I originally wrote this post in 2014. We were doing well financially then, but we are much more comfortable now. Did I change over the last 8 years? Am I still frugal and what do I splurge on these days? Today, I’ll give you an update.
All right, you probably know that I’m a pretty cheap guy. Normally, I prefer the cheap or free option rather than expensive/luxurious ones. Unsurprisingly, more wealth didn’t change me at all. I’m still frugal and don’t splurge on many items. We optimized our personal finance over the years and it enables us to keep investing even in challenging times. Let’s look at our Big 3 expenses for example.
Housing – We live in a duplex and rent out one unit to generate passive income. As a result, our monthly housing expense is much lower than average for our area.
Transportation – Our car is as old as our son and we hope it’ll last until he goes off to college. We drive less than 5,000 miles per year so we don’t have to pay much for gasoline either. Our transportation cost is minuscule compares to the average household.
Food – This one is the anomaly. Our food expense is about 20% higher than the average household in our state. That includes groceries and eating out. We cook most of our meals and eat out a few times per month. It is somewhat surprising to see that our monthly food expense is higher than average.
Dave @ Accidental FIRE put together some great maps to show the median cost of the Big 3 expenses in each state. Check it out if you haven’t seen his post yet.
Anyway, I am still frugal and don’t like to spend a lot of money. I’d rather invest, but there are a few things I don’t mind splurging on. Here are the 5 things I don’t skimp on.
1. Eye Glasses
I put on my glasses when I wake up and take them off when I go to bed. A cheap pair of glasses never worked for me. I tried several from the internet. The cheap ones don’t fit right, feel cheap, and/or don’t look good. In this instance, I don’t mind paying for designer frames because I’ll wear them every day for about 5 years. Even if the glasses cost $600, that’s only about 33 cents per day. My prescription is quite bad so I go for the lightest lenses (high index) available. Anti-reflection coating is also a must for me. All these add up, but I don’t mind paying for a high-quality product. I wear glasses all the time and that’s what people see first.
Also, we love our optometrist. She runs a local business and she needs our support. My eyes have issues and they need specialized care. The internet can’t provide that.
It’s been a tough few years for the travel and tourism industry. I still managed to visit my parents every year, but international travel is a lot more difficult than in the good old days. There are so many rules and restrictions now. Fortunately, things are improving. Many countries are opening up and this summer will be very busy for the tourism industry.
When RB40Jr was born, we put off international travel for about 4 years. We didn’t want to travel until our kid is a little bit older so he could enjoy it too. Vacationing in the US was good too. Once he was 4 we were ready to travel internationally again. We’ve been to Thailand, Hong Kong, Japan, Iceland, Mexico, and Costa Rica. It’s great to show him that the world isn’t like the US.
Travel isn’t cheap. This year will be especially expensive due to the energy inflation, but we love traveling. It’s one of few things we don’t mind splurging on. Although, travel can be even cheaper than staying home. I spent just $2,000 on my 3 months long trip to Thailand.
3. School district
This is very important when you have children. Like all parents, we want to live in a good school district. RB40Jr’s elementary school is awesome. It’s a public school, but all the teachers and staffs are so great. Our son has a hearing disability and the support has been phenomenal. We really love this school. Next year, he’ll move to a junior high school. I hope it works as well.
We could have purchased a home in a cheaper area with mediocre schools, but we decided to pay more to be in a better school district. We are also saving up in the 529 college savings account for our son. Education is very important to us.
4. Smoke detector
In the process of buying and selling our property investments, I found out that smoke detectors last about 10 years. Anything older needs to be replaced. That’s a good rule because you never know if an old smoke detector is still functioning properly. Previously, I just change the batteries whenever the smoke detectors chirp, but now I’ll replace them every 10 years or so. Also, your smoke detectors are probably the cheapest model available. Better smoke detectors have dual sensors to detect different kinds of fire, but they are a bit more expensive.
*Update – The last time I shopped for a smoke detector, the batteries are not replaceable anymore. You just replace the whole thing when it runs out of juice. I feel this is much safer.
NA – Child car seat
As a cheap guy, I love hand-me-downs. However, a child car seat is one item that I won’t take or hand down to my friends and family. Most child safety seat is good for around 5 years. The materials degrade as the seat age and you shouldn’t use the car seat past the expiration date. Another reason to buy a new seat is that safety standards improve all the time. A new seat is not cheap, but it’s probably safer than an older one. You never know if an old seat was in a car crash or if it has ever been recalled.
*Update – This is no longer a concern for us. Our son doesn’t need a car seat anymore. Yay!
And my new #5 is food! We enjoy eating delicious food and we don’t mind spending money on it. Fortunately, I also enjoy cooking so our food expense is still reasonable. I cook on the weekdays and Mrs. RB40 cooks on the weekends. That’s the biggest secret to keeping your food expense reasonable – cook at home. We enjoy going out to eat as well, but we only go a few times per month. It’s just easier and more comfortable to eat at home.
What about you? What are some of the things that you don’t mind splurging on?
*Sign up for a free account at Personal Capital to help manage your investments. I log in almost every day to check on my accounts and cash flow. It’s a great site for DIY investors.
Source: Retire By 40