Oh, the Things I Could Buy!
There’s this person I know who lives “The Life”. This person travels to all the best places, very regularly. This person seems to have it all. This person almost makes me jealous with his/her seemingly ideal lifestyle. It must be so nice to be able to do all that. It must be so enjoyable, so fun, so great.
Recently, after yearning to have that person’s life for a bit, I came back to my world and remembered that I live a ridiculously inexpensive life while making a great income and have a mid-sized money mustache sitting in the bank/investments. I then decided to look at both sides to make sure I’m making the right choice on living below my means and banking tons of cash each month instead of living it up, like this person I know is.
Here’s the stats on my current situation:
- I net $2,000 per month after all my bills are paid.
- I have no debt.
- I’m a year away from breaking the six figure mark in total savings/investments.
Here’s what I could buy with my current lifestyle without going into debt or having trouble paying my bills every month:
- Vacations: I could take one international trip every month. Or, I could take 3 domestic weekend trips to pretty much anywhere in the U.S. every month. Or, I could take 2 weekend trips every month where I pay for a friend to come with me. I could do any of these options while still paying rent, paying insurance and buying groceries each month.
- Loan Payments: If I felt like borrowing money, boy could I have a hay day. Let’s see, I doubt any bank would loan me enough money to capture $2,000 per month in payments. But if they did, I’m sure I could borrow a ton of money for that. How fun would that be? I would probably have a hard time buying enough stuff to spend it all.
- Vehicles: Five years ago, I bought a $20,000 car for $350 per month. So I figure I could buy six $20,000 cars with a $2,000 monthly budget, if I borrowed for them all. Hmm, along the same lines, it seems that I could then buy a $120,000 car with that same budget. Wow, what a nice car that would be.
- Real Estate: I could buy a pretty nice house with the wiggle room I have. No, a lender wouldn’t lend to me on a house nice enough to have a $2,000 per month payment, but I could get a nice one, or maybe two. Maybe I could get a lake home while I’m at it.
Now, let’s stop talking about monthly spending and throw out options for dropping some real cash to buy some expensive things:
- A 2013 Cadillac Escalade ($63,170 – $82,875): I could buy one of those, in cash. Holy cow, those are nice.
- A house outside of the metro area: My sister is interested in a house in her town that’s listed for $60,000. I could buy that in cash.
- A small and modest condo or a fixer upper in the metro area: I could find something that needed a ton of TLC here in the metro and exchange my stash of cash for it.
- A new boat: No problem.
- A new Harley Davidson: no problem.
- A year off work: Easy.
- Four years off work: I could pull that off.
- A year off of work traveling the world: Oh yeah, with plenty of money to spare.
- Going south and spending an entire year on the beach: I could do that.
The point is. WOW, I could do some crazy stuff if I wanted to. I could have the coolest toys of anyone I know. I could live the ritziest lifestyle of anyone I know. I could be looked at as the guy with the perfect life. I could make others jealous. I could also be broke.
Instead of being broke, I’m over here living in a modest one-bedroom apartment that no-one’s impressed by. I’m wearing clothes from Kohl’s that aren’t flashy at all, which I got on sale. I own little more than some clothes, a few pieces of furniture, a TV a computer and a paid for car. I travel once or less per year (for non-work reasons). I go out to eat as little as possible. I bring lunches to work. I don’t own toys. My life and possessions are, well… boring.
But, I do own a few things that aren’t boring, like 1,500 shares of Vanguard Total Stock Market Index Fund Admiral Shares (VTSAX) and a pretty hefty chunk of cash sitting in the bank. I don’t know about you, but I’m okay with my boring life and boring assets. They are growing at an unbelievable rate.
Would I like all the toys and all the vacations that my money could buy? Gosh, it would be kind of nice. Would I rather have a lifestyle that people envy and be broke, having to work until I’m dead and being stuck in the process? Or would I like to live a boring life, knowing that my future is getting better and better every day? My answer is boring. I’ll take boring any day if it means a bright and free future.
Category: Getting Ahead
Kraig,
In my book its not where you are in this world, its who you are with.
You are awesome, keep it up.
-Faye
Thanks, Faye. You are right with that by the way.
What about buying experiences not things?!
I mentioned all sorts of travel in there. Isn’t that experiences?
Kraig,
Awesome post my man.
I couldn’t agree more. I’ve had people email me before asking why I’m so crazy and not “living it up” a bit more. By living it up, you mean trading away my precious, dwindling time for some trinkets…of which of course will lose their luster long before I’m done working to pay for them? Umm, no thanks.
And you’re right. I own some pretty fancy stuff. I just posted my Freedom Fund update and I’m up to $98k. That’s not too boring at all. One day the people wondering why I’m not living it up will be wondering how I amassed so much money. I must be lucky…or maybe I won the lottery. No, I’m a trust fund baby. Yeah-that’s it.
Keep em coming. I’ll be in touch this weekend! Stay warm up there buddy.
Best wishes!
DM,
There is hardly a person out there who knows just what I’m talking about as much as you do. It is nice having many shares of ownership in growing, successful businesses. It’s much better than buying other things that won’t matter anymore once the money is spent. Living the life isn’t all it’s cracked up to be. Our boring (but yet not boring) approach is pretty sweet, isn’t it?
Look I like my possessions, but I would not want it to be a large part of my assets. I enjoy seeing my assets grow over time. Whether it is stocks, mutual funds or my real estate.
Agreed. I enjoy the same thing. And I wouldn’t want a significant part of my assets to be stuff either. I was and still kind of am in that situation with my car. I don’t like the feeling. I consider selling it very often. It’s a large amount of my assets and it’s dropping in value daily. Yuck.
I definitely see where you’re coming from. Do you plan to live the simple life even when you get to retirement or is there going to be a point where you start enjoying your assets? If the latter, do you think it will be hard to make that transition?
Hi Lance,
Good question. I plan on living the simple life for the rest of my life. I’ll be enjoying my assets, not by exchanging them for goods and services I don’t need, but by living on the income they generate.
“Enjoying my assets” in the way you speak of it is not what I ever plan on doing. That would mean burning up my freedom and trading in my future for some “stuff”. I don’t ever plan on doing that. So yes, I guess I won’t be enjoying my money ever. But in my opinion, living a life where I can do what I want when I want is MUCH more enjoyable than buying things. My point is, yes, I’ll be enjoying my assets for the rest of my life, but not with buying, but by leaving them alone so I can live a more full life.
6 cars! You should buy 6 cars! haha, just kidding. I don’t think boring is necessarily a bad thing.
I’m going back and forth between joining some friends on a trip to Thailand. I could absolutely afford it, but I think I’m cool with boring for a while. A long as I enjoy my “boring” camping vacations instead of going around the world, I don’t really care. I’ve got plenty of interesting places in America to check out first.
Ross,
Six cars would be sweet, huh? Haha, not with all the depreciation, it wouldn’t. I’m with you on taking cheap domestic trips for now instead of world class trips. A camping trip instead if a trip across the world will allow for big progress. But yes, someday, it would be fun to splurge.
I applaud your ability to stay focused on what you desire. I’ve read Your Money or Your Life a number of times since I first discovered it more than ten years ago. While I wholeheartedly agree with the decision to buy freedom (and exchanged my money solely for that and not for much pleasure for years) I recognize now that I do enjoy splurging occasionally.
So I work a lot to spend money on nice restaurants, nice vacations, and to overspend on “quality” stuff once in awhile which goes against the book’s advice to enjoy life on a modest budget and with a mindset that abhors excess and gluttony. I’ve just never fully embraced that despite my attempts to do so. We may get there someday. We may continue on this path of mostly being good and occasionally enjoying a bit of extravagant fun.
At least we’ll do what we choose with mindfulness which I think is important no matter which path you choose. Would you agree that mindless spending on extravagance is really the enemy of the truly wealthy?
Jenny,
Yes, I suppose I agree. If you’re aware of how your spending on things and experiences impacts your finances and still decide to spend the money, that’s your choice. It’s all about what you value. If you value those things just as much or more than time, then no problem, go for it. I have stopped seeing most of the value in those things though. Whether good or bad, I don’t know, but they have less appeal to me now that I strive for independence.
I’ll take not having to work anymore in my 30′s over a some shiny net thing that’s going to be old and not get much use after a few months or a year. I was trying to think of what I’d even buy with my monthly gap and I there’s nothing that I would really even want except for more travel. But of course, the more I travel the less gap I would have every month.
JC,
I struggled to list ways I could spend my gap also. It’s not easy to think of what to buy when you’re so focused on the “why” of not buying. It just doesn’t even excite me anymore.
There is a fine line between the two situations you describe. I got caught up a few years back in the money accumulation and stopped living for a while. I had a hard time spending on myself, and it wasn’t the life I wanted to live.
Sure you are rocking it with your finances, and taking 4 trips per month just because you can afford it is kind of ridiculous. But you can take two trips per year, to go to a cousin’s wedding or have fun with old friends that won’t hold you back so much. I like simple things and don’t want more than what I have, so I get while you don’t stockpile objects, but if there is something that you do enjoy you could indulge a bit more without compromising your future.
You’re right, Pauline. I am a bit of an extremist. What I usually discuss is one extreme and then this fantasy is the other extreme. What you’re saying is why not be in the middle. It’s a fair question. I just have a hard time being in the middle. I see the middle as where everyone else is, not that that’s a good reason not to be there. But, it’s just what’s natural for me, to not be in the middle.
It’s good to dream but an Escalade?
Wait a year or so and go for a Range Rover Autobiography. Only $130k….
It’s total luxury but also a real 4×4 – check out the a very recent Top Gear test in the Nevada Desert!!!!
Haha, I’ll take a look, John.
All I could think of after seeing that Caddy is what the gas mileage is, probably 3 mpg!
Sweta,
Haha. Yes, I’m sure the gas mileage isn’t good. Can you imagine driving one of those? I mean sure, it would be comfortable. But every mile you drive probably costs you $10 or more. What a good way to make yourself broke.
LOVE this post, Kraig! The great thing about being in your situatiion? It encourages value-based spending. Now that you know that you can, I bet it helps you to evaluate potential wants much more objectively. Congrats!
Thanks, Laurie. This situation does encourage value based spending. Anytime you have money available to you that you’re not spending, it seems like a value decision. I’m deciding more and more each day that I don’t want to spend money on worthless stuff, but instead according to my values of time and being with or helping/adding value for others who I care about.
Real estate is the best thing to buy with your $2,000 net income. It is safe to invest with property and provide your children a nice home when they get older. You may also include buying insurance for the just to be prepared no matter what kind of financial situations that my try to break you down.