HOW TO TELL WITHOUT DOUBT THAT SPECIAL SPLURGE IS A-OK!
Life is short and I, MR. FRUGAL HIMSELF, believe we can continuously treat ourselves to AFFORDABLE splurges. Especially splurges that bring us JOY!
Our goals remain timeless – Spend less than your income, pay yourself first and contribute to savings/investments.
As your Net-Worth continues to grow, so can your splurges. Life is too short NOT to have fun and JOY!
SO HOW DO YOU DECIDE IT IS ACCEPTABLE TO SPLURGE?
BY ANSWERING YES TO BELOW QUESTIONS!
DO YOU HAVE SIX MONTHS OR MORE OF EMERGENCY FUNDS?
You need a minimum of six months of expenses in an emergency savings account for the unexpected (job losses, health care emergencies, expensive auto repairs, etc.). In addition, you need good health insurance, disability insurance, etc, covering the things most likely to derail you financially.
ARE YOUR SAVINGS ADEQUATE FOR YOUR FUTURE NEEDS?
ALWAYS pay yourself first. Calculate how much you can afford to spend without affecting your savings rate and ability to pay bills on time. NEVER ALLOW splurging to affect your savings and financial goals!
DO YOU HAVE ZERO DEBT ON DEPRECIATING ASSETS?
Simple rule, if you pay for it and it is worth less as soon as you drive off the lot or open the box, PAY for it with cash or pay that credit card debt balance each month. Today, 27% of Americans are signing up for seven year car loans. A VERY BAD IDEA!
Avoid debt on depreciating items such as new cars, expensive handbags, etc. If you cannot pay cash – you cannot afford the splurge! Your J-O-B is to pay your credit card debt balance IN FULL monthly, AVOIDING 18-30% interest charges!
WILL YOU OR SOMEONE YOU LOVE GAIN LONG TERM JOY FROM THE SPLURGE?
You work hard for your money. Maybe you put up with a KNOW IT ALL, BAD BREATH, MIDGET BOSS! Treat yourself and the people you love. Just make sure that your splurges, bring long term (not fleeting-like new car smell) joy.
I splurged this year by hiring a photographer guide to take me into Grand Teton and Yellow Stone National Park. As an amateur nature photographer the experience and photos brought me immense joy! Take a look at a couple of shots below.
HAVE YOU DONE YOUR RESEARCH?
Before spending a large amount of money, do the research to ensure you are not getting ripped off! Maybe there are equivalent items less expensive. I recently learned I can save 30% or more buying refurbished camera lens. Look for alternatives! Again- DO YOUR RESEARCH!
ARE YOU STILL MEETING YOUR LONG TERM PLANS?
You MUST stay on plan and not allow one splurge to lead to multiple splurges. If that occurs before long you are in debt and well off your plan. Maintain and FIND self control!
IF YOU ANSWERED YES TO ABOVE QUESTIONS, TREAT YOURSELF TO SOME WELL DESERVED JOY!
SPLURGE ON THE IMPORTANT THINGS IN LIFE
The question about when to splurge was asked by a friend. The question caused me to reflect on my life and what is important. I can afford nice vacations, expensive dinners etc. I want to be there more for the people I love far more than spend money on luxury for self. I splurge by:
Traveling to visit the people I love.
Increasing my charitable contributions to the causes I care about. This year I added three charities to receive monthly donations.
Wounded Warriors – Did you know over 20 veterans take their lives every day? That hundreds of thousands have been permanently wounded from these stupid wars we have now fought for 18 years. The least I can do is give.
St Jude’s – I have a daughter and would give anything to protect her. I cannot imagine the fear and pain of parents who have a very sick child, while living in the richest country on earth, and cannot afford to get that child the best medical care possible. So I give. I splurge a little more and I give for something that bring joy to others. And maybe I can help one child and his/her family.
Each month when I see the credit card charge for charities, the only question I ponder – Can/should I give more?
CONCLUSION – THERE IS A YUGEEEEE DIFFERENCE IN BEING FRUGAL AND CHEAP!
Years ago I accompanied my wife on a business trip to Florida, where we stayed in a very nice hotel, the Peabody. They actually use to periodically march the hotel’s pet ducks through the lobby. Kid you not. {I always wondered how they control the potential for “accidents”.} The hotel probably had to stop due to people taking too many duck selfies and scaring the ducks!
We had planned to stay in the Florida area for a few days after the meeting ended. So, while she (my wife not the ducks) was wrapping up her last meeting, I came to the DUMB idea to change our hotel and save some money. I think I just jumped in the rental car and drove and saw signs with prices. Yep I was that dumb! You know this did not end well-right? After the meeting, I proudly tell my wife I’m saving us money and have moved us to a less expensive hotel. This hotel was a DIVE and our feet stuck to the carpet. I am NOT kidding. This hotel saved us money, but lets just say I did not enjoy ANY amenities in that room for the duration! My lesson- there is a BIG difference between frugality and being DAMN CHEAP!
To my reader – Thank you for this question. I hope I answered it adequately, if not let me know. This was a topic I would not have known to write and had no idea where to start. I am glad I was asked the question, as it gave me an opportunity to ponder my own legacy.
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger, with a NC State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I had a desire for making a difference as a speaker and writer, to help others. I was blessed to be coached, and mentored by strong men and women in both my family and professional life. It is time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age. I am a successful investor in equities, real estate, etc. and happy to share my personal finance and investment lessons learned. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog, as recommendations for your personal situation. For individual finance advice please seek your own licensed CPA or financial advisors.
