Like many of you, I’m frugal to a fault. For 13 years after college, I saved 50% – 70% of my income partially due to humble living conditions. From 28-37 I drove a $8,000 car that depreciated to $3,000 even after my income grew by 3X. And even after I had finally escaped the corporate world in 2012, I still couldn’t stop saving at least 50% of my income.
By the third year of early retirement, however, I started seriously questioning the point of working and saving so much if the money was never going to be spent. Saving for retirement in retirement is illogical. I started getting angry at being unable to kick my frugality addiction to the curb. People with much less were spending so much more and having a great time doing so. Why couldn’t I be more carefree?
Despite my best efforts to spend more like everyone who posts about their fabulous lives on Facebook, touching principal still felt like a crime. Instead of relaxing as a good retiree should do, here’s what I did instead to maintain a 50%+ savings ratio:
* Worked on ways to generate $200,000 a year in passive income
* Took on part-time consulting gigs with three fintech companies over three years
* Continued publishing 3X a week on Financial Samurai
* Developed new online business partnerships
* Downsized to a smaller house to free up cash flow
* Bought a Honda Fit instead of a Jeep Grand Cherokee Limited
* Invested 90% of every dollar saved
Then one day, I burned out. I dropped all my consulting gigs, wrote the biggest e-mail autoresponder known to man saying I was too busy, and finally found some breathing room to spend a little more than normal.
Instead of limiting myself to $100 shoes, I ventured out and bought a $240 pair of shoes (on sale for 50% off of course). The guilty feeling only lasted for an hour while the pair of Tod’s loafers is still my favorite shoe three years later.
Instead of taking an Uber Pool to save $6 to go downtown, I began ordering my own Uber. I still feel guilty for some reason, but the feeling has lessened because I remind myself that time is way more valuable than money.
Instead of staying at a 3-star hotel in Angkor Wat, Cambodia, we decided to stay at a 5-star hotel for $100 more a night. We knew we were never coming back, so we also hired a private van with much needed AC to be our driver for $50 a day. It was so worth it.
Then I realized something. Keeping spending constant after a certain age eventually leads to lifestyle deflation because everything is relative. If everybody still watched cathode ray tube TVs, you’d be happy with your tube TV. But you’re no longer as happy when everybody else is watching a paper thin 4K TV. If you don’t at least increase your spending at the rate of inflation, your quality of life will begin to deteriorate because you can’t help but notice progress all around.
For those of you who can’t seem to lift your spending despite an increase in your income and net worth, let me share with you five ways for overcoming frugality so you can maximize your lifestyle. Dying with way too much is poor consumption planning.