Compulsive Saving and ER

[Jay_Gatsby]

I've been struggling with the concepts of compulsive saving for ER and enjoying life in the present. Has anyone encountered this dichotomy, and if so, how did you deal with it?

 

[retire@40]

It's like a food diet.  If you completely deprive yourself it won't work in the long run.

Just like you should always put a little treat in your meal once a day or once a week, you should also have a "travel and entertainment" line in your budget.

The key word for long-term success is moderation with a slight bias toward savings and away from wasting.

 

[polloloco]

Clean Living,,, In Moderation

 

[Cut-Throat]

Everything in moderation, including moderation!

 

[Beachbumz]

I'm pretty big on living for the present, so I used leverage real estate to accomplish both. It has some risks, but it worked for me. (harder now though IMHO due to the run-up in real estate values).

Don't totally deprive yourself today, cuz you ain't guaranteed tomorrow!

 

[peggy]

Oh, boy, do I know where you're coming from on this one!

I get so fixated on FIRE that I hesitate to spend $75 on a piece of software that will be of use in one of my hobbies and overall is just fun to play with.

What I've done for 2005 is sit down and start a "to-buy" list--things that will give me pleasure over the long term or otherwise fit into my goals/FIRE plan--and tell myself that it's okay to buy these things.

The list is about 15 things so far, from the Return of the King extended edition DVD to that piece of software, to a knife sharpener, to a half dozen books. (All the other books I want to read, I will get from the library.)

Will let you know how that goes.

 

[FlowGirl]

Starting this coming year (January 2005) we're switching to the method of having a fixed percentage of each paycheck go directly to retirement savings and not worry about how we spend the rest.

Actually we've always done the fixed percentage method, but previously we always tried to sock away huge amounts on top of that. I've always been a big believer in balance, but trying to save as much as possible, as quickly as possible ,always meant tough choices when it came to spending money. So I pulled out the spreadsheets, figured out a reasonable savings amount that will get us to our goal, and that will be it. No more guilt about spending as long as we have the money in our checking account.


I think it helps to have a target date for ER. My husband is eligible for his pension in 2017 at age 44, so our savings goals are based around that. I think without a specific date you end up with a goal of "as soon as possible" and that can end up being a grind.

I've said this before, but I also have a strong sense of my own mortality. The idea of saving money and never getting to enjoy life scares me more than not achieving ER.

 

[parnass]

I've said this before, but I also have a strong sense of my own mortality. The idea of saving money and never getting to enjoy life scares me more than not achieving ER.

Hi FlowGirl,

Take care not to confuse spending money with happiness. One can find plenty of ways to have fun and be fulfilled without spending a fortune. It's a matter of managing one's desires for buying "stuff" and avoiding exposure to advertising which tempts one to overspend.

Good luck.

 

[John Galt]

Flowgirl's story is my story. Dying never scared me.
Not doing what I wanted before I depart scared
the hell out of me.

JG

 

[FlowGirl]

Hi FlowGirl,

Take care not to confuse spending money with happiness.  One can find plenty of ways to have fun and be fulfilled without spending a fortune.  It's a matter of managing one's desires for buying "stuff" and avoiding exposure to advertising which tempts one to overspend.

Good luck.

I totally agree. Fortunately the spouse and I are not big into having "stuff." We don't have TV, and I hate shopping (except for food), which I think helps a lot.

But we do like to travel and so we take at least one big overseas vacation each year. Local trips and camping are fun, but the month we spent backpacking around Italy or cycling around Ankor Wat were quite a bit more expensive. They were also worth every penny.

 

[John Galt]

I hate shopping too, but "no TV"? I have thought about it from time to time. A month ago I counted and between here and our condo we owned 8 TVs. Have since sold 2 of them. OTOH, we have very little invested
in them, so the only downside is time stolen from other
more beneficial activities. I actually enjoy TV, but can take
it or leave it with very little angst.

JG

 

[FlowGirl]

 I actually enjoy TV, but can take it or leave it with very little angst.

JG

I wish I had this attitude - if I did then we'd probably have TV. The problem for me is that for the past several years I've been working from home and it is simply too tempting to turn on the TV in the middle of the day and get sucked into whatever program happens to be on. I have no discipline when it comes to turning off dumb shows and if I have TV then I don't get any work done. We do have an actual television set that we use for watching DVDs on the weekends, but its not hooked up to antenna or cable.

The advantages of no TV are that I don't have a cable bill, don't get exposed to advertising, and the spouse and I spend more time talking and reading now. The main disadvantage is feeling out of the loop when it comes to pop culture. I'm not sure we will spend the rest of our lives on a "no TV" diet but it works for us right now.

 

[judy vastine]

it is simply too tempting to turn on the TV in the middle of the day and get sucked into whatever program happens to be on.  I have no discipline when it comes to turning off dumb shows and if I have TV then I don't get any work done.

quote] I can relate to this! I am a product of the 60's when TV was somewhat new in every household and it was on all the time. We just recently got cable and I have to really limit myself. I also happen to be a flipper. Can't stand the commercials so I change channels constantly. No one can stand to watch with me.

Judy (wonder what's on HGTV?)

 

[Jay_Gatsby]

Starting this coming year (January 2005) we're switching to the method of having a fixed percentage of each paycheck go directly to retirement savings and not worry about how we spend the rest.

Actually we've always done the fixed percentage method, but previously we always tried to sock away huge amounts on top of that. I've always been a big believer in balance, but trying to save as much as possible, as quickly as possible, always meant tough choices when it came to spending money. So I pulled out the spreadsheets, figured out a reasonable savings amount that will get us to our goal, and that will be it. No more guilt about spending as long as we have the money in our checking account.


I think it helps to have a target date for ER. My husband is eligible for his pension in 2017 at age 44, so our savings goals are based around that. I think without a specific date you end up with a goal of "as soon as possible" and that can end up being a grind.

I've said this before, but I also have a strong sense of my own mortality. The idea of saving money and never getting to enjoy life scares me more than not achieving ER.

Very interesting solution to the problem.

As the years have gone by, I've noticed that my aggressive saving, while certainly smart over the past 4+ years, has in some ways cost me opportunities to enjoy life as much as I would like. Originally my savings goal would have put me at the $1 million mark at age 38-39 (I'm 34 now), but I don't think I can keep up an aggressive savings plan for the next five years. I don't want to begin living my life at age 40 with $1 million in the bank. No matter how much money you have, you still can't buy back the time.

Perhaps scaling back the aggressive savings is in order. You don't need $1 million to be financially independent. That is to say, you don't need $1 million to have the financial freedom to work at a job you like, spend time with family and friends, enjoy hobbies, etc...

 

[Skylark]

We have our savings plan on track, but it is pretty boring not being able to travel. We are squeezed right now because I am trying to 1. save for retirement, 2. pay off credit card debt, and 3. save for a new roof for the house.

Saving for retirement is direct deducted/deposited, so that is on autopilot. The credit cards are almost paid off, and probably will make the last payment in January, which will free up monthly cash to save for the roof, which we hope to do this spring, partly with heloc. But until then there is no fun money.

One thing that prevented a mutiny is that we had a budget for christmas cash, saved up over a few months. It was good to be able to hand the frau a wad of cash to go christmas shopping.

After the roof, we need to build up the emergency fund and will need a vehicle, but we are going to have to increase the household budget and save some vacation money too.

If we didn't have a budget laid out, we would not be able to resist impulse spending, and these expenditures would be made without much consideration or weighing of options. By using a spreadsheet budget, we can at least decide what is most important.

Come February, its going to be tough not to grab the roof money and head somewhere warm and sunny where the blizzards don't howl. Maybe next year!

 

[Jay_Gatsby]

This is how I always did it, and it works pretty good. Otherwise, you'd end up having a conversation with yourself at every meal. "Do I really have to eat this Filet Mignon - Rice and Beans would be cheaper"

Holy self-doubt Batman I thought only I was thinking along those lines. It's good to know I'm not alone.

Seriously though, I've been asking myself that same question in virtually every aspect of my life for the past couple of years. In fact, I've been wondering why I've become so "boring" and/or "cheap", or otherwise can't enjoy life as much as I did previously.

Change is most definitely in order. 8)

 

[Jay_Gatsby]

Yup Jay, it's all about balance. Go too far one way and you might throw in the towel out of frustration.

Sit down create a budget. Pay yourself first, and leave some left over to enjoy life today. Don't ever put today on hold for tomorrow!

For a while I thought aggressive saving was a way of competing in the "race" to millionaire status. Once I'd reached that milestone, I'd feel like I'd "arrived" and could loosen the pursestrings. 8) I've come to realize that saving isn't a race against anyone else (a reverse "keeping up with the Joneses"), but rather an exercise in self-discipline and balance.

 

[JWV]

8)  I've come to realize that saving isn't a race against anyone else (a reverse "keeping up with the Joneses"), but rather an exercise in self-discipline and balance.  

Wise, Grasshopper.

 

[shanna]

This past year I sat down and got our finances and investments organized, and while we were already good savers I got so excited about ER that I went overboard on scrimping.

We usually take one big overseas trip per year but this year I hemmed and hawed when the issue of planning a trip came up (because I secretly wanted to save the extra $$) and my husband is disappointed that we won't be having our annual adventure. Next year we'll go back to taking our big trip.

I think we'll go back to maxing 401Ks, Roth IRAs, and a fixed amount of additional monthly savings and stop scrimping so much.

 

[BigMoneyJim]

Good thread. It's easy to get caught up in calculation, planning and hoarding every investment dollar.

What's funny is when you're deeply in debt you know where to put your money. When you've got after-tax and pre-tax savings and no debt you start second guessing yourself. I keep having to remind myself how well off I am.

Another odd thing is that I spent so little (relative to before I decided to eliminate debt) for 3-5 years I'm now having trouble finding worthwhile ways to spend my fun money. I suppose it's a phase I'll get through.

I have a list of things I want to buy, but I made it so when I have an urge to buy something I can refer to the list and decide if what I'm wanting now is more important that what's already on the list. Perhaps I should schedule/budget a periodic purchase from my list (assuming it will add enjoyment to my life).

 

[JonnyM]

Flowgirl:

Starting this coming year (January 2005) we're switching to the method of having a fixed percentage of each paycheck go directly to retirement savings and not worry about how we spend the rest.

I think she nailed it. Mrs. M & I have chosen to interpret the lifestyle as "Living Within Your Means". Since the savings is essentially automatic plus we both had additional monies withheld for DBP pensions from our checks for our entire careers, the remainder is OURS to er, ah, well blow.

The mistakes of our mispent (joke in there somewhere) youth was "living beyond our means", i.e. incurring debt, and then having to deal with it. Since in recent times as we get closer to my final ER we've converted to living on a cash basis, no credit cards anymore except for rare instances and then full payoff during the grace period, we find ourselves in a fun position of always knowing what is "affordable". We either have the bucks or we don't. If we see some major toy of interest, then we wait until the excess funds build up in the funstuff account and go for it.

I hope this will translate well in FIRE as our expenses, that is to say our spendable dollars after everything is withheld from my paycheck added to DW's ER DBP paycheck, is roughly what we'll be stuck with when I join her in FIREworld. I'm still contributing to a 457 plan that should be able to fund the FunFund for an additional 4k a year once I ER.

Meanwhile we don't feel deprived, we get reasonable toys every year (I'm down to about 2 guitars per year now), and continue to covet gas plasma TV's. I want one, but darn if I'm going to go into debt to buy one.

 

[John Galt]

I have never been a compulsive saver in my life.
Now, I believe that I have a good sense of when I
am getting off track, using net worth as my primary
guidepost. I am frugal, but I don't sweat every dime.
Also, on EVERY major purchase, I consider carefully
how I will come out if I have to sell at some point.
I have tried budgeting and found it boring and a
waste of my time. What I do seems to be working and
so I will stick with it.

JG

 

[haha]

I have a list of things I want to buy, but I made it so when I have an urge to buy something I can refer to the list and decide if what I'm wanting now is more important that what's already on the list. Perhaps I should schedule/budget a periodic purchase from my list (assuming it will add enjoyment to my life).

Well, yours is a very organized form of hedonism. Another approach is spend on anything that gets you a skill that you would like to have. Singing, dancing, music instrument, surfing, snow-boarding, a foreign language. While I can't really remember the "stuff" I had years ago, the skills I acquired are part of me. And some of these things get harder to learn every passing year.

You also can't go wrong spending on fun with women. Someday you will probably be married, and you will definitely look back with fondness on lots of the girls you didn't marry, and the great times you had with them before the advent of Honey-do's; feminine headaches and a bunch of other things that I don't want to depress you with.

Mikey

 

[John Galt]

Well, I certainly did my share of dating in between my 2 marriages. I must say though that while the highs were
very high, the lows were equally low. I wouldn't trade
the experience, but at my age I am glad it's all behind me.

JG

 

[Jay_Gatsby]

You also can't go wrong spending on fun with women. Someday you will probably be married, and you will definitely look back with fondness on lots of the girls you didn't marry, and the great times you had with them before the advent of Honey-do's; feminine headaches and a bunch of other things that I don't want to depress you with.

Mikey

That's funny, and probably true.

I like the approach of making a tangible list, although I've had a mental one for a couple of years now (one could say I've been going "mental" during that same time). Many of the things on that list are all large purchases that have all been postponed because of my current career situation, of which I've been aware for the past several months. The one thing that I'm learning you can't continue to postpone is a vacation, since going on one will likely give me the clarity to solve my current career situation (or take my mind off it while things percolate among third parties).

Yet I can't help be like Uncle Scrooge and relish in the ever-increasing account balance. There's nothing quite like it, and when it increases without any effort on my part, that's the sweetest of all. Perhaps it's a sense of superiority, in that I saved my money while my contemporaries wasted theirs, and therefore they're working for the same money for which I don't need to work as hard for anymore. Then again, they may have done as Mikey suggested, and have fond memories.