FREE NEWSLETTER
WHEN I GOT DIVORCED, my ex-wife told the judge at family court that I was good with money. But most folks I knew at that time wouldn’t be so kind: They’d say I was cheap.
No, I didn’t align myself with the financial independence-retire early, or FIRE, movement. During my days as a driver-salesman, after I diverted 15% of my pay into the 401(k), I spent every nickel raising the kids, paying the bills and trying to keep up with my big bucks buddies. One thing I refused to do: pay interest on anything other than the mortgage.
This left us with one nice car for my first wife, while I drove a rusty beater to work, which also bolstered my cheapskate reputation. Why else did folks call me cheap? Toward the end of the week, when the well ran dry, we’d pass on things like eating out with friends until the next payday rolled around.
Then the wife and I divorced. Three years later, I bought a duplex and fell in love with my next-door neighbor, Chris. We lived well on half of our combined not-too-impressive income. After several years, the excess began piling up. We had money going into retirement accounts, while filling up non-retirement accounts as well.
The times, they were a-changin’. Chris retired at age 64. A few years later, I hung it up at age 70. I suppose I was one of those ICE—”I’ll continue earning”—types mentioned by HumbleDollar’s editor. By then, my job was preparing tax returns, and I only had to work hard for four months of the year.
Today, we’re collecting Social Security and withdrawing 3% of our IRA balances each year. That leaves us with $40,000 more per year than we were used to living on. But even with the IRA distributions, we manage to stay within the 12% marginal income-tax bracket, plus today’s withdrawals should help in the years ahead, limiting the size of our required minimum distributions.
Amid all this extra income, I had an epiphany. Gee whiz, we could buy some pretty things without guilt. And that’s when 15 months of frivolous spending began.
It was December 2022, and it started simply enough. I’ve always been an audio enthusiast. My 50-year-old integrated amplifier had seen better days. I’m old school and had no desire for the latest 90.1 gazillion-channel home theater system. I just wanted another two-channel stereo amplifier, but maybe with a few modern amenities.
I test drove some different models at Jamiesons, the local hi-fi joint, and ended up plunking down $1,500. To a non-enthusiast, that might seem like a lot of money. Trust me, it isn’t.
Then we really upped the spending.
Chris and I had been watching the development of a nearby 55-plus community. We’d both been reluctant to even stop in and check out the innards. Perhaps it was divine intervention that finally sucked us in. So here we were, standing in the foyer of the model home, staring at the exquisite staged furnishings and getting glad-handed by the eager-to-please salesman.
We toured the house. Plenty of bedrooms. Fancy bathrooms. Great kitchen. All on one floor. No snow shoveling. No grass mowing, either. Okay, I suppose I could grow old here. Then it happened: A bonus room of the size necessary for a proper listening space. That sealed the deal.
During all my years listening to my relatively high-end turntable, I’d never had a dedicated hi-fi space in any of the houses I lived in. Our current home was a condo, with neighbors living on the other side of the walls. My stereo system was confined to the basement, which had seven-foot ceilings and shared space with the cat’s litter box.
And that’s how my $1,500 integrated amplifier turned into a $400,000 impulse purchase.
We had enough cash lying around to buy the lot, but we had to sell the condo to pay for the construction. The place sold quickly, with the proceeds going into the bank. Form 1099-INT for the account showed up last month, and we were briefly thrilled to see it generated $5,000 in interest while we waited for the dreaded construction payments. I say “briefly thrilled” because I soon realized that, if the money had instead been parked in the S&P 500, it would have generated about $20,000 of gains instead of $5,000. Oh well, pigs get fat and hogs get slaughtered. I didn’t want to be the latter.
“Crap, honey, we’re gonna need some new stuff for the new digs.”
We must have visited every furniture store in a 100-mile radius of Toledo, searching for picture-perfect stuff for our new 1,900-square-foot mini-McMansion.
So, in the 15 months since that fateful day in December 2022, not only did we acquire a new amplifier, but also we got a new house, furniture, appliances, artwork and you-name-it for our forever home. I’m happy to report that we remain debt-free and took no hit to our net worth.
Chrissy keeps asking me if we can really afford our new place. But I don’t have any buyer’s remorse. We worked and saved hard, and now it’s time to enjoy the fruits of our labor before the go-go years fade into history. The big spending is in the rearview mirror, we’re rebuilding the disaster fund, and we’re actually saving more each year than we’re withdrawing from our IRAs, with the extra money going into our regular taxable account.
That’s all I have for now. If you need me, I’ll be at the Glass City Record Show searching for some rare vinyl records that I just have to have for my record collection. Someone told me that if it’s vinyl, it’s not hoarding.
For 30 years, Dan Smith was a driver-salesman and local union representative, before building a successful income-tax practice in Toledo, Ohio. He retired in 2022. Dan has two beautiful daughters, two loving sons-in-law and seven grandchildren. He and Chris, the love of his life, have been together for two great decades and counting. Check out Dan’s earlier articles.
Want to receive our weekly newsletter? Sign up now. How about our daily alert about the site's latest posts? Join the list.
The only thing I miss about vinyl is the cover art.
Vinyl vs. CD or streaming is sort of like the difference between using a coffee maker vs. Keurig. It’s about the process. And just for the record, I also have a substantial collection of CD’s, and I stream music as well.
Just for the “record”–I saw what you did there, Dan.
No one asked the most crucial question – what are the speakers?
1975 vintage Klipsch Heresys and subwoofer.
I have some vintage Cornwalls that are worth more than I paid for them in 1982
OMG corrupt, the new Cornwalls are going for about 7k now. Hell of a nice speaker.
is it a myth that records sound better than CDs?
Lol Johny, that’s a trick question. If pressed I’d have to opine that CD’s have the edge. I’m just an old fart hooked on the nostalgia of records.
Dan, it was fun reading how a “cheapskate” (fellow traveler here) went on a spending spree. It actually strikes me as a very well considered one, and glad to hear how well it’s working out.
If I lived any closer to you I’d offer you a deal on around 140 vinyl LPs I’m about to take to a local record store to sell. “Meet the Beatles” anyone?
Please invite us for a get together to experience the audio room!
“Pigs get fat and hogs get slaughtered” may be my new personal finance mantra.
It is a keeper, unfortunately I can’t take credit for coining the phrase.
Dan, Music is so powerful. A wonderful stress reliever that can be a great boost to your health, improve memory and learning capabilities. My mom and I used to sing together.
Your audio room sounds like a haven.
Congratulations! I hope you have a long and happy time in the new house. I didn’t put the proceeds of my house sale in the market either, knowing I would need them in less than a year to buy into a CCRC. I did buy a short-term CD, at a newly favorable rate (early 2023).
This is awesome. Hope you and Chris enjoy your new home, especially the audio room!
Dan,
Considering you wrote you were a cheapskate when I read “I soon realized that, if the money had instead been parked in the S&P 500, it would have generated about $20,000 of gains instead of $5,000”, I thought the next line was you realized the additional income had pushed you into a higher tax bracket or you had to pay taxes on the income. As you probably well know you could have just as well lost tens of thousands in short order (see March 2020). Only a gambler or a financial fool would put the proceeds of the sale of their primary residence, needed in short order to pay for its replacement into stocks, and you do not appear to be either. You made the conservative, and in my opinion the correct decision as to where to park those funds. Enjoy the new digs. You earned it!
It is amazing how many people are shocked to have to pay taxes on interest, dividends, and capital gain distributions (even during a market downturn).
I’m not shocked, I just hate paying the government money on passive income! My risk, their reward.
Been there, done that in a similar scenario expect it took over a year to sell our house while we lived in our new 55 plus condo which meant a mortgage during that period plus two property tax bills and HOA fee. All new furniture was part of the deal too and nearly five years later we are starting to work on a new kitchen.🤑
Just curious, where did you live while waiting for your new home to be built? That must have been stressful too.
We have also done that 2 property dance with a mortgage and double HOA fees; no fun at all!
We rented an apartment at a Redwood community. With no one living above or below us, and thanks to highly soundproof walls, it wasn’t terrible at all. It also had an attached garage for us to use as storage. I’d also add that the property is meticulously maintained both inside the units and the landscaping.
I’m just curious. How did you manage to spend $400,000 plus and not take a hit to your net worth? Was that your emergency fund, and do you not count your emergency fund as part of your net worth? I think I’ve got some recalculating to do on my part!
Hi Fran, I must confess that I almost struck that statement from the article, but here is my reasoning. I calculate that the new home is worth at least as much as we paid for it, and that due to market performance in 2023 our investments actually increased beyond the distributions. Perhaps there’s a bit of smoke and mirror in my assertion? Decimating the emergency cash indeed makes me very uncomfortable and we are rebuilding that as quickly as possible.
Same 400k money/value, it is now in different buckets.
Perfectly sound reasoning, Dan–no smoke and mirrors at all. You simply increased the value of real estate holdings in your asset mix while proportionately reducing cash. Thanks for the interesting article.
Dan, even though you’ve sullied your reputation as a cheapskate, I’d hang out with you for a listen to some old vinyl. Who’s your favorite?
Edmond, I am an avowed Parrothead, when Jimmy Buffett died it was almost like losing a family member. At the record show I picked up some Leonard Cohen and Leon Russell stuff. Music from the Beatles, Willie Nelson, Stevie Wonder, Buddy Guy, Bob James, and even some Broadway musicals all float my boat.
Dan: thank you for a most enjoyable read – and terrific taste in music! I share your sorrow over Jimmy’s premature demise – his songs and the imagery they evoked were a source of comfort and stress relief to me over the decades.
I dread when Willie finally goes, but can imagine the tributes that will follow for this American Treasure. Congrats on your journey and forever home.
(Still searching for that myself!)
Toby Keith’s passing hit me hard. He was toward the end of the line of true country music. Now I’m almost strictly jazz on my car radio! I’m a big fan of “Sonos” while in my home office, whereby I dial up any genre and have a go at some favorites.