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Old 11-06-2008, 01:29 PM   #21
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I know I'm not addicted to savings, even though I fit all three criteria listed in the article. I view money as instrumentally valuable. It buys me and my family things, experiences, and security. Through diligent saving and investing, I plan to (eventually) have enough funds to live the remainder of my life as I see fit and do whatever I want. If that makes me addicted to something, then I guess I'll have to accept that nomenclature.

I would rather be a savings addict who is free from the requirement to work for a living at a relatively young age than someone who is 65 and still chained to a desk and working to put food on the table.

As with anything, moderation is the key. There is no reason to unduly sacrifice quality of life today in exchange for some golden ideal that early retirement holds. At the same time, it is not good to squander your wealth today on things that bring little enhancement to quality of life, when that money can grow significantly over the years and provide a better future quality of life for you.
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Old 11-06-2008, 02:45 PM   #22
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Quote:
Originally Posted by Geoffrey View Post
I found this article thought provoking:

http://articles.moneycentral.msn.com/Investing/StockInvestingTrading/secret-millionaires-addicted-to-saving.aspx?page=all

The central premise is that many "savers" do so as a way of dealing with their anxiety/insecurity over possibility of one day running out of money. The author suggests that you might fall into this category if you:

> save more than 20% of your earned income each year
> spend and give away less than 3% of your total net worth each year
> increase your net worth by more than 5% from year to year

As for myself: guilty, guilty, guilty.

Continuing, the author suggests,

"Savers also experience a rush of good feelings -- happiness, relief or optimism -- right after they make a bank deposit, reduce their spending or make a long-term investment. This is often when they feel most vital and most pleased with themselves and are most able to relax and enjoy the other aspects of their lives.
. . .
But for Saver types, there's still a downside --- because this financially derived happiness is only temporary. The part of our mind that can never have enough soon realizes that survival is still far from ensured, and it wants another pleasurable experience -- more security, more abundance, more happiness -- so it looks for a way to save even more."

I must admit that I sometimes struggle with the question of whether I am simply frugal, or whether I am a compulsive saver. Any other addicts out there? Any thoughts/comments?
The last three or so years I was employed, I was saving around 50%.
I'm still saving, but it is less compulsive. I have to get past the idea that not saving is a moral failure; as long as income exceeds outgo by a few dollars, everything is copacetic.
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Old 11-06-2008, 02:47 PM   #23
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Between savings and investments, we'll probably be putting 1/3 of after-tax income away. Hasn't stopped our net worth from dropping nearly 25% this year....
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Old 11-06-2008, 03:04 PM   #24
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I suppose we're guilty as well. Foolish us, living within our means and believing that things don't always go according to plan!

At one point we were saving 45% of our income to tax-deferred accounts because we were getting killed on taxes and we didn't want a 2nd home, RV, boat with a galley, etc. We had everything we needed and most of what we wanted, so why spend more? I drove the same pickup truck for 18 years because, well, the thing just wouldn't die.
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Old 11-06-2008, 08:26 PM   #25
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If nothing else, this type of person can always find a job as a controller or CFO.
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Old 11-06-2008, 09:33 PM   #26
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Quote:
Originally Posted by Khan View Post
The last three or so years I was employed, I was saving around 50%.
Piker

I'd feel like a crazed profligate if I spent half of what I make.
Then again, most people would recoil from my lifestyle necessitated by extreme saving, but it is my choice.

The revolting issue is that the government has quite effectively wiped out our ability to safely make a reasonable return on saved sums. Between an obscenely low interest rate and taxes on that small amount, it is obvious that the "saver" is a reviled species in modern society. Even on this board it seems few are all that terribly upset with the current economic situation vis--vis saving.

There seems to be a general feeling here that we are just going through a slightly intense round of economic slowdown with a return to normalcy in the not too distant future. Most of the ERF posters seem to be into equities as the primary means of growing thier money any stocks very much have thier place when acquired at the right price. Thay is to say, cheaply.

I would sugest a more thourough consideration of the general economic condition at a global level. Things might not be completely rosey. Maybe it would be better to can the frugality approach and just live for the bleeding moment?
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Old 11-06-2008, 10:18 PM   #27
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Quote:
Originally Posted by FUEGO View Post
I know I'm not addicted to savings, even though I fit all three criteria listed in the article.
Denial ain't just a river in Egypt.
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Old 11-06-2008, 10:25 PM   #28
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What a great addiction!

I have to tell myself and make an effort to not spend. If only I could get addicted to saving.

Anyone know how I can become an addict?
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Old 11-07-2008, 07:22 AM   #29
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"Savers also experience a rush of good feelings -- happiness, relief or optimism -- right after they make a bank deposit, reduce their spending or make a long-term investment. This is often when they feel most vital and most pleased with themselves and are most able to relax and enjoy the other aspects of their lives.



This is me!! Just threw in an extra $29.00 into the savings account. I'm giddy
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Old 11-07-2008, 03:22 PM   #30
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I must admit that I sometimes struggle with the question of whether I am simply frugal, or whether I am a compulsive saver. Any other addicts out there? Any thoughts/comments?
I've always been an income-oriented investor, and you gotta have capital to generate income from that capital, so I've always been an aggressive saver. It's true that I could have acquired substantial capital much more quickly by borrowing it, but that entails risks I wasn't willing to take. So, I just lived modestly, viewed myself as a little company with a profit/loss statement and balance sheet, and managed my finances carefully. So far, I have no regrets.

What would life be like in the U.S. if we became the world's largest creditor nation instead of the world's largest debtor nation? Is this a goal worth sacrificing for? I think so, but no one is listening to me.
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Old 11-08-2008, 10:11 AM   #31
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Check book "Spend to the End"

Since most people don't have an opportunity to be in on a successful tech start-up, or professional athlete and make millions.....the only way to retire early is to spend less and save more. I left the workforce at 55, in part by saving half my gross each month from my net.

All this frugality has a couple of potential downsides. First, as mentioned in the book, you can end up with too much in tax-sheltered accounts and pay a lot more income tax in your elder years via mandatory minimum withdrawal requirements, and certain to be higher future tax brackets. Another risk they mention is the estate tax, currently 55% above $2000,000, and needing to be revised by the new administration in 2011.
One might think that reaching these levels is not possible, but early participation and compound returns can make it true.
As the book implies, you might be still able to retire early, and have a more level standard of living by not saving as much.

I know from experience, that savings habits are hard to break. I don't go to Starbucks even though I could. Two buck Chuck red wine from Trader Joes is very satisfying.....

One of the notes in the book is that a daily visit to Starbucks over a lifetime is equal to the price of a BMW 325.
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Old 11-08-2008, 12:22 PM   #32
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I have been a "saver" for about 30 years; ever since the last of four kids left the nest. Sold home moved far away to be sure they did not return just joking about the "return", but I did brainwash them suggest they not try that. Now after all that time I am working on trying not to save a dime - just spend all cash or other earnings as it comes in and just maintain a static "nest egg" adjusted for inflation (CPI-W increases). It is pretty hard to do but we are working on it.
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Old 11-08-2008, 06:22 PM   #33
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I have been a "saver" for about 30 years; ever since the last of four kids left the nest. Sold home moved far away to be sure they did not return just joking about the "return", but I did brainwash them suggest they not try that. Now after all that time I am working on trying not to save a dime - just spend all cash or other earnings as it comes in and just maintain a static "nest egg" adjusted for inflation (CPI-W increases). It is pretty hard to do but we are working on it.

30 years AFTER your 4th child left home? Geez, I thought I had kids early, but my 4th won't be 18 till I'm 49. I should have started earlier or not had the last two
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Old 11-09-2008, 10:20 AM   #34
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I wish we were addicted to saving. We do save a big chunk of our income, but I'll admit I'd love to go on a spending spree.
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