Are You a Spender or Saver ?

[Helena]

Just say NO to consumerism
and GET OUT OF DEBT !!


High income, low net worth could doom retirement

Have you ever thought that if you were making $100,000 or more it would be easy to save money?
Apparently it isn't, even for people making upward of $250,000. There's no shortage of high-income earners
who have relatively little net worth.



Entire article and chart at link below

High income, low net worth could doom retirement (Page 1 of 2)

 

[Grizz]

Good topic. I have seen my yearly family income increase about 300% in the last 10 years, and we do save some of it. The strange thing is, our standard of living is increasing at a faster rate than our savings.

I don't feel a need to keep up with the Jones', but somehow over time you find a way to justify a car that is newer, or a new electronic gizmo. Next thing you know, there you have it, a new improved lifestyle that you've become accustomed to. It's insidious, and although I have had some success battling some of the spending urges, I'm certain that it is a human natural instinct that we're all up against.

 

[RetireeRobert]

Have you ever thought that if you were making $100,000 or more it would be easy to save money?
Apparently it isn't, even for people making upward of $250,000. There's no shortage of high-income earners
who have relatively little net worth.

High income, low net worth could doom retirement (Page 1 of 2)

Thanks for the link---some interesting stats. I found it fascinating the column of the chart that showed for income categories of under $25k (meaning down to $0) all the way to income of up to $250k, the percent of income needed to pay bills was almost a constant around 53%, 55%, 58%---across ALL those income categories.

As to people seeming to be in debt no matter how much they earn, spending it all and then some, I know several like that. Afrined from high school whom I roomed with in college and afterwards for awhile, became a pharmacist and earned big bucks from day one. I (a saver) have been retired seven years, but he is still working and has to work to age 66 or perhaps longer to be able to retire. He was always a big spender and frittered his money away. I remember 24 years ago getting him to open IRA accounts and start saving. Within about five years he had withdrawn his IRA funds (yes, and paid the early withdrawal penalty) to travel to South America or something. Even today he makes $105k salary, but he only really started thinking retirement and started funding it about 12 or 15 years ago. Hence he doesn't see being able to stop working till 66 or as late as 70. He may have his mortgage on his house paid off by then.

I (the saver) have been debt free for some 12 years.

Go savers!

 

[bots2019]

My favorite stat on the chart - 9% of those earning over 250k don't save because they don't make enough to make ends meet!

I think personal spending habits are often a matter of satisfaction. My grandfather, an uber-saver, seemed to derive perverse pleasure from not spending money, even to the point of deprivation.

This mentality seemed to filter down generations, to my mom, an obsessive second hander, and me, a LBYM type who spends just enough to avoid becoming a card carrying cheap bastard. We're moving in the right direction at least, maybe my son will be able to buy a new car someday, personally I get more satisfaction out of a deal.

 

[Helena]

I live a conservative lifestyle in a less expensive
part of the country and am completely out of debt.
I have never made six figures in my life but have been
able to save with little effort. Yet, many who do make
six figures can't make ends meet? I wonder what
percentage of their income goes to pay interest
on debt ?

 

[RetireeRobert]

I live a conservative lifestyle in a less expensive
part of the country and am completely out of debt.
I have never made six figures in my life but have been
able to save with little effort. Yet, many who do make
six figures can't make ends meet? I wonder what
percentage of their income goes to pay interest
on debt ?

It is amazing, almost unfathomable, isn't it.

I too never made six figures in my whole career. But I retired early, no debt, am sending three kids to college, getting ready to build a new house for cash, and I never felt the slighest strain geting to this point. But my $105k friend (and way back when, I started out of college at $7k a year--he started at $12k) at age 60 has 6 or 9 years to go to reitre and to just then get his mortgage paid off.

I just can't understand it myself, given my own easy experience, but it happens all the time to lots of people. I just don't get it.

 

[Puzzley]

I've always known that my wife and I were not very diciplined savers, so the answer for us is to save it before we ever see it... I've maxed out every savings vehicle and retirement opportunity that my Megacorp has offered, and every bonus for the last 12 years has gone entirely into a deferred compensation account. This has forced us into a cheaper lifestyle, and has allowed us to save about 50% of pretax income for a number of years. It'll be a little late, but I should be able to be FIREd next year, at 63...

 

[lazygood4nothinbum]

i just don't like shopping so i'm a saver by default.

 

[FinanceDude]

I'm a saver, and DW is a shopper, although her Target shopping sprees have been under $250 lately, so we are making some "progress".........

Also, any advice for a guy whose DW just buys two of everything so she doesn;t ahve to try it on in the store, and we end up with stuff with tags hanging on it for long streeches of time in neat piles??.............

 

[Nords]

I wonder what percentage of their income goes to pay interest on debt ?

Sounds like a lifestyle issue to me, and as long as they're willing to keep paying 7.45% of their income to FICA & Medicare... well, who am I to criticize their blatant desire to work for the rest of their lives?

 

[RetireeRobert]

Also, any advice for a guy whose DW just buys two of everything so she doesn;t ahve to try it on in the store, and we end up with stuff with tags hanging on it for long streeches of time in neat piles??.............

So, you mean she buys two different sizes, one of which she can be pretty sure will fit? Sounds like an expense way to save a few minutes at the store. Have you tried talking to her, maybe explaining how expensive that "time saving" is?

Just kidding. But really, tell her that time she "saves" at the store, is valued at the price of whatever that dress costs. And then tell her how long you or she has to work to earn that much money.

Get her thinking along the "your time or your life" mentality-----everthything you want to buy cost not "only" dollars, but ALSO the time you have to spend to earn those dollars. Is spending that much time working "worth it"? Powerful concept. Try "calmly" explaining it to her

Maybe this approach would be helpful. On the other hand, how much "time" do you want to trade to pay for a divorce?

 

[MooreBonds]

Also, any advice for a guy whose DW just buys two of everything so she doesn;t ahve to try it on in the store, and we end up with stuff with tags hanging on it for long streeches of time in neat piles??.............

one simple way: restrict her to cash only. That way, she can only buy half as many "pairs" of dresses/shoes/etc. She should find out really quick that it's worth her time to spend 1 minute in the dressing room so she can then buy the higher number of dresses that she wants.

 

[Milton]

I have seen my yearly family income increase about 300% in the last 10 years, and we do save some of it. The strange thing is, our standard of living is increasing at a faster rate than our savings.

Wow.

I don't feel a need to keep up with the Jones', but somehow over time you find a way to justify a car that is newer, or a new electronic gizmo. Next thing you know, there you have it, a new improved lifestyle that you've become accustomed to. It's insidious, and although I have had some success battling some of the spending urges, I'm certain that it is a human natural instinct that we're all up against.

No, not everyone.

 

[W2R]

I am spending the same now as I did when my income was lower. I just continue to let my income rise, but don't increase my spending.

Since I am single, this works pretty well. I don't feel especially deprived, because I have every bit as much to spend as I did last year (and the year before, and the year before, and so on). I am frugal but I also buy some things for fun.

I will be getting a cash award sometime soon. I have no idea how much it will be, but the last one was $1200. I am not thinking of "what treat will I buy for myself". Instead am thinking of how great it will be to be able to contribute the max to my Roth in January instead of later. So, I guess I'm a saver!

 

[Caoineag]

I definitely have upped my standard of living more than I think appropriate which is why I am currently digging back out of the whole into a positive savings but then I see myself as a spender. Not neccessarily in the traditional ways, but still a spender. So I am following the tradition of many a smart spender before me by taking my money away from myself before I can spend it. That sad part is I am the financially savvy partner in my marriage but we are getting there.

 

[FIREd]

I am spending the same now as I did when my income was lower. I just continue to let my income rise, but don't increase my spending.

Same here!

But really I am a spender at heart. I love to buy things. I love waiting with anticipation for the purchase, I love browsing for, researching and comparing products on the internet, looking for deals, and then finally the day has arrived... I wake up in the morning energized and in a good mood. I am gonna spend that money and feel good about it. Excitement is building, my heart is beating a bit faster, I am ready to enjoy myself. So I log on to my Vanguard account and buy a few more share of my favorite mutual fund... Aaaahhhhhh!

 

[W2R]

Same here!

But really I am a spender at heart. I love to buy things. I love waiting with anticipation for the purchase, I love browsing for, researching and comparing products on the internet, looking for deals, and then finally the day has arrived... I wake up in the morning energized and in a good mood. I am gonna spend that money and feel good about it. Excitement is building, my heart is beating a bit faster, I am ready to enjoy myself. So I log on to my Vanguard account and buy a few more share of my favorite mutual fund... Aaaahhhhhh!

I guess I am a spender at heart too, then! I really get a charge out of putting my money into a mutual fund. Just got $5K of Vanguard 500 on November 2nd. So far I've lost $64 out of that $5000, but it was still fun.

 

[UncleHoney]

I'm trying to visualize life with an after tax burn rate of $10k-$15k per month. Must be like living in the drivers seat of an F16 with full afterburners on, covering a lot of territory but never seeing a thing.

Lets see..... there would be a mortgage on the McMansion, property taxes and insurance. Then car payments on a bimmer or two or a couple of SUV's and cars for the kids and all the gas and service bills.

Everyone in the house would have a cell phone with txt messaging. There would be highspeed wireless and cable TV with all the sports packages for the 65" HD flat screen and separate feeds for the kids rooms. Need to throw in a few IPods and IPhones for good measure along with some laptops.

Outside I guess there would be the pool and the pool man and the lawn service to keep the place looking nice.

Maybe go out to eat 3-4 times a week (wouldn't want to mess up that nice $75K kitchen with all the fancy stainless steel appliances). Maybe make a few three day trips each month to the beach or skiing in Aspen. Oh yes, got to have the latest skis and the accouterments to go along with them.

Don't forget the membership to the golf club and gym and the latest carbon fiber golf gear.

Hummmmm must be missing something from the list but can't think what it would be right now. Maybe throw in a few jet skis and snowmobiles.

My big question is; How do these people find time to enjoy all the stuff they're paying for? Just writing checks for all this stuff would keep me busy and worrying what will happen when it all comes to an end. Looks like they're running down the street carrying a leaking keg of gun powder.

 

[Meadbh]

I am spending the same now as I did when my income was lower. I just continue to let my income rise, but don't increase my spending.

Since I am single, this works pretty well. I don't feel especially deprived, because I have every bit as much to spend as I did last year (and the year before, and the year before, and so on). I am frugal but I also buy some things for fun.

W2R, you and I are two of a kind!

I'm wondering two things.
(a) how much does a person's cultural background influence saving vs. spending?
(b) why is there an ad for $4m properties on this page?

 

[bots2019]

(b) why is there an ad for $4m properties on this page?

Yeah, I thought that was pretty funny. Rule #1 of marketing - know your audience!

btw - that's starting at 4M, I'm sure you could also find nicer ones.

 

[Helena]

why is there an ad for $4m properties on this page?

I wouldn't live on an island if it cost 4 dollars...
being surrounded by all that ocean would keep
me constantly nervous... I don't even want to
live on the coast... that's the result of being
born and raised in the desert.

 

[BUM]

Spender or saver? Now I'm a spender, because I've been a saver all my life.
But I still like to save while spending

 

[W2R]

W2R, you and I are two of a kind!

I'm wondering two things.
(a) how much does a person's cultural background influence saving vs. spending?
(b) why is there an ad for $4m properties on this page?

(a) I'll bite. I would imagine that a lot of Americans (and a lot of those on this board) have a cultural/ethnic background like mine, and that it is really not all that unique. Despite the gorgeous German model depicted in my avatar, actually my ethnic background is Scottish-American and my paternal ancestors came over in a boat in the early 1730's. My maternal ancestors followed not too long afterwards. I have a big dose of American pioneer in my background, moving West, working hard and making do with what they had. Massive, massive doses of Puritan ethic have been passed down to me through the generations, and this has plagued me unmercifully and I try (often unsuccessfully) to put it in perspective. Some Calvinist background/attitudes as well.

(b) I found myself laughing at the ad! Being able to afford a property like that for ER is a nice fantasy, but realistically, even if I could afford it I doubt I would be interested. See (a), above.

 

[tricky88]

I'm a saver - no surprise. Most people here are bound to be. However, it is a never-ending struggle. Some months I am mystified to see how much we spent on things - something, somewhere - when I thought we were being very frugal. I think it must be like meditation; you practice it, but most people never perfect it. And the ones that get really close to it are probably pretty annoying. I always try to give thoughtful gifts for christmas and birthdays that aren't bought from a big chain store and just show off the appropriate price tag. I try not to keep gadgeting-up with ipods, cell phones, cable and other constant monthly bills that just become part of an accepted routine. But it does never end.

I'm sick of ads, sick of consumerism. Sick of the treadmill mentality that infects us in the US (and probably in other countries too to some extent). I wish I was better able to fight it on a larger scale than just on my own. Reading this forum regularly and seeing there are others out there that feel the same way is a big source of encouragement towards that.

 

[Khan]

(a) I'll bite. I would imagine that a lot of Americans (and a lot of those on this board) have a cultural/ethnic background like mine, and that it is really not all that unique. Despite the gorgeous German model depicted in my avatar, actually my ethnic background is Scottish-American and my paternal ancestors came over in a boat in the early 1730's. My maternal ancestors followed not too long afterwards. I have a big dose of American pioneer in my background, moving West, working hard and making do with what they had. Massive, massive doses of Puritan ethic have been passed down to me through the generations, and this has plagued me unmercifully and I try (often unsuccessfully) to put it in perspective. Some Calvinist background/attitudes as well.

(b) I found myself laughing at the ad! Being able to afford a property like that for ER is a nice fantasy, but realistically, even if I could afford it I doubt I would be interested. See (a), above.

I grew up on and around small farms in Maine (father's family) and New York (mother's family); mother's parents immigrated from Germany.

The farm houses/barns/... in NY were built by grandfather and his children and other relatives. They sewed many of their own clothes, grew most of what they ate (animal and vegetable), hunted and gathered in the large woodlots, and brewed their own applejack.

Folks in Maine were similar; some relatives were fishermen.

Frugality was simply what was.