Are You a Spender or Saver ?

[figner]

Maybe I'm in the oddball category here since most seem to be savers, but I find it hard to resist spending sometimes. Love gadgets, tools, and computers, and have a tendency to pick up expensive hobbies where I _must_ have the perfect whizzmajig to do it just right... Fortunately, I don't spend a lot on housing or cars, and try to balance periods of excess with frugality.

 

[Rambler]

I used to think the cultural background made a lot of difference, and I still think it has influence, but there are other influencers out there as well (tv ads, the jones's down the street etc). My brother and sisters and I were all brought up the same way. My father retired about 5 years ago, with an ending salary of 24k, but he waited until 67 to do it and they live just fine with what they have and are very happy. They live on their social security and a couple of very small pensions (+ or - $200/mo total). However, they have somewhere around 500k in savings, that they never touch unless they need to buy a new car. My parents have a decent standard of living, but not extravagent. They drive a new Corolla (older Corolla was totaled in an accident last year but no injuries), and also have a 12 year-old Nissan truck in excellent condition. They had paid off their mortgage some 15 or 20 years earlier, and have been debt free for that long. They always taught us to save what money we needed to buy things including cars (except for a home).

As for me, I had my mortgage paid off by the time I was 35 on a modest salary. Then and there I vowed never to have a mortgage or any other debt again, even if I up-sized, up-scaled, luxurized, etc. After my salary finally super-sized (low-sixers), DW and I found a piece of land for our dream home. She wanted to build right away, mortgage and all. I refused. We took it slow...a year to decide what we wanted, a year to design, and nearly two years to build, and was completed a couple years ago. But we did it without debt, and it sure feels good.

Now, DW is very happy that we did it that way, because we are on an international assignment now with mega-corp (1 year assignment has lasted 8 1/2 as of this writing), and we are saving like crazy for FIRE. Because we have been here so long and because my work schedule is so hard, she now can't wait to get home to her dream home, and she knows that there is no way that I can get a j*b making what I do now (now high sixers, sometimes low sevens) near our dream home. We are both happy that we could retire now if it came to that, but our DD has a year and a half to graduate HS, and with that time left we can further build our nest egg so that our standard of living stays as high as it is now even without a paycheck.

My brother on the other hand was in debt 55k when he married and that number has climbed rather than fallen. Everything he buys is on credit. My sister is the same way, and had to declare bankruptcy earlier this year. My other sister keep saying she is going to pay off her debt, but keeps up-sizing, upscaling, and luxurizing, even though they can't afford it. They all essentially live month to month...no savings.

Back to us, we do enjoy some luxuries sometimes, but not nearly the in the same amounts as my contemporaries at mega-corp or in my network of acquaintances. But, we also know that we won't always have this kind of income. By the time I pull the plug, we will be able to have spend (after tax) somewhere on the order of 90-100k per year, inflation adjusted, for the rest of our lives....at a withdrawl rate of +/-3%. But the way we figure it, this will be more than enough for our needs.

The moral of the story: your background can have influence over your spending and saving patterns, but it doesn't always.

Rambler

 

[Zoocat]

My background is Scotch-Irish and the stereotype holds true in my family. Drinkers, yes. And my dad was/is as tight as (the ole Irish saying goes) a nun's knickers. When I was in high school I got an allowance of $10/month to buy any school lunches and my clothing, which I couldn't afford to buy obviously so ended up sewing myself. I had two pairs of shoes, sandals and sneakers (California). This was not a poor family, just struggling middle class. Parents had no money for college. My sister and I paid for it ourselves. My brothers never went to college.

In my marriage I was the frugal one, paying extra on the mortgage, making sure bills paid on time, complaining about ex-husband's credit card usage, and always trying to get him to save more. Useless struggle, that one turned out to be. I guess I learned something from Dad. Today I bought a waterproof outdoors jacket Northface brand for $200. Just about killed me!

Now dear ole Dad has saved plenty of money to pay for his own nursing home if and when he needs it. Still, last Thanksgiving he tried to get me to commit to moving there to nurse him when he becomes decrepit. Ah, I don't think so.

 

[Moemg]

My family was not cheap just careful with money .We were middle class but my parents stressed education and we all ( 2 sisters 1 brother ) went to college with our parents help . My parents gave us a great life even on my Dad's salary as a state policeman .Christmas at our house was a magical time with my Mother baking cookies and my Dad assembling toys . They were the best !

 

[Milton]

My father retired about 5 years ago, with an ending salary of 24k, but he waited until 67 to do it and they live just fine with what they have and are very happy. They live on their social security and a couple of very small pensions (+ or - $200/mo total). However, they have somewhere around 500k in savings, that they never touch unless they need to buy a new car.

Do they spend the dividends/interest? If not, why not ($500,000 will buy more new cars than they could possibly need)?

 

[TickTock]

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.

This is DW and I as well. We LBOM, but don't consider that we deprive ourselves.

Now, on the one hand it's 'easy' for two DINKs with good jobs to preach LBYM, right? OTOH, most folks with our incomes (and higher!) don't save much; expenses tend to increase with income for most humans.

It almost comes down to: do you want to look rich or be rich? It's not impossible to do both, but it takes one heck of a lot of money!

F'r instance, we live in a nice house. But it's less than we could afford - even by traditional measurements, rather than the ones the banks were using until the sub-prime crunch hit - what's the tradtional rule of thumb, 2.5 x annual gross income? We're below it.

We drive what I consider to be nice cars - both bought new (not at the same time!!!), loans paid off, and we intend to keep them for many more years before buying new ones. And I know that buying vehicles new is not the most economical way, but I judge it worth the extra cost to know exactly what the vehicle's history is.

We spend money on things that we judge to give us good value, but we don't go and get a big-screen TV and a vacation home and a boat and a blah blah blah. I'm not knocking any of those items as such, but for us they wouldn't provide good value for money spent.

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!

That's us, too. When we get a dollar in our hands, the first thought is, "Save it", not "Oooh, now we can afford [insert thing here]".

 

[Rambler]

Do they spend the dividends/interest? If not, why not ($500,000 will buy more new cars than they could possibly need)?

They don't spend the divies or interest. Dad is a wonderful man but a bit tight with his money. He is (rightfully) worried about Mom having enough if he passes first, as the SS$ will decline significantly. So in the meantime, they just let it grow.

Rambler

 

[OAG]

Rambler: That sounds so familiar even down to the approximate cash # and funny but the actual age. Sure your not my kid writing under another name? I think my kids would say the same about me. It has always been a worry in me that DW or myself would cost the kids financially in our later years. NO ONE, at least that I know of, wants to be a financial burden to their children. In the meantime, to attempt to avoid that, you just save, save and save.

 

[Rambler]

RW: No, Dad wasn't in 'Nam...but I agree. He is very independent, does not want to be a burden in any way, shape or form. He is still saving...from his meager SS income. Save save save...his favorite saying is "use it up, wear it out, make it do, or do with out...that's a LBYMer!

R

 

[unclemick]

Hmmm - wrapping up 14 yrs of ER - after Katrina and three deaths in the household, ages 89 down to 51, - I watch the mortality tables more than the investment tables.

IRS single life I think is 84.6(memory?).

Still bumping up to 5%variable of portfolio seems outrageously extravagent at times.

heh heh heh - save a little here and there and then when it's appropriate spend like a drunkern sailor! Er or something.

 

[sunshine]

I guess my choices have changed as I aged...

before I was 30 I spent every penny I earned, but was cash and carry: NO Debt

30-40 I spent like a drunken sailor...justified by if I'm going to live I may as well live well: aquired 80K debt

40+ pay off debt and SAVE SAVE SAVE...plan FIRE

Seems like there should be some balanced approach in my future

 

[audreyh1]

8 years retired. Our spending has dropped each year until recently.

The first two years after retirement was our highest spending. We took a lot of expensive group trips, going to all those places we'd really wanted to go, but didn't have time/energy for while working. But we had also deliberately set aside a generous one time "travel budget" for just that purpose.

The next two years our spending dropped drastically. We'd had enough of the group trips and starting organizing/doing our own thing. Travel costs came way down.

The next year we got a small RV. Travel costs came down even more.

Traveling with an RV was so much fun, we decided to ditch the house! Our monthly expenses came down even more. [Not counting the cost of the big fulltime RV - that blows all accounting out of the water].

The first fulltime RV year was the lowest monthly expenses since retiring! 6 years later!

Since then, we have kind of let our spending "creep up". Partly due to covering some parents medical expenses. But also, after spending well under 3% of portfolio for several years, it just seemed silly so we've just decided "anything goes" until we cross that 3% number we're not even going to worry about it!

So I guess that means we've converted to full spend mentality?

Audrey

P.S. Oh, before retiring I was a big time saver.

 

[SteveR]

My parents were children of the Depression and they squeezed every penny into copper foil. They both were the first and only kids in their families to go to college. They valued education and thrift but were not cheap. We kids never lacked for the essentials but we did not have what many of our friends had. We are now successful in our own right but not extravagant. I chose to retire early but the others like what they do and don't want to quit just yet.

Spender or Saver?
Both. I have saved but also spent carefully on special items I really wanted. Never paid full price for most things and enjoy the hunt for the best quality item at the lowest price. After my divorce I never carried CC balance and my only loans were my houses and an occasional car.

We are in a transitional period right now; converting some assets into others and exchanging one toy for others. We are downsizing and looking forward to more quality time together. Our income is mostly "spending" as it comes from liquidation of some part of our portfolio. The only saving we do now is by not spending on something.

 

[novaman]

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.

Hey- You talking about me??!!

Seriously- you are right about this- I live in rich Mclean Virginia- this stuff is all around me.....people buying bmw's and benz for their kids when they get their driver's license. health club and country club memberships. Owning every toy you could imagine..... its a tough life here

 

[Alan]

Seriously- you are right about this- I live in rich Mclean Virginia- this stuff is all around me.....people buying bmw's and benz for their kids when they get their driver's license. health club and country club memberships. Owning every toy you could imagine..... its a tough life here

It is very similar where I live - including many of the folks I work with - and I know they earn about the same or less than me. Having read the article of Credit Scores by State and seeing Texas bottom of the list I realize it not so much about how many poor folks live here but probably as much about the constant struggle to keep up with the Jones's.

 

[dessert]

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.

Bots2019 or anyone else for that matter....
I have seen this term "uber-saver" on several different threads lately. I have never heard of that before and was wondering what it meant.
Google doesn't recognize it either.

 

[joesxm3]

uber = super

 

[mountaintosea]

Scott-Irish/English/German/Swiss/Cherokee background. Parents were/are frugal. Out of 5 children I'm the saver. But I'm also the single one. My brothers and sister like to spend or their spouses like to spend. Obviously when single you have more control over finances (besides everything else!) Personally I don't understand how people can live like that! It's not worth the stress. But what do I know?

From my own experience I don't think it's necessarily true that because parents were savers that makes their children savers. For me it's peace of mind. For them I think they've bought into the whole consumerism mantra we hear/see constantly in the states. It permeates everything here. I've detected resentment from individuals because I chose to save rather than spend. In fact I've had friends tell me NOW that I've retired I need to buy a TV, etc. It doesn't occur to them maybe I'm just not interested! I think people are down right suspicious of savers. Hey I don't care if they spend, it helps my stocks! So spend, please!

 

[dessert]

uber = super

Thanks joesxm....learn something every day on this site.

 

[Meadbh]

I moved from Ireland to the US during the 1980s. The biggest cultural difference I noticed was the constant pressure to spend in the US. Ads and incentives are all around and there is so much to spend it on. A young person growing up in the US naturally assumes that's "normal". During my 3 years in the US, I found my spending habits influenced to some extent, e.g. Christmas presents for ALL my friends,.....but now I've regained my frugal ways!

 

[Gekko]

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.

Well, let me help you out a bit here. My income is well north of your example. Some of your description fits, while much of it does not.

20 years ago it started out with wife being the saver and me being the spender. I grew up poor in a hand-to-mouth environment, so had no clue how to handle money, even though I was dedicated to making a lot of it. She grew up with the original Millionaire Next Door family (I kid you not), so saving and frugality were baked into her DNA.

Now, I'd say we're about even. I've come around to her thrifty ways and she's loosened up a lot on spending (income permitting). We've also reached a point in NW where we can breath a lot easier knowing our future retirement is well on the way to being fully funded.

We spend on clothes, going out, and housing. This is partly a function of living and working in the big city. We don't own cars (or jet skis/snowmobiles), and our TV would qualify as an antique. We're generally pretty low tech people, except we do have cell phones (who doesn't these days), high-speed internet (needed for work), and cable (for really just for the reception). Shamefully, I have an Ipod.

To our less economicly-gifted families and friends, I know we are a puzzling couple: in some ways we seem ostentatious, in other ways we seem practically austere. We try to focus spending only on those goods and services and experiences that would make a meaningful difference to us. In particular, having grown up fairly poor, I like trying new luxury things, at least to say I've tried it once. Most things I don't need to repeat.

We also enjoy saving and seeing our investments and NW grow. We establish a budget for spending and saving at the beginning of each year, and we're pretty good at sticking to it (now that there's enough money that neither of us feels too constrained). In fact, for 2007, we were about 40% under budget, which allowed us to make an interesting investment we might not have otherwise considered.

As to having time to spend it, well I must admit that we save a lot of money that way. I have a demanding career and wife is always involved in numerous interests that do not leave either of us much time for shopping. But, we gain satisfaction from our work and interests. Interestingly, following this forum has convinced me that I want to continue working for at least another 10 years (to mid-50's). I'm not someone who can't wait to quit their J*b and I like the lifestyle we have (expensive though it may be) and want to make sure we have the means to continue some semblance of it in retirement. I might change my mind if work became too onerous, but life life is all about trade-offs. I'm happy to have the choices.