When do you decide to spend today instead of save for tmw?

[Anonymous]

Anonymous wrote:

Anonymous wrote:My FIL has accumulated quite a large investment portfolio and is literally saving it for "legacy" (my wife and daughter). I appreciate this but it is born out of a deep nihilism and inability for himself to experience joy for himself. He eats PBJ on white bread so as to not spend a dime on "frivolous" things. I'm no spendthrift lavish luxury spender, but the forced austerity is bizarre for a 75 year old feeling the pinch of mortality.

Sounds like David Sedaris’s dad. Such a strange psychological makeup.

Totally disagree. I see significant nobility in his sacrifice to provide for his family.

[Anonymous]

How about agreeing on a set amount to save and then spend the rest. The amount to save could be zero if, for example, the grandparents fully funded your kids 529s and you expect to inherit some money down the road. At the end, only you know your full financial picture. If you really have no idea, I would spend some of your discretionary income on a financial planner.

[Anonymous]

I spend on kids activities, shows we want to see, good groceries, and occasional vacations. We save at least 20% of gross income and try to max out all available tax preferred vehicles. Since my husband’s income dropped from $75k to $15k, we are feeling the pinch a bit more, but we are older and college savings is set. For us, we were never extravagant but we also never got over $325k HHI. We are closer to $260k now which is enough to meet all of our our needs, most of our wants, and save for the future.

[Anonymous]

Anonymous wrote:I spend on kids activities, shows we want to see, good groceries, and occasional vacations. We save at least 20% of gross income and try to max out all available tax preferred vehicles. Since my husband’s income dropped from $75k to $15k, we are feeling the pinch a bit more, but we are older and college savings is set. For us, we were never extravagant but we also never got over $325k HHI. We are closer to $260k now which is enough to meet all of our our needs, most of our wants, and save for the future.

If you are saving 20% of gross you are killing it. Congrats.

[Anonymous]

Spend some time identifying your goals and priorities. Figure out what it costs to do those things. Spend/save accordingly.
Six months to a year later reevaluate your goals and priorities. Adjust if needed. Repeat.

If your "challenge" is extreme frugality or having a lot more than you grew up with, start spending a little more on things that are a priority. For example, if travel is a priority don't try to force yourself to pay for a Disney cruise. Try paying for a family tour in a city you're visiting, or pay for a hotel instead of camping. You'll probably enjoy it. You'll see that your financial picture doesn't fall apart despite the additional spending.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You “have college savings” and three kids. How much?

+1. You are going to need a minimum $160k-$200k per kid for instate tuition and expenses.

Huh? UMD cost of attendance is 29k per year. If you're talking UVA then your numbers are correct. But there are tons of cheaper in-state schools in most states than UVA

Not it isn’t. I bought two prepaid tuition plans for a newborn and 2 year old, 1 year ago. It was $95kish for both for 4 years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My FIL has accumulated quite a large investment portfolio and is literally saving it for "legacy" (my wife and daughter). I appreciate this but it is born out of a deep nihilism and inability for himself to experience joy for himself. He eats PBJ on white bread so as to not spend a dime on "frivolous" things. I'm no spendthrift lavish luxury spender, but the forced austerity is bizarre for a 75 year old feeling the pinch of mortality.

Sounds like David Sedaris’s dad. Such a strange psychological makeup.

Totally disagree. I see significant nobility in his sacrifice to provide for his family.

According to an interview with David Sedaris, his dad told him that he was giving him money each year as a gift, let David write him thank you notes and then it turns out the dad never gave David the money (because he said that David had enough already). There was a lot of disfunction in that relationship!!!

[Anonymous]

YOLO.

[Anonymous]

Figure out the things you really want to spend money on and then start doing them! For us, we have 2 kids, 230k HHI. We really don’t want to wait until our kids are older to travel so we are alternating regular beach vacations with a “bigger” vacation. I am a nurse and in my job I am often seeing people in their 40s and 50s with cancer and it has made a pretty big impact on how we have decided to not to wait to do some of these bigger trips.

[Anonymous]

The fact that life is short and you could die (or possibly worse become disabled) at any time can also be viewed as a reason to save so your family has greater security rather than spend. The new Mercedes really is not of as much use to your kids when you are dead than money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You “have college savings” and three kids. How much?

+1. You are going to need a minimum $160k-$200k per kid for instate tuition and expenses.

I disagree. I have a kid in-state now and it’s about $30k/ year and that’s only because we’re paying for a much more expensive apartment than needed. It could be closer to $25k if we needed to be more frugal.

This^^^. Most states have several schools that are ~$25K or less "All In". Once you don't live in the dorm you can save even more with an apt and no meal plan (my kid could uber eats half their meals and make the rest at home for less than what we pay for the meal plan). An good education can be had for ~$100K currently in most states.

[Anonymous]

I am a saver who has to encourage myself to spend, and it helps me to go with the idea that capital is what affords unusual luxury so I prioritize things this way:

First we already have established a 6 month emergency fund plus additional savings for unexpected expenses (e.g., I keep a fund that is our out-of-pocket limit of health expenses; a fund for dental, for vet, for car and for house in cash savings).

1) 20% pre-tax to retirement.
2) Budgeted expenses (monthly bills, groceries etc.)
3) Pre-established amounts to kids' college accounts. (We worked with our planner on what this should be).
4) Expanded expenses for experiences (restaurants, cultural events, kids' lessons/activities) we can cash-flow with current income.
5) All extra from current income goes to taxable investment accounts or sinking funds. Sinking funds are for designated things we know we need/want within the next 5 years. A big trip, a particular home renovation etc. Taxable investment is more fungible.
6) At the beginning of the year, we calculate 4% of the taxable investment account and that is our money to spend on something "extra" that year. If the market is down we might not take the full amount (like this past year the 4% would be around 15000, but the market tanked before we decided to use it and we didn't really have anything extra we really wanted, so we will likely take out less and take out more next year).

So 4-6 are our ways of 'spending for today' while balancing saving. 4 is directly spending from current income, and 5-6 are saving/investing for 'fun' spending.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You “have college savings” and three kids. How much?

+1. You are going to need a minimum $160k-$200k per kid for instate tuition and expenses.

Huh? UMD cost of attendance is 29k per year. If you're talking UVA then your numbers are correct. But there are tons of cheaper in-state schools in most states than UVA

Not it isn’t. I bought two prepaid tuition plans for a newborn and 2 year old, 1 year ago. It was $95kish for both for 4 years.

Tuition =/= cost of attendance.

[Anonymous]

Anonymous wrote:We make 250k. Our only debt is our mortgage, and that payment is 2k. We fully fund the TSP/403b. We have college savings. Dh is a fed, so we have the 'pension' when he retires + health care will be affordable. We will have SS.

We have about 2k to do something with each month. Roth? Brokerage? We have both, and we fund both randomly. How do you decide when to spend it now (vacation) and when to save it? I feel like our goals for retirement will be met (our financial person agrees). We travel, but conservatively (we have 3 kids, so we usually drive).

I’d say, if you’re over 18 and solvent, and you’ve already factored charitable contributions in, subtract your age from 100 percent. That’s the percentage of free cash to spend on the future.

Spend 1 percent on any kind of disaster prepping. (Boating, camping gear, flashlights, tuna, etc.)

Spend the rest on fun things. Because: You need to think about the future, but who knows how long you’ll be able to do fun things. You have to have some fun now.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You “have college savings” and three kids. How much?

Agree this isn’t clear enough. If your goal is instate, funded by you, you’re going to need 450K in the college accounts. If you’re goal is private for the three kids, without merit, you’re going to need $1M. That’s where to put the extra 2K OP unless you already have this accounted for. In which case, save some in a brokerage account and enjoy a bigger vacation occasionally.

You may need that amount when the kids are going to be in college. If the kids are 0, 2 and 4, you can be fully funded with way less assuming conservative historic growth, no?