Saving methods

[azanon]

What methods of savings have you guys used over the years? The two choices to choose from seem to be either the budget method or "forced scarcity" method.

I tend to do the latter, paying myself first. Being married, its been really hard getting my wife onboard with this concept. I'm paid every other week, and i've noticed my wife seems to be a little dismayed at the huge chuck of cash that disappears right off the start. It also gets a little *tight* that last week before we get paid again, and she probably blames me for that, though doesnt express it verbally.

I also tend to analyze my finances with quicken once a month (when my checkbook statement comes in). I called my wife in to take a look at our networth graph over the past 2 and 5 years this past time and said "see, look how good we're doing". She seemed to be less than impressed, and was probably thinking all the things we could have bought with that money. Basically, i'm getting treated like a miser by her, and not a wise financial savy person. * sigh *

Well, I guess i'm making some compromises in that I bought her a new car not long back (jetta diesel /grin), while i drive a 10 year old car.

 

[Cut-Throat]

Sounds like my Ex. Current wife of 17 years is on board.

There is a communication problem and a net worth graph is not going to do it. You need to discuss life plans, values etc. Otherwise it's usually divorce. Money is the number one reason for Divorce.

My Ex got very interested in our Quicken Files right before she took them to her Divorce Lawyer. Cost me a bundle, but hindsight says it was the best financial move she ever made for me

 

[azanon]

Well, i came from a relatively well off family (dad makes close to 150K and we lived in Eastern Arkansas to boot), whereas she came from a divorced family, lived with her mom, and her mom had next to nothing. Basically, they were poor.

Though my dad made a lot, he was/is not a big spender. He taught me the value of money early own. He did at times spoil me, such as buying me a new acrua integra when i was 17. I remember how foolish i felt driving it onto the highschool campus, because i knew everyone was thinking the same thing; look what daddy bought him. I knew I hadnt earned it and I felt guilty.

I guess what i'm getting at is that I realized that material things dont buy me a lot of pleasure. Oh sure, i like a baseline standard of living, but to the point that anything becomes excessive, I'd just prefer the security of not waisting money and preserving it; much like my dad. In contrast, I think my wife is trying to make up for all the things she didnt have as a kid, and was denied for so long. She also assumes that we'll probably just keep working through old age because "what else would we do with all that time?" /sigh.

I dont think its making her majorily unhappy with me, but she'd probably prefer i not be that way. This whole goal would be SO much more fun if we were of the same mind. That would be so cool, cause we could talk about how much we saved every month.

 

[Nords]

Azanon,

Sorry to hear about the strife. Erma Bombeck used to write that people got married to worry about money together.

I'm not going to pretend that these options will work for you guys, but maybe they'll inspire a brainstorming session:
(1) Want more money? Get a job.
(2) Decide on how much of the budget will be spent on "Whatever the spouse wants to buy", hand over that amount every paycheck, and don't ask questions or critique.

If it's routinely getting tight in that week before the paycheck arrives, maybe it's a sign that the savings rate needs to lighten up a little.

Another option, not one that would necessarily inspire spouse cooperation, would be to chart "Years to ER" vs "Savings rate". Unfortunately if she's already effectively ER'd on your salary, then there's no incentive to reduce the former by raising the latter.

The best savings methods we ever had were the "too busy at work so no chance to spend it" and "deployed underwater for 90 days" methods. They were extremely effective but I'm not sure that I'd sign up for either of them again.

Today we use the "How long do I want to work for this?" and "How much care/feeding does this require?" methods. The answers are usually "Not much" and "Too much."

 

[azanon]

Those are all good points. We are both working now, and doing decent i think for our age. I'm 32 and already a GS-12/3, she's a social worker with a MSW (30 years old) that just finished that degree so not making much yet.

I guess in a marriage its like you're saying; i have to accept that its not all my decision. If she doesnt want to focus on it, then i'm probably going to have to give a little and not save so much/work longer. Forced to choose, she's worth working longer meaning I might not work excess for material things, but I would do it on her behalf.

 

[wabmester]

Our budget includes mad money for my wife, and she also has opted to work 1 day/week for a little extra (she gets to keep it all). Whenever she asks for something a little extravagant, I ask her if she's sure she'll still like it in 30 years when future-us are starving and on the street. Sometimes it works

 

[JonnyM]

Until well past your current age I saved relatively nothing, and due to circumstances of divorce, what I did has been absorbed anyway, so in my case, I began by using the forced withholding method from my paycheck. When I had my ER (with very little thought to the FI part) epiphany about 5 years ago, it was mostly due to the realization that the agency I worked for "premitted" ER as early as age 50. That was my initial goal. I was so intrigued by the concept that I really didn't have to work into my 60's that I calculated I would just figure out how to survive on whatever pittance I received based on the formulas that were in place at that time. Our County had a 457 plan in place, and most employees used it as a location to dump their excess cafe funds from their health plans, then get to tell their friends on the 'outside' how they are big time investors now. I started by slowly increasing the amount deducted as I received step increased or COLAS over time. The cool part was if I increased the deduction say $100, my paycheck would only decrease $70-something or so due to the magic of pretax savings! Eventually I got to the max which at the time was $8500yr I think, now our fine Feds have raised the amount to I believe $13000yr and due to recent personal events I can't keep up, but I've got a goodly chunk in there now, and I'm working my way back up to the max again as I get close to ER. Of course my other 'forced savings' is the DBP or as I see it called on boards like this one my Inflation Adjusted Pension, which is a non-elective withholding that is matched by the agency. I've calculated that the DBP which includes COLAS and paid Health Plan, plus the modest 457 nestegg will get the job done for me and Mrs. JonnyM. My DW inadvertantly FIRE'd a couple years before me by getting severely injured OTJ. Her retirement is basically equivalent to what she would have received if she'd have worked two more years for the same County I work for, and yes we were a sordid office romance 14 years ago.

So we did all our savings via the forced withholding, we never saw it, can't spend it variety.

Azanon, I worry about you and your spouse's lack of like-mindedness about materialness. Clearly you're dealing with it now, but what happens in 20 when you want to pull the plug in ER? How's that going to play? It took me 3 tries to find the DW to ER with, she is the reason I find FIRE so appealing to be able to spend more time with her!

 

[bow-tie]

That's an awesome picture JonnyM.... it does say more than a thousand words.

Azanon, I agree that its a concern that you and your Mrs don't share a similar philsophy.  But by the same token, I don't think it has to be something that cannot be overcome.  Figuring out a middle ground could get you well on your way.

 

[Vale]

I was of similar mindset to your spouse so can somewhat relate. What we did which doesn't necessary work for everyone was to come up with a budget and split it based on our income ratio. We also maintained separate portfolios whose growth rates tied to our individual savings after the contribution to the shared budget. Basically, once your portfolio is able to contribute to the % of allocated expense, you get to ER.

Back track abit, we used to think that we would like to work as long as we're able to do so. On one of those times that you can't plan, spouse and I both simultaneously hit some rough patches at work and experienced severe burnouts. We took three weeks off but stay at home without planning the usual expensive vacations...exhaustion and depression being the major driven factors. To our surprise, we found that we can enjoy well... doing nothing. I think that often, working people associate time off with destination vacations and don't really have a good feel for what a regular non working life is like....good or bad depending on the person.

Anyway, after that, the budget get tighten just abit as habit is hard to break despite the mutual incentive but it get tougher to argue 'cause you kinda know where the other person is coming from.

Disclaimer: I did say that it doesn't work for everyone. Portfolio overlaps, shared assets so on and so forth...

 

[John Galt]

My spouse and I are poles apart on financial issues,
but I knew this going in. I obsess over them. She hardly
gives it a thought. Although I was late to the party,
I saved enough to ER. She saved nothing. I have
wondered what she expected. Did she plan to work forever? Not too appealing. I keep working on her
ER/future/financial planning. She apparently never gives it a thought. However, she does pull her weight
and is basically thrifty so perhaps I should be satisfied
with the status quo. BTW, my experience was similar to
Cut-Throat's. Money issues killed my first marriage
and I had been quite open about our finances. This cost
me some money (in the divorce) but paid off big time
in the long run.

John Galt

 

[trumpeting_angel]

I have a fair amount of experience witnessing the financial difficulties of "grew-up-poor" people. The earning and having of money is a completely different experience if you never had enough growing up. I was fortunate to have grown up in a thrifty, reasonably well-off household, but some people I've been close to grew up poor. Money was so scarce, that the idea of holding onto it is alien. Money in the hand was the means to get something, something fun, something exciting, something to help one feel better. Money "in the bank" earning paltry interest, or (even more abstract and hard-to-understand) money invested in the stock market that could go down as well as up - these things are amorphous and really don't seem to BE something, particularly not something to sacrifice for.

Even if one of my friends who grew up poor understood the concepts intellectually, and even if they came to beleive in it, they would still have to overcome some very powerful emotions about deprivation, satiation, and delaying gratification before they would be able to put a saving plan into action. I expect that being dragged there by one's spouse would probably not quite be adequate motivation.

I applaud the ideas of discussing goals, and jointly deciding on an amount of "mad money" each paycheck. It might save a marriage, even if it puts the retirement off a year or so.

Just my 2 cents,
Anne

 

[JAZZ]

Azanon, you're doing a fantastic job and ya just gotta stick with it even if she does not understand!

Not many I know of have the discipline to go with the forced scarcity method, so paying yourself 1st is the only reliable means.

It concerns me a bit that you say "it gets a little tight that last week before payday"......for goodness sakes you get paid every other week! In a way I think that works against a saving mentality because guys I know that get paid every week are the worst savers.

Federal workers also get 3 checks per month twice each year.....thats a good time to stash more money away. If you pay down your mortgage faster, the Ms. might appreciate your efforts more (just a though), but if she does not, ya still gotta stick with your savings, you savvy financial whiz.

 

[SDY888]

Azanon,
Sympathise with your position, but afraid I can't offer any insight or advice based upon experience as my wife and I are pretty much of the same mindset.

All I can think is that any kind of force or pressure probably won't work. Persuation and watching the results must be the way to go, with a bit of reward/inducement thrown in. Communication, dialogue and goal/value setting is also important along with a bit of compromise. I wish you good luck!

My wife, whilst raised in a relatively affluent family (comfortable as opposed to''Rich''), still has an attitide of scarcity towards money: she never has enough and still saves hard and cuts costs where possible. I on the other hand came from a relatively poor background and money was always scarce, although we didn't go short of the essentials. I developed the outlook that having been raised "poor" I do not intend going back there (and neither is my family) so I saved hard, cut costs etc.

So from two completely different backgrounds, my wife and I have developed basically the same financial attitude.

Simon888

 

[ESRBob]

Azanon,
my sense is that you've still got many years to go before FIRE, so a few more years one way or the other shouldn't make too much difference, given all the variables out there. For that reason, you might find you can ease off a little from the enforced savings, have a life that is comfortable, and take a little longer to get to your financial goals. Otherwise you might not make it anyway -- you didn't mention if you have kids yet?-- and do the math on a divorce and you'll realize that will _really_ cut into your savings. So finding a middle ground is key. She probably married you thinking she wouldn't have to worry about money after her hard childhood, and now you are "tight" every other week, which is bound to get her emotions flaring up.

ER is great as a long run strategy, but don't let getting there ruin your life today. It's just too big of a mountain to climb all at once.

Hang in there,

ESRBob

 

[haha]

Otherwise you might not make it anyway -- you didn't mention if you have kids yet?-- and do the math on a divorce and you'll realize that will _really_ cut into your savings.

I disagree somewhat with what I think is being said here. If you are fairly early in a marriage, don't have kids, your wife has a way of making a living, and you don't see truly eye to eye about something as important as money, get the hell out. It will never cost you less. If you have a child or children, and then get divorced, you pay big in pain and money. If you wait until you have saved more money, or you are older, you lose more and have less opportunity to get it back.

And remember- she can always pull the plug, for any reason, at any time. If her reasons make no sense, she still gets to walk off with a big hunk of your blood sweat and tears.

Don't forget, there are 6 billion people in the world, and half of them are female.

Mikey

 

[brewer12345]

I disagree somewhat with what I think is being said here. If you are fairly early in a marriage, don't have kids, your wife has a way of making a living, and you don't see truly eye to eye about something as important as money, get the hell out. It will never cost you less. If you have a child or children, and then get divorced, you pay big in pain and money. If you wait until you have saved more money, or you are older, you lose more and have less opportunity to get it back.

And remember- she can always pull the plug, for any reason, at any time. If her reasons make no sense, she still gets to walk off with a big hunk of your blood sweat and tears.

Don't forget, there are 6 billion people in the world, and half of them are female.

Mikey

Wow, that's cold. I guess relationships and marriages are disposable, too?

I think the smart thing to do in azanon's case is to try to have a sit down discussion with the wife and make sure you both agree on where you want to be in 20 years' time (or whenever) and what you need to do to get there. If you can both come to an agreement, you are less likely to have problems around spend vs. save because hopefully both people have bought into the program.

I suspect that your wife doesn't react well to the monthly Quicken report because the numbers on the screen don't mean anything to her. Try to translate it to concrete goals that she values.

 

[haha]

Wow, that's cold. I guess relationships and marriages are disposable, too?

Maybe cold, maybe clear-sighted.

Haven't you looked around? Isn't the LD50 for marriage in the USA about 6 years?

My guess, and it's just a guess, is that divorce (or its predecessor marriage) is a bigger threat to many people's ER than wrong SWRs, social security finagling, or inflation.

But luckily, it's one more of those choices that you can make, and be happy or not with the decision.

Mikey

 

[John Galt]

Man, divorce did not retard my ER. It was the single most important event that enabled me to ER. I
will allow that I am probably the exception, as usual.

John Galt

 

[Whakamole]

I have to say that this relationship may be something you should reconsider.

I'm not going to say that your wife isn't interested in ER - rather she seems uninterested in all the sacrifices you as a couple will have to make to achieve that goal.

I've learned that if I want to ER by the time I am (hopefully) in my mid-40s, that means tremendous sacrifice now. It's not easy all the time to see people drive new cars and live in expensive homes, while you are scrimping and saving; it's even harder when you know you could afford that lifestyle but don't. Some people can't understand it.

My concern is that eventually your wife will get tired of it - many divorces are caused by finances - and much of your hard work will go to her or some lawyers.

 

[JonnyM]

Wow, that's cold. I guess relationships and marriages are disposable, too?

I think the smart thing to do in azanon's case is to try to have a sit down discussion with the wife and make sure you both agree on where you want to be in 20 years' time (or whenever) and what you need to do to get there. If you can both come to an agreement, you are less likely to have problems around spend vs. save because hopefully both people have bought into the program.

Relationships and marriages don't always stand the test, true statement, a statistical majority, for you to trash the concept of divorce if two people are inherently not compatible indicates a lack of experience in that area, for which you should be applauded for your good fortune.

I will stick with my original comment that there lack of agreement on such a fundamental issue is grounds for concern.

Of course they should talk it out and try to reach consensus. Is that a forgone conclusion? I think not. Do we have enough information to even begin to know if they belong together? Not a chance. Should he realize his dream of ER? Without a doubt.

 

[deserat]

I'll chime in here as well--it is to your advantage to try and make a marriage work--for many reasons one big one being financial - HOWEVER, if there is a large divergence in your beliefs and values regarding money, there will be a tough row to hoe in the future.

My personal experience and mantra: ER and how I view money (aka control of my time) are very important to me and would be a relationship maker or breaker or what I call in life a non-negotiable. For some it might be smoking or sports or food or whatever they value.

Off-topic: I use non-negotiables in my travel as well. If I am traveling with someone to somewhere, there is usually something I want to see. For example, I was in Berlin for a weekend, there were 2 non-negotiables, the Reichstag and the Walking tour - I didn't care whatever else we did. My companions could either do what they wish then or come along when I went--in this case, they said those were the best things of the trip

Deserat

 

[brewer12345]

Guess I must have touched a nerve here. Sorry, guys, but I absolutely don't understand the immediate, almost reflexive turn towards notions of divorce as soon as there is a disagreement. The OP was talking about he and his wife not quite seeing eye to eye, not irreconcilable differences. Sheesh!

 

[Whakamole]

Guess I must have touched a nerve here.  Sorry, guys, but I absolutely don't understand the immediate, almost reflexive turn towards notions of divorce as soon as there is a disagreement.  The OP was talking about he and his wife not quite seeing eye to eye, not irreconcilable differences.  Sheesh!

I think it is more that, if there is going to be a divorce, do it *now* and get it over with, rather than wait until the OP was close to ER, and then seeing his nest egg vanish in a divorce.

 

[azanon]

Ive been reading all this, but should probably jump in here to clear up the issue about the marriage; She's a wonderful girl in many regards and personally its not as bad as maybe i made it sound. I am the one in charge of the finances. Its just that sometimes she's not excited about my level of saving, as I said ealier. I dont suspect for a moment that her level of discontent is actually brewing to an eventual point that she'd leave me over it. If anything, i make up most of the extra savings slack by being the frugal one where's she's not.

If push came a shove, i could back down from 15% gross to 10% to make her happy. She is more important, if i'm eventually forced to choose. At my level of savings I have already, such a drop would only delay my retirement about 4 years or so anyway because of the exponential power that time has on a smaller savings sum.

 

[John Galt]

Once I decided to quit, I wouldn't have delayed my retirement 4 weeks, much less 4 years, wife or no wife.
But, that's just me. It's an acquired taste.

John Galt