When Ayo and I were planning for our year of mini-retirement (yes, the one that I have been doing for about two-and-a-half years) we tried to be as frugal as possible. The centerpiece of our dining room was a sturdy plastic folding table, we never really went out for meals, and we kept our expenses incredibly low – especially for a couple living in New York City.
I am at an interesting financial point in my life. I have no income beyond interest and dividends and I am making my spending decisions independently. My net worth fluctuates with the economy but I am not making new contributions to my (very diversified) investments. Interest and dividends only cover a very small portion of my expenses. So what dictates my spending? How frugal do I want to be?
There are a number of questions whose answers are driving my overall spending decisions right now:
- How long do I expect to continue with no income?
- At what net worth will I no longer feel financially independent?
- What kind of lifestyle do I want to lead?
I find it easy to track all of my expenses. I can tell you what I have spent this month to the penny. For real.
Do I want to budget? If so, do I want to spend freely within my cap? Do I want to live as frugally as possible? Somewhat frugally? How about my attitude toward “stuff”? Has that changed? Do I want to try living without a budget?
Answers in part two.
::Enter suspenseful music::
posted by yair