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Re: Arbitrary Savings Goals
Old 09-28-2005, 07:21 PM   #21
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Re: Arbitrary Savings Goals

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Originally Posted by brewer12345
Take it easy on the poor guy. *I think most of us on the younger side just try to keep plodding along as best we can with either a "magic number" or a rough idea in mind. *If you are more than 5 years away from potential ER, there is no way you can plan everything out. *There are simply too many variables that could change. *Expenses, number of family members, interest rates, asset returns, inflation outlook, etc. could be and probably will be very different by the time any of us young 'uns are even close to ER.
Exactly. *We are at least 12 years away from ER, so our *savings goal is definitely somewhat arbitrary. *Right now we live overseas, travel a lot, own no property, and have no kids. *At least a few of those factors will likely change before we retire, and then there's the stuff you mention beyond our control (like inflation and returns) that may alter our target.

2005 has been a good year for us, and for the first time we feel very comfortable with our current standard of living. *Right now maintaining that standard of living is our ER target, and it will no doubt change, but its something to shoot for in the meantime.
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Re: Arbitrary Savings Goals
Old 09-28-2005, 07:53 PM   #22
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Re: Arbitrary Savings Goals

Perhaps the point I was inartfully trying to make was that imposing an arbitrary savings goal can be a form of self-imposed tyranny, i.e., the tyranny of having to chase after the arbitrary goal. Personally, I've spent a great deal of energy trying to close in on $1M without ever really sitting down to figure out whether $1M will actually be enough (or more than enough) to fund my retirement goals. That $1M tends to hang out there on the horizon -- taunting me -- and although I am drawing closer, chasing after it is just as mind numbing as the job I am trying to escape. Maybe what I am beginning to realize is that I need to sit down and figure out whether I already “have enough” to satisfy my retirement goals. Doggedly chasing after an arbitrary goal doesn’t seem to make much sense to me anymore.

Robert
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Re: Arbitrary Savings Goals
Old 09-29-2005, 09:55 AM   #23
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Re: Arbitrary Savings Goals

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Originally Posted by Nords
You may never need to use your martial-arts skills to back-kick your boss through a closed door, either, but knowing that you can do it if you need to makes all the difference.*
I would prefer a good choke hold. Watch him turn purple before he passes out
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Re: Arbitrary Savings Goals
Old 09-29-2005, 01:11 PM   #24
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Re: Arbitrary Savings Goals

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Originally Posted by Nords
I think that other humans are attuned to pick up on that inner peace and the self-confidence that FI (or a good back kick) radiates around you.* If they're intimidated by it, then they should be!
Indeed. Being on the "receiving end" of such an attitude (not arrogance or cockiness) can be very unnerving. In fact, it's often when you walk in with the "don't give a crap" attitude, along with a healthy dose of bravado, that you get what you want (or believe you deserve).
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Re: Arbitrary Savings Goals
Old 09-29-2005, 02:39 PM   #25
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Re: Arbitrary Savings Goals

Quote:
Originally Posted by robert
Perhaps the point I was inartfully trying to make was that imposing an arbitrary savings goal can be a form of self-imposed tyranny, i.e., the tyranny of having to chase after the arbitrary goal.* Personally, I've spent a great deal of energy trying to close in on $1M without ever really sitting down to figure out whether $1M will actually be enough (or more than enough) to fund my retirement goals.* That $1M tends to hang out there on the horizon -- taunting me -- and although I am drawing closer, chasing after it is just as mind numbing as the job I am trying to escape.* Maybe what I am beginning to realize is that I need to sit down and figure out whether I already “have enough” to satisfy my retirement goals.* Doggedly chasing after an arbitrary goal doesn’t seem to make much sense to me anymore.

Robert
Sounds like you answered your own question. How much is enough depends on your personal circumstances. If you're a good 20 years away from ER I don't know if you can plan with that much precision - who knows what your expenses will be like by then. Just save like mad, control your spending, and work toward moving ER ever closer. If you're within a few years or so you should have a good idea as to what your expenses are and you should be able to calculate whether $1 MM is enough. I agree that picking an arbitrary number is, well, arbitrary.
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Re: Arbitrary Savings Goals
Old 09-29-2005, 03:20 PM   #26
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Re: Arbitrary Savings Goals

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Originally Posted by . . . Yrs to Go
Just save like mad, control your spending, and work toward moving ER ever closer.
I'm opening a can of worms by saying this (and that's exactly what I want), but Robert Kiyosaki would disagree...

http://finance.yahoo.com/columnist/a...richricher/983

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Re: Arbitrary Savings Goals
Old 09-29-2005, 04:29 PM   #27
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Re: Arbitrary Savings Goals

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Originally Posted by Jay_Gatsby
I'm opening a can of worms by saying this (and that's exactly what I want), but Robert Kiyosaki would disagree...

http://finance.yahoo.com/columnist/a...richricher/983

I guess we'll have to toon in to future installments to find out how you get rich by not saving, not diversifying, and not investing for the long-term. Lotto, levered speculative investments . . . Not sure its a good path to riches but 1 in 724,294,245,687 really do well.

I love this part: "I have no investments to sell you. " But did you know "I self-published a little book titled "Rich Dad Poor Dad." Which is just the best little book of all-time. It's sold a bazillion copies and anyone who hasn't read it needs to run right out and get a copy. If you already own it, just run right out and buy another - it will make you twice as rich. :


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Re: Arbitrary Savings Goals
Old 09-29-2005, 07:10 PM   #28
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Re: Arbitrary Savings Goals

Quote:
Originally Posted by Jay_Gatsby
I'm opening a can of worms by saying this (and that's exactly what I want), but Robert Kiyosaki would disagree...
There's a lot of reasons that Kiyosaki hasn't returned to Hawaii in decades, among them the lies he's told over the years. If he's practicing what he preaches, then why is he writing Yahoo! columns and what charity is he donating the salary to?

I think Yahoo! Finance has found a great way to attract attention to themselves, but they're pushing what little is left of their credibility over a cliff.
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Re: Arbitrary Savings Goals
Old 09-29-2005, 07:51 PM   #29
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Re: Arbitrary Savings Goals

Yeah, I've noticed how Yahoo Finance's quality of articles has been decreasing over time. I laughed when I saw Kiyosaki was going to do an article on there. I guess they want to make Suze Orman look good in comparison.
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Re: Arbitrary Savings Goals
Old 09-29-2005, 07:59 PM   #30
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Re: Arbitrary Savings Goals

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Originally Posted by justin
Yeah, I've noticed how Yahoo Finance's quality of articles has been decreasing over time.* I laughed when I saw Kiyosaki was going to do an article on there.* I guess they want to make Suze Orman look good in comparison.*
The best way to make Suze O. look good is if she stopped writing and
giving financial advice. A book with her photo on the cover and blank pages
should do it.

JG
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Re: Arbitrary Savings Goals
Old 09-29-2005, 08:07 PM   #31
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Re: Arbitrary Savings Goals

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Originally Posted by MRGALT2U
The best way to make Suze O. look good... a book with her photo on the cover and blank pages should do it.
JG
Is that the photo they take after hitting her in the back of the head with a 2x4 to make her eyes bug out? Where her mouth is still frozen in a snarling rictus of fiendish carnivorous glee smile?

WARNING: Back away from the monitor before clicking on this link...

Considering your criteria of feminine pulchritude, JG, maybe you should stop shopping for that scanner.
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Re: Arbitrary Savings Goals
Old 09-29-2005, 08:21 PM   #32
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Re: Arbitrary Savings Goals

Quote:
Originally Posted by Nords
Is that the photo they take after hitting her in the back of the head with a 2x4 to make her eyes bug out?* Where her mouth is still frozen in a snarling rictus of fiendish carnivorous glee smile?*

WARNING:* Back away from the monitor before clicking on this link...

Considering your criteria of feminine pulchritude, JG, maybe you should stop shopping for that scanner.
Yeah those eyes are a little buggy.

Re. the scanner.............still waiting on CompUSA to call me to pick it up.
If they don't come through by tomorrow, then I may just go to Kinkos
(as suggested) with photos and a blank disc. I called and they quoted
me $9.95 per photo! I thought that was a bit much since I am only
paying $30 for the scanner (assuming I ever see it). Be of good cheer
though. Photos will follow, one way or another. Remember, everything I say is (by definition) a promise.

JG
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Re: Arbitrary Savings Goals
Old 09-29-2005, 08:37 PM   #33
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Re: Arbitrary Savings Goals

I am kinda disappointed that Yahoo! Finance would add Kiyosaki to their "expert" panel.

Especially because his opening text clearly is 180 degrees opposite from the rest
of the group. I guess that's "giving all angles" approach.

But still... I feel sorry for the numbers of people who may read Yahoo! and then
go buy his books and get sucked into a cult.

With Suze, she seems to usually make some sense if you can get past all
of her "don't listen to them, listen to me! stupid, stupid, stupid!"

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Re: Arbitrary Savings Goals
Old 09-29-2005, 08:45 PM   #34
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Re: Arbitrary Savings Goals

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Originally Posted by just_hatched
I am kinda disappointed that Yahoo! Finance would add Kiyosaki to their "expert" panel.
The amazing thing is that Yahoo! let him write a two-page advertisement for his book as a feature column. I never read "Rich Dad, Poor Dad" and hadn't any pre-conceived notions about Kiyosaki but judging from Nord's post, my initial impression was spot on.

If this guy is really spouting "you don't need to get an education and you don't need to save" non-sense, Yahoo! is doing a real disservice to its readers by promoting this guy.
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Re: Arbitrary Savings Goals
Old 09-30-2005, 02:13 PM   #35
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Re: Arbitrary Savings Goals

Quote:
Originally Posted by Nords
...criteria of feminine pulchritude, JG...
pulchritude.?.?* Now THAT is a 25 cent word.* *

Regarding Kiyosaki, he's just like every other fin-book author.* They all have the light to lead us to the land of prosperity.* Whatever.* If that were the case, considering how many of those books get bought each year, we would see a considerable uptick in the wealth of households, and never again would a financial self-help book be published, since it wouldn't be needed.* Not very likely...

Being younger myself, it's hard to think about a savings goal and not wonder whether it's arbitrary.* Time will tell, that I am sure of.
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Re: Arbitrary Savings Goals
Old 09-30-2005, 02:39 PM   #36
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Re: Arbitrary Savings Goals

I guess it's all part of the psychology that's written about as "mental accounting", but
I do find it interesting that if I look at my budget and say "if I can save $100 in this
category this month, that's $1200 per year at X% interest which grows to...."

But if I look at the overall effect on my net worth in say, 5 or 10 years, it's the difference
between $920,000 and $930,000 which doesn't seem worth it to scrimp now.

Of course, there are LOTS of assumptions about what can happen in 5 to 10 years that
may prove the projection wrong, but I guess the question is: does it become
less important to be frugal as each year passes even though mathematically it is
just as important in any given year? (i.e. the same mathematical return for scrimping)

It seems to be more of a perception thing to me.
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Re: Arbitrary Savings Goals
Old 09-30-2005, 03:13 PM   #37
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Re: Arbitrary Savings Goals

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Originally Posted by just_hatched

Of course, there are LOTS of assumptions about what can happen in 5 to 10 years that may prove the projection wrong, but I guess the question is:* does it become
less important to be frugal as each year passes even though mathematically it is
just as important in any given year? (i.e. the same mathematical return for scrimping)
IMO, the more frugal you are in the earlier years and where you save as much as you can and invest it in a variety of areas, the better off your $$ will be after those 5-10 years. Waiting to save and invest will prevent you from getting the full effect of compounding of your $$.

One the flip side, you should be making more $$ as your career (business) progresses. This would give you more $$ to save assuming you are still frugal resulting in more $$ in your account. By far the best way is to LBYM as early as possible and invest your savings. Later in life you will not need to be as frugal and will still have the $$ there for your future.

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Re: Arbitrary Savings Goals
Old 09-30-2005, 05:23 PM   #38
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Re: Arbitrary Savings Goals

Quote:
Originally Posted by just_hatched
I guess the question is: does it become
less important to be frugal as each year passes even though mathematically it is
just as important in any given year? (i.e. the same mathematical return for scrimping)
In addition to the "compounding effect" on your savings mentioned by just_hatched you have the "multiplier effect" on your spending. That is for every additional dollar of spending you will need >25x in savings to achieve a 4% or better WR in retirement. So scrimping early gives you the benefit of a longer compounding period while scrimping later ultimately reduces the size of the stash you will need.
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Re: Arbitrary Savings Goals
Old 09-30-2005, 06:17 PM   #39
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Re: Arbitrary Savings Goals

Quote:
Originally Posted by . . . Yrs to Go
So scrimping early gives you the benefit of a longer compounding period while scrimping later ultimately reduces the size of the stash you will need.
Quote:
Originally Posted by SteveR
Later in life you will not need to be as frugal and will still have the $$ there for your future.
Agreed. So if you scrimp early, you'll have more available later. If you also decide to scrimp later, you can ER earlier. (that's what I'm hearing)

I think what I was trying to say in relation to "arbitrary savings goals" is that let's say I pick $1 million as a savings goal. If I project out 10 years and say I'll have $1,020,000 NW by then. If I adjust the numbers in my spreadsheet for my current budget to see what happens and add another $100 per month expenditure now, then I recalcuate and see that I'll have $1,001,000 NW in 10 years.

Psychologically, I may say that I'll still meet my $1M goal, so who cares if I spend another $100 per month? Or I could say that $100 more per month will cost me $19k over 10 years (I'm completely making these numbers up) and I may decide not to spend the extra $100 per month now so I can have $19k later.

They sound like 2 different situations when they are actually the same, depending on how it's worded.

Like buying a car for $30k and choosing to add an extended warranty for $1k - after all what's $1k when you're already spending $30k, right?

Also, unless the goal is purely to ER ASAP, then it seems there should come a time when you can start easing off of the scrimp mode. (which SteveR seems to be saying)
When that time comes is probably more of a personality thing than a financial thing - whether there is some concept of "enough". Which actually, that's what I like about having some definition of enough such as 25x expenses, at least it's something other than "more than what I have now".


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Re: Arbitrary Savings Goals
Old 09-30-2005, 06:42 PM   #40
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Re: Arbitrary Savings Goals

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Later in life you will not need to be as frugal and will still have the $$ there for your future.
From what I read on this forum, this is easier said than done But always being vigilant on waste is always a good thing. There is always giving money away.
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