I Don’t Regret Spending Big on These 4 Things

Spend extravagantly on the things you love, and cut costs mercilessly on the things you don’t. –Ramit Sethi, I Will Teach You to Be Rich

To reach financial independence (FI), you need to pay close attention to 3 areas of your life: income, spending, and investments. I previously discussed a few mistakes that I’ve made in investing. Today, I’ll turn spending.

We all want to maximize our income for the job that we’re doing and the amount of effort we’re putting in. We all want to maximize our investment returns while minimizing the risk of losses. No one intentionally seeks lower income for the same job or lower investment returns with higher risk.

Spending is not the same.

For some people, the goal is to minimize spending in order to maximize their savings. This can be taken to an extreme, at the expense of enjoying your life along the way.

Other people go to the opposite extreme, spending everything they make in order to maximize their life now. This can lead to financial ruin when life throws a curveball such as a job loss or large unexpected expense.

On the trailhead of your financial journey, you might need to cut expenses drastically for 6-12 months to get consumer debt under control. Beyond that, at Pathway to FI, the goal is to spend intentionally and maximize the value you get out of every dollar spent. The result is having “enough” savings and great life experiences.

You can enjoy life now and still reach financial independence early in life. Don’t sacrifice a decade or more of your life to get to financial independence a few years earlier. There’s much more to life than FI!

To make this happen, we don’t try to minimize spending. Instead, we focus on increasing income, which gets us to financial independence much quicker. Read When Is Saving Money More Important than Investing for more on that idea.

Throughout my life, I’ve tried to strike a balance between saving for the future and living life in the present. Below are 4 things that I don’t regret spending big on. Your list will be different, but you may relate to something on mine.

Before I go any further and you judge me as another high income earner who spends frivolously, please understand that I am frugal by nature. However, I am a living example ofe Ramit Sethi’s quote above, which I only ran across a few years ago.

My wife and I shared a single car for 9 years before our child came along, she began working part-time, and our schedules required a second vehicle. After leaving my job and moving, we’re now down to a single vehicle again. We haven’t had cable TV for the last 15 years. And we don’t eat out often, compared to most Americans.

We choose to spend big on the things that are important to us and to cut out the things that we don’t value.

1. Travel and adventure

I love outdoor adventures, exploring new places, and experiencing unique cultures and foods.

Rafting the Colorado River is the definition of adventure. This is where my travels began, right in my home state of Arizona.

White water rapids so large that they have their own 1-10 scale instead of the standard Class 1-5. Daily hikes through narrow canyons with turquoise rivers leading to waterfalls surrounded by moss and ferns. Encounters with bucks and bighorn sheep along the way.

Sleeping under the stars on the sandy shoreline, wondering if it will rain again tonight. Going a week without running water and any of the luxuries that we’re so used to today. The only exception was the gourmet meals cooked by our expert river guides using food refrigerated by the river water, which flowed from the depths of Lake Mead and Lake Powell!

I really caught the “travel bug” the year I was married. That year, I was invited by my new in-laws to New Zealand. They exchanged homes with some Kiwis for a couple of weeks, so a good part of my lodging and transportation expenses were covered. What an opportunity! But it was still an expensive plane ticket and trip overall for someone who was just starting his career.

I instantly fell in love with the beautiful, rugged green landscapes and natural diversity of the south island, where sheep outnumbered humans. It felt like another world to a guy from the Arizona desert. The Great Walks became my first bucket list. The interesting accents and sayings, matched with the friendliness of the Kiwis, attracted me to their culture.

I had to go back for more! And we did. Two more times, so far.

As you can probably tell, this stuff makes me alive. We traveled as much as we could up to the birth of our daughter. Much of our time was spent in the southern hemisphere where it was summer during our winter breaks and we could maximize our time off.

Below, I wrote down our biggest trips during those first 10 years, along with the rough cost at the time. Then I calculated what the money would have grown to, adjusted for inflation, if invested in the S&P 500.

Big spending on trips over the first 10 years of my adult life has been a joy that's 100% worth it. — Table 1 – Big trips between 2006-2015 with rough cost at the time and what it would have grown to by June 2022 if invested in S&P 500, not counting inflation

We got a great deal on a cruise around South America and through the Antarctic Peninsula when the cruise industry was suffering during the Great Recession. We learned how to scuba dive and were awestruck by the Great Barrier Reef.

In total, we spent almost half a year and $63,000 on the 9 trips in Table 1. If we had invested that money instead of having those experiences, it would have grown to $154,000—after adjusting for inflation!

This number really surprised me. Yet when I look at the table, it reads like the list of my most memorable experiences in life. Only a few life events are missing.

Looking at the big picture, $154,000 is now around 5% of my investable assets. That’s still a nice chunk of change for me and I’ll certainly take it. But it isn’t life-changing. In fact, I wouldn’t give up those memories for $200k today. I’ll never be able to repeat them in the same way as I did as a younger adult.

Travel. Because money returns. Time does not. –Unknown

2. Gear for active hobbies

We’ve collected a lot of sporting equipment over the years for martial arts, hiking, biking, paddling, snowboarding, cross-country skiing, and snowshoeing to name a few. I won’t go through the details, but my estimate is that this cost us $5,500 before our move to Colorado in 2022.

With more time on my hands now, I’m investing even more in these activities:

I found a great Stand-Up Paddleboard that makes paddling on our local lakes amazing!

After a couple of fun races, I decided to get serious about mountain biking. So I upgraded my inexpensive bike to a much lighter, full-suspension bike with 29″ wheels that completely changed the experience for me. I didn’t realize how much I would enjoy mountain biking until I had the right equipment!

I also decided to learn archery. So I bought an entry level compound bow, and am working on target shooting.

When my first winter in Colorado came around, I quickly learned that all the locals love powder days! And apparently my 18-year-old snowboard wasn’t designed for powder like the newer models are. So they convinced me to buy a powder board like the boards they were riding.

Then I went to a cross-country skiing clinic, where I learned that I needed special skate skis to do what I really wanted. My old classic skis just didn’t work like everyone else’s. They slowed me down and made skating awkward.

Investing in gear for these sports in the last year has cost me another $4,600. But I’ll be using it for years. And I won’t regret it a bit!

Big spending on quality sporting equipment has made living in the mountains amazing! — Table 2 – Cost of upgrading sporting gear after moving to the mountains

I love sports, the outdoors, and exercise. Combining 2 of these is great, but for me there’s nothing better than combining all 3. I try to do one of these activities every day, and the diversity keeps me challenged and interested. It’s naturally kept me in shape too.

Find something you love to do that makes you active, then give yourself permission to buy quality gear. It will bring you joy and make you get out more often.

There is no question in the medical research that an active life leads to greater happiness, health, and lifespan. I mentioned some of the research in this article.

But sports don’t have to be expensive.

You don’t need $150 running or hiking shoes to hit the trail. You can find a used baseball glove, golf clubs, or tennis rackets online or at a secondhand store. Pick-up basketball and soccer games are free. I joined a volleyball group at the local community center, and it cost me nothing!

3. Nice starter home

My wife and I bought our first home immediately after we were married in 2007.

We had a decent down payment saved. This was mostly because of some luck I had in college. I bought a townhouse with a friend and we rented the extra bedroom. It appreciated 65% before we sold it two years later!

We had good entry level engineering incomes, so we decided to buy a home that we could grow into and would enjoy living in for decades. We paid $275k for a 2,850 square-foot, 3 bedroom home near Tucson.

It wasn’t the most luxurious home or an exclusive neighborhood. But we loved the privacy of the lot compared to our neighbors. Enjoyed the spacious layout. And the location was great for an active lifestyle and short commute to work. It was a home that always made us smile when we returned from a week away.

The price tag may sound low to you if you’re from an expensive coastal city or if your reference point is today’s home prices. But $275k turned out to be expensive for our home at the time. Over the next few years, the Great Recession happened. Our home’s value dropped to $165k before slowly rising again many years later.

We sold it this year for $400k when we moved to Colorado. This amounted to less than 2% annual appreciation considering the $35k we put into the backyard and master bathroom. So it wouldn’t have been considered a good investment. But that wasn’t its purpose. It was a great home for the 15 years we lived there.

We could have easily spent $50k less on a perfectly acceptable, smaller home on the same block. But we wouldn’t have been as happy living there for so long. This might have caused us to move when our daughter was born, our incomes were higher, and we had family visiting more often.

Moving is expensive! It cost $24k in realtor commissions plus a few thousand in repairs to sell our $400k home. Then we paid another couple thousand to move our stuff. And we did most of the work ourselves, including driving the 26-foot truck 600 miles across state lines. So call it $30k to move plus the value of our time. And I place time at a premium!

Moving isn’t something you want to do more than a couple times in your life if you can avoid it.

Many of our neighbors and friends lost their homes in foreclosures and short sales the first few years after we bought ours. If we bought more than we could afford in the first place, then we could have easily lost our home too. Fortunately, the $1,250 mortgage payment was affordable for us when we bought it, and became more affordable over time as our incomes rose.

It’s worth buying a home you will never feel the need to move from. But only buy what you can afford. A good rule of thumb is for your mortgage to be less than 25% of your monthly take-home pay.

4. Healthy food

Nutrition has been important to me since my 20s when I began recognizing how much better I felt after a healthy meal. I also discovered that healthy food can be the best tasting food. Proper nutrition can give you more energy throughout the day¹, promote a good mood and healthy brain function², support your immune system³, and prevent chronic diseases⁴.

Many people think you can’t eat healthy and saving money on food at the same time. The agriculture and food industries have become really efficient at growing potatoes, corn, soy, and wheat. And on using them to make highly processed foods such as chips, white bread, and soft drinks.

But you can find a balance between cost and nutrition by making a few low cost whole foods staples in your diet. Some suggestions include rice, beans, oats, onions, carrots, and sweet potatoes. Did you know that Okinawans—one of the longest-living populations in the world—got up to 67% of their calories from sweet potatoes?⁵

I try to get most of my calories from real, unprocessed foods by eating a wide variety of colorful fruits and vegetables, whole grains, nuts, beans, and fish. This has cost around $200-300/month more than the Standard American Diet (SAD), which adds to around $45,000 over my working lifetime.

That’s a big number. But in my opinion:

Good health, energy, and mood are worth paying for.
And good nutrition is a great medicine.

By eating healthy, you’re likely to reduce your lifetime medical costs. So the extra food cost may not be as big as it seems.

No one can say exactly how much or how little you’ll save individually, but research by Tufts University and Brigham and Women’s Hospital estimates that Americans would save almost $40 billion in lifetime medical costs by eating just 0.4 more servings of fruits and vegetables a day! The savings rise to over $100 billion if they also ate another 0.2 servings of whole grains, 0.1 servings of nuts and seeds, 0.2 servings of seafood, and 1.5 teaspoons of healthy oils.⁶ These are tiny, easily achievable numbers for you and me.

My eating habits are far from perfect. I have the same weakness for ice cream, pizza, and a bacon cheeseburger that you do. But as a general rule, I don’t keep them in my house and try to get most of my calories from nutritious foods. I expect to live a healthier and happier life as a result.