 contributions on auto-save, why not do the same with your mortgage principal (since you mentioned wanting to cut that down more quickly) and regular contributions to your investment of choice, such as an index fund?

Then look at what's left every month, and see if you actually do need to cut back spending anywhere.

For me, cutting back on eating out would be low-hanging fruit. Eating out, with the additional tax and tip, is such a money suck, and the food usually isn't that good for you, either.

Good luck! And congratulations on raising a financially-aware teen,

Thank you so much for the response, I appreciate it. Do you mind if I ask a few questions?

1. Can I ask, what does LAYM mean?
2. You also mentioned automating "principle payments," I didn't even know that was possible to do? I suppose that depends on the brokerage firm.
3. My mortgage is 3.125%, do you think it's worth it with such a low interest rate?

I do put $1,000 into a separate investment account every two weeks, but I feel like the most I've been able to do is just "not lose" money, so extra money I've just been putting into savings since I'm frustrated with the stock market. But you're right, I need to be able to cut back eating out. But I usually take the family out Friday and Saturday night just so my wife doesn't to cook and to get out of the house after the work week. But yeah, maybe I need to find some cheaper alternatives that are also healthy.

When I got serious in savings mode, a couple of mantras kept me on the wagon:

Every $1k saved now means about another month I can retire earlier in a few years
Every non-discretionary purchase - would I rather see my savings increase by that amount instead?

I stopped buying new clothes for every trip, stopped myself looking at shoes, chunky things like that.

If your 14 year old has noticed, put her in charge for a while?

That is a fantastic point... "Every $1k saved now means another month I can retire earlier..." Your last point is interesting too... what do you mean / suggest by putting her in charge?

 

[Dash man]

If you haven’t built up an after tax brokerage account, you should do so. Only saving in a 401k can bite you later on.

 

[COcheesehead]

While I was working we learned to live at a certain level, comfortable without being extravagant. Every increase in my income was an opportunity to increase savings. I got to the point where I was banking 60% of my gross income. We retired early and now live better than we did when I was working.
Sometimes we all need a wake up call.

 

[racy]

...How is it that I've allowed myself to become so irresponsible with money? Again, I have no debt, I'm still maxing out 401k contributions, dumping a ton into my daughter's 529 every month, and even saving a little bit beyond that... I'm supposedly getting a promotion / pay increase, and a bonus next month... which will be substantial (to be clear, I work very hard), but it frustrates me how loose and irresponsible I've been....

Sounds like a serious case of wealth guilt. Maybe check out: https://millersonfire.com/wealth-guilt-how-i-overcame-it/
You've worked hard and been fiscally responsible so enjoy it, I say. Personally, I'm glad I don't have to worry anymore about prices and the cost of buying 'unnecessary' things.

 

[MarieIG]

With regard to the paying off the mortgage debate - the argument against that is the money would be put into investments to generate additional income and/or net worth - not so much that it would be spent on superfluous stuff.

 

[MarieIG]

If you haven’t built up an after tax brokerage account, you should do so. Only saving in a 401k can bite you later on.

+1

 

[Ready-4-ER-at-14]

One way we dealt with the problem of having more was to increase our lifestyle by a small amount say 10% whenever we made more suddenly. That way we felt rewarded and hedged the probability that some of this gain was phantom gain due to inflation.

I remember a demonstrated story about a man who increased his income a bit, enough that he could afford a new in the ground swimming pool. It was nice but as inflation ate away at his gain he suddenly found he could not afford that swimming pool.

Maybe it helps to look at splurge spending as a sort of like falling off a normal eating pattern or having a few too many drinks. You see the scale reading or see blood shot eyes in the mirror and feel the hang over. You just resolve to handle it better in the future day by day, decision by decision.

I think I will have a similar revelation in 3-5 years. Best description I have heard of being suddenly aware of significant changes is waking up in a panic after falling asleep in a drifting boat.

Sounds like you are aware and have a plan. Good job!

 

[W2R]

What helps me the most is to update my spending record every day, recording every last cent I spent. Knowing exactly what I spend seems to discourage me from unnecessary spending.

It's been hard this month because I have had several unexpected large expenses! So now I'm paying even closer attention to spending and making a big effort to cut back for a while.

It doesn't help that I need a new roof. So, it may take a while to get back on course.

 

[simple girl]

I guess I'm looking for some admonishment, encouragement, and similar experiences / advice to get back on the right track. I'm 44 if that makes any difference.

What are your goals/what do you want to accomplish with your extra money? Are you hoping to retire early? If so, what do you still need to do with your money in order to accomplish that goal?

I think unless you identify your personal goals for saving money you won't be motivated to do so. You have to identify what motivates you, personally, to save. If your goal is to enjoy your money now more than save it for some future purpose, well, keep doing what you are doing.

 

[Ronstar]

I would shoot for maxing 401k, funding the 529, and maybe saving as much as you can ($50k annually ?) for the rest of your working years. You may need the extra savings as a bridge to get you to 59.5 if you decide to retire early.

And cut spending on "stuff". I try not to spend much on stuff, because stuff takes up space and stuff eventually will need to be dealt with - either sold, moved, donated or whatever. And stuff requires work. Better to have less stuff when you get older.

 

[marko]

A good sign that you're frustrated with yourself! At least you're aware that you are going overboard!

Because of that, I'd not sweat it. There is a natural tendency for 'spending creep' when good money starts coming in and most of us have been there at some point. Unless you're locking in long term debt (bigger mortgage, bigger boat/car payments), it's ok.

After a bit, I'd try to just tap the brakes rather than revert to your old lifestyle and resume putting more away, unless your higher income could be at risk (layoffs, demotions, recession).

Too many people deprive themselves during their earning years with an eye on RE only to find that they missed out on a lot.

I think you just need to find a 'new balance' where your finances, savings and spending are better aligned. Figure out where you're out of whack relative to the new income and straighten it out.

 

[MarieIG]

What helps me the most is to update my spending record every day, recording every last cent I spent. Knowing exactly what I spend seems to discourage me from unnecessary spending.

It's been hard this month because I have had several unexpected large expenses! So now I'm paying even closer attention to spending and making a big effort to cut back for a while.

It doesn't help that I need a new roof. So, it may take a while to get back on course.

A new roof is a necessity - and money well spent. A dream house must have what it must have. Also, a tad different from a third classic vehicle in storage . . . I suspect that you don't like the disruption of your budget. But - it could be worse, i.e. dental work (ouch). Just sayin'

(BTW, the need for a new roof would make me too.)

We all know that you have planned for the lumpy expenses and money set aside for it.

 

[Car-Guy]

So, I'm a little financially frustrated with myself.

I started a new job about 14 months ago where I effectively doubled my income. I have no debt except for a mortgage, have a rental property, two pensions, and lots of 401k savings... so I'm not struggling to be sure. But with my new income, I quickly fell into the trap of living a lifestyle much higher than what I have normally accustomed myself to.

How is it that I've allowed myself to become so irresponsible with money? Again, I have no debt, I'm still maxing out 401k contributions, dumping a ton into my daughter's 529 every month, and even saving a little bit beyond that...

I'm supposedly getting a promotion / pay increase, and a bonus next month... which will be substantial (to be clear, I work very hard), but it frustrates me how loose and irresponsible I've been. While I consider myself really lucky, I wonder what the best way to approach this with my family is.

I was literally getting ready to pay cash for a 1966 Mustang GT, and then was like... I work from home, I barely drive the cars I have. I already have two classic cars in storage units, what the hell is wrong with me?

I don't think you are being irresponsible at all and shouldn't feel financially frustrated. Sounds like you are making plenty of money and savings plenty of money, with more to come, so why not enjoy the fruits of your labor "as you go". (Especially the cars.)

I did, and have never regretted it.

 

[Aerides]

[*]Can I ask, what does LAYM mean?

Living Above Your Means - as your post title indicates

That is a fantastic point... "Every $1k saved now means another month I can retire earlier..." Your last point is interesting too... what do you mean / suggest by putting her in charge?

Simple: "Dear Daughter, every purchase besides food/gas/bills, if over $50, I will ask you for input in my decision making before I decide to go ahead!" Or whatever works in your family. She's seeing it enough to notice and call you out. Give yourself a threshold. Chances are, just running that thru in your head and considering what she might say will work to reduce discretionary stuff.

 

[RunningBum]

Depends on how badly you want to ER vs. enjoying the fruits of your labor now.

If ER is your #1 goal, not only is the extra money you are spending not being saved, but you are getting used to a richer lifestyle which will take more money to maintain.

On the other hand, balance in life can be important too. Enjoying some stuff now while still putting away some money is not the end of the world.

 

[Jerry1]

You doubled your income so I doubt you’re living above your means. Do you really think you doubled your spending? You start making more and you spend more. Whether or not that’s irresponsible is another question. You don’t say how old you are. The younger you are, the less it matters. Also - do you have a goal beyond saving? Do you have a date in mind that you’d like to retire? A date when you’d like to have the house paid off?

One thing mentioned above was to increase your after tax savings. You don’t want all you money in tax deferred accounts. After that, learn to live with your new means. You don’t live they way you lived when you first got your job and you’re not going to live the same as before now that your income has doubled. Plus, you have reason to believe your income will increase more. Good for you. I’m happy for you. Be happy for yourself.

One thing that happens when people retire is that they have to learn how to go from being savers to being spenders. It’s the change from the accumulating phase in life to the spend down phase. You’re going through something similar. Focus on where you’re at now and move forward. Set some goals so that you keep some guardrails on and don’t go crazy with your spending but don’t think of yourself as the same person (financially speaking), you’re not. Again, good luck. This is an exciting time in your life.

 

[NgineER]

I wouldn't sweat it too much but take a look at your spending habits/categories and see if that spending makes you happy.
Will you hit your retirement goal on time?
Will this increased spend say $50k--> $100k cause you to have to have a kitty twice the size?

 

[Surewhitey]

Couple of things jump out to me. Double income usually brings a different tax bracket. Max your pre-tax account to at least make it less taxing.

Having a post tax account started will help you with the bridge years of ER and 59.5/65/70...

I ebb & flow with saving more vs enjoying the excess. I'm trying to get DW to consider what is "enough" by blowing off the expenses of a mediocre vaca vs a nice one & enjoying spending more than usual on occasion. The only thing I've noticed for my personal concerns are usually in a down market, not long-term reality.

 

[82-T/A]

Thank you so much everyone for all the responses. I appreciate it! I hope it's not rude for me to respond in general rather than everyone individually.


There's so much great advice here.


I too have gotten some pretty big expenses that have popped up. My taxes went up substantially on both my houses, as well as my home owners insurance. I'm now paying a combined $1,500 additional a month to pay for insurance and taxes on my rental and my primary residence. The primary residence, well, I bought it just over a year ago, so the taxes were re-assessed from the original homesteaded value that I was paying from the prior home owner's assessment. I'm protected from future increases because I'm homesteaded, but on my rental, the taxes are now ~$9,700 a year, hahah... it's insane. I can't homestead that because I don't live there. I am thankful that this hasn't really affected me... but like with everything else, I've taken on services that I never would have.


I'm paying $396 a month for my wife to go do cross-fit multiple times a week. She has a six pack now after 9 months, which is insane... but it keeps her healthy and obviously I like it. I'm also paying for Terminex / termite protection for my home, as well as other services like music lessons and other things for my daughter, and continuing education as well (working on another degree that I'm paying for out of pocket). So I think I just started to realize that my spending has started to slip from my control. I won't say it's a control thing, but at the very least, I realize I need to re-budget now and really take a hard look at my finances to make sure that I'm staying on track... which brings me to the next topic.


As for retirement, I have absolutely no idea what retirement even looks like for me. I think about this almost every day, and when I go running with my wife, I talk about it constantly, because I don't even know what retirement really is. Is that me sitting behind a computer playing video games all day (I spent all of 8 hours playing video games total for 2022), is that me traveling with the wife, or is retirement where I'm able to take another job without concern or fear of a sustaining income from it? I guess I just don't know.


I think that's probably something I need to figure out. Someone on here mentioned spending their whole life saving, and then figuring out how to go from saving to spending in retirement. My parents are like this too... my dad is very financially responsible. My parents travel a lot, and they are enjoying life in The Villages, but at the same time, he definitely doesn't spend his money either. So of course, he's always trying to have that inheritance conversation with me, about a trust and what have you... so I just keep telling him to put it all in my daughter's name or I change the subject. I'll tell you what... my daughter is going to be a lucky person.



I guess I'm just rambling now, sorry. I am usually very goal-oriented and driven, but lately I've had no goals whatsoever... I have no idea what retirement looks like for the wife and I... and I think I need to figure that out first, otherwise I have absolutely no savings plans or goals. Like, I'm just saving money, because I know I need money in retirement, but I need to figure that out. In the mean time, I'm going to go through everything. I think I also want to sell off a ton of stuff because I feel like I have too much "stuff" now. I also want to take one of the cars out of storage... my very first car that I bought when I was in high school, finish restoring it, and start driving that around again.




EDIT: responding to some other comments. I am maxing out pre-tax retirement. I think it's $21,500 if I remember correctly... and I'm also maxing out contributions to a Roth.

 

[Dash man]

Saving money in an after tax account provides a lot of flexibility as you approach early retirement. It gives you the funds you need to bridge you from retirement to when you can access your retirement funds. You can also use the after tax money to pay the taxes on any Roth conversions you may do between retirement and RMD age. You can also use it to manage your income for ACA subsidies.
Additionally, I suggest you open a Roth IRA for each of you and your spouse and use backdoor Roth contributions to fund it. It’s simply contributing after tax money into a traditional IRA, then converting it to your Roth IRA. Take advantage of tax free growth.
Start learning about retirement and taxes, and things like IRMAA. If you adjust some things now it can save you tens of thousands later.

 

[Chuckanut]

Can I adopt your daughter? She seems like one smart cookie!

On a more serious note.......

I think after years of budgeting and maybe penny-pinching it's normal to want to splurge. My suggestion is simple. First, increase your savings. You will need it later to optimize you life. Second, budget yourself some 'mad money' every month for little splurges that come up as we live.

You might also want to listen to this Podcast. There is some good advice on balancing how we use our money and health over our lifetime. Just my 2¢.

https://peterattiamd.com/billperkins/

In this episode, Bill unpacks the Die With Zero philosophy which challenges conventional thinking related to the balance between health, wealth, and time—the three variables important for fulfillment. Bill makes the case that we should strive for maximum net fulfillment rather than net worth (or even health). He argues that we need to optimize our life to have memorable experiences before it’s too late and that most people are over-saving and under-living. Bill also explains how one can apply the principles in Die With Zero to break out of “autopilot” and optimize their life to achieve maximum net fulfillment.