Having Identity Crisis

[azanon]

I'm 32, married to a 30 year old sweetie, have a one year old son and have a decent start on savings. My wife and i bring in a combined 92,500k/year (hasnt always been that way). I currently have a net worth of 102K. My retirement savings thus far is about 27K in my TSP and another 30K in Roth IRAs (wife's included). My other assets would include taxable mutual fund accounts, house equity, titled cars, etc.

My identity crisis is, I just cant make up my mind what kind of monetary lifestyle would make me happiest. For instance, my personal car now is about 10 years old, but in good shape/low mileage. Part of me wants to buy a 30K dollar+ car that's all nice and fancy, another part of me wants to continue frugality and try to max TSPs, IRAs, etc.

I actually like my job (though i'd still prefer not to work if i didnt have to). My wife, I believe, also seems to enjoy working (using her degree) over not working.

Anyway, what i'm getting at, am I the only one that struggles with just considering a defacto 10% savings and living the good life now and just retiring at early/mid 60s vs 15-20% savings or more and retiring in my 50s, sacrificing to retire early? If not, tell me your take on this.

Quite frankly, i cannot say which I think would make me happiest. Both options seem attractive so its as frustrating as hell. If anyone has any insight, i'd appreciate it.

 

[cute fuzzy bunny]

Perhaps the crux of it is looking at what "the good life" entails and what exactly makes it "good".

If you're having problems with your old car and thats a hassle, or its butt ugly and you hate driving it, then a replacement would suit you. But you dont need to spend $30k..

If you want a $30k car to make yourself feel better or to impress the friends and neighbors, ponder on why thats important. You might find that it isnt. Or discover why and solving THAT might be a lot cheaper than 30k

I guess its important to fit your lifestyle to your life. I'm reminded of the part in "The millionaire next door" where the wealthy guys friends and family want to buy him an expensive car to replace his old american car. He doesnt want it: how would he drive that down to the fishing hole and how would he throw a bunch of fish on the back seat?

Maybe just knowing that the majority of millionaires drive used american pickup trucks will reduce the crisis?

 

[Bob_Smith]

Azanon, you may like your job now, but who knows what you'll be felling in 20 years. You may be desperate to get out. Tough to know. I do know that my tolerance for nonsense at work declined dramatically as I aged. And the dynamics of the workplace can change almost overnight. If you decide to go for expensive cars and the like, you might really regret it later. Besides, you can live a very good, happy life while living below your means - especially with your income.

I doubt that you'll ever look back and wish you had bought a better car 20 years ago. But you may very well wish you had saved more.

 

[azanon]

Well, i've always been fascinated by the concept of retiring early. I'll never forget seeing my first compounding, investment chart. I also found the personality article on the main page interesting since i am a heavy INTJ (strong score on all 4 attributes).

That being said, there's the other side of me that says, you know, i've busted my ass, earned a masters degree, have a great job, and i'm driving a 10-year old nissan 240sx! Sure, if i went by the defacto worlds standards, i could alleviate that and drive a really nice car today. The part of me that knows i've worked so hard says i deserve it now.....

Hh well, i'll be tormented by this, but in the meantime, i'll just keep treading water and keep the 240sx

 

[cute fuzzy bunny]

Funny...when I read the sentence that ended in "and i'm driving a ten year old nissan", I considered that as positive an accomplishment as the rest.

 

[mickeyd]

I feel your confusion.  Been there.  Done that.

Spend now and be happy now or not spend now but spend when you retire  .

Have you read "The Millionaire Next Door" by Stanley and Danco?.  If not, I recommend that you read it and see where you fit in that little jewell of a book.

 

[charlie]

Azanon,

Our "fancy" car, a Lincoln Towncar with 20k miles, was bought at a big discount back in '96. It was the best
car bargain we ever had and is still going strong with
no problems. If you shop carefully, you can find a
"like new" car of your dreams for a LOT less than $30k.

IMHO, the good life is a balance of LBYM and treating
yourself occasionally.

Cheers,

Charlie

 

[newellcr]

Azanon,

"Quite frankly, I cannot say which I think would make me happiest. Both options seem attractive so its as frustrating as hell. If anyone has any insight, I'd appreciate it. "

Yes, to a certain extent I'm "enjoying" this myself. You mention the TSP (I'll assume you are a fed as opposed to a participating military type). The FERS let's you retire at an age close to 57.5 with 30 years of service. Yes, that's a long way off, but this is a full retirement with unreduced pension and a Social Security look alike benefit. Just pointing that out if you didn't know - a lot of folks don't. So I'm guessing that ought to push you closer towards ER at this age than in your "early/mid 60's".

Just curious, have you set an approximate retirement budget as something to shoot for? I ask because you might want to run the projections using various rates of return and contribution rates to see what satisfying your itch for a new $30k something or other might cost you later in terms of extra years working, $x,000 per year less, or whatever you see in the numbers. What the numbers don't tell you has been touched on by some of the other replies already. Maybe this likable job will change for the worse. Maybe the current boss will be replaced by a tyrant. Etc. These might make you really regret not appreciating the paid for car.

Looking at the numbers and the unknowns should help you make an informed decision.

Good luck,

Chris
Who expects to drive his 8 year old Audi A6 wagon (bought used, of course) for a long time.

 

[Sheryl]

My identity crisis is, I just cant make up my mind what kind of monetary lifestyle would make me happiest.  [snip]  Part of me wants to buy a 30K dollar+ car that's all nice and fancy, another part of me wants to continue frugality

Azanon, I can completely relate to what you say, which means I probably have more sympathy than great advice. I am 44 and the longer I work, the more I want to ER. I am always balancing things like the car choice you described. I'm driving a 7 yr. old Toyota, and starting to have the urge for something new. I ask myself, is that worth delaying ER for another year

The others gave good advice about looking at the numbers, and establishing a plan, so at least you will know what levels of saving will achieve what possible results.

I sort of enjoy some of the challenges of living frugally (no I don't recycle tin foil - yet). I am really good about considering the pros and cons of any particular purchase before making it, what does it actually "buy me?" But I don't hesitate to buy something expensive either, when I really want it. I will buy half my clothes in thrift stores, then spend $200 on a pair of shoes.

As others said, you really have to consider what "the good life" really means to you, and what you want to teach your son...

The way I look at it, it's not really a decision that has to be made once and for all, every day that you save some, you're closer to ER, every day that you spend you're further.

 

[Trace]

Azanon,

I can certainly understand your identiy crisis. I am just a couple years older than you with similar income (+ wife and 2 kids). Here are a couple of things that I do to keep focused:

(1) Put together an excel spreadsheet (or a software program) and model the growth of all of your assets (TSP, Roth IRA's, Pension, House Equity, etc) for the next 25 years. For planning purposes, use a very conservative rate of return on your investments.

(2) Determine how much money you will need (in future $) to ER. Compare your future ER requirements to your conservative financial model.

A solid game plan will help you understand how much you can spend on an automobile or other big ticket items. This will keep you focused. I previously felt guilty whenever money was being spent. I now only get worried when my net worth strays from my plan.

Take advantage of finding great deals. For example, I vacation every year in 5 star resorts. Going to Orlando in a month for 7 nights and staying in a 2 bedroom Gold Crown Condo (with 8 outdoor pools). My total cost of this vacation will be less than 50% of what the normal cost would be.

You can find great deals on used cars by doing your homework. The market is currently flooded with used cars. I purchased my last vehicle at wholesale levels when living in FL: www.offleaseonly.com I had to travel to pick up the car but saved thousands. I paid $8,995 for a 2 year old car (30K miles) with leather, climate control, 100K mile no maintenance engine, etc. I have driven the car for over two years. It is paid for and makes a great commuter. I now live in the midwest but would not hesitate to travel south to find a great deal.

I am a strong believer in balance. You can enjoy life now and still plan for ER.

Good luck.

 

[azanon]

Thanks guys, these comments and suggestions have been really helpful.

This discussion really got me thinking. What I "was" doing was saving to pay cash for my next car. But interestingly enough, I find (found) myself in the present not content about this issue and, thus, looking forward to this "future" day that i could have enough cash to replace my perfectly working fine car I have now. Interestly enough, if i just decide enjoy the "now", then I can be happy every single day because I took one more step towards ending the rat race.

I was wanting a really fast, hot car, like a subaru WRX. But you know, when I really think about it, it isnt so much because "I" want/need it as I'm allowing myself to be concerned about how others perceive me. I guess it really is foolish (especially for me) to be concerned about what i drive since ultimately it just gets me to where i want to go.

Regarding tracking/projections, i currently use quicken to enter all my finances (which is how i knew my net worth). I have run several general retirement predictions, but as you guys know, its really a shot in the dark to have any sort of accuracy with me at this early age. Basically, what i try to do, is just save as much as I can because there's no such thing as saving too much .

I'm really all for ER. Unfortunately, my greatest hurdle will probably be my wife. Its not that she spends a lot or wants frivilous things, its that she just doesnt get focusing on ER. She's bought into the view that it causes us to suffer now. Fortunately, she just keeps that as her opinion, but allowes me to be the controller of our finances, so i guess in the end, the worst that will happen is that maybe she wont be as content with "me" for being in this mindset. I just bought her a 4 door VW Jetta Wagon (TDI 44mpg ) so maybe that'll keep her happy for the next 10-15 years or more.

Yes, my official retirement age is 57. I'm a federal employee and that would be the date i can get my pension, my substitute SS (till 62), and have access to my TSP. However, just recently, several folks were offered "early outs" and even paid 25K as an incentive to leave. Maybe i'll get an offer like that too in my early 50s

Azanon

 

[BigMoneyJim]

Basically, what i try to do, is just save as much as I can because there's no such thing as saving too much .

Actually, if I had to choose between being a miser and spending every penny I think I'd get more out of life spending every penny. But luckily the vast majority of us aren't forced into choosing an extreme, so I think the trick is to live frugally enough to enjoy the future but enjoy now enough in case tomorrow never comes.

What's really funny to me is that we all seem to start panicking just about the time we have our ducks in a row. You're doing it now that you're ready to go on financial autopilot until retirment. New retirees seem to do it when adjusting to the retiree lifestyle. I'm doing it now: I'm now more or less debt free, have my savings set up and am no longer married to my job, but I keep fretting about what to do next. The irony is I worked hard to attain this freedom and now catch myself worrying more than I did when I was $20k in debt and out of a job.

Maybe we are used to having crises direct our lives?

 

[azanon]

Actually, if I had to choose between being a miser and spending every penny I think I'd get more out of life spending every penny. But luckily the vast majority of us aren't forced into choosing an extreme, so I think the trick is to live frugally enough to enjoy the future but enjoy now enough in case tomorrow never comes.

Well, that's not really what i meant by that and its probably my fault for not being more clear. Basically, what I try to do now is to just simply ask the question, do i really need this, or that? before i give up the greenbacks. If the answer is, I could be happy without it, then my ER date gets shorter, and that's a good thing.

By all means, i'm not going to suffer. For instance, I pay fees to play in league tennis, i'll buy myself a new pc game or music cd here and there, i rent dvds, i even have a nice (but small 30" wide) hdtv. I also get outdoors when i can though i'll try to choose the less expensive activities (going hiking, to parks, museums, etc).

 

[BigMoneyJim]

Well, that's not really what i meant by that and its probably my fault for not being more clear. Basically, what I try to do now is to just simply ask the question, do i really need this, or that? before i give up the greenbacks. If the answer is, I could be happy without it, then my ER date gets shorter, and that's a good thing.

Sorry, I have a tendency to take things out of context and pick at them. I'm the same way as you...I don't have to worry about saving too much because I'll always be entertaining myself.

Since my free cash flow is now increasing suddenly and I'm apt to spend it I made a list of things I might want; when I get the urge to buy something I'll look at the list and decide if I want to buy what's on my mind or if something better is on the list or if I'm better off saving the cash. I tend to get excited about something for a couple of weeks to a month and then lose interest, I have to watch out that I don't spend money on something that I won't care about in two months. (I put lots of vacation spots on my list; I've never regreted traveling.)

 

[ganda]

I doubt that you'll ever look back and wish you had bought a better car 20 years ago. But you may very well wish you had saved more.

When I first started earning some decent money I came within inches of buying an NSX - lovely, lovely cars and I'd still like one today. But I didn't buy it, I kept my crappy underpowered car instead, and I invested the money - which paid off big time. That money is part of what's helping me ER.

I used to have a 200SX (the turbocharged Euro version of the 240SX you don't want any more) and I thought it was a hoot! I have one of these WRXs you want now, and sure it's fast and grippy and all but it's honestly not the nicest of cars to drive (although I've driven much, much worse). Just saved you $30K

 

[JOhn Galt]

Bob_Smith is right. I never looked back and wished I had bought a better car, but saving
more? You bet!

John Galt

 

[Hyperborea]

I was wanting a really fast, hot car, like a subaru WRX.  But you know, when I really think about it, it isnt so much because "I" want/need it as I'm allowing myself to be concerned about how others perceive me.  I guess it really is foolish (especially for me) to be concerned about what i drive since ultimately it just gets me to where i want to go.

I have found that one of the unanticipated benefits of saving for FIRE is that I have become less attached to material goods. Sure it would be nice to have a cool car but I don't desire it in the same way. I've had to make the choices of what I want to do with my money rather than let my emotions carry me away. It's actually quite liberating. It appears that saving for FIRE is quite Buddhist.

 

[ordway]

I think you likely hit the nail on the head with the realization that the pressure to spend more was based on others' perceptions more than your own desires.

My husband and I live way, way below our means. (We're 30 and 31 years old, btw, so in your same bracket). But it's not about deprivation - it just so happens that our income has gone up a lot since our grad school days, but our spending habits have not kept pace. I *could* go out and buy a new $30K+ car with cash, but why would I want to? At our old condo, our little Hyundai Accent stood out among the neighbors' BMWs, but that just made me smile. It probably helps us a LOT that neither of us cares a whit about what other people think, or what society's expectations are - in fact, we're well aware that those expectations are usually pretty twisted!

We live what I'd consider a darn good life... by our standards. For instance, a fancy car is absolutely not important to us in the least. I'd rather have no car if it were practical! So our cheapy subcompact gets the job done. On the other hand, we have a very nice home theater setup with a large widescreen TV, surround sound system, etc... maybe a waste of money for some people, but we love watching movies at home and it gets used every day. I don't care about fancy furniture, so we have basic stuff, almost all second-hand but very practical... but we're computer geeks, so we have a total of 4 computers in use. (One desktop for each of us, a laptop, and a server.) It's all about what YOU enjoy, not what others expect of you.

Saving a lot also gives you lots of freedom... not just for future early retirement, but right in the here and now. For instance, earlier this year my husband took a six-week unpaid sabbatical from work... something most of his co-workers would not have been able to *afford* to do even if they wanted to. Then he got a great job offer and we picked up and moved cross-country, which meant some unexpected expenses and several more weeks without a paycheck. It was a great decision... and in very large part it was due to being ABLE to go without an income for a time.

 

[Whakamole]

This young dreamer is still driving his nine year old economy car. Nothing wrong with that!


I'm dealing with the same struggles though. You have to live a little, otherwise you won't even be looking forward to being retired.

 

[John Galt]

I may have posted this before. When I semiretired in
1993, I was driving a Chevy S-10 pick up. In 1994,
a real nice contract job just fell in my lap. I
immediately fell back into my "big spender" mode,
bought a couple of suits, a Cadillac Seville, rented a
luxury apartment for temporary use, etc.
Obviously, I had not yet mentally adjusted to my new
life. In hindsight, this was a huge mistake and I was
damn lucky that my ER moved forward as well as it did.
It was actually about 4 years later that I took a serious
look and decided if I was careful I could quit
completely. That is the good news because in 1993
I expected to work part time indefinitely.

John Galt

 

[BunsGettingFirm]

Always a tough choice. At your salary, you're probably thinking along the lines of a BMW 325i or an Audi A4. I know. My friends have those, and they are nice, but just the fact that they always have to worry about where they park their cars or whether the HID lights are going to get boosted is enough to convince me that those entry-luxury cars aren't worth the trouble.

Think back to 10 years ago about how great the then-new 240SX looked and how proud it made you feel being seen driving it, and then think about how it makes you feel now. The Bimmer's going to be same old drag 10 years from now.

Well, i've always been fascinated by the concept of retiring early. I'll never forget seeing my first compounding, investment chart. I also found the personality article on the main page interesting since i am a heavy INTJ (strong score on all 4 attributes).

That being said, there's the other side of me that says, you know, i've busted my ass, earned a masters degree, have a great job, and i'm driving a 10-year old nissan 240sx! Sure, if i went by the defacto worlds standards, i could alleviate that and drive a really nice car today. The part of me that knows i've worked so hard says i deserve it now.....

Hh well, i'll be tormented by this, but in the meantime, i'll just keep treading water and keep the 240sx

 

[cute fuzzy bunny]

Keep it 15 more years and its a classic!

25 and its retro and cool!

35 more and its close to antique!

 

[panhead]

Heh Heh, cars and motorcycles are my weakness, but only the older classic ones, not the new ones. I buy, fix, drive and sell some neat cars/bikes when I have the extra time, and this is one thing I want to ER to do. It makes me a little extra $$ to fund my hobby, and keeps me in cool convertibles and slick Harleys. Of course, I think they're cool cause' they're what I like, and I don't see someone else driving the latest year, better model, blah blah car that I don't have yet. In fact, just passing the same model of car is usually rare, and almost always calls for the "thumbs up" sign. Probably some male ego here, but hey, that's nothing I'm short of !

-pan-

 

[John Galt]

Yeah panhead, I too have a weakness for bikes and
cars (also boats). Can't stand to go around in a beater,
even though that would fit my budget. Know what you mean about the "thumbs up" thing. I owned 2 Mazda
Miatas. While not really rare, I used to get the "thumbs up" from other owners. Anyway, they were cheap
to buy, cheap to own, economical to drive and fun.
I really miss them.

John Galt

 

[panhead]

Mazda Miatas eh ? I recently got into MGs just because they were cheap. The midget I picked up for next to nothing really reminds me of the miatas, except it isn't nearly as reliable . Having the hobby of fixing and selling allows me to enjoy them while only adding to my budget. I'm not sure I can make "real" money doing this, but I never lose money, and it keeps my hobby going. As for boats, it's all over, I bought my first boat only a few weeks ago. As per my usual way, it is broken and needs love and affection from me. At least it was cheap to begin with, we'll see if it ends up that way ! (1970's Glastron, 17' 4 cylinder volvo penta I/O).

-pan-