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Old 12-16-2019, 04:07 PM   #161
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So wondering if all this extra money makes any of you change your thinking or budgets?

I started the year (after that horrible December '18) with a projected 2.5% withdrawal rate and felt pretty good... (have other income outside of the financial investment portfolio.) Here we are about a year later and despite my best efforts and still pulling out that money and what I thought was excess spending am up quite a bit from where I expected. So does one recalculate their 2020 budget based on the new balance or do you stick with what it was when you started plus inflations as is suggested and keep letting it grow?

I am all for LBYM That is Below not "Beyond" or perhaps is it time for a little extravagance? Hard when one is cheap by nature and been all about savings for some time.....

A related question, do you believe it is better to blow a fixed amount on something special, Trip, new car, Kitchen renovation, or adjust your lifestyle? Better clothes, more and better restaurants, Bigger house, a boat, 5 star travel instead or 4 star. First class instead of Business? Anyone afraid of getting used to that more expensive lifestyle?
I don't budget, really. I spend what I need and watch what percentage that is of my FIRE stash to modulate whether to spend more or less. As of Friday's close my net WR is 0.35%, so obviously I don't know how to spend money. I'm rather uncreative that way. It does make me think I need to be more creative, or else my kids will just be the ones to travel First Class.

Whether to recalculate or just give an inflation adjustment ends up being a trade off between spending more now vs. ending balances, on average, being lower. Depending on the withdrawal rate, you're also potentially increasing the risk of running out of money, but your 2.5% is probably bulletproof according to standard thought.

I don't like "blowing" money regardless of what it is blown on. I've tried that and it just makes me feel worse to waste it. I'd rather not spend it in the first place. I don't really worry about getting used to a nicer lifestyle, as I've experienced aspects of a nicer lifestyle before and for the most part it really doesn't do much for me. Although business class in Emirates from Seattle to Dubai was nice and worth the upgrade.
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Old 12-16-2019, 06:15 PM   #162
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And, yet ANOTHER all time high today, for the total of my portfolio plus bank accounts. Don't wake me up from this sweet dream!



As for the question of how this affects my budget, I am really used to living a certain way that is comfortable for me, and have no desire to get all ritzy or high end la-de-da about the way I live. That just wouldn't be me; my overall lifestyle will not change.

I might spend a thousand or two for fun sometime in the next month or two, just because I can. No earth shaking permanent changes in spending level, though.
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Old 12-16-2019, 06:18 PM   #163
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And, yet ANOTHER all time high today, for the total of my portfolio plus bank accounts. Don't wake me up from this sweet dream!



As for the question of how this affects my budget, I am really used to living a certain way that is comfortable for me, and have no desire to get all ritzy or high end la-de-da about the way I live. That just wouldn't be me; my overall lifestyle will not change.

I might spend a thousand or two for fun sometime in the next month or two, just because I can. No earth shaking permanent changes in spending level, though.
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Old 12-16-2019, 06:21 PM   #164
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Sell!
Sell!
Sell!
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Old 12-16-2019, 07:04 PM   #165
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I made a hundred and thirty grand last month, woo-hoo!
You done great for 1 month of November. I can see why you blow that dough.
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Old 12-16-2019, 07:15 PM   #166
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Yeah Baby!

The landscapers are working up the 3D model of my yard. Should be about 2 to 3 months of plan revisions and then the work begins.

Wifey will be happy!
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Old 12-16-2019, 07:24 PM   #167
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I've been slightly underinvested for the last year or two, since circumstances changed and we didn't need as aggressive a mix any more. Add to that my general feelings that valuations are a little too high, and it led us closer to a 55/45 allocation. That said, it has grown enough that I've been able to take SEPP from two of my IRAs and they are still slightly up over the last couple years. And I like having enough dry powder to keep my options open if the market decides to go Ursa Major again.
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Old 12-16-2019, 07:46 PM   #168
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Sell!Sell!Sell!
RobbieB would say "Spend! Spend! Spend!".
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Old 12-16-2019, 08:03 PM   #169
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That is about right, NW-Bound. LOL
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Old 12-16-2019, 08:11 PM   #170
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Spending can be thought of as a method of rebalancing. Instead of selling stock to buy bond, which is overvalued now, one rebalances into Wagyu beef, XO Cognac, caviar, etc...

I don't like bonds either, so I am piling up cash. I never have so much cash. It pays a little less than 2%, so it's not too bad.
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Old 12-16-2019, 09:10 PM   #171
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You are doing everything but saying that word.
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Sell!
Sell!
Sell!
Well, you know the market is a roller coaster. What goes up, must come down, and vice versa. No problem, right? Que sera, sera...
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Old 12-16-2019, 10:20 PM   #172
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Yep, it's getting a bit scary.
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Old 12-17-2019, 04:01 AM   #173
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So does one recalculate their 2020 budget based on the new balance or do you stick with what it was when you started plus inflations as is suggested and keep letting it grow?

I am all for LBYM That is Below not "Beyond" or perhaps is it time for a little extravagance? Hard when one is cheap by nature and been all about savings for some time.....
I always base my Jan annual withdrawal on year end portfolio value. Which means we took a cut in income in Jan 2019, but expect a big raise this coming Jan knocking on wood....

But our budget is independent of our income. We don’t immediately ratchet up our spending and often bank most of the excess. Spending changes are more gradual.

But I tell you, if there were some big ticket item you were waiting on - this would seem to be a good time.
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Old 12-17-2019, 11:59 AM   #174
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I'm starting to think that if my portfolio exceeds $x that any excess is eligible for Blow That Dough! spending.

Does anyone else do this? If so, how has it worked for you.
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Old 12-17-2019, 12:15 PM   #175
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I'm starting to think that if my portfolio exceeds $x that any excess is eligible for Blow That Dough! spending.

Does anyone else do this? If so, how has it worked for you.
Sometimes I find myself thinking that as long as my portfolio is bigger than it was before I bought my Dream Home.... but I haven't actually spent the excess, which is several hundred thousand by now. I suppose not spending the excess is why it keeps growing as it has.
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Old 12-17-2019, 12:52 PM   #176
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So wondering if all this extra money makes any of you change your thinking or budgets?
...
So does one recalculate their 2020 budget based on the new balance or do you stick with what it was when you started plus inflations as is suggested and keep letting it grow?

A related question, do you believe it is better to blow a fixed amount on something special, Trip, new car, Kitchen renovation, or adjust your lifestyle?
In retirement I do not so much budget and track cash flow out due to expenses. So far in retirement my outgoing flow has been less than half of what we expected, even with "Blow That Dough" items like using upgraded vacation travel options and buying a 3rd car. Couple that with the market gains this year and yes, I am looking at increasing our projected flow for next next, but not by a lot, maybe 10%.

We did a lot of major home improvement projects in the years before I retired as to not have to worry about them during retirement. We are happy with our lifestyle and most likely will end up being a bit more generous to family and charities. I am also looking at spending on additional items we planned to spend on in later years but may spending on them now when we can enjoy them more. For example:

- Replacing DW's 2011 Toyota Corolla, in solid condition, no issues, and 65K miles, with a new model to get additional safety features that did not exist on 2011 models.

- Paying off our mortgage now instead its planned payoff in 8 years. The rate, outstanding amount and monthly payment is low. But now we could pay it off without having to sell any equities and still have more than enough cash for our plans before we take SS(sometime in 2-7 years).
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Old 12-17-2019, 12:53 PM   #177
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Yep, it's getting a bit scary.
Don't worry, there's air even at the top of Mount Everest (29,029).
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Old 12-17-2019, 01:04 PM   #178
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I'm starting to think that if my portfolio exceeds $x that any excess is eligible for Blow That Dough! spending.

Does anyone else do this? If so, how has it worked for you.

I've thought about that from time to time. Right now, I'm flirting with a threshold that makes me feel FI. Like, I could lose my job tomorrow, and everything would most likely be okay. But, I've thought about another threshold, where if I hit that, all the stops would come out, and I'd have no trouble spending extravagantly. Well, extravagantly, by my measures.

That "Blow that dough" threshold is 1.5x my FI threshold, so it's a bit of a leap. But, if we have another period like 2012/2013/2014, or even 2017/2018/2019, it could get me there quite easily. Provided, the last few days of 2019 don't give us any nasty surprises.
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Old 12-17-2019, 01:13 PM   #179
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... That "Blow that dough" threshold is 1.5x my FI threshold, so it's a bit of a leap. But, if we have another period like 2012/2013/2014, or even 2017/2018/2019, it could get me there quite easily. Provided, the last few days of 2019 don't give us any nasty surprises.
Yeah, we're currently at 1.3x what we had when we retired 8 years ago.. and a 36 year time horizon vs a 44 year time horizon (in both cases to age 100).
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Old 12-17-2019, 01:38 PM   #180
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I'm starting to think that if my portfolio exceeds $x that any excess is eligible for Blow That Dough! spending.

Does anyone else do this? If so, how has it worked for you.
Yes, I tend to think that way too. But I don’t usually end up acting on it.

We are, however, gifting a considerably larger amount then we usually do at the beginning of next year. This is like an advance for our heirs. Both the size of our portfolio and the apparently high valuations of the markets encourages us to make this move now. It does mean a larger withdrawal than usual.
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