Loosening the Purse Strings
The $11K Table Set
The first item was the table. Why did you think the table was a wise purchase?Her: As noted above, we both come from large families, have frequent house guests and family dinners and other social events and frankly need the seats. For example, over a recent one month period we had 16 people in addition to the 5 of us stay here, and hosted two dinners with over 50 people.Him: We're at that point in life where there is no point to buying crap. Now if we're going to buy something, I want it to last. Although I didn't really care enough about a dining room set to spend a 5 figure amount on it, I knew that she did; it was important to her. She also researched and shopped it well. We had the money saved up, we could afford it, and it was something we had talked about and planned getting for years. Hardly a splurge.
The Home Remodel
Your next major 2014 expense was a major home remodel. You basically spent $15K to have the entire back wall of the main floor of your home replaced with very high quality windows and a door. Why did you think that was a good way to use your money an...
The Expensive Vacation
Your next major 2014 purchase was your 15th anniversary trip to France that cost you the better part of $10K. Your thoughts on that?Her: We had a fantastic time. We could have done it on less money, but we went and did what we wanted to. We saved money where we could, but we weren't trying to do this trip “on the cheap.”Him: I don't regret a dime I spent on this. Easily the most enjoyable $10K spent in the last decade and well worth 2 1/2 beat-up Durangos. We knew it was going to be expensive when we spent $2200 a piece on direct flights from SLC to Paris. Even the flights were awesome though. I caught 5 “free” movies going each way. What a pleasure compared to domestic travel! We basically did this trip without ever looking/caring about the price of anything. If we wanted to do something, we did it.We didn't have the kids, we saw a ton of sights we had always wanted to see (Normandy beaches, Carcassonne, Paris, the Riviera, Chamonix-Mont Blanc), did some climbing, ascended some via ferratas, and realized just how much better French food is than English.
Expensive Vacation Number Two
Although you had a lot of cheaper road trips, you also took the family to Hawaii for Christmas the same year the two of your went to France. That couldn't have been cheap. Your thoughts on that splurge?Her: That trip has been years in the making and was 90% paid for a year ago. It was actually a family reunion for my widespread family. I have siblings in Guam, Mauritania (Africa), Hawaii, Louisiana, and Oklahoma, along with parents and grandparents in two other states. Hawaii was as central as any other place to meet. This trip was a big deal because everyone was able to make it and we haven't been all together for at least 5 years.Him: Christmas in Hawaii? What's not to like? Lava and sea turtles on the Big Island? Boogie boarding, hiking, snorkeling, and hanging out with the kids and the Obamas on Oahu? As you'll notice, we have a lot lower threshold to spend a lot of money on a trip than on stuff. We find that makes us happier, and that's certainly consistent with all the financial happiness studies out there. Again, you'll notice a few key principles behind these “splurges”- paid for with saved money, well-researched and shopped, and purchased with an intent to increase our happiness. We generally also try to spend “extra money” on one time purchases, rather than ongoing expenses like a leased car or a fancier home.
The Fancy Bike
Jim bought a mountain bike that cost more than his old beater Durango this year. What was the thinking behind that?Him: I love mountain biking and have been doing it for a long time. It's something nearly every one of my partners do. We've actually had qui...
The Furnace
You had to replace a furnace this year. What was that process like?Her: The furnace went out. We couldn't blame it, since it was 25 years old and you can only really expect 15 years out of them. It was pretty cold for a couple of weeks while we waited for it to be replaced. Luckily, our house has two, so we slept warm, but we had two space heaters going in the kitchen for a while. Clearly the furnace replacement was a need, but we didn't need the fancy new one we bought. A bare-bones one (70% efficient) was $2500. After $600 of rebates from the manufacturer and our local gas supplier, the fancy one (98% efficient and much quieter) was $4000. We figured that it wouldn't take 15 years to make up $1500 with lower energy costs.Him: I had a beautiful experience buying this furnace. The furnace saleswoman came over and showed us 30 furnaces in a brochure. It is a wonderful thing to only have to ask a single question with a purchase like this- “Which one is the best?” She pointed it out, and I said, “Let's get that one.” Having a good income, a solid emergency fund, and an optimized financial situation provides for lots of financial freedom, like buying any furnace you want without having to worry about whether you'll be able to put food on the table that month.
The Boat
Okay, let's talk about the boat. What's going on there?Him: We bought a $6K boat 5 years ago as I was leaving the military. Actually, it was only a $3K boat, since the military subsequently paid me $3K (about a dollar a pound) to drive it across the cou...
Loosening the Purse Strings
Robert Doroghazi, author of The Physician's Guide to Investing, said this about splurging:Well, the mortgage isn't quite paid yet, but more on that in a couple of weeks. We're certainly at that point where by any reasonable measure we can afford to loosen the purse strings. Despite all of these expensive, unnecessary purchases in the last year, we're still saving 25-30% of our income (maxing out all retirement accounts,) giving 10% of it away, and paying almost a quarter of it in taxes. Our “mandatory” (fixed + reasonable variable) monthly spending is just 10-20% of our income. I see these “splurges” as the benefits of a well-planned financial life and expect to continue to do them from time to time going forward. We want to be just as deliberate about how we spend our money as we are about budgeting it, investing it, and giving it away. Here are a few guidelines to use when deciding whether you should buy expensive stuff like we have this year.
10 Questions to Ask Yourself (and Your Spouse) Before Splurging
Now it's time for you to weigh in readers. What do you think about our reasoning for purchases? What did you spend money on in 2014? Do you regret any of it? What other rules for spending would you add to this list? Comment below!
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