How Will It Feel to Actually Spend Our Investments?

Before we dive in today, we want to say THANKS. We’re so grateful to all of you who read here and comment here, and we haven’t told you so in a while. So we’re sending a big virtual hug your way. (If you haven’t read it, here’s our post on what you guys mean to us. It’s all even more true now than when we wrote it.)

Okay, tell us if this sounds familiar to you: Somewhere in your home, you have some tiny soaps or hand towels that are “for guests only.” Or you have a formal living room that’s only “for special occasions.” Or dishes that only come out at Christmastime. Or some something that’s so special that you literally never use it at all. Or even if you don’t have any of these things now, you grew up around someone who did.

In my house growing up, we pretty much had all of the above. We weren’t rich, but my parents must have thought that that’s what civilized people do, they reserve part of their belongings for other, fancier people to use. You know, in case the Queen just happens to drop by, or maybe the Dalai Lama. But the idea of having soaps and hand towels we couldn’t use, and a whole room we never set foot in, to me it all just felt so wasteful. So frivolous.

Even though I hated that we had stuff we didn’t use when I was a kid, and we make a much bigger effort now to use everything we own and to use every part of our house, the truth is that we still have something very central in our lives that we aren’t allowed to touch, that we’re saving for a special occasion: our investments.

Special Occasion Thinking

We’ve spent more than a decade building up our savings and investments, all the while granting them a special status by not touching them. Even shelling out $8,000 for our tax bill this year felt painful, despite the fact that $8,000 is practically nothing compared to our full portfolio. The pain of paying that bill made me wonder if we have “special occasion thinking” around our investments. In other words, if we treat our investments like those tiny soaps. Nice to look at, but not to use.

Starting sometime next year, we’ll quit our jobs and we’ll start to live primarily off of our investments for the first time ever. We’ll go from being savers to being spenders. From net earners to net whatever-the-opposite-of-earners are. (Can we mooch off our own investments? In that case, we’ll become net moochers.)

It’s going to be a huge shift.

Given this “special occasion thinking,” I’ve begun to wonder: will we even be able to bring ourselves to spend our investments? Or will we start to view them as a sort of super-sized emergency fund, and find other ways to make money to cover our living expenses? (Further evidence of this thinking: Keeping the bulk of our nest egg off-limits until we hit our 60s, even if that’s for a lot of sound reasons.)

Obviously creating additional streams of income wouldn’t be a bad thing, and doing so would increase our long-term chances of success at making our portfolio last. But that approach starts to feel a little like not using the guest towels, when the whole point of a towel is to be used. (I’m not joking — I remember having to dust the guest soaps and guest towels as a kid. Towels and soaps that get used never need dusting. Not sure if there’s a financial analogy in there, but if you come up with one, please share it!) The entire reason we’ve spent all these years saving is to be able to use that money for our living expenses in the not-too-distant future, not just to admire the pretty numbers.

Using the Guest Soaps, er, Spending Our Investments

When it comes down to it, what will it actually feel like to spend that money? Will it feel painful and scary, like paying that tax bill? Or will it just be a matter of ripping off the bandaid? Scary in theory, but no big deal once we actually do it. We can’t really know, because this will all be new territory. But we have some thoughts on how we can soften the blow:

Redefine success: Currently success means the numbers are getting bigger, both the ones we can control with our savings rate and even the ones we have zero control over because the markets are in charge. (Yes, we know it’s irrational.) But we’re going to have to define success differently in retirement if we’re not to feel like total failures at it. So far we’re thinking we can define success by how well we stick to our spending plan (shh… don’t call it a budget), how well we hack travel, and maybe how well we do at fun jobs.

Stop defining ourselves by a number: We don’t actively or consciously define ourselves by our net worth now, but we sure know what it is, we feel proud for having gotten to this point, and I’d be lying if I said we weren’t a little attached to that number. In positive market circumstances, our net worth should continue to climb even as we begin drawing down our investments, but just as our net worth sometimes goes down now, it will inevitably go down in the future, and may even decrease over time if the markets misbehave. The less we define ourselves by our number, the less devastated we’ll be if the number shrinks.

Remind ourselves that it’s okay for the numbers to go down: The final step will probably also bear the most repeating. We’ve seen our numbers go up for so long now that seeing them go in the other direction will no doubt be jarring. Not being able to dump more money in when the markets dip will be a bummer. But checking in with our projections will help, reminding ourselves that we’re okay spending down most of our taxable accounts (with a buffer, of course) in our two-phased retirement approach. (We hope we don’t spend them down entirely, of course, but we prefer to rely on conservative projections, and so accept this possibility.)

Any of This Sound Familiar?

Anybody else feel like special occasion thinking around money is real? Retirees especially, we’d love to hear from you on this! Was it hard to start tapping into the accounts that had long been off-limits? And for those who have no money hangups around this stuff, feel free to regale us with tales of things you weren’t allowed to use as a kid — my memory is stuck on these little soaps that were shaped like roses and seashells. :-)

One More Thanks

Before we go… As another thanks, we want to publicly call out our top recent commenters, all of whom we consider friends, and who all write excellent, thoughtful blogs that we love. Check these rad bloggers out! Big smooches going out to:

• My girl Maggie @ Northern Expenditure
• Amber @ Amber Tree Leaves
• The PE @ The Personal Economist
• My girl Sarah @ The Yachtless
• FF @ Fervent Finance
• Neil & Kalie @ Pretend to Be Poor

xoxo