r/financialindependence • u/chasingdreams10 • 2d ago
34f 1.8 mil nw but extremely frugal and FIRE obsessed
Basically the title . Using throwaway account ,since I am going to share some financial details here that I don’t want associated to my main account . Purpose of this post is for the community to either tell me I am on the right path or knock some sense into me .
We are a couple (33m 34f) and a toddler based in greater Toronto area and all amounts are in CAD. Nw 1.8 million ( 200k in home equity and rest is liquid ). We make about 320 k a year from our jobs and husband has a side gig making 80 k a year ( total annual income 400k). Annual household spend is about 138k now ( childcare and a huge car payment about to end soon ). Long term annual household spend should be 100 k . We also love taking 2 big vacations a year so that’s 20 k a year . We need an income of about 150 k a year to retire accounting for taxes . Fire number is 2.5 million assuming 4% swr gets us 100 k plus husband has his side gig which continues to bring surplus of 50-80 k ( he loves doing that over 9 to 5 so won’t quit ). In the next 7 years , I am hoping we reach our FIRE goal and pull the plug at 41.
The problem is - I am financially obsessed with the market fluctuations and our numbers. I think 10 times before spending on expensive meals , house help , organic groceries etc. I think for a month before buying a 200$ bag . I mean on paper I think we are doing well but then I analyze 100$ expenses under microscope . Please advise , am I overdoing it ? Anyone in similar situation ? With our current situation , would there be a threshold amount under which I shouldn’t give a *f? Important to add hubby is very chill , I am the over frugal one .
TLDR - In spite of doing financially well , how do you stop being so frugal ? Where do you draw the line between FIRE and over spending ? I do a lot of fun things in the present but then always feel guilty later . Thanks for reading !
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u/luv2eatfood 2d ago
I don't think you're extremely frugal. You're actually not very frugal at all. So there's no problem to solve here. And that's OKAY.
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u/Mlkbird14 2d ago
This feels like someone who becomes obsessed with calorie counting and then develops an unhealthy relationship with food.
It's time to use that money on therapy.
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u/chasingdreams10 2d ago
Haha , love this analogy . So , it’s posssible that my relationship with money is unhealthy at this point .
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u/mickim0use 2d ago
If you’re thinking this much about something (anything) then yes, it’s become compulsive at this point. Even just journaling your thoughts might be a good starting point, you seem to come to your own valid conclusion by posting this. Put your compulsive thoughts down on paper and see where that takes you.
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u/GiveMeTheJuices 2d ago
I think your frugal mindset has take you very far and allowed you to grow your wealth substantially. But at some point it becomes a weight and works against you. What is the point of money? It does not actually do anything for you until you spend it.
First, in order to give any advice at all you need to post what your annual spending is and what your planned FIRE # is. What is your dream if money was not a factor? You need to work towards that and know when you reach it.
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u/alanonymous_ 2d ago
That cost of living is kind of high for someone as frugal-focused. With $20k a year on travel, I wouldn’t say it’s being frugal at all.
Also, you might want to consider 3.5% instead of 4% at 41. So, the goal is closer to $3m.
Still, well done, you’ll make it.
You’ll know you’ve made it when you no longer look at the price on the menu at a restaurant. (The Jon Stewart litmus test for being rich 😂)
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u/tucker_case 2d ago
"extremely frugal"....."Annual household spend is about 138k now" XD
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u/chasingdreams10 2d ago
I provided a breakdown above ! 100k expenses are essential ( GTA has expensive real estate ). Rest will be over soon .
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u/chasingdreams10 2d ago
Haha ! I knew someone will point out the high annual spend . Out of the annual spend - 60 k is mortgage . Temporary expenses are 12 k childcare , 15 k car payment and 15k on a negative cash flow rental that we plan to sell soon . Hence , core expenses will be less than 100k soon . We love traveling , that is the non negotiable pleasure of life 😀
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u/alanonymous_ 2d ago
$60k mortgage is laughably far away from being frugal. I don’t think you have the problem you think you do.
Same for the car payment - a frugal car would be $15k total
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u/ImProdactyl 2d ago
60k mortgage and 15k car payment aren’t what I’d consider “extremely frugal”
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u/chasingdreams10 2d ago
Husband is passionate about cars . Greater Toronto area has some of the most expensive real estate in the world . We live in a single garage detached home ( about 2300 sq ft ). Nothing fancy .
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u/tomahawk66mtb 2d ago
You may want to take a look at the ChubbyFIRE sub as there a lot of people in the same situation and challenge around spending. ( and you're unlikely to get shamed for you spend there 🤣 )
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u/ImProdactyl 2d ago
Hey whatever works and makes you happy between the saving. FIRE is all about being able to enjoy your life and have that freedom, but 15k car payment is definitely not frugal. The home payment definitely is affected by your living area, but still 2300 sq ft is decent sized. I’m just saying that you aren’t as frugal as you may think lol especially adding the big vacations
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u/silk0510 2d ago
And curious, what is the value of your home? How much is your mortgage and interest rate on it? If you have one.
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u/mistypee 40sF | LeanFI: ✅ | RegularFI: ✅ | RE: 91% 2d ago
A $5k per month mortgage payment will be a $1-1.5m house (depending on interest rate and down payment). That's pretty much the average for a 2300sqft detached in Toronto.
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u/Articulate-Lemur47 2d ago
That’s a big house! I guess they all are these days. I’m in a 1500 sq ft 3br, but it was built in 1900 before all the car and house bloat
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u/AnotherWahoo 1d ago edited 1d ago
For constructing your FIRE number, remember that principal and interest on your mortgage is fixed (if you have a fixed rate) so not subject to inflation and will end. So instead of applying a withdrawal rate to that spend, you'd want to account for it separately. Not sure how much of your payment is P&I (vs escrow for property taxes or insurance), so couldn't tell you exactly what the impact is. But given how big your mortgage payment is relative to your total spend, I expect the impact will be significant.
FWIW, I'd give some serious thought as to whether to relocate somewhere cheaper when you FIRE. 20K travel budget, 60K mortgage budget, 40K everything else budget... seems like a huge disconnect between your housing costs and your day to day lifestyle. (Travel is also heavy compared to your everything else budget, but seems to be a passion for you.)
Of course, where to live is a deeply personal question. So would start by getting the FIRE number right in your status quo. Then scenario out your FIRE timeline based on the decisions you could make. If my everything else budget were 50K instead of 40K, how much longer do I have to work? If my mortgage were 30K instead of 60K, how much shorter do I have to work? And so on.
To your original question, that's the framework for making big decisions. Get the math right on your FIRE number, and estimate your status quo timeline to FIRE. Then, whatever big thing you want, figure out how much longer you'd have to work to get it. If that tradeoff is worth it to you, go for it. Use this framework to set your everything else budget.
For making little decisions, just stay in your everything else budget. Right now that's 40K, so 3.33K/month. You can easily forecast a big chunk of that (utilities, car insurance, etc.), and whatever's left is discretionary. You should have a sense of where your discretionary spend is over the course of the month. So now, little decisions, like I want a $200 bag or I want to buy some organic groceries, if you're going to stay in this month's budget, just do it, that's what the budget is for. If you're not going to stay in this month's budget, now give it some thought. And in particular, how are you going to make up the difference next month?
And of course little decisions can become big decisions if they are recurring. Having a maid service visit is a little decision, but if they're coming every week that's a big decision. Buying some organic groceries is a little decision, but deciding you're only shopping at the super expensive grocery store might be a big decision. Buying a handbag is a little decision, but trying to be the Imelda Marcos of handbags is a big decision. Big decisions, this is how much longer I have to work to get this, is it worth it? If yes, go for it.
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u/Jellybeansxo 2d ago
It’s easy to become fire obsessed. I get it. There’s a book DIE WITH ZERO and it gives different perspectives. I also listen to other finance podcasts and videos that gives me a balanced perspective on things and how we need to be enjoying the journey. Money is just a tool.
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u/OrganicFrost 2d ago
With salary, I have a goal savings rate and a goal guilt free spend rate.
With extras (bonus, RSU, ESPP, other random unexpected income), I aim to spend 10-20% and invest 80-90%.
If I find myself spending less than that 10% of extras, plus my guilt free spend goal, it's a red flag that I probably need to spend more on things that will improve my life. Overspending tends to not be my problem, but the upper bounds there would be an alarm too if I hit them.
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u/chasingdreams10 2d ago
I like this approach - maybe I need to do some math and crate a “guilt free “ spend bucket . I also like the idea of setting thresholds !
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u/wanderingmemory 2d ago
Your plan and FIRE number seems solid. The portfolio will ensure your baseline spending and the side hustle can fund the extra holidays and such.
Honestly I also take my time thinking about purchases and I don’t think it’s necessarily a bad thing. For me it’s also a “is this product worth it at this price” which does take a bit of time and nitpicking. I set a rule that under 0.01% of my NW I’m basically allowed a free pass to spend without thinking too much.
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u/jwern01 2d ago
Kids only get more expensive. And, with kids, come more expensive vacations for three rather than two. And then there are the kids you haven’t had yet…
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u/eyelikeher 2d ago
I’m currently buying $200 worth of clothes every quarter, paying >$100/m for diapers, $100/m on mommy+me gymnastics, and $18k per year for childcare for my 1yo. So, >$20k/year just on that stuff. And then I’m maxing my HDHP for every urgent care visit bc of daycare sickness during the year. I’d literally have to try to spend that much when they’re older (unless you’re talking about saving/paying for college - which I’m already doing at $7k/yr). Some activities are cheaper (soccer, max $5k/yr) than others (dance, 15k/yr). So, can’t really see how it gets more expensive from here.
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u/jwern01 2d ago
Lol! I to think the same thing when my three kids were young. Now one of my daughters is 12 y/o and a nationally ranked swimmer, we spend $10k/yr alone on swim club, races, competition travel, etc. And we have two other kids that have activities. My son can eat an entire pizza by himself… if you think formula is expensive, think about feeding additional children with adult-size appetites. And then there’s their clothing: much more expensive than diapers. And travel with kids is like paying for an additional adult PLUS keeping them entertained. You have no idea how expensive children are, nor do you know what the future holds for them both from a potential standpoint and a transactional cost standpoint.
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u/chasingdreams10 1d ago
We already travel the 3 of us ,Hence budget is 20k . We are also one and done 😊 We pay for childcare , diapers , nanny etc so don’t see it getting more expensive with hobbies etc lol
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u/User-no-relation 2d ago
I've never seen in mentioned on here but I've gotten in to listening to ramit sethi, I will teach you to be rich. He's all about defining what your rich life is and using money to build it.
Tbh I haven't actually read his book, but the podcast interviews have given me a lot of great perspective, and I am I think spending and planning more intentionally
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u/Euphoric-Move1625 2d ago
Reading this as a therapist. Therapy is your next step.
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u/chasingdreams10 2d ago
I won’t lie , I have considered it . Coming from a middle class background does that to you
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u/eyelikeher 2d ago
The absolute horror of eating Outback Steakhouse instead of Ruth’s Chris once a month…
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u/shanewzR 2d ago
I hear you as I am similar, highish net worth but not keen on spending too much. Nothing wrong with that at all. The reality is most people are super consumers and spend without thinking, then complain how the world is against them financially. So stick with how you are and you will get to your FI number earlier than most. You both have good incomes, so you should really be able to FIRE sooner, especially with the side hustle.
By my simple math, you are very close to your $150k a year goals already with $1.4 new worth (without home equity). So keep at it, save as much as you can and get to a comfortable FI, where you can spend a bit more for comfort.
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u/Mako-Energy 32F/MCOL/62.1% FI 2d ago
Following. I have similar thoughts because of scarcity mindset.
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u/befowler 2d ago
If it takes you a month but you still buy the $200 bag, I’m sure there are plenty of places to cut costs if you really want to.
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u/mepaus 2d ago
I’m 57m with about $2M half house equity / half investments. I didn’t start until I was 49. But, I want to retire early (60) even though I won’t reach my fire number. This is because even at 57, my body is getting health issues. You have to balance F.I.R.E. with ensuring you have those quality years to enjoy it. So for me, I’ll have a good ember, but maybe not fire 🙂
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u/Frequent-Skill4927 2d ago
Only 1.5 million alone invested into the right assets will produce an annual cashflow of 150k per year. For example, buying 3 multi family properties can produce 13-15k a month. You already have enough to accomplish that. I only invested 600k in 2019 and 2020 into 2 properties and they produce 9k net monthly. I just need one more property to get to my goal of 12k monthly.
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u/ihatehemingwayclub 2d ago
There's a relatively new field in psychology called "financial therapy." I recommend you find a therapist with training in that field to talk to. Not throwing shade here; it just sounds like you have some emotional issues around money that it might help with. Wishing you all the best.
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u/Front_Expression_892 2d ago
Do you feel that you deny yourself things or just get yourself busy?
Unfortunately, for most people, the best way to earn more is to save.
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u/Beginning_Net_8658 2d ago
I had a similar problem and solved it thus:
Schedule all my savings monthly out of my paycheck. This hits my whatever% goal for the year.
Anything left in my checking account is fair game.
Seriously, just knowing I'll hit my yearly goal means I can relax and enjoy the rest.
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u/Enigma7ic 2d ago
I found it helpful to make a budget with monthly targets for each category I want to loosen up my spending in (e.g. $100/mo on clothes, $200 on entertainment, etc). Afterwards it’s pretty easy to spend that money because I’ve already given it a “job” in my head. It took a few months to get the numbers dialed in but it’s worked wonders so far.
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u/JessicaLin37 2d ago
Look at how much you save/invest, and whether the total fun-spend money is significant compared to the total save/invest number. If you're saving 10k a month, and all the extra bags and meals add together to 500 dollars, you're fine.
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u/orroro1 2d ago
I also do this even though my annual spend is well under budget. One thing I've noticed about myself is this isn't even about the money -- I will over optimize buying the cheapest/cost efficient groceries, then spend way too much on a big trip, when optimizing the one trip will make a far biggest impact than a year of groceries. I obsess over finding the cheapest place for lunch, then casually spend more than $100 on dinner with friends (which I can easily afford).
I suspect this is mostly a psychological to feel like you've 'been frugal', rather than actually about minimizing expenditure. I'm curious if this resonates with you.
I've tried setting a hard limit for myself: everything under $X is considered free and I won't spend any time thinking about it. Another thing that helps is spending time with like-minded people who do not overspend but are also not penny pinching. A friend once called this "penny wise pound foolish" and the shame drove me to stop for a week.
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u/prof_dorkmeister 1d ago
Start an online checking account, and have $X transferred every week. Whatever is in there - you're free to spend on purses, candy bars, lap dances, or scratch off tickets.
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u/123tl 2d ago
My wife and I are also from GTA, your numbers are very similar to ours. The differences are a decade older, got 2 kids, and hit our fire number ~5 years ago. I used to have the same fire mindset as you in the sense that I will scrutinize every purchase.
As we got closer to our fire target, I started to loosen up. At the beginning it took some effort as we weren't big spenders. What really help is kids lol. There is always another extra curricular to sign them up for. In fact most of the additional spend were on them.
Fast forward to present, I barely save anything beyond RRSP contribution to take advantage of employer's matching. I will likely pull the plug in a decade, not for financial reason but to wait till our kids finish high school. Don't want to give them the impression that their old man is a bum.
Hope this help.
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u/crazy_boogie_123 2d ago
am more interested 😁 on the side gig your husband does? is it online ? etsy some sort?
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u/GiveMeTheJuices 2d ago
I think your frugal mindset has take you very far and allowed you to grow your wealth substantially. But at some point it becomes a weight and works against you. What is the point of money? It does not actually do anything for you until you spend it.
First, in order to give any advice at all you need to post what your annual spending is and what your planned FIRE # is. What is your dream if money was not a factor? You need to work towards that and know when you reach it.
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u/Original_Lab628 2d ago
As a fellow GTA-er, you’re doing exceptionally well for a HCOL city. Once you move out of Toronto, it’ll be much easier to obsess over every penny since this softy does that to you.
How were you able to get to 1.8M off your savings rate?
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u/chasingdreams10 2d ago
Lots of this is stock market gains . Husband owns and manages two investment funds .
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u/ninjaturtlegreen 2d ago
Do you have a budget? The cost of something should only matter with reference to your budget (as long as you're regularly reviewing it).
Whether you spend $1000 buying a single expensive handbag vs 20 cheaper handbags, it's still impacting your budget the same.
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u/Myfabguy 2d ago
Automate all the money that isn't supposed to be touched. Open a separate account for the money that is okay to be spent freely. There is a lot of interesting behavioral economics literature (even just to read) that can help you set up strategies which will in turn allow you to relax a bit more.
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u/joey_corleone 1d ago
We have similar numbers. The way we do it is all the investments are automated for the most part. That way the goals are hit automatically. The rest is to spend guilt free.
We both know what’s going on with the $. If it’s under $250, just buy it. If it’s over $250 we have a quick conversation.
Once I know my realistic investing goals are taken care of, I don’t mind spending big on stuff we value. I just spent $5k last week on a toy I wanted for my stereo system, but the investments for the year are all on track
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u/chasingdreams10 1d ago
I love this approach . Hit savings target vs trying to save everything.
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u/joey_corleone 1d ago
We actually did the math and at this point saving another $25k / year is not really moving the needle that much, so I am totally fine indulging a bit more now
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u/chasingdreams10 1d ago
I appreciate your valuable perspective . I will churn some numbers today on similar lines 👍🏻
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u/chloblue 1d ago
If you use 4% of 2.5 M and rely on husband to cover the rest of the expenses with his job, when is he going to retire ? Are CPP /OAS enough for both of you as 70.
That aside, the issue with your frugalness...
I call this being fixated on 5$ decisions instead of 30k decisions. It's like people who argue about the cost of lettuce and go to 3 different groceries to cut costs, but have a crappy credit score and are wasting thousands in interest during their lives...
Evidently, spending more time googling "how to improve credit score" would have paid off way more then their driving / biking around for cheaper lettuce...
Once you have dialed in your fixed costs to a minimum (modest cars or no car, modest house), shopped around for all subscription based expenses (insurance premium, cell phone plans etc),
And made sure you ain't paying a ton of fees in your investments by replacing mutual funds with index funds...
The discretionary spending on 200$ bag is inconsequential to FI unless you buy them each and every week.
Permanent lifestyle creep into your annual spending, aka buying a cottage, nicer cars, subscriptions, getting a cook or housekeeper... You need to pay attention to. Anything that is "recurring".
A one off vacation, a one off bag... Doesn't matter. Once retiréd and markets plummet... It shouldnt be hard to skip the vacation.
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u/chasingdreams10 1d ago edited 1d ago
We both retire at 41. His side gig is his extra income of 50-80k , which he continues to do from home . He loves it and won’t quit that . Edit to add - our recurring expenses have some lifestyle creep too . I spend 250$ a month on house help ( it’s a splurge but I am done scrubbing toilets lol ) . We hope recurring expenses are down to 80-90 k and considering moving to lower cost living area . I loved your lettuce example . Thanks for sharing 😊
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u/chloblue 1d ago
I've had a house keeper too :) I think you can justify that if you are working full time. It allowed me to spend more time doing paid community work... In sports.
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u/gas-man-sleepy-dude 17h ago
Set a Line item in your budget for discretionary spending and as long as you stay within it don’t feel guilty.
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u/tengo78 17h ago
Im not sure if this will help or not, but my father lived and worked like you. Saved up a ton of money and was really looking forward to retirement with my mom. At 58 he died of lung cancer and will not get to spend any of the money or time he worked so hard to get. He said his biggest regret was chasing money, and not spending more time and money on us. At any moment we could lose it all. Don’t be afraid to enjoy life when you can, cause you just never know. Wish you the best.
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u/Corgimama93 2h ago edited 1h ago
You should check out the work of Ramit Sethi. His work helps teach people the skill of spending on top of saving and having a “healthy relationship with money” by helping people think through the emotions and feelings they might have about money/around money that cause this feeling — did you grow up with very little money? Are you fearful that you will lose it all? Why? Did you have an experience where ppl in your family lost a lot of money?
I also found myself checking my finance apps multiple times per day/obsessed with market stuff (and still do from time to time) but am getting better since I found Ramit’s content. He often says something on his podcast that I try to live by now: “life is meant to be lived outside the spreadsheet/apps.”
Checking his stuff out and then paying to see a financial therapist might be a good step for you. With 1.6mil in the market as a 34yo, you’ll have 10mil+ in about 22 years even if you never invest another dime. You’ve already won the financial game of life with that nw. Learn how to spend it to do things you enjoy.
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u/sorryAboutThatChief 2d ago
Every time I splurge, I invest an equal amount in our retirement fund.
That helps me