Most of us aren’t like comedian Steven Wright. We aren’t nearly as witty or rich as he is. He’s different than the rest of us in one other way. He knows when he will die – his birth certificate has an expiration date on it. (See? I told you he was witty.)
No one knows when they are going to go. Last month, I talked with a 42-year-old personal trainer about setting up an appointment to get on his program. Less than a week later, I was at his funeral.
The FIRE (financial independence/retire early) space seems to be realizing this. I wonder if it’s because some bloggers I follow aren’t 30 years old anymore. They are in the 40-50 age range now. Carl from 1500 Days asks What if you run out of life?. Tawcan has a follow-up article with his thoughts.
The universe is screaming at me to write about this topic.
Running Out of Life
On some level, we are all running out of life. When we are young, we presume to have a ton of life left – and that’s generally true. When we are young, we don’t have much money – unless you grew up like Paris Hilton. As we get older, we generally acquire more money as we run out of life. At some point, you may find that you have more money than life.
It’s been extremely difficult to admit that we may have more money than life. For most of our lives, we’ve had around 87-90% of our net worth in real estate equity or retirement plans. We also always had less than 4% of our money in liquid cash. So when we had a million dollars of net worth, we could only access less than $40,000. That may seem like a lot of money, but it’s spread in many accounts – some for this website and some for our real estate company. We always had enough to move around a few thousand dollars when needed.
Our net worth was telling us we were rich, while our bank accounts were telling us the opposite. Last year we sold a rental property, and it’s starting to switch. Our retirement/equity is down to 83% of our net worth. Our liquid cash is up to 11% of our net worth.* We have more money that we can freely spend now.
However, things have changed considerably in the last couple of weeks. My wife got a huge promotion and is now no longer considering retiring any year now. The promotion means a lot more money and, oddly, a lot less work. I thought this meant she’d work three more years to maximize her pension. This past weekend she surprised me by saying she wants to work six more years to reach the mandatory military retirement service of 30 years.
I’m still trying to process this. It’s her career, and it’s great that she wants to continue. I’m kind of jealous that she has a solid direction she wants to go in. For all I know, I might be training elephants six years from now.
As great as all that is, it is the opposite of the direction of where I thought we were headed. She’s going to be earning even more money. It will require her to spend more of her life in meetings. I hope she enjoys it as much as she says. The good news is that she’s not tied to any decision. It’s only been a couple of weeks, so if the honeymoon doesn’t last, it’ll be easy for her to choose to retire.
Learning How To Spend
As for me, I’m left thinking about something 1500 Days wrote, “Spending money to maximize happiness isn’t easy.” I’m the worst when it comes to spending. That’s why it is terrible to shop for me for Christmas, birthdays, and, most recently, Father’s Day.
My top gift, something I asked for, was this Coway Air Purifier (affiliate link). With the air quality being a problem in New England due to the wildfires recently, it was at the front of my mind. To borrow from Marie Kondo, it doesn’t exactly “spark joy”. However, investing in health is a positive. If we have more money than life, why not spend a little money on having more life?
When I read about other people spending money to maximize happiness, it is often about spending money on an experience with friends and loved ones. Travel is a typical example. I’ve found that spending that time requires syncing up, which can be difficult. Kids have only specific school vacations – though we are getting more comfortable stretching them. My wife earns more vacation than most people, but one long European trip can eat up most of it. I haven’t been able to sync up with friends for years – they have their own family schedules.
Another way we can try to spend our money is to increase our daily happiness at home. We had our upstairs painted and re-carpeted in January. The spark of joy had worn off in a couple of months. It’s necessary to maintain the house, so it was money we needed to spend. We finished our basement a couple of years ago. It’s been great when we use it, which is a few times a week for about half the year. The other half of the year it is too cold. We could probably upgrade that.
This is a long way of saying that I agree with Carl of 1500 Days. It isn’t exactly clear how to spend money to maximize money. Most of what I might spend money on creates additional tasks such as planning the vacation or hiring a contractor. I even thought about whether it would be worthwhile to hire an assistant (it would be my wife hiring one), but we decided that it might be more work to train that person to help.
It may take a little time, but I’m sure we’ll find some things to spend money on. If you’ve been following the blog, we usually have a few extravagances each month. I can always go back and cycle through those pictures to bring back memories of how we are doing fine, whether we choose to spend a little money or a lot of money.
* I’m counting money in our well-diversified brokerage account as liquid cash even though it isn’t. In this case, I’m defining “liquid” as money we can get if we need it. I don’t consider our real estate or retirement accounts as money we have access to. We can always get HELOCs or take a penalty on a distribution, but that’s a doomsday scenario that is well guarded by the layers of actual cash, brokerage investing, multiple streams income, wife’s pension, etc.