How do you decide when to splurge?

[jennypenny]

For years we've talked about what we wanted to do for our 25th wedding anniversary. We like to travel, and had plans for a big trip with the family. We never really talked about costs or budgets, just what we wanted to do. Maybe because it seemed so far away? Or maybe because it's like talking about winning the lottery and we never really thought we'd make it to 25 years.

So ... here we are in year 25 and it's time to book the trip, and now I'm getting cold feet. It seems like so much money. I've been working out how to use points and miles and such, so we'd only pay for about 1/2 of the trip. Even with that, if I'm honest about it, the trip will still cost around $10K start to finish. Ouch. It's not that we don't have the money. I'm just starting to question the value of the trip. OTOH, it's our 25th anniversary. There's no way we'll get to a 50th, so this is it as far as 'jubilees' go for us.

How do you decide when it's ok to splurge? And on what?

[George the original one]

$10k is only $400 per year of marriage. A little over $1 per day. Seems like you've earned the splurge

[George the original one]

Less than $1 per day when you both contribute!

[Dragline]

Not sure I can help you much here. I offered to take DW on a big trip for our 20th, but we ended up just driving back to where we got married at the Jersey shore and hanging out for a few days sans children. We listened to Van Morrison, drank a lot of wine, walked around Cape May and Wildwood (in the daytime) and then took the ferry home, just like we did when we got married.

It turned out to be really special and nostalgic -- in the end, I was really glad we did that instead of a big trip.

I suppose that my only real advice is to ditch the kids somewhere for this event, and keep a very open schedule.

Or maybe spend some of the cash on a nice new firearm with a 25-round magazine. I went with an additional ring myself.

[Felix]

Not sure how to answer the general question, I usually go by feel.

But one thing I'm sure of is that you should definitely take that trip!

[tylerrr]

work odd jobs on the trip.....

joking....

[jacob]

If I have wanted something that I otherwise can't easily justify (by the principles) for two straight years, I have never regretted buying it.

[lilacorchid]

It's a hard choice. A few ways of looking at it:

Money is a tool: Is this a good use of the tool?

Money is a representation of time: If going on a vacation were a project to work on with the vacation being the final result, would you spend the amount of time you worked to get the 10k on working on the vacation?

Money can be horded: If you some how lost 10k (say it was stolen), would you be stressed as hell trying to recover from this loss?

And of course, because this is a partnership and a vacation together: What does the other half think? It's his 25th too.

[Ego]

I have always liked the YMOYL method of defining money as life-energy.

http://ymoyl.wordpress.com/about/life-e ... -and-love/

When we buy something with money we do so with the expectation that we will get more from the purchase than the life-energy-cost of earning the money. Do you expect to get more than the life-energy cost? Which factors will you consider when making the calculation? There are many factors, and the weight of their importance can change drastically over the course of a lifetime.

Another way to look at it.... If you were suddenly transformed into the ninety-year-old version of you, but you had the ability to give advice to the current you, what would you tell you?

Happy 25th!

[jacob]

Life-energy doesn't work so well when a portfolio is in a runaway mode.
It turns negative. You'll have money you never worked for.

[Ego]

Life-energy doesn't work so well when a portfolio is in a runaway mode.
It turns negative. You'll have money you never worked for.

You worked for the capital. With growth, the costs involved in earning each drachma decline.

[jacob]

That's another way of seeing it.

[Tyler9000]

If I have wanted something that I otherwise can't easily justify (by the principles) for two straight years, I have never regretted buying it.

+1. If you've thought about it for multiple years, it's no longer a splurge. It's a plan. $10k is a lot of money, but I'm confident you've thought about it enough to really make it count.

[jennypenny]

I should have explained that part of the reason it costs so much is because I'm insisting on taking the kids with us on the trip. If it was only us, I could do it for almost nothing. The trip is almost 3 weeks, which is another reason it's so expensive. I like the different ways to look at how to assess the expenditure. I'm going to think about each today. I got an extension until tomorrow for placing the deposit.

I was curious what everyone else has splurged on and whether they thought it was worth it afterward. It actually physically hurts when I sit here thinking about spending this kind of money on something for myself. Is that a bad sign? OTOH, the reason we have the money to spend is because I'm so particular about how we spend our money.

[Felix]

Life-energy doesn't work so well when a portfolio is in a runaway mode.
It turns negative. You'll have money you never worked for.

You worked for the capital. With growth, the costs involved in earning each drachma decline.

This is interesting. Say you won all your capital in the lottery or inherited it (by winning the birth lottery). What's the life energy in your money? It would be completely negative.

I never took the model there, I guess it's only fascinating theoretically. YMOYL only applies to working folk anyway.

[Felix]

@jenny: if it's only so expensive because you bring the whole family together, it seems that you are not really just splurging the money for yourself but spending it on a joint experience for your family.

[Ego]

It actually physically hurts when I sit here thinking about spending this kind of money on something for myself. Is that a bad sign?

It might be good to look closely at why you are feeling it physically. Do you feel other purchases or just this one? Does everyone else want to go? No need to answer here.

[Ego]

Life-energy doesn't work so well when a portfolio is in a runaway mode.
It turns negative. You'll have money you never worked for.

You worked for the capital. With growth, the costs involved in earning each drachma decline.

This is interesting. Say you won all your capital in the lottery or inherited it (by winning the birth lottery). What's the life energy in your money? It would be completely negative.

I never took the model there, I guess it's only fascinating theoretically. YMOYL only applies to working folk anyway.

Maybe that explains why inheritances and lottery winnings evaporate so quickly while earned income is more likely to be saved (for some). I place a higher value on what I have earned.

OTOH, I believe it is possible for loss-aversion to play a role in earned-wages (at least it does for me). I want to hold on tightly to what I earned.

[Chad]

I was curious what everyone else has splurged on and whether they thought it was worth it afterward.

A Jeep Wrangler. It's an absolutely atrocious ERE and world citizen vehicle, as it's expensive (they aren't cheap off-road beaters anymore) and gets terrible gas mileage. You really couldn't find a bigger waste of money...well, maybe a Tahoe type massive SUV/truck. It was a "want" I have had for a long time and interest rates were ridiculously low (1.5%), which allowed me to keep the money invested and use an almost free loan.

I do think it was worth it. The cost does still bother me a little, but it was a conscious decision I made over a couple years. I knew what I was giving up and getting.

I do tend to wait and research the hell out of any potential splurge. The time and research work generally tells me if it's of real value to me. For the Jeep it was about 3-4 years of waiting and researching, and I didn't feel any less interested after that time period and work. I usually don't wait that long. My wait time is probably more like 6-8 months, but that's usually for much much much less expensive items.

[Scott 2]

If I really want something, and the want is sustained over time, I buy it. For me, that's a simple as keeping a "to buy" list and seeing what keeps getting re-added. Often, a few weeks after recognizing the initial want, a way to derive the benefit without spending much will occur to me.

With something in the $10k range, I think 1-2 years is a decent cooling off period. You've been thinking about it for longer than that.

The other thing that is really important to me, is value. Yes you're talking about $10k for a trip, but you are also talking about 5 people over 3 weeks. $650/week/person seems like a reasonable cost for something like this, provided everyone will enjoy it.

I think the worst case scenario is you go and your family hates the trip. Maybe you're sitting there laughing at the idea, because they all love to travel so much. That's a good sign.

Another way to think about it - how long does it take you to increase net worth by $10k? Are you willing to trade that time working for the 3 week trip with your family? The answer might be very different if your monthly savings rate is $50 vs. $5000.

I hate to travel and am strongly biased against it. However, from what you've shared here, I'd guess taking the trip is the right choice.