Early Retirement Extreme Forums

Once one has reached ERE/FI, one must grapple with depreciation.

Many will think "automobile", but that is not what I am posting about.

I am thinking of one's personal infrastructure. You are retired, living on passive income, and you have set up your living quarters and/or possessions. You are ready to rock and roll from now on. However, you notice that your "set up" is degrading as time goes by, and your once cheery little world has begun to depreciate from what you once saw it as.

The consumer will view their kitchen, seeing it worn and stained, and call in a contractor for a new $24,000 remodel. This is why the consumer will not ever retire. If I put my 15 year old very clean and well maintained and operational kitchen up against the new 24K one, I will be equal with the money spender on the remodel in technicality.

The secret is that I must maintain my present infrastructure to last.

Another way to look at my above post is this:
Yes, style and bling are part of the Joneses desire.

But in reality, aren't the Joneses spending the $24,000 to keep up with me, due to their laziness in lack of maintenance on what they already had? Quite possibly the Joneses could have done a deep cleaning, paint, window treatment, freshening, etc, and saved most of the 24K.

I agree with the idea, and as a homeowner, I'm really learning that things fall apart. A hundred year old house isn't still standing because it was neglected. In order to maintain your infrastructure, whether house or bike or shoes, you'll need to invest effort into it. Either way it'll need your time, whether in a direct form as you take on DIY projects, or indirectly as you work to pay contractors to do it for you.

I'm learning it from my employer. I work on a large college campus and there is pretty much always construction going on somewhere. Some of it's stupid--for a while the student union was getting renovated every single summer. Some of it is for changing needs--more people started majoring in computer science in the 1980s and eventually a new building was added for them. Some of it is for changing priorities--we had a bathroom renovated with low-flush toilets and foaming soap. And some of it is for things breaking down--we had a science building with gas lines that were breaking.
I've heard it estimated that you should budget 1% - 2% of the value of your house each year for these sorts of costs. I'm guessing 1% might be good enough for maintenance, but 2% if you also want changes.
(The value of my house has almost tripled over the past 13 years, and I've only been adding regular inflation to my savings figure, not keeping up with this estimate.)

Degradation is an important cost to incorporate if you own anything that needs maintenance (ie a house).
My cost-of-living spreadsheet lists pretty much everything I own and identifies replacement cost and timeframe.
Yup. Everything. From major repairs to the roof on the house every 40 years at £20k in today's money (add £40 per month to living costs) down to socks at £2 a pair replace every two years (8p per month per pair).
No idea how accurate my estimates are but it makes me happier to know I've allowed for these things.