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
- 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.
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.
Revenge Spending Ideas
With the S&P 500, NASDAQ, real estate, and other assets near record-highs, you would be remiss not to do a little revenge spending. It feels great to take profits and buy something you can actually enjoy!
Rising interest rates may derail the rally in the short-term. Therefore, you might as well utilize some of your profits on a better life.
1) A quality mattress ($1,000 – $5,000)
We sleep on our mattresses 6 – 8 hours a day on average. If you want to be productive while you’re awake, a good mattress should help facilitate a good night’s sleep. Mattresses should be changed about once every 10 years for optimal performance and hygiene.
If you have allergies or don’t like bed bugs, changing your mattress every 10 years should help, along with an allergen cover. We bought Four Seasons Essentials mattress encasements for all of our mattresses to help extend their life and reduce allergens.
2) A humidifier ($100 – $500)
The air gets dry during the winter. As a result, your throat and nasal passages can also dry out. Get a high-tech humidifier to help regulate the humidity in your room to allow you to breathe better.
Aprilaire makes a fancy whole home automatic humidifier that costs about $250 full price. It pulls heated air from your furnace directly through the humidifier and can cover up to 4,200 square feet.
Or if you want a simpler, way more budget-friendly option, the TaoTronics Cool Mist 4L Ultrasonic Humidifier is a popular choice.
3) A Google Nest thermostat ($200 – $300)
A Google Nest thermostat is great for controlling the temperature of a room, floor, or entire house from an app. The thermostat will learn about your temperature preferences throughout the day and automatically adjust itself accordingly.
You can also easily program temperatures throughout the day and week with your phone. The 3rd Gen Nest Thermostat comes in a bunch of colors now and works with 95% of 24-Volt heating and cooling systems.
If you have a large house on multiple floors, a Nest thermostat is particularly helpful because you won’t have to get up to manually adjust the temperature any longer.
4) A fancy vacuum cleaner ($200 – $800)
After we got the Dyson Animal Cordless Vacuum, I began to love vacuuming the house every week. Not only is the Animal powerful, it’s cordless, saves your back, and it’s very gratifying to see all the dust and debris collect in the see-through canister. Those old, loud, and heavy vacuum cleaners are so passé! I loved mine so much that I bought my parents one too.
If you want to motivate your lazy spouse to do some housework, buying fun tools like a vacuum cleaner with a see-through container may just do the trick.
5) A Coway air purifier ($300 – $1,500)
Due to COVID-19, great interior air ventilation is more important than ever before. Not only should every classroom have a high-quality HEPA air purifier, so should every home.
The air quality in your home can sometimes be worse than the air quality outside. Why not purify your air of excessive bacteria, dust, and other impurities, especially if you work from home, have allergies, have asthma, and/or have little ones?
Many west coast residents also go through weeks of intense forest fires every year as well. The time to buy an air purifier is before the forest fires ignite once again.
I bought three Coway Airmega line of Smart Air Purifiers which automatically adjusts fan speed based on the amount of pollutants in the air in real-time. They come in a range of sizes with or without wifi/app functionality too. I also bought a smaller air purifier for my daughter’s room.
Oh, and one thing you should remember doing is updating your homeowners insurance policy. Home values have increased and you might be in a natural disaster area (fires, etc).
6) A hot tub ($5,000 – $25,000).
The best revenge spend I’ve made over the past five years was buying an outdoor hot tub. I bought a Sundance Altamar hot tub for about $13,000 after tax + $2,000 for electrical work.
Once the lockdowns began in March 2020, I went from using my hot tub 2X a week to regularly 3-4X a week. Not only did my hot tub provide a nice sanctuary for me to listen to podcasts and think of new post ideas, it was also a fun place to take my son. With our son out of school, it was great to have a water activity to mix up the day.
The hot tub also provided reprieve for my wife. I would take my son to the hot tub for about an hour (lowered the temp to 98 degrees) and then give him a shower after.
Giving him a shower saved about 15 minutes as part of our son’s nighttime routine. Being out of the house for 1-2 hours also enabled my wife to rest more or spend more quality 1X1 time with our daughter.
Having a hot tub is absolutely my favorite must-have item during a lockdown. Being outside is already calm-inducing. If you do a lot of physical activity, having warm jets massage your back and feet is heaven on earth.
7) A fine watch or jewelry ($5,000 – $30,000)
Nobody needs a fine watch just like nobody needs jewelry. However, since we are revenge spending, a fine watch or jewelry are definitely items on the list.
Personally, I like buying limited-production stainless steel watches like the stainless steel Rolex Daytona. You can’t buy one for list price unless you’re on the dealer’s special list. It’s fun to buy watches that look good, has a purpose, and can potentially increase in value.
For more info on buying and selling watches, you can read about my side hustle as a watch dealer.
Unfortunately, I’m not wise about fine jewelry. The most expensive jewelry I ever purchased was my wife’s engagement ring after some extensive research on cut, clarity, carat, color, price, and branding.
8) A safer car ($30,000 – $120,000)
One of the leading causes of death in America is car accidents. According to the National Safety Council, there were over 40,000 car accident deaths in America in 2019.
The main causes of death are drunk driving, speeding, and cell phone use. If you drive often and/or have a family, it’s worth spending as much money as you possibly can on safety. Once you do, the best way to minimize getting into a car accident is to be an alert and defensive drive. Speed really kills.
Here are some of the safest cars to choose from.
9) A Toto Washlet ($400 – $1,500).
After buying a Toto Washlet for the fixer I bought on the west side of San Francisco in 2014, I can never go back to non-bidet toilets. Going back to a toilet without a bidet is like chucking your smartphone in a lake and only using a landline telephone. Never gonna happen!
For the other fixer I bought in early 2019, I went overboard. Instead of buying a lower-end Washlet for ~$500, I bought three top-of-the-line Washlets for $1,500. I decided to get the best because I was already spending so much money on remodeling labor. In retrospect, an entry-level Toto Washlet was good enough.
If you don’t have an electrical outlet close to your toilet, then get a non-electric bidet like the Luxe Bidet. It’s only about $35 bucks and can be easily installed yourself. Spraying yourself with cool water is better than no water!
Besides, you’ll save a lot of money on toilet paper, which has sometimes been hard to get during the pandemic. When we started seeing shelves run out of toilet paper we felt a little giddy at the silliness.
10) Fun Memorabilia ($100 – $1,000)
My one ongoing vice is spending money on things I wanted during my childhood but couldn’t afford. As a result, I’ve bought retro-Air Jordans, retro-Agassis, and dozens of He-man toys from the 1980s.
The great thing about buying all these memorabilia is that they don’t cost a lot. At most, a new pair of retro-Air Jordans cost $200. Each He-Man figure costs between $10 – $80. Nothing I’m buying will likely appreciate in value.
However, if you want to buy memorabilia that has the potential to appreciate in value, you can do so easily online now.
11) Home entertainment system ($300 – $20,000)
Who doesn’t love to watch movies and Netflix shows at home? I’ve only gone to the theatre three times since 2010 and each time I regretted it! Instead of spending $15/per on a ticket, $10 for popcorn, and have to drive, an awesome home theatre system with a huge high-definition TV and 5.1 surround-sound is a better experience.
We bought our 60″ Sony Bravia 4K TV several years ago for around $800. Now, you can get even larger and clearer TVs for cheaper. It’s nuts! We also have a nice receiver and Definitive Tech speakers and subwoofer.
12) Fine Foods Like Caviar, Lobster, Kobe Beef, Jamon Iberico ($100 – $5,000)
If there’s one thing we’ve learned from politicians like Gavin Newsom and London Breed, it’s that we should live it up and eat the finest foods.
Most of us probably saved a lot of money cooking at home during the pandemic. Therefore, once the pandemic is over, it’ll be fun to make reservations at all the top-rated restaurants in your city.
If you still don’t want to go to restaurants for a while, you can get all the finest foods delivered to your door nowadays.
13) A sweet house ($500,000 – $10,000,000)
Spending money on a hot tub is one level of revenge spending awesomeness. However, buying a sweet house is the ultimate revenge spend!
Owning a larger house with decks, more outdoor space, and views in a less dense area is the best money spent during a pandemic and after. We’re all spending more time at home. Therefore, it’s important to have a more spacious home to work and relax.
A larger house is also great if one of your family members gets sick and needs to quarantine. If you have more bedrooms or private areas, you lessen the chances that other people in your household will get sick. Given health is priceless, being able to be more healthy in a larger house really increases its value.
Finally, not only do you enjoy a higher quality of life in a larger house, there’s also a good chance it will appreciate over time. When you can enjoy a nice house and make money, you’re really winning.
The best time to own the nicest house you can afford is when your kids are living at home with you. If that’s you, I’d look for better deals over the next 18 months.
14) New home appliances ($1,000 – $20,000)
If you already have a sweet home or can’t afford a new home, an easy way to spruce things up is to get new home appliances.
Think about how often we upgrade our electronic devices. We get new phones every 1-5 years. We buy new TVs every 5-15 years. Why not upgrade our washer/dryer, range, refrigerator, dishwasher if it’s been a while?
Hiring a handyman to change your fixtures (doorknobs, faucets, curtain rails, etc) is an easy way to update your home as well.
Finally, replacing old windows and doors with new windows and doors is one of the best returns for your dollar. The noise and temperature insulation are fantastic.
15) Endless in-person service ($50 – $200/hour)
Once herd immunity is here, it’s worth treating yourself to in-person service. For example, how many of us are dying to get a massage or a chiropractic adjustment? I used to get a massage at least once a month. When things go back to normal, I’m getting a a massage at least once a week for three months.
Another service you might want to consider is hiring cleaners. I’m presuming most people have tried to minimize non-family members into their homes since the start of the pandemic.
What’s great about in-person expenditure is that these folks need our help the most. Not only are we spending money to improve our lives, we’re also improving theirs. Add on a nice tip, and everybody is winning all around!
16) Fly Private ($1,000 – $10,000/hour per person)
Forget jumping from economy class to business class to first class as you build more wealth. Fly private once everywhere opens up! If you’ve got a big family, all the more reason to fly private to amortize the cost.
Flying private and owning a mega-mansion are really only the two things that differentiate centi-millionaires and billionaires from the rest of us. Therefore, if you can fly private once a year, you’re at least half of the way there. Of course, if you end up buying a sweet house as well, then you’re basically there.
17) Join A Private Club ($3,000 – $150,000 + ongoing fees)
Joining a private sports club or social club is a great way to network, boost mental health, and get some exercise. If you have kids, a private sports club with a pool and other facilities may also be a great outlet for them as well.
If you’re in business, the networking aspect of a private club is huge. You may have existing clients at the private club where you can deepen your relationships. The club may have prospective clients as well. The stronger you grow your network, the potentially greater your net worth.
Joining a private tennis club has greatly expanded my business and social network. With a growing loneliness epidemic among us, a private sports club has been extremely valuable to me.
18) Private School ($15,000 – $60,000 a year)
Let’s say your two million dollar portfolio is up 40% thanks to a great year in the NASDAQ. Why not use some the $800,000 in gains on private school?
One of the best gifts you can give your children is the gift of education. If you can find a private school with smaller classrooms, regularly in-person classes, and more interesting curriculum, it could be worth it.
Revenge spending on private school might provide for the longest dividends. Just make sure you find a school that’s the right fit. Don’t forget to superfund your kids’ 529 plans. A 529 plan is one of the best generational wealth transfer tools today.
Revenge Spending Is So Sweet
If you’ve survived the pandemic so far, you should really celebrate. Let us revenge spend to our heart’s content.
I’ll be shooting an e-mail to my watch dealer to see if there’s anything rare worth buying. The last time I bought a nice watch was in 2008, during the last financial crisis. Hence, it would only be appropriate to revenge spend during our current crisis.
I’ll also be spending tens of thousands of dollars finishing up a ground floor remodel at a rental property. The space will go from around 250 sqft to 625 sqft. I’ve installed three new windows, added a bedroom, a closet, a full bathroom, a hallway, and a laundry room. But this really isn’t a revenge spend as it is a remodeling investment.
My real revenge spend will be renting a nice house in Oahu near the beach for a month. By mid-2022, most Americans will have been vaccinated. At four and a half, my son should also begin to remember his childhood more.
The degree to which we revenge spend is up to each of us to decide. I’ve offered up many considerations in this post. Surely you will have your own ideas on what to revenge spend on. Let’s enjoy our wealth! Our investments have certainly warranted spending more on a better life.
Readers, do you plan to revenge spend any time soon? If so, what do you plan to revenge spend on?
For more nuanced personal finance content, join 60,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. I help people grow their wealth and live the lifestyles they want.