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Revenge Spend Time! Spending Money To Get Back At Life

Updated: 01/03/2023 by Financial Samurai 63 Comments

If there is one time to have money and spend money, it’s during a pandemic. Money should help make difficult times more bearable. If you can’t afford to spend extra money during a pandemic, then you can always revenge spend once the pandemic is over.

Revenge spending is a way to make up for tougher times since the lockdowns began in early 2020. Further, revenge spending may help you feel better about politicians locking you and your business down while they still get paid with benefits.

However, perhaps not everybody should revenge spend. Let’s go through some criteria that should probably be met before splurging. Perhaps meeting at least three of the criteria before revenge spending is the responsible thing to do.

Reasons To Revenge Spend

  • Didn’t leave your house to do anything fun for more than six months
  • Didn’t visit friends or relatives for more than six months
  • Held onto your investments through the worst of the crisis
  • Added more to your investments during the worst of the crisis
  • Juggled work and parental duties full-time for more than 10 months
  • Held onto your job for the duration of the pandemic
  • Kept maxing out your 401(k) and saving 20%+ of your after-tax income
  • Started a new project or side hustle that is making money
  • Finally launched your own website that cannot be shut down by the government during a pandemic
  • Improved relationships with your immediate family members
  • Worked as a frontline worker during the entire pandemic
  • Showed empathy and kindness to others with your time and money
  • Didn’t catch COVID or give anyone COVID
  • You have a multi-bagger investment gain
  • You smartly took advantage of record-low mortgage rates and refinanced.

Reasons Not To Revenge Spend

  • Got COVID-19 and spread the virus to others
  • Refused to wear a mask and respect other people in public places
  • Didn’t take up any hobbies or start any side hustles
  • Stopped working on your website or side hustle during the pandemic
  • Decided to quit your job instead of negotiate a severance when negotiating a severance has never been easier
  • Made no improvements in any areas of your life
  • Gained more than 5% of your body weight

Personally, I’d rather revenge spend after making more money or doing something good. This way, spending money feels more rewarding.

However, for those of you who are pissed off that your personal liberties were taken away for so long, revenge spending is one way to make yourself feel better as well.

Why You Should Revenge Spend More Money

The pandemic reminded us about three things:

1) Tomorrow is not guaranteed. We better make the most out of each day for today could be our last. The YOLO Economy is going to be amazing as people live it up more.

2) To make money, it’s better to be an asset-owner than a laborer. With risk assets surging to all-time highs and service economy jobs still way down, there has never been a more clear reason to be an investor.

3) Consumption smoothing is difficult. For the investment-minded individual (that’s you), during times of uncertainty, you tend to hoard money and not spend. You then tend to keep aggressively saving long after the worst has passed.

During good times, you then tell yourself to save for the impending bad times, which is still fresh in your memory. The cycle repeats until you are left with more money than you need. This is great if you are following the Legacy retirement philosophy. However, there comes a point where you are saving way too much.

Of course, if you are struggling to make ends meet, please do not revenge spend. But for those of you who’ve been able to maintain or grow your net worth during the pandemic, a session of revenge spending is encouraged. Otherwise, there really is no point working so hard and saving so much.

Hoarding Massive Wealth Is Stupid

Imagine being worth $100 million. Would you bother continuing to work at a job you hate? Heck no! Yet, I know guys who do just that because they want to be billionaires. They think they won’t be happy until they achieve such a milestone. Nuts!

Because of their inability to consumption smooth, upon death, they will likely have to pay at least $40 million in estate taxes to the federal government.

Sure, they could set up a GRAT and other things to try and reduce their estate’s tax liability. However, at their net worth trajectory, paying a lot of estate taxes is an inevitability.

It would be much better if they spent the money or gave it away while they lived. The same goes for all of us.

Personally, I plan to revenge spend in 2023 as part of my goals. After writing Buy This, Not That, a Wall Street Journal bestseller, being a stay-at-home dad to two kids, and working on Financial Samurai, I need a break!

As a 46-year-old this year, I am in my first year of decumulation mode. I do not plan to die with a lot of money because I don’t want to have wasted my time and energy.

Spend To Conquer A Scarcity Mindset

Revenge spending is an exercise to help break the scarcity mindset. One of the reasons why we save during bad times and good times is because we consistently fear bad times will come again.

I have been diligently saving 50% – 75% of my after-tax income since 2000 because I saw so many people get let go during the 2000 dotcom collapse. Then came the 9/11 terrorist attack. Then the 2008-2009 financial crisis really knocked us out for several years. And now, of course, it’s the global pandemic.

Shoot. I don’t even have a job and I’m still worried about a job loss!

As a father, my mind is always wondering: What else bad is going to happen next?!

Unexpected bad things can and will happen. As a result, I bet there will be a whole new generation of money hoarders for years to come.

The longer you live, the more good things will happen to you. Unfortunately, the longer you live, the more bad things will happen to you too. We tend to remember the bad events more than the good events.

Don’t let the global pandemic permanently lower your standard of living for the rest of your life. Course correct through revenge spending.

If we can’t spend money during bad times to make our lives better and we can’t spend money once the bad times are over, then when can we ever spend money?

Revenge spending helps break the scarcity mindset cycle.

Determining How Much To Revenge Spend

Let’s say you’re used to being frugal for years. Instead of going on a multi-year-long revenge spending binge where you often find yourself passed out in a luxury suite in Vegas, start small and revenge spend your way up.

Starting small can include revenge spending for just a week or only during holiday sales. Starting small can also include revenge spending on lower-ticket items first. I suggest you do both.

The idea is to slowly cure your frugality disease or money guilt by changing your habits one little step at a time.

I’ve suggested a good spending ratio of 2:1. In other words, spend $2 on something beneficial, like an investment for every $1 you spend on a splurge.

Responsible Methods To Revenge Spend

Another way to revenge spend is to follow my 10X Investment Consumption Rule. The rule states that if you want the latest $1,000 iPhone, then you best make at least a $10,000 return on an investment to pay for that unnecessary item.

However, the 10X Investment Consumption rule is also born out of a scarcity mindset. It often takes a very long time to earn 10X more than the cost of an item you want to buy.

Perhaps the most responsible way to revenge spend is to take 10% of your annual investment returns and blow it on whatever you want. This way, you’ve still got 90% of your investments hopefully working for you. You’re also not paying a lot of taxes and you’re rebalancing your portfolio.

If you tether consumption to investment returns you will never go broke. You will also likely eradicate any money guilt you have for spending money.



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Fun Frugal Toys You Can Make At Home For Kids Of All Ages

Updated: 01/01/2021 by Samurai Sydney 13 Comments

When I was growing up, our house was always pretty neat because I hardly had any toys. For example, I had no lego blocks for my parents to accidentally step on. My parents would only get me a present once a year. And that something was usually an action figure, not something expensive like a Gameboy. Going over to a friend’s house to play Nintendo was a treat.

Being frugal is in my blood. Until this day, I still wear track pants and shirts with obvious holes. Even when my tennis and softball buddies make fun of me for looking so raggedy, I relish their ridicule before I crush them. Being reminded about my upbringing makes me better appreciate what I have today.

With many parents looking to save money during this difficult period, I want to share some fun frugal toys my wife came up with for toddlers and kids with imagination. Take it away Sydney!



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How Rich Must You Be To Dine At French Laundry Like Gavin Newsom?

Updated: 08/24/2022 by Financial Samurai 61 Comments

Since 2007, the Michelin Guide has awarded The French Laundry their highest rating of three stars. Unless you’re really rich or a politician, you will likely have to wait months to get a reservation at this Yountville, California restaurant in Napa Valley.

Deca-millionaire California Governor Gavin Newsom and his wife were spotted having an opulent dinner with California Medical Association officials in mid-November. The 12 of them were all sitting in close quarters indoors without masks, which is against what Newsom has been encouraging Californians to do.

How Rich Must You Be To Dine At French Laundry Like Gavin Newsom?
Source: Fox 11, Gavin Newsom with CMA officials

As a Financial Samurai, you know the rules are different for politicians and the rest of us. There are folks out there who learn how to befriend more politicians so they can do what they want. Therefore, none of us should be surprised or angry at the hypocrisy. After all, it is the people who give politicians power by voting.

Instead of getting upset, think about the bright side.

Perhaps Newsom and his rich and powerful friends know something we don’t? Maybe COVID-19 isn’t as deadly as they are making it out to be. Or maybe they secretly got vaccinated already since that’s what politicians tend to do, take care of themselves first.

If these things weren’t true, Gavin and his wife wouldn’t have risked dining with the glass doors closed with multiple households, especially since they still have young children. Politicians also wouldn’t sing the virtues of a public school education while sending their kids to private school.

But enough about Gavin’s actions. Let’s talk about the cost of The French Laundry and how rich one must be to dine at similar types of restaurants!



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Cash Management Is Really All About Stress Management

Updated: 12/02/2022 by Financial Samurai 73 Comments

Cash management is important during bad times, but also during good times. Give the increasing volatility in the stock market, cash management is even more important to manage stress.

At any given time, every investor must always decide three things:

1) How to invest their new cash flow

2) How to invest their existing cash

3) How to reposition their existing investments if at all

As long as enough money is coming in to cover your expenses, life is fairly good. As our cash hoard grows, there’s also less financial stress because you can more easily cover unanticipated emergencies like a furlough.



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Money Scams During COVID-19: Beware Of Desperate Measures

Published: 09/05/2020 by Financial Samurai 27 Comments

Desperate times often lead to desperate measures. I’ve noticed several money scams during COVID-19 we should all be aware of. If you know of more money scams, please share them in the comments section below.

It makes me so mad that there are scammers out there. I’ve been scammed before, and it felt terrible. But at least when I was scammed I was younger and it wasn’t for a lot of money. After I was scammed, I became much more vigilant.



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The Average Net Worth By Age For The Upper Middle Class

Updated: 11/15/2022 by Financial Samurai 164 Comments

This post will look in depth at the average net worth by age for the upper middle class. The upper middle class, aka the mass affluent, is loosely defined as individuals with a net worth or investable assets between $500,000 to $2 million.

The upper middle class is also sometimes referred to as the aspirational class or HENRYs. HENRY stands for High Earners Not Rich Yet.

Some also define upper middle class as those who are college educated with incomes in the top 15%. A top 15% income is roughly $100,000 or greater for households or $65,000 or greater for individuals.

The upper middle class is an aspirational class that many aspire to achieve. With enough hard work, determination, and a long enough life, many of us can achieve upper middle class status. To folks, having status is even more important than money.

The upper middle class didn’t inherit their money. They mostly earned it through hard work. On the other hand, getting rich with a net worth of above $10 million often takes a tremendous amount of luck.

The Middle Class And Upper Middle Class Are Different

The middle class is different from the upper middle class. The middle class is defined as those earning between 67% and 200% of the U.S. median household income. The Pew Research Center defines middle-class households as those .1 That’s between $42,330 and $126,358, using the U.S. Census Bureau’s 2020 median income of all households.

We can also define middle class in terms of net worth. According to the U.S. Census data, the average net worth for U.S. households in 2022 is about $300,000. The median net worth is about $100,000. In other words, wealth is concentrated at the top.

We all aspire to be upper middle class or rich. However, statistically, it’s not possible. Therefore, it’s worth discovering other ways we can feel rich without actually being rich.



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The New Rule For Engagement Ring Buying

Updated: 11/03/2022 by Financial Samurai 264 Comments

To all the ladies in the house, you’re in for a real treat! To all the fellas thinking about proposing, maybe not! It all depends on how materialistic you are in the first place. Even if you are already married ladies, point your hubby to this article about the new rule for engagement ring buying. If you do, you might just get a ring upgrade!

So what’s the new rule for engagement ring buying you ask?

Well before we get into the most obvious new engagement buying rule all of society should follow, let’s discuss some of the current ridiculous engagement ring rules that must be thrown out the window!



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How To Better Maintain And Grow Your Multiple Income Streams

Updated: 08/23/2021 by Financial Samurai 54 Comments

Anybody who is currently trying to build multiple income streams knows that it’s hard work to maintain them all. Whether the reason is due to a low interest rate environment, mental fatigue, or a tremendous amount of extra hustle during undesirable hours, when it comes to creating your own safety net, patience is a virtue. This post looks to help you grow and better maintain your multiple income streams.

One thing I’ve realized over the past 25 years of trying to build wealth is that if you can give your income a purpose, then you tremendously raise your chances of holding on and growing that particular income stream.

For example, at age 25, I wanted to quit finance and become a mango farmer / beach bum in Hawaii. I was sick of work after only three years. 

However, at age 26, I bought a condominium and because of the mortgage, making money suddenly became more meaningful. For the next 10 years, I focused full effort on maximizing wealth so I could ironically have the option to be a beach bum!



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Opportunity Cost Is A Spender’s Greatest Enemy: My Tesla Story

Updated: 03/09/2022 by Financial Samurai 24 Comments

Opportunity cost is a spender’s greatest enemy. Given America has a spending problem, our country will constantly be in grave danger without adopting better financial habits.

Back in 2018, I decided to join a Meetup softball league in San Francisco. I was one year into being a stay at home father and I needed to get out of the house more. Tennis had always been my sport, but I thought it would be nice to mix things up.

The softball league turned out to be a great outlet. I met people from various parts of the Bay Area from different socioeconomic backgrounds. The person I developed the best relationship with was with the organizer named Bob.

Bob is a preschool teacher who helps manage some of his parents’ properties. As a property fanatic myself we talked about various investment opportunities.

Of course, I shared my enthusiasm for ocean view properties in San Francisco. Then I mentioned my heartland of America investment thesis. Who knew that today’s global pandemic would accelerate the demographic migration towards lower-cost areas of the country.



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The Best Budgeting System: Go Broke to Win Big!

Updated: 02/07/2022 by Financial Samurai 25 Comments

On July 15, 2009, I introduced the Go Broke To Win Big budgeting system to help readers better manage their money. Today, having a strong budgeting system is more important than ever. There is so much uncertainty in the world, having a financial plan is supremely important!

The Go Broke To Win Big budgeting system enabled me to leave the rat race in 2012. It also enabled my wife and I to remain disciplined financially, despite a raging bull market that ensued.

Now that economic uncertainty has returned, the budgeting system has provided us much-needed calm. Perhaps this budgeting system will help you boost your finances over the years as well.



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