We’re on track for $15 million net worth in a few years, but spend $700K annually – is that excessive?

A Reddit user is trying to figure out if his spending is out of bounds. Considering that he spends $700,000 per year, it may seem at first glance like the answer to that is obvious. However, there is more to the story worth considering before deciding that his spending is out of control. 

So, is his excessive spending justified by his situation?

How can you spend $700,000 per year?

For those getting by on far less than $700K annually, it may seem hard to believe that spending that much money is even possible. But, here is where the Redditor said his funds are going:

• $10,000 per month for rent on a three-bedroom home in his city apartment
• $9,000 per month for the mortgage and expenses of his weekend home
• $25,000 per month for credit card bills and other expenses
• $66,000 annually for private school
• $6,000 monthly for his housekeeper, parking, insurance, and medical deductions.

While he said that his monthly credit card bill sounds like a lot, he uses his cards to cover routine expenses, including things like vacations and charitable contributions. The card use has been steady at around $20,000 to $25,000 monthly for years. 

So, all of this adds up to around $700,000 annually, and some of the expenses, such as the rent and the weekend home and private school, may be difficult to get out of. 

Is the Reddit user’s spending out of control?

While it’s easy to see how the numbers add up, the big question is whether spending this much is justified. To answer that, though, you need to look at the other side of the coin: Income. 

While the poster is spending a lot, he is also making a lot of money. His annual income is around $2 million per year.

He has also used this money wisely to build his assets. He has a liquid net worth of $9.5 million, and another $3 million in unvested stock and VC investments. He has a target net worth of $15 million because that would allow him to continue spending around $600K per year, assuming he follows the 4% rule, and he’s on track to hit that within three to five years. Since he’s only 49, he would then be able to retire at a pretty young age with plenty of cash to live a lavish life.

Given those circumstances and the fact that he’s spending less than half of his income, the Reddit user’s lifestyle doesn’t seem that out of control. He’s clearly saving a lot, he’s accomplishing his goals, and he’s enjoying life. While he certainly could be a little more frugal, if he’s happy with the schedule on which he’ll achieve financial independence, there’s no real need to force himself to do so.

Of course, he may want to check in with a financial advisor to see if there is a way to streamline and optimize his spending and investing habits, as it never hurts to have a second set of eyes on your financial plans — especially given how much money is at stake. On the whole, though, the poster is in pretty good shape, and if he stays the course, he should be on track to a secure future despite his big spending habits.