Income is Income

[Matt]

Following up on my troublesome predicament regarding the $5,200 upgrade, I’ve been reflecting on ‘how’ I could pay for this, if I were to…. I particularly enjoy the way that my brain wants me to believe something, and the effect that has on decision making.

After writing the original post, I wandered to the mailbox, pondering how odd it felt to have a series of positive people and comments, since recently there’s been too many weirdos hanging around the site.. when I arrived, I found a ‘Big Fat Check’ from Ebates for $461. <insert Ebates link and promise that you too, can get rich here, lowly intern>

Big Fat Check

This got me to thinking, does this mean the upgrade now is really only ~$4,700, because of this free money? This is a slippery slope, and taking it a step further, if the check was valued at exactly $5,200, would that make it free to upgrade?

That’s how a lot of the travel community thinks about income and expenses. I see it a lot with things like ‘I get SPG points for free because the fee is $10 and I get 2% cashback on $500 so it is zero’.

The reality is that you spent the $10, and then you decided to replace that $10 with money that you earned. No difference from spending the $5,200 on the upgrade, and then replacing it with real money, money earned from Ebates <$$$ Link> or from a side gig.

Another reminder here, in that income is income, expense is expense. It is very easy to blur lines when transactions create income and expense at the same time, but they must remain delineated.

Upgrading a Cruise

• Is Matt going to talk himself into the upgrade?
  • Looks like it!
  • No way, he’s not that crazy
  • Who cares, just tell me how to MS
  Where will this end?

The post Income is Income appeared first on Saverocity Travel.

Continue reading...

 

[bradfol8]

Money is for spending and you only live once so......Looks like it!

 

[Josh F]

I think it's a waste of money personally. However, I do concur that income is income. I see lots of people post that since they got a $300 sign-up bonus from a checking account that now their $300 positioning flight was actually free... I understand it being easier to justify that way - I also understand that now that you have more $ you can do things like that, but you still could have spent that $300 on anything else in the world. I look at that differently than specific points (e.g. IHG) which have more limited uses outside of IHG Hotels...

 

[AnyNameYouWish]

I'm not sure. I understand the issued room isn't up to the expected norm but 5200 is a lot more. It might come down to the quality difference it allows with a child.

That's what tips it for us anymore. I will pay significantly more if I can close a door between the sleeping areas of my husband and I and our children. When they were younger, it was different. So whatever that thing is, that you need to make traveling with your child the most comfortable, if that 5200 allows that and going without the upgrade does not, then I vote for the upgrade. Otherwise, no.

 

[GettingReady]

Money is for spending and you only live once so......Looks like it!

I respectfully disagree. I retired last year and my husband this year. We saved over the years and I never felt deprived. Okay, maybe a twinge of envy when other people were driving new cars, but we have no regrets. On the contrary we're so thankful we can retire, delay SS, and according to CFPs have a greater than 99% chance of enough money based on living to age 100---all because we saved money during our working years. Delayed gratification has been well worth it for us.

 

[Josh F]

I respectfully disagree. I retired last year and my husband this year. We saved over the years and I never felt deprived. Okay, maybe a twinge of envy when other people were driving new cars, but we have no regrets. On the contrary we're so thankful we can retire, delay SS, and according to CFPs have a greater than 99% chance of enough money based on living to age 100---all because we saved money during our working years. Delayed gratification has been well worth it for us.

I find that the middle-ground (perhaps upper-middle ground) approach works well. We go on quite a few vacations that are pretty subsided with points. However, we stretch those points further by staying at nice hotels, but not the top of the line hotels. We generally travel in economy (splurged once for biz tickets for our 10 year anniversary). We eat at good/nice restaurants, but not those crazy expensive ones. That's why to me $5,200 for an upgraded statement room is crazy. We spent $1K (+ taxes/port fees) on our last 6 night cruise with RC - last minute deal in the off-season + some deals going on, so that's for 2 adults/2 kids. Sure the interior room was a bit tight - but it was just for sleeping. We have some friends, who go on 1 crazy-extravagant trip every 1-2 years. I'd much rather go on 3-4 trips every year and have fun.

 

[bradfol8]

I respectfully disagree. I retired last year and my husband this year. We saved over the years and I never felt deprived. Okay, maybe a twinge of envy when other people were driving new cars, but we have no regrets. On the contrary we're so thankful we can retire, delay SS, and according to CFPs have a greater than 99% chance of enough money based on living to age 100---all because we saved money during our working years. Delayed gratification has been well worth it for us.

You also have to understand it's not your pockets your pulling money out of with this topical discussion....it is in fact his so....for you I get it....for him...well we don't know what's in his pockets. Cheers!

 

[GettingReady]

Does the depth of the pocket really matter? Most millionaires I know are pretty frugal and they got there because of that. Sure they splurge occasionally but it's not a lifestyle. I venture to say if they thought in terms of "Money is for spending and you only live once..." they never would have made it. This isn't directed at you personally, but that was my parent's attitude and they lived from paycheck to paycheck. My brother and I chose a different path and both of us have a NW over 7 figures. Being a high income earner, he's done way better than me. Anyway, fun discussion and I definitely agree with Matt that there's a slippery slope and it's easy to rationalize. I have more than enough points for our travel needs, so I'm starting to focus more on CB since we're delaying SS.

 

[labboypro]

Most others are covering the "is a cruise 'worth it'" commentary. Instead...

Be careful (this is general advice to all) to not count your money twice. When you consider your ebates check as 'free money,' you need to go back and un-count it on whatever deal you did to get the cashback in the first place. I see this double-count a lot on the bigger deal boards (I've caught myself doing it on occasion)...

This week: "I just got 'free money' from CB site."
Three months ago: "I saved $nnn, including cashback."

/2 cents

 

[GettingReady]

Excellent point. I don't count CB until if/when I receive it. If I'm buying 3PGCs, I don't factor it into the decision on it being a deal unless it's an AO that I know works, or something like Visa checkout at Newegg.

 

[Matt]

Does the depth of the pocket really matter? Most millionaires I know are pretty frugal and they got there because of that. Sure they splurge occasionally but it's not a lifestyle. I venture to say if they thought in terms of "Money is for spending and you only live once..." they never would have made it. This isn't directed at you personally, but that was my parent's attitude and they lived from paycheck to paycheck. My brother and I chose a different path and both of us have a NW over 7 figures. Being a high income earner, he's done way better than me. Anyway, fun discussion and I definitely agree with Matt that there's a slippery slope and it's easy to rationalize. I have more than enough points for our travel needs, so I'm starting to focus more on CB since we're delaying SS.

Part of the problem is that we're already frugal, but if we keep going on at this rate, we will very likely have too much remaining.

The complication for me is 'where does it end' the cruise upgrade itself is a single item, but this itinerary includes opportunities for Safari and other things.. there's a whole bunch of 'once in a lifetime' opportunities from it. So when the mindset changes, what are the broader effects.

A part that bothers me is that even if we were to spend $20K on this vacation (a ridiculous sum for me) then we would still spend far less than people at our stage in life, and still be far ahead of the game... I'm just wondering about what happens if we tilt back many areas, such as deciding it is time to get a new car, or to do other things like that too.

Just an interesting topic for me to ponder through, since the $5200 itself, in isolation is affordable, but the other stuff could go anywhere....

 

[redbirdsj]

Part of the problem is that we're already frugal, but if we keep going on at this rate, we will very likely have too much remaining.

The complication for me is 'where does it end' the cruise upgrade itself is a single item, but this itinerary includes opportunities for Safari and other things.. there's a whole bunch of 'once in a lifetime' opportunities from it. So when the mindset changes, what are the broader effects.

A part that bothers me is that even if we were to spend $20K on this vacation (a ridiculous sum for me) then we would still spend far less than people at our stage in life, and still be far ahead of the game... I'm just wondering about what happens if we tilt back many areas, such as deciding it is time to get a new car, or to do other things like that too.

Just an interesting topic for me to ponder through, since the $5200 itself, in isolation is affordable, but the other stuff could go anywhere....

For me it's a constant assessment of directing spending toward areas where it will have the maximum effect on my happiness. This will obviously be different for each person/family. It will also change over time as you move through different phases of life. For us it's travel, splurging on nice meals with friends, high quality food generally, memorable experiences, and conveniences that give us extra leisure time (maid, spending extra for the better located hotel, etc.). It's not: fancy cars, a huge house, the latest toys/gadgets, memberships in social status clubs, or other traditional trappings of the rat race.

I know many high income earners who barely save at all because they follow the spending habits of their peers without much thought because that's just what people in their peer group do.

 

[GettingReady]

For me it's a constant assessment of directing spending toward areas where it will have the maximum effect on my happiness. This will obviously be different for each person/family. It will also change over time as you move through different phases of life. For us it's travel, splurging on nice meals with friends, high quality food generally, memorable experiences, and conveniences that give us extra leisure time (maid, spending extra for the better located hotel, etc.). It's not: fancy cars, a huge house, the latest toys/gadgets, memberships in social status clubs, or other traditional trappings of the rat race.

I know many high income earners who barely save at all because they follow the spending habits of their peers without much thought because that's just what people in their peer group do.

Different phases of life definitely change things. When you're younger, you often care more about "things" which become less important as you age. The same with buying new clothes. I think it also depends on personality. I enjoyed saving money over the years and often would do so with any OT I earned. It was a huge transition when we quit saving and started spending with retirement. During the "saving years" I was hyper-focused and hated it when my husband bought something that wasn't on the list. Now I just shrug it off.

Matt, one thing I'm curious about...your concern over "too much remaining." My two older kids didn't want an inheritance because they received money from their dad. Nonetheless, we have gifted the grandkids $15K each via the parents to use for college or whatever. Our youngest will get the bulk of our estate. My husband would like to leave him a significant amount but I'm fine either way. He's got a great job, on the right track, etc. What's too much (rhetorical question). Are you planning on leaving anything to the kids/grandkids? What about charities? Is "too much remaining" another justification? The same with a "once in a lifetime" experiences? Just playing the devil's advocate here. I also think using other people as a benchmark is another form of justification. If you have the money and want to spend it, it's probably not necessary to justify it to yourself or anyone else.

 

[Matt]

Matt, one thing I'm curious about...your concern over "too much remaining." My two older kids didn't want an inheritance because they received money from their dad. Nonetheless, we have gifted the grandkids $15K each via the parents to use for college or whatever. Our youngest will get the bulk of our estate. My husband would like to leave him a significant amount but I'm fine either way. He's got a great job, on the right track, etc. What's too much (rhetorical question). Are you planning on leaving anything to the kids/grandkids? What about charities? Is "too much remaining" another justification?

By too much remaining, I just feel that after leaving something to the kid/s and/or to charity is something of an arbitrary 'sweeping' of the account. IE if we decided to leave $1M vs $1.1M then it doesn't really matter, but what might is any missed experiences on the way there.

I'm going to give it some more thought, it is certainly stirring up some good ideas on my side.

 

[labboypro]

...we will very likely have too much remaining.

This is a quandary I will not likely ever face... unless I win the lottery (I guess I'd have to buy a ticket) or there's a previously unaccounted-for rich uncle who's leaving me something, I'll probably have to run a sad story Kickstarter campaign for my end days. Oops.

 

[bradfol8]

Does the depth of the pocket really matter? Most millionaires I know are pretty frugal and they got there because of that. Sure they splurge occasionally but it's not a lifestyle. I venture to say if they thought in terms of "Money is for spending and you only live once..." they never would have made it. This isn't directed at you personally, but that was my parent's attitude and they lived from paycheck to paycheck. My brother and I chose a different path and both of us have a NW over 7 figures. Being a high income earner, he's done way better than me. Anyway, fun discussion and I definitely agree with Matt that there's a slippery slope and it's easy to rationalize. I have more than enough points for our travel needs, so I'm starting to focus more on CB since we're delaying SS.

Never did I mention the depth of his or your pockets. I only speak from the idea of what one is willing to take from their pockets based on a "special" situation. This def seems like a special situation as Matt put it as being a possible "once in a lifetime."

 

[bradfol8]

Most others are covering the "is a cruise 'worth it'" commentary. Instead...

Be careful (this is general advice to all) to not count your money twice. When you consider your ebates check as 'free money,' you need to go back and un-count it on whatever deal you did to get the cashback in the first place. I see this double-count a lot on the bigger deal boards (I've caught myself doing it on occasion)...

This week: "I just got 'free money' from CB site."
Three months ago: "I saved $nnn, including cashback."

/2 cents

CB should be looked at as the cherry on top of whatever great deal you found that pushed you through a portal in the first place. I like to see it as new found money that was never originally calculated into the committed spend made for the deal.

 

[GettingReady]

Never did I mention the depth of his or your pockets. I only speak from the idea of what one is willing to take from their pockets based on a "special" situation. This def seems like a special situation as Matt put it as being a possible "once in a lifetime."

My apologies. I'm really not trying to be antagonistic. Maybe because I'm older, but I've found there's always "once in a lifetime" experiences that come up. Do something because you want to, have the money, and feel it's worth it---not because of FOMO (fear of missing out).

See what you started, Matt! All this aside, I will always appreciate your help in planning our first award trip in 2015, and taking what was an overwhelming endeavor and helping me to break it down in pieces.

 

[R.R.]

Great thread -- I have a special line item on my budget spreadsheet for extra income, whether from cashback that is cashed in, or freelance income, or any reimbursements. But I don't count cashback until it's cashed in and available for spending, and any such income is balanced against the full amount of any spending expenses entered in the expenditure section of my budget spreadsheet.

All this factors in to an annual savings goal (which filters up to a lifetime FIRE goal), so if I'm meeting that annual goal, then I don't stress about individual expenditures for vacations. I don't think I'm too affected by FOMO, but I do think strategically about whether I'll likely return to a destination or not, in regard to whether to plunge in to various activities. Maybe I could rethink each one, and perhaps accelerate my goals, but I'm satisfied with my current pace.

 

[GettingReady]

Having a goal is huge. We never got in on the FIRE movement and only found out about different groups three years before retirement. Those three years still helped with final preparations and striving towards a goal was a big part. After that everything became focus on miles and points which has made a big difference in retirement travel.