How many times have you blown $1,000?

Ever wondered how many times in your life you’ve blown $1,000?

$1,000 x 300 = $300,000

Image courtesy of graur razvan ionut / FreeDigitalPhotos.net

Image courtesy of graur razvan ionut / FreeDigitalPhotos.net

In past posts, I’ve noted a few of my focus numbers for pretirement. For example I’ve targeted a goal of around $300,000 (plus paid-off mortgage) as my freedom number. (Think $600,000 for a couple.) I’ve also remarked on how many households pin their core monthly non-mortgage expenses at around $2,000 per month ($1,000 per person). This includes my own.

So if you’ve been aggressive and paid off your mortgage in record time, you are likely looking at monthly core expenses near that magical $2,000/month (for two people). And, of course, if that seems insane, you’ll probably want to examine your spending rates. However, if we accept that number, then we can safely say your Pretirement Fund number is probably somewhere around $300,000 for each person. It might be a little higher or a little lower based on your personal investment yield, taxes and other factors, but just to keep things simple, we’ll use round numbers for now.

In my own situation, I’m a little shy of that number, which is why I’m only semi-pretired today. I have too much net worth locked up in my house and, of course, made many dumb investing and spending mistakes over the years.

Which begs the question: How many times have I blown $1,000? It’s an important, but troubling question. Have I done it 300 times? More? It makes me want to go back and slap earlier me across the face.

Let’s take a look: (Making guesses at the exact amount in most cases.)

Over-improved my first home$30,000+30
Luxurious vacations over the past 20 years (At least $3,000/year on average)$60,000+60
Bought new car (Stupid, stupid)$40,000+40
Eating out (Maybe $40/week on average for the last 10 years)$20,000+20
Over-improving current house$30,000+30
Various electronics over past few years$15,000+15
Furniture purchases$10,000+10
Random other crap$20,000+20
TOTAL$225,000225

So because I’m Pretired Nick, you might assume I’m some sort of Frugality Ninja (hey, good URL, someone should snag that!). But, really, I’ve been just as much as a big American spender as anyone else. OK, maybe not as much as most people, but still pretty bad. But I’m not here to shame myself before all of you, but rather to show HOW EASY it is to reach pretirement by doing nothing more than staying employed and cutting back on the spending.

$100 x 10 = $1,000

So you don’t think you’ve blown $1,000 all that many times? Let’s break it down: how many times have you blown $100? Dropping a hundo is easy. I sneeze a hundred bucks into a tissue just about every week! My numbers above are definitely under-counting the drip by drip of small purchases. Gas for the car, art, gifts, new shoes I didn’t really need, tools purchased unnecessarily and so on.

Have you dropped $100 just 10 times in the past year? Month? If you dropped $100 per week, that’s $5,200 each year. Doesn’t sound like that much money until you realize that’s five $1,000 bills that could have gone toward your pretirement fund — nearly 2 percent of what you needed right there!

I listed out just my big, memorable purchases above totaling to $225,000. If I had cut back just by $100 per week on average for the past 15 years (something that would have been very easy for me at various times), I’d have more than the remaining $75,000 needed to reach my Pretirement Fund goal.

$30,000 x 10 = $300,000

Or to frame things in terms of time, let’s say you’ve realized 40 years in a cubicle isn’t for you and you’d like to tough it out through 10 more years of your career and then be done. You’d need $30,000/year ($2,500/month) for each of those years on average (again, ignoring your mortgage and growth on the money).

But $2,500 a month seems like an impossible amount to put aside month after month! The thing is, many households have monthly budgets of $6,000-$8,000 or even more. Obviously housing costs are by far the biggest drag on people, but it’s also TVs, vacations, clothing, random plastic crap, lattes and car expenses.

I realize it’s too late for many of us. We can’t go back and add many years of savings to our lives. But like the Chinese proverb says: There are only two times to plant a tree — 20 years ago and today. Regardless of where you’re starting, build a spreadsheet, decide on your goals and build a plan to get there.

$100,000 x 3 = $300,000

It always comes back to real estate with me. Like I have mentioned many times, we really have more house than we should have given our goals. Should we choose to downsize — something we’re seriously considering — that should free up at least $100,000 that I can put toward my Pretirement Fund, putting me over the top! Or I could work a couple more years and save that up quickly given that I have very low expenses.

Which way will we end up going? We really have no idea at this point. But you’ll be the first to know as we wrestle with this final step toward pretirement right here in front of all of you!

Hopefully the math lesson wasn’t too silly for everyone. The point isn’t to teach my readers basic division and multiplication, but simply to remind that breaking big problems into smaller problems always makes things easier and that small spending, even $1,000 here or there, can really add up and keep you working much longer than you want. I’m living proof on both the negative and positive sides of that equation.

So what do you think? Does breaking your goals into bite-sized chunks help you get there? And how many times do you think you’ve blown $1,000? 

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26 Thoughts on “How many times have you blown $1,000?

  1. We were just discussing the same thing last week. It is funny looking at the random times when we’ve wasted 100s, if not 1000s the last few years. I’m pretty sure if I rounded up all my wasted money I’m be a lot closer to pretirement!

    I also love the idea of breaking up savings goals in to chucks (like 1k), it makes it seem like every little addition is making a difference. Cheers to buying our freedom.
    Stephen recently posted…Margin of the 3rd WorldMy Profile

    • Pretired Nick on October 9, 2013 at 1:07 pm said:

      You bet, Stephen! Sometimes the most important thing we can do is get the psychology working in our favor! Smaller goals, met little by little is the way to get there.

  2. – Nick, can you write a post on over improvements for a house? I’m interested in knowing about these.

    – When you think about it this way, I’m sure we have spent several thousand dollars on just take out. Astonishingly enough.
    Savvy Financial Latina recently posted…LEAN IN: Negotiate Like A WomanMy Profile

  3. Egads, Nick. I shudder to think of it, but I am so thankful you broke it down that way. It makes it seem more, rather than less, possible to pretire than it did before. Just when you think you don’t have anywhere else to cut…

    Thank you for another zip zap post!

  4. It’s weird but our round numbers are remarkably similar. I figured we’d want/need about $600k to really feel financially independent.

    Unlike you, I don’t have the courage (yet) to look back on my big financial mistakes and publish them. I’ll just skip to the part about planting the tree today. :)
    Done by Forty recently posted…Notes from PeruMy Profile

    • Pretired Nick on October 10, 2013 at 8:16 am said:

      It’s actually pretty amazing how many people have told me the same thing. Yet many make a lot more than I made when I was working and are totally broke! And once you peg your costs at around $2,000, the math just works out to put you at that level.

  5. Brilliant post, Nick! Stuff like that really makes you think and I am sure I’ve blown $1,000 several times in my life too. I threw away money on blogging related stuff – so much on tools that promised the sky and the sun and of course didn’t work that I could’ve hired someone to write a year’s worth of high quality articles that would’ve certainly boosted my blogs. Not to mention house-related stuff and so on and so forth.

    Just yesterday we were checking out some furniture for our house in an upcoming room that needs to be furnished and the only thing I liked was only available in a different city and transportation costs would’ve been $300. If I had followed my impulse of buying, I would’ve thrown $300 away simply because I was considering that product a must have. Which is not true. So yeah, we can easily throw away money and after you do the math, it’s pretty scary.
    C. the Romanian recently posted…How to Pay Off Your Mortgage Faster than the RestMy Profile

    • Pretired Nick on October 10, 2013 at 9:00 am said:

      Thanks, C! I’d be interested in what blogging stuff you spent money on. Just curious. It’s also interesting that you threw out the number $300. I’ve been thinking lately how that price point seems to be one (at least around here) that is just low enough where people don’t even blink and drop the coin, but it’s high enough it can add up quickly.

  6. I don’t even live in the US, so our yearly earnings are not that big and yet we have squandered many ‘thousands’. off …
    dojo recently posted…Saving and Frugality: being frugal when it comes to pregnancy clothesMy Profile

  7. I’ve blown many a $1,000. Mostly on shoes, nights out, and weekend trips.
    Lisa E. @ Lisa Vs. The Loans recently posted…Weekend Recap: Disneyland DamageMy Profile

  8. I guess it depends on your opinion of wasted money. We spend just about $3,000 per year on travel right now, but that’s to visit family. I’ve spent money on other experiences I certainly didn’t need, but live on as happy memories. Maybe you didn’t need to buy a new car, but did you need to buy a car? In any event, the thought process is certainly a good one and well worth the time. Life is all about tradeoffs and it’s important to make sure that you’re making choices that actually bring you satisfaction.
    Matt Becker recently posted…Staying Safe With DIY Car RepairsMy Profile

    • Pretired Nick on October 10, 2013 at 1:33 pm said:

      To me, it depends on your goals. While my pretirement is somewhat delayed due to my travel addiction, I’d call it a waste — and regret very little of it. But, yes, mostly it’s about the thought process and awareness of where the money is going.

    • My sentiments exactly Matt… It in part depends on if you are “stuff” or “experiences” oriented person. I am most definitely experience oriented so have dropped many a thou’ on travelling and holidays. From there it’s just making sure you are getting the best value when you are dropping those amounts. If you don’t care for travel, don’t spend as much money on it, don’t care for stuff then ditto. If you want travel, experiences and stuff, then what the hell are you doing reading this website?! :)

      For some strange reason however I find that once an “amount” goes over a certain number I start to care less about getting the best deal possible, as in:
      “I’m spending more money than I really want anyway, so what the difference does it make if it is £3000 and £4000”

      This is obviously a completely stupid attitude and one that I need to work on (as it is particularly relevant for when purchasing holidays/travel)… but seeing as most humans experience the same feelings as a general rule, I am guessing I am not alone.

      I need to think along the lines of: If I can save £100 off of a £3000 bill then great, if I found £100 on the street I wouldn’t ignore it!
      theFIREstarter UK recently posted…Start your FIRE Part II – Location, Location, LocationMy Profile

      • Pretired Nick on October 17, 2013 at 8:47 am said:

        Stuff vs. Experiences is a good way to look at it. I’m definitely much more into experiences.
        It is very interesting psychology how we tend to think “three-something-something” and basically interpret $3,000 and $3,900 as the same number.
        You should check out this piece on converting spending into winning: http://pretired.org/saving-money/convert-spending-into-winning-to-trick-yourself-into-saving/

        • Ahh I’ve already read it of course, I’m guessing that’s where I got the idea in the first place.

          It’s funny about the 3-something-something effect. In the past I’d make more effort to get something for 21 as opposed to 29 than save 100 off of something that was, say, 2900. It’s the percentage savings that seems to count. This is clearly bonkers!

          From now on I’ll focus on the absolute amount, and remember to employ your trick. Thanks!
          Andy @ theFIREstarter UK recently posted…Internal Locus of Control: Develop one, retire earlyMy Profile

          • Pretired Nick on October 18, 2013 at 9:24 am said:

            Good for you! The only danger is this mentality can turn you into an annoying penny-pincher (what do they call that in the UK?) pretty quickly. Once I’ve decided I need something and have made my overall pricing decision, I don’t worry too much about the exact dollar amount (I probably should be better about that, though). The biggest savings comes in not buying the thing at all.

  9. Being a long time guitarist and composer, I know that dividing and conquering works. I teach it to all of my students too. The ones who break their tunes up and drill smaller sections learn better and faster than the others. We have chipped away at our finances the same way. It also worked.

    I have blown $1000 enough times to keep me from sleeping if I were to think on it too long, PTNick. Furniture comes to mind, cars, knick-knacks, vacations we really did not want to take (as opposed to just the two of us), Mexican food, and on and on….

    5-10 pages of Walden may still do the trick tonight…

  10. The true answer is “Who knows?”. Poor investments. Expensive investment adviser. Not taking advantage of various programs and opportunities over the years.

    Overall, I think we did pretty well to avoid losing a $100 here and a $1000 there. It all adds up though. Whenever I have a spending decision, I try to consider up front costs and long term operating costs.

    I was just thinking a few minutes ago about how I did some quick math on my outdoor motion activated floodlight. Using compact fluorescent bulbs instead of halogen means 60 watts instead of 300 watts. And I only used 1 bulb in the fixture instead of 2, so it is actually 30 watts. The light is still bright enough to illuminate the path into the house and bright enough to scare away any bad guys trying to access my house or backyard. Electricity savings = $40/yr, and up front costs were under $10 to get a CFL compatible fixture and slightly more expensive CFL floodlight bulbs. And the bulbs last longer, so the savings are slightly higher. And I don’t have to change bulbs hardly ever.
    Justin @ RootofGood recently posted…Root of Good One Month UpdateMy Profile

  11. Like you, I wish I could go back and slap the hand of my former self before spending that money. So much of it I can’t even remember what it was on. We are digging out of debt and striving for retirement over the next 5 years. Thanks for sharing your experiences.
    Mrs. Breeze recently posted…My Cancer JourneyMy Profile

    • Pretired Nick on October 18, 2013 at 9:12 am said:

      Oh man, it does tend to trickle out the door, doesn’t it? Oh well, all you can do is start where you are! Each day is a new challenge!

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