I think this is taking things too far

[FIREd]

It's all relative. Some of our friends think DH and I are odd because we choose to live in a small house and drive old cars but could afford fancier stuff.

I agree. I think a lot of people would view the FIRE crowd as taking it too far.

 

[ejman]

I know for a fact that anyone that spends more than I do is crazy and anyone that spends less is a miser

 

[haha]

If I had $10,000,000, I would still be cash flow constrained, not constrained by a lack of ideas for nice ways to improve my life.

Sunday I went down to the beach with my friend. Having espresso at a shady spot, looking at the glistening water. We walked by an open house at a waterfront condo building.


"Waterfront living in Seattle's finest neighborhood! Sweeping view of Lake Wash. from the balcony of this light & bright 2-Bed, 1.75-Bath condo. Freshly remodeled with new kitchen, designer colors, slab granite counters and more!! Go swimming or tie up your friend's boat on the private dock. Sunny deck, wood fireplace, exercise room, sauna & much more. Just a few blocks from Madison Beach/Park and all of the vibrant shops, restaurants and amenities this lakeside community has to offer."


Now I really like my condo and my neighborhood. But would I consider this place an upgrade? Do you have to ask?

Every material thing in life can be upgraded. Would I prefer a BMI M3 to my Subaru?

Would I like to be able to buy whatever seafood for every dinner?

Would I prefer to eat at Canlis, or at Red Robin?

And best of all, I would have excellent services at all times. I would never fly other than 1st class.

Ha

 

[Danmar]

These "frugality" threads always stir up a lively discussion. Once people develop frugal habits over a long period of saving for FI, it seems some have difficulty loosening the purse strings once retired. Often the discussion centers around what kind of car they drive(BMW's usually cited as the biggest waste of money imaginable), or how they travel, or if they dine out, etc. I know people who continue to save money in retirement but I don't get it. After all you can only do two things with money-spend it or give it away. I have been very fortunate and now find myself quite wealthy but it wasn't always this way. As I realized my wealth was building, I gradually spent more. Wasn't that difficult (along the lines mentioned by Ha). My spending would be very high by most measures. No one has ever called my frugal, at least for a long time. Could I spend more? You bet! Do I worry about it? Nope. Once retired LBYM doesn't make much sense to me. Obviously you need to live within your means. Frugality, IMHO, is simply a means to FI. Once you make FI how you spend you money depends on your tastes and personal utility function. I don't view frugality as a moral issue but rather a prctical technique that can be very useful at certain times of your life. I suspect others here may have a different opinion.

 

[pb4uski]

I like the way you framed it.

LBYM as one tool of achieving FI

Once FI is achieved, then LWYM

 

[Alan]

I like the way you framed it.

LBYM as one tool of achieving FI

Once FI is achieved, then LWYM

+1

We are currently planning next year's long vacation, to Ireland, England, France, Norwegian or Icelandic cruise, and maybe a week elsewhere. It is great to not have to consider saving for the future, but simply to ensure that it is within our budget. I like the acronym LWYM, as that describes the phase of life we are now in.

 

[Lsbcal]

We are currently planning next year's long vacation, to Ireland, England, France, Norwegian or Icelandic cruise, and maybe a week elsewhere. It is great to not have to consider saving for the future, but simply to ensure that it is within our budget. I like the acronym LWYM, as that describes the phase of life we are now in.

Have to mention LWYM to DW. I'm sure I'll get a puzzled look.

We are talking about going to England, Wales and Scotland next year too. How long are you going to be going for Alan? Got to make sure we keep up with the Alan's .

 

[Texas Proud]

Suppose you run Firecalc and get the following result:


The Y-axis shows the failure rate. I haven't shown the X-axis numbers because we all have different numbers.

The question is:
What level do you feel safe spending at?

1) The 95% success rate level (black dashed arrow)
2) The 100% success rate level (red arrow) with no buffer
3) The 100% success rate level (green arrow) with a buffer
4) The 100% success rate level (blue arrow) with a big buffer

Personally I would go for the red arrow but monitor yearly. We have an unofficial priority list that seems to grow. DW always can find a new idea if I run out of them. So no problem finding things to spend on. We live in a nice house and try to enjoy ourselves without getting silly about spending.

In all likelyhood, there is no difference between the black and red... IOW, going from 95% to 100% is not going to be a real difference... if the market went kaput, you would probably be making adjustments along the way in either case... so, no real difference...

Now, the other two with bufferes.... that would give you some room to ignore a lot more noise than you could with less reserve....

With me, I would feel comfortable spending at any of these levels... I would just spend what I would want up to the point of the max, but if I were way under... no big deal....

 

[Danmar]

I guess the fear of running out of money can cause some people to be very conservative in their spending. This may be confused with LBYM in retirement I guess? I personally view these as two different questions. I want to spend as much as I can without running out or short changing my heir. A balancing act for sure.

 

[Lsbcal]

Hi Texas Proud, interesting comments. I should add that the X-Axis extra dollars between each set of arrows would pay for a very nice vacation for us. So maybe the bad time consequences would not be that big between the black dashed arrow and red, but the lifestyle issues are immediate.

I'm wondering if this would be a good thing to put in a poll here? Any thoughts?

 

[Chuckanut]

I'll toss in a war story of my own. Back when I was just a young teen, my parents had friends who were millionaires. This was back in the 60's when a million dollars was actually worth a million dollars - a nice home, travel, good food, etc, and no need for an alarm clock. They never had kids because 'children are to expensive'. They drove an old beater VW bug. When we had family/friends potlucks, they either brought nothing or a few miserable cookies or pieces of fruit. The husband died in his early 70's of a stroke. Within a few years the wife went crazy and was sent to a mental hospital. Thye had no wills (lawyers are crooks) and no heirs. The state of California got all their money.

 

[Texas Proud]

Hi Texas Proud, interesting comments. I should add that the X-Axis extra dollars between each set of arrows would pay for a very nice vacation for us. So maybe the bad time consequences would not be that big between the black dashed arrow and red, but the lifestyle issues are immediate.

I'm wondering if this would be a good thing to put in a poll here? Any thoughts?

Sure, run a poll.... I bet most will go with the 95%...

Since this is all backtested and we do not know what the future holds, there is really no 100%... say you were a rich French landowner who thought he was good to go just before the French revolution....

Even more recent is some of the South American countries who had high inflation.... with the way our debt is going, it is not out of the question that we could have it here...

I would rather live a little bit better today and make necessary adjustments than have a very big boatload of money when I die... take a look at some of the ending values of the 95%.... some are pretty nice aren't they

 

[Mulligan]

These "frugality" threads always stir up a lively discussion. Once people develop frugal habits over a long period of saving for FI, it seems some have difficulty loosening the purse strings once retired. Often the discussion centers around what kind of car they drive(BMW's usually cited as the biggest waste of money imaginable), or how they travel, or if they dine out, etc. I know people who continue to save money in retirement but I don't get it. After all you can only do two things with money-spend it or give it away. I have been very fortunate and now find myself quite wealthy but it wasn't always this way. As I realized my wealth was building, I gradually spent more. Wasn't that difficult (along the lines mentioned by Ha). My spending would be very high by most measures. No one has ever called my frugal, at least for a long time. Could I spend more? You bet! Do I worry about it? Nope. Once retired LBYM doesn't make much sense to me. Obviously you need to live within your means. Frugality, IMHO, is simply a means to FI. Once you make FI how you spend you money depends on your tastes and personal utility function. I don't view frugality as a moral issue but rather a prctical technique that can be very useful at certain times of your life. I suspect others here may have a different opinion.

I would describe your situation Danmer, as one who "has a healthy relationship with money". That should be the ultimate goal for everyone. After I get a few more bucks stashed away in my reserves, I hope to be there, too!

 

[Alan]

Have to mention LWYM to DW. I'm sure I'll get a puzzled look.

We are talking about going to England, Wales and Scotland next year too. How long are you going to be going for Alan? Got to make sure we keep up with the Alan's .

We have to arrive in England for a wedding on April 20 and we are currently planning to return on September 3rd. We'll be spending 2 weeks in France plus another week in Kent on the way back with DW's sister and husband who live in Edinburgh so we won't be going to Edinburgh this time. However, we have friends on the west coast of Scotland in Ayr that we plan on seeing so Scotland will also be on the itinerary.

All of May will be in Ireland.

 

[Danmar]

I would describe your situation Danmer, as one who "has a healthy relationship with money". That should be the ultimate goal for everyone. After I get a few more bucks stashed away in my reserves, I hope to be there, too!

I am not sure what a healthy relationship would entail, but thanks. We certainly do enjoy our lives. I agree that money doesn't buy happiness, but it doesn't buy unhappiness either.

 

[NW-Bound]

I agree with earlier posters that one can always spend more money, and can still get some incremental hedonistic returns. That is true unless one is up in the stratospheric wealth class of the billionaires.

I am not sure what Bill Gates or Warren Buffet would spend more money on (how can they spend 3.5%WR of their stash?), but as I am so far below that level, I would not or should not have problems spending more than I do right now. For example, I can't afford to fly 1st class, take a limousine to/from the airport, or to always stay in fancy hotels downtown, drink $1000 bottles of Cognac, or cook with $400 tiny bottles of balsamic vinegar. If you think I do not know how to spend more, just give me some money and watch me!

I would need to have a whole lot more just to enjoy the aforementioned privileges, let alone dreaming of new ones. So, I am not at all frugal, not anymore since I am living off assets now, and may be living right at my means already. In fact, I am not even sure how much I can really spend from my assets, not knowing what investment return is going to be in the years ahead.

So, I have to ration the pleasures that my limited money can buy. Without any other evidence to the contrary, I have to accept the 3.5%WR as the limit of my means. Hence I am not at all frugal.

 

[Alan]

I am not sure what Bill Gates or Warren Buffet would spend more money on (how can they spend 3.5%WR of their stash?)

Bill Gates has been flushing some of his stash down the toilet.

BBC News - Bill Gates looks to new toilets to improve world sanitation

His charitable organisation, the Bill & Melinda Gates Foundation, is looking for future loos that can improve sanitation around the world.
At the Reinvent the Toilet fair, hosted at the foundation's Seattle campus this week, designs included a lavatory that used microwave energy to turn excrement into electricity.

and more info here:

Bill Gates challenges scientists to reinvent toilet - Telegraph

To pass the foundation's threshold for the world's next lavatory, it must operate without running water, electricity or a septic system, not discharge pollutants, preferably capture energy or other resources, and operate at a cost of 5 cents a day.

The United Nations estimates disease caused by unsafe sanitation results in about half the hospitalisation in the developing world. About 1.5 million children die each year from diarrheal disease.

 

[NW-Bound]

I am really curious to see if it is really energy or fiscally efficient to cook waste with microwave, then to use the dried "good" to generate electricity. Think of all the fancy equipment that needs to be build and maintained.

I recently read a book by a Malawian whose village is so poor that people lives would be much improved if they only get a solar panel to run an electric water pump for irrigation. That would save them much labor to trek down to a lake to fetch water for their crop, and it would also improve the yield. Low tech beats fancy schmancy high tech as far as I am concerned.

 

[pb4uski]

I'll toss in a war story of my own. Back when I was just a young teen, my parents had friends who were millionaires. This was back in the 60's when a million dollars was actually worth a million dollars - a nice home, travel, good food, etc, and no need for an alarm clock. They never had kids because 'children are to expensive'. They drove an old beater VW bug. When we had family/friends potlucks, they either brought nothing or a few miserable cookies or pieces of fruit. The husband died in his early 70's of a stroke. Within a few years the wife went crazy and was sent to a mental hospital. Thye had no wills (lawyers are crooks) and no heirs. The state of California got all their money.

Talk about frugal to a fault!