Learning to spend after years of saving...

[FUEGO]

Ha - this is the "problem" with people in this forum. And by "problem" I don't really mean problem, because it got most people where they are. BUT - for the love of [insert your deity here], stop fretting over single George Washington expenditures. I'm sitting here imagining you driving home after they charged you an extra $1. I bet you don't go back now, but I also bet it is killing you inside. I also bet you do make more $1-$10 expenditures, but you probably go through an agonizing analysis for each one. Suggestion: change your numbers - especially if you are someone like OP with $2.7M. How about, if you want something that is $100 or less, just buy it. Who cares.

Ohh - and you know what? If you are having trouble spending your budget, that means you don't need a budget!! Just spend freely and check the account balance every month to ensure you are not off the rails. This completely goes against virtually every forum member's rules to live by.

I realize this post might come off somewhat like I am attacking you, but I am not. I'm really attacking me. When I read your post it sounded exactly like me. So I am giving myself some terse advice.

It does sound like you're attacking me, but I get it I'm a work in progress.

I've taken a very zen approach about losing the $1 at the grocery store. I'll still mention the error and sometimes go to the customer service for higher amounts but it's just not worth 5+ minutes to collect a dollar (ie I wouldn't stand in line somewhere for $10/hr so why would I do so at the grocery store?). I also know that statistically I probably average out on the $1 ripoffs and the $1 undercharges (they miss an item or they ring a cheap item twice thinking the second item is the same type when it's really more expensive), so I'm probably not losing as much money as I think (if the goal is to be charged exactly what you owe every single time).

The $1-10 purchases probably do happen more often, and they don't bother me. We could do 100 of the $1-10 purchases per year at an average price of $5 each and only increase our spending by 1%. Therefore, not really worth worrying about since these small purchases are more like weekly or monthly occurrences and not daily. We're already rocking it on the monthly and annual expenses (no cable, free cellphones, efficient utility usage, cheap insurance, dropped to 1 car, etc).

Great example of just doing the small purchases without worrying: DW wanted to buy some plastic superheroes for our 5 year old for his birthday (and we already have quite a bit of goodies for him AND a floor with several superheroes scattered across it). My main objection was the clutter ("is it materially better to have 9 superhero action figures instead of 7 of them") and not the $21 (actually I bought some gift cards online so it was more like $15 - frugality dies hard!). Will I ever miss the $15? No, it's unlikely.

The $100 spending is a different story as those can add up quickly. I think about it and if it's much work I'll pay to outsource it or if it brings value I'll buy it. This week it was $389 for the plumber to snake my main sewer drain (could have rented the big snake drain machine for $100 or so and DIY). And $220 for an HVAC cleaning and refrigerant recharge (I surely could have purchased a manifold gauge set, 1 lb of refrigerant, violated an EPA regulation and refilled the system myself, and DIY'd the cleaning). I think that's the first home expense all year so it adds a bit to our budget but it's not like we pay that much every month.

Re: the budget - we have a budget but just spend whatever for the most part. For example, our travel budget is $10,000 per year but I booked a 9 week vacation to Europe. We might come close to only spending $10,000 but who cares if it's $12-15k since we probably won't spend 9 weeks in Europe every summer (I miss Mexico and it's CHEAP!! And US road trips are CHEAP!!).

Most of our spending is discretionary or outsourced stuff that we could DIY. If our spending capacity ever shrinks then we can tighten out belts. Otherwise we can keep spending like drunken sailors (what it feels like right now, though objectively <$40,000/yr spending is very conscientious).

 

[Teacher Terry]

Our first year in retirement felt funny so we spent very little. Then year 2 comes and we both end up with good p.t. gigs and now we spend like crazy. I am intent on traveling, going out and doing all the things that I missed through the years with raising kids, going to college, working f.t. etc. Also I have had 3 good friends die in their 50's and 60's so the point really hits home about life is short.

 

[Moemg]

I really do not remember how I spent the first year of retirement but in year two when my stash dropped by 40% I went in the frugal mode not super frugal just not free spending like I was doing .Now I spend moderately usually a few trips a year and home improvements and keeping the grand kids happy . Actually I feel really cheap when I watch HGTV and people are gutting perfectly decent kitchens because they dislike the granite color .

 

[Teacher Terry]

I never really understood how different home means buy new furniture. I have moved 30x's and just take what we have.

 

[Freedom56]

I retired at 52 this year. We have saved and lived well below our means for decades. We have 2.7M of which half is untaxable...our house is paid off, cars paid off, no debt....but we are struggling learning how to actually start spending the money. All those years of being miserly have become ingrained. Anyone else have this problem??

We have the same issue. But then again it's a good thing. Our savings continue to grow during retirement. There is no compelling reason to go on spending binges now. Spend money on travel and leisure and home improvements. Our top spending categories are now:

Travel and leisure
Health insurance premiums and co-pays
Property tax
Home improvements
Food

Your frugal habits got you to early retirement, why change? Do you want to end up broke and in your 60s like the vast majority of people?

 

[Happyras]

I retired at 52 this year. We have saved and lived well below our means for decades. We have 2.7M of which half is untaxable...our house is paid off, cars paid off, no debt....but we are struggling learning how to actually start spending the money. All those years of being miserly have become ingrained. Anyone else have this problem??

+1 on being so ingrained, and one year into "FIRE", I still struggle. It is easier to gift a 100K to our kids than pay for something without a discount for ourselves.

I really struggle with the whole income tax issue of touching IRA funds, we are still in a high tax bracket and with no end in sight we can't even efficiently roll Roth conversions. Leveraging cheap money by borrowing and letting our accounts grow just feels better. We travel first class and high end suites on cruises, but when I drop $$ on some little appliance for our kids new home, my wife cringes, maybe because we are spoiling them a bit. Buying things is not a priority, but kick starting our kids and future grandchildren seems to be an easier way for us to open the purse, than buying some new engine or toy for ourselves. I guess I get a little fulfillment from seeing our children live well, than the thought of them waiting 30 years for way too much at once.

 

[NoOneGetsIt]

+1 on being so ingrained, and one year into "FIRE", I still struggle. It is easier to gift a 100K to our kids than pay for something without a discount for ourselves.

I really struggle with the whole income tax issue of touching IRA funds, we are still in a high tax bracket and with no end in sight we can't even efficiently roll Roth conversions. Leveraging cheap money by borrowing and letting our accounts grow just feels better. We travel first class and high end suites on cruises, but when I drop $$ on some little appliance for our kids new home, my wife cringes, maybe because we are spoiling them a bit. Buying things is not a priority, but kick starting our kids and future grandchildren seems to be an easier way for us to open the purse, than buying some new engine or toy for ourselves. I guess I get a little fulfillment from seeing our children live well, than the thought of them waiting 30 years for way too much at once.

Hope this isn't too forward...we have about 3M...are we in the same ballpark as you?

 

[NoOneGetsIt]

+1 on being so ingrained, and one year into "FIRE", I still struggle. It is easier to gift a 100K to our kids than pay for something without a discount for ourselves.

I really struggle with the whole income tax issue of touching IRA funds, we are still in a high tax bracket and with no end in sight we can't even efficiently roll Roth conversions. Leveraging cheap money by borrowing and letting our accounts grow just feels better. We travel first class and high end suites on cruises, but when I drop $$ on some little appliance for our kids new home, my wife cringes, maybe because we are spoiling them a bit. Buying things is not a priority, but kick starting our kids and future grandchildren seems to be an easier way for us to open the purse, than buying some new engine or toy for ourselves. I guess I get a little fulfillment from seeing our children live well, than the thought of them waiting 30 years for way too much at once.

We have the same issue. But then again it's a good thing. Our savings continue to grow during retirement. There is no compelling reason to go on spending binges now. Spend money on travel and leisure and home improvements. Our top spending categories are now:

Travel and leisure
Health insurance premiums and co-pays
Property tax
Home improvements
Food

Your frugal habits got you to early retirement, why change? Do you want to end up broke and in your 60s like the vast majority of people?

No but also have no one to leave it to and you ant to enjoy it...it is a struggle

 

[Fedup]

I will be giving seminars on this subject. I'm an expert in this.

 

[NoOneGetsIt]

It does sound like you're attacking me, but I get it I'm a work in progress.

I've taken a very zen approach about losing the $1 at the grocery store. I'll still mention the error and sometimes go to the customer service for higher amounts but it's just not worth 5+ minutes to collect a dollar (ie I wouldn't stand in line somewhere for $10/hr so why would I do so at the grocery store?). I also know that statistically I probably average out on the $1 ripoffs and the $1 undercharges (they miss an item or they ring a cheap item twice thinking the second item is the same type when it's really more expensive), so I'm probably not losing as much money as I think (if the goal is to be charged exactly what you owe every single time).

The $1-10 purchases probably do happen more often, and they don't bother me. We could do 100 of the $1-10 purchases per year at an average price of $5 each and only increase our spending by 1%. Therefore, not really worth worrying about since these small purchases are more like weekly or monthly occurrences and not daily. We're already rocking it on the monthly and annual expenses (no cable, free cellphones, efficient utility usage, cheap insurance, dropped to 1 car, etc).

Great example of just doing the small purchases without worrying: DW wanted to buy some plastic superheroes for our 5 year old for his birthday (and we already have quite a bit of goodies for him AND a floor with several superheroes scattered across it). My main objection was the clutter ("is it materially better to have 9 superhero action figures instead of 7 of them") and not the $21 (actually I bought some gift cards online so it was more like $15 - frugality dies hard!). Will I ever miss the $15? No, it's unlikely.

The $100 spending is a different story as those can add up quickly. I think about it and if it's much work I'll pay to outsource it or if it brings value I'll buy it. This week it was $389 for the plumber to snake my main sewer drain (could have rented the big snake drain machine for $100 or so and DIY). And $220 for an HVAC cleaning and refrigerant recharge (I surely could have purchased a manifold gauge set, 1 lb of refrigerant, violated an EPA regulation and refilled the system myself, and DIY'd the cleaning). I think that's the first home expense all year so it adds a bit to our budget but it's not like we pay that much every month.

Re: the budget - we have a budget but just spend whatever for the most part. For example, our travel budget is $10,000 per year but I booked a 9 week vacation to Europe. We might come close to only spending $10,000 but who cares if it's $12-15k since we probably won't spend 9 weeks in Europe every summer (I miss Mexico and it's CHEAP!! And US road trips are CHEAP!!).

Most of our spending is discretionary or outsourced stuff that we could DIY. If our spending capacity ever shrinks then we can tighten out belts. Otherwise we can keep spending like drunken sailors (what it feels like right now, though objectively <$40,000/yr spending is very conscientious).

May I dare ask about how much you needed to feel comfortable retiring at 33? I love that you did!!

 

[Fedup]

I never really understood how different home means buy new furniture. I have moved 30x's and just take what we have.

The decor doesn't fit. We don't even bring anything old from the previous home to our new home either, everything stays in the garage until we manage to get rid of them. Why ruin a good house with old furniture.

 

[davismills]

I am leaving everything to charity even though I have a sibling.
No nieces or nephews.
Some first cousins but not close. They have kids.

Ditto. We have one niece between us and she didn't even send a thank you card for an expensive wedding gift we bought her. Boy, that's gonna cost her.

 

[W2R]

I never really understood how different home means buy new furniture. I have moved 30x's and just take what we have.

You know, one of the best parts of moving into my Dream Home was when I moved all of my furniture and stuff into it. Suddenly, it went from a house to a home. The transformation was awesome to see. All my wonderful stuff was there surrounding me, and instantly, I settled right in and was so happy. Everything was just perfect and looked so much prettier with all my pretty stuff all around me.

My Dream Home has one of those kitchen "bar" type counters where you can eat at the counter, and my old house did not. So, I bought some bar stools from Amazon. But that was the only furniture I bought.

That said, if we ever lose our minds and move again, and if the move is out of town, then I would not take one single piece of furniture with me except for my small easy chair. I'd sell the rest or give it away. I'd put the easy chair in the back of my SUV, with a couple of suitcases and a box or two, and off I'd go. Then at the new town I would buy all new furniture and have it delivered.

 

[davismills]

We're still having some trouble "letting go" after 4 years of retirement as well. We went to see a Jeff Dunham show the other day in a city relatively close by, but we hate driving at night so we elected to stay in a hotel after the show. Let me tell you, brothers and sisters, Motel Six has not improved since our college years. We survived though and our dog, Bebe, came along at no extra charge. Cha Ching!

 

[FUEGO]

May I dare ask about how much you needed to feel comfortable retiring at 33? I love that you did!!

About 1.2 million plus a mostly paid off home (I think there was $40k or so on the mortgage).

Since then it's grown to around 1.65 million with a totally paid off house. My wife did work for about 2 years after I retired, so there's that income (gross was ~65-70k x 2 years).

I think we were targeting $1.3 million initially and figured 1.2 was "close enough" and that we could always trim spending a tiny bit or make a tiny bit of money to get by. Of course using the FIREcalc/******** method aka the 4% rule, most scenarios have your portfolio growing in real terms over time which is what has happened to us over the past almost 4 years. Net worth went up $500k and we paid for 4 years of living expenses out of the $$. Granted, we had some income from DW and from my blog but it was probably closer to a quarter million total, definitely not a half million.

So in summary, we're swimmingly wealthy compared to where we were at retirement. A 30% correction would put us roughly back where we started FIRE, so not too much concern about this market top. We could still get by pretty well on a 3-3.25% withdrawal rate.

 

[daylatedollarshort]

Our neighborhood and the surrounding areas areas have an online group and it is pretty wild what people give away for free because they bought replacements - working appliances like newish washers and dryers, Pottery Barn type furniture, all sorts of things. If I had an empty house and more time than money I think over the course of a year, maybe a lot less, I could furnish every room with just other people's discards and with some flea market flip type creativity.

 

[jonat]

I retired in December at 61 - DW retired many years earlier. We also lived below our means for many years and have $3M+ with Fidelity and no debt. Our advisor says that at our current spending we'll die with more than we have now and that we should spend more!

We're doing some of that - a mega-vacation next year - but DW is insisting that we need to "budget" and is reluctant to spend (though we did just blow $3K on an Oriental rug today!) Neither of us is collecting SS yet and I have a modest pension ($1K/mo) starting when I turn 65. No desire to leave a "legacy" - our goal is to "bounce the check to the morgue", but reality will likely be that we leave a sizeable bequest to favorite charities.

I think like a lot of people here, we'll be careful the first year or two and see how it goes. I used to be eager to buy "toys", but have cut that way down so far.

 

[sanfanciscotreat]

Yup...been retired a little over a year and still can't spend much. My one "extravagant" purchase was about $2000 on a nice bass...irrelevant in the grand scheme of things. I've also been researching 2-3 year old vehicles to replace my older car and have even taken a few test drives, but I just can't pull the trigger on anything.

Are you talking about a bass boat or a bass speaker system?

 

[sanfanciscotreat]

I'm hiring out more stuff like that too in part because, setting aside humanitarian considerations, I'm very much aware I'm worth far more to DW alive and uninjured than any amount of money I'd save on a DIY project. So if there is almost any risk of injury I hire it out.

You discover the older you get your most effective tool is your check book.

 

[Music Lover]

Are you talking about a bass boat or a bass speaker system?

None of the above... A bass guitar. I play in a few bands.

 

[sanfanciscotreat]

Since retiring in 2010 we have moved to NC and a much nicer home still with no mortgage payments. Very few homes in our HOA and have been selling one or two days after listing. And this is not in Asheville. Had to start SS income and RMDs this year and the tax bracket moved up also. Still hard to spend our allowance each month. Have 24K left not spent so far this year. Will splurge for the AK cruise at the end of the summer and will upgrade to first class on the air flight. Looking to buy the wife her dream classic car and a gently used sports car for me. Stock accumulated from my employer just keeps going up and am selling as much as I can each year and stay in a reasonable tax bracket.

 

[misshathaway]

I am leaving everything to charity even though I have a sibling.
No nieces or nephews.
Some first cousins but not close. They have kids.

Me too, although my charity choices have changed since I did my first will. Now I'm more concerned about a charity's efficiency and impact. My family research is so I can figure out who would get it if I get rid of the old will and die intestate before I make the new one. If it's somebody I don't like, it might put a fire under my butt to get the new one squared away

 

[Happyras]

Hope this isn't too forward...we have about 3M...are we in the same ballpark as you?

Yes, pretty much too much saved and lots of post retirement income from rentals and business assets.....

 

[Car-Guy]

I retired at 52 this year. We have saved and lived well below our means for decades. We have 2.7M of which half is untaxable...our house is paid off, cars paid off, no debt....but we are struggling learning how to actually start spending the money. All those years of being miserly have become ingrained. Anyone else have this problem??

No, but I was almost a decade older than you when I retired with my millions. I was much, much more worried about money and spending before I retired than after.

I never was a LBYM type but by any comparison, I was much more conservative in my spending before I retired. That's why I saved!

 

[Ready]

I purchased a pair of Bose headphones last week for $349. They have the active noise cancellation that helps to drown out the motorcycle and truck noise that permeates my house since we live in the downtown area.

It took a lot of convincing to pay that much for headphones. I still remember hitting the "order" button on Amazon and thinking "did I really just spend that much on a pair of headphones"?

Now I laugh about it, since the headphones have been awesome and I use them every day. I know I can afford them but the LBYM in me says I must be crazy to spend that much.