Saving too much?

Simple living, extreme early retirement, being wealthy, ...
Chad
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Post by Chad »

A close friend recently past away and it has made me rethink how much I should be saving. I save a lot, but it will take me longer than 5 years to get to retirement. Anyway, is it better to live for the moment a little more? Do the savers sometimes put stuff off for too long? Why is depriving yourself now better than in the future?
Just curious on everyone's thoughts, since the majority on here are have at least some early retirement goals.


B
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Post by B »

Hi Chad,
Wouldn't that motivate you to save even more, to bring retirement closer?
I don't view saving as deprivation. In many ways, it forces me to indulge in more fulfilling pursuits. Instead of going to a restaurant for dinner, I cook a new recipe and share with friends. Instead of driving to work, I take an invigorating bike ride. What I did at first to save money becomes an integrated part of my lifestyle. Every time a change like this sticks, I don't want to go back to the old way.
I am looking forward to converting more and more aspects of my life in this way, with the ultimate goal of ditching the full-time job. The temptation isn't in saving less and spending more, it is in quitting the job and living the life I want NOW, before I have enough saved to safely do so.
If I felt the way you did, I'd reconsider ERE. How would you spend more money that would make you feel more "in the moment" and less deprived?


mike
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Post by mike »

I think you bring up a very good question. I tend to think of this in terms of "life maximization". After all we don't know when or how our number will come up and it would be a "waste" if someone deferred all their desires to some future date and unfortunately never got to that date.
In terms of lifespan (number of years), everyday we live through is one less day we have and one never knows when the time is up (of course one could look at statistics, genetics etc to come up with an estimate but that is what it is, an estimate...actual results may vary widely)
So the idea for me is to "maximize" an asset (life)...which leads to the idea of some sort of balance between current sacrifice versus future gain. However I think that if one tends to look at Early Retirement/Financial Independence through the lens of sacrifice, it really doesn't seem worth it. For me I know, it is more like a game..a kind of beating the system, rebelling against the status quo kind of endeavor. There is some great joy to be derived by strecthing a dollar to the logical extreme. To relax the assumptions behind what we all "should" be doing (buying, consuming, kissing up to the boss, playing company man etc.)..and considering new alternatives is what I find very empowering and liberating about frugality/ER etc.
It has been a way of reconnecting with my earliest feelings of great joy as a kid, when I remember what made me happiest was not more toys but the prospect of having endless days at the beginning of summer, walking in the woods, playing with friends and looking up at the night sky through my simple home made refractor telescope. I had all I needed then. (To make sure that this is not just nostalgia..which one always sees through rose tinted glasses..I have experimented with taking time away from work to have simple vacations...no fancy restaurant and resorts but rather time spent hiking..traveling in minimal creature comfort and realized that I feel just the same way today..actually even more so since I am acutely aware of my mortality and limited time on this planet.)
Somewhow we have made life more complicated than it needs to be.


jacob
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Post by jacob »

If you spend so little that you're not enjoying it anymore, you're in over your head. Too far and too fast. I did that once for 6-12 months when I decided not to buy books. I hadn't figured out the whole internet/library thing yet.
However, the point of this whole exercise is that it shouldn't feel like sacrifice. When some runner guy puts on the shoes to train for an event, he wouldn't consider the training a necessary sacrifice to win the event. Training would be part of his life and who he is. However, he could start out too fast which will hurt and lead to injuries, so the idea is not to do that but continuously try to train/live better. Analogy complete.
Consider that I have substantially more money than I need to be FI/ERE; however, I see no need to spend it because doing so wouldn't make life more enjoyable with the lens (good word) I'm currently seeing the world trough. It would be as if the runner now had the opportunity to get a ride in car...why would he want to do that?


il-besa
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Post by il-besa »

Hi Chad,

to me living frugal and planning for ERE should not defer our current happiness.

Actually, living frugal made me MORE happy than running out to buy stuff I don't need, because becoming frugal happened as a consequence of a shift in my view of life values.
But if saving too much means defer your happiness to a later moment, then I think you should spend more in what would give you happiness NOW.
We live in the present, past and future are only illusions :)
Ciao

D


a.e.k
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Post by a.e.k »

Sorry to hear about your loss Chad.
I feel like I am living my more authentic life when it's lined-up with my goals.
And they aren't all far off goals..because embracing whatever comes my way today is the only way I'll get anything done.

And this moment isn't about living in a way that can't be sustained or that I cannot afford.
I often remind myself of how fortunate I am to be experiencing different sensations, different temperatures, rain, wind- all that night darkness- instead of focusing on the fact that I am walking home (because I don't have a car and the next bus is an hour off).
Alive- not in a dramatic way- but a very genuine "I'm scared I'm going to run into a bear- look at that sky!- crisp air-cool cheeks- gosh it's nice to be stepping into a warm home" sort of way.
Finding beauty in strange moments is a gift I give myself.
If something is worth spending money on- I'll do it.


Chad
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Post by Chad »

@B

Yes, and no. Yes, because getting to early retirement would mean success. But, no, because what's the point if you don't make it to early retirment?
@mike

I like the maximizing asset thought.
@jacob

My use of the word "deprive" was probably incorrect, as I wouldn't categorize my thoughts on my current savings rate that harshly. It was more for discussion.
A good example of my thoughts would be:

I would love to take a trip to Whistler in Canada, but it is rather expensive (flight, hotel, shipping the skis, etc.). Instead I stay within driving range on the east coast where I live.
While the east coast trips are fun, a trip to Whistler would be rather special considering the terrain and size of the ski park and town.


Chad
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Post by Chad »

And, taking the trip to Whistler would not put me anywhere near financial hardship, but continued expenditures of this type would delay my ERE.
@a.e.k.
Thank you for the thoughts and the advice. I think your paragraph on being "Alive-..." is easy to forget and we should be reminded of it now and then.


Wild
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Post by Wild »

I found Jacob's book to be helpful in this respect because of the way it articulates a coherent philosophy and addresses the question of "why ERE?" Admittedly, the first steps of ERE may be a bit frustrating as one tries new things, perhaps unsuccessfully at first, that they have outsourced their entire life: cooking from scratch, entertainment, etc. On the one hand it's sad that we, ourselves, quite literally don't know how to live; we only know how to make money outlays in exchange for our living. (Hence the need to "make a living.") On the other hand, there is tremendous reward and fulfillment in stopping the outsourcing and taking your life back.
There are some, the vast majority probably, who will always see ERE as a huge sacrifice, or too big a compromise. Unfortunately, society/socialization holds a tremendous spell over people. It's always fun to ask, as others have done on this forum, would you do something if you were the only one doing said something: Would you take a loan on a house/shelter for 30 years and pay over double its initial cost if you had never heard of anyone else doing such a thing? Would you live in a 4 bedroom house if everyone else lived in a yurt?
The typical response of course is that not everyone else lives in a yurt, and the response is correct. But the point here is that doing something different from the societal norm does not constitute a sacrifice. It may be a sacrifice in the mind of someone who strongly identifies with others (and "entertains" oneself by watching reruns of House Hunters), but different does not mean sacrificial. In fact, most elements of ERE are so mutually beneficial, that the whole is greater than the sum of the parts. (For example, the choice to ride a bike yield->no car capital outlay, depreciation, insurance, maintenance, parking fees->ability of capital to appreciate and earn income, ability to retire earlier; more exercise->better health->better temperament, less health care costs, earlier retirement->time, energy, and flexibility to engage in other mutually beneficial endeavors...)


jacob
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Post by jacob »

@Wild - That's a great response! Would you mind letting me post it on the blog?


Maus
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Post by Maus »

Looks like there's been some great deep thinking while I was on my DV. Wild articulates my own take on saving for ERE well. The key is mindfulness about what it is we are foregoing to increase the savings that will be the engine of ERE. If, for example, you are frustrated because the European trip everybody says is necessary to being well-rounded and civilized is competing with your savings goal, you have to ask yourself "Is this trip something I truly want for my own sake, or is it is simply checking off an item on the social expectation check list?" If the latter, you need to work on why those expectations are driving you. If the former, then by all means take the trip. It will bring you joy and expand your self understanding. But the distinction is critical.


mike
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Post by mike »

I think you can't ignore the "network effect" of socialization which can have tremendous consequences.
After all it was only because everyone was buying houses (a.k.a the American Dream) that there was a demand for housing and prices kept going up till they no longer could...this is clearly a network/socialization impact. Facebook and Ebay became so huge because everyone else was getting on it and the more the users, greater the utility/demand.
In the big scheme of things, the pendulum swings between overconsumption and materialism at one end and frugality on the other. In a world full of yurts, I imagine it would not be too long before someone started touting the benefits of a mcmansion (central a/c, swimming pool, bbq pit..ah the wonderful luxuries)..and soon there would be people selling their yurts and entering into wage slavery for a chance at owning one of these modern houses...and the cycle starts all over again.
To me ERE is analogous to selling stocks when everyone is buying and the market is overvalued and vice versa.


Sven
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Post by Sven »

Sad to hear about your loss! :-(
I think we all have (had) some moments that we wonder we are overdoing it.. or at least i had.. and i am kinda sure there will be more such moments coming. :-s
But which seems to work for me to get through these moments: in the beginning of the year you set a saving goal for the next year (nothing new here).. this should be really challenging, but also not completely unreachable (you don't want to find yourself depressed and give up)! Then you promise yourself that you will reach that goal and whatever you will have saved more than that goal, you can spend on whatever you can imagine next year! :-)

To express it like people in the midst of the rat race would: For me this is really motivating myself to go the extra mile to reach that goal and preferable even further! Also it is easier to persuade myself in the moments i am overdoing it. (keep in mind that you can really do whatever you wish to do with it)

This also puts some pressure on yourself if in the middle of the year you notice you were slacking a bit.. then you start calculating and all of the sudden you find plenty of ways to have less costs/earn some more money on the side (no, it is not cheating ;-)).. It also gives you plenty of time to think about what you would spend that leftover money on next year.. completely guilt free! In the end you can still choose to save that money as well, but then that is completely up to you! :-)
If the next year you find out the target was 'too easy' (you probably didn't think so the year before, but in the end it felt like that), you just increase it and start over..


Wild
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Post by Wild »

@Jacob- Don't mind at all.
I hope it didn't come across as too ERE-ogant :)


Concojones
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Post by Concojones »

Chad,
Also consider Jacob's rule of thumb for buying something (or not). A $1 cup of coffee may seem like a one-off thing, but it's recurring because tomorrow you'll want another one. This translates into a $365 yearly cost, requiring a $365*25 = $9k = 1 year of saving. Likewise, your Whistler trip may reflect your desire to go to an awesome ski resort once a year, costing say $1k on average, or $25k / 2.5 years of savings.
What I suggest builds on the above. First, give yourself a guilt-free spending budget (say $2k/year, or whatever seems reasonable to you using the above approach). Then, set your priorities: which guilty pleasures will you spend it on? BTW, this is similar to Sven's guilt-free spending suggestion above.


Chad
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Post by Chad »

Thanks, I appreciate all the input and it's good to hear the facts. However, I was looking more for emotional arguments on spending or not spending. Sorry, I wasn't very clear. I don't have much of an issue with the rational side, as I'm probably too rational most of the time.


Cashflow
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Post by Cashflow »

I see "spend" versus "invest" as a choice people make.
The more they invest rather than spend, the sooner they will reach financial freedom, which then buys them lifestyle freedom.
But it's not wrong to spend more and invest less; all that does is make lifestyle freedom occur later rather than sooner.
So which do you want more -- the doodad or the lifestyle freedom? Then allocate your capital according to your answer.


a.e.k
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Post by a.e.k »

I'm trying to lessen my proficiency with emotional decision making!
I was weighing benefits about going overseas to meet extended family, study the language, explore.. I imagined myself at 80 & looking back at life and I decided it was worth a few sacrifices now (and less financial freedom for some time). It was an emotional decision.
If it's a life goal- then I think it is in a different category than mindless consumerism/spending.

But ERE is a different lifestyle..I'm still swayed by my INFJ personality (that F..feeeeeeling part rules high).

(By the way, I now live in Whistler so if you need any info in the future- I am glad to help)

However..I ended up moving here because of emotional reasons (missing the mountains..) so I don't fit well into these forum discussions at all! (But I enjoy all these analytical types since it is not at all how I am driven)


Robert Muir
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Post by Robert Muir »

A few years ago, I happened to mention to my brother-in-law, during a holiday visit, that I'd always wanted to learn to play the piano. What he said, while cliche, was poignant. He said, "well, you're not gettin' any younger". Then, just a couple of months later, Robert Palmer died.
So, I bought a piano and started taking lessons.
Chad, money or no money, it really boils down to what's important to you. What do you want to do before you die? What do you want to spend your life energy (money) on now, that will delay the date that you're free to do anything with your time?


Britz
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Post by Britz »

@Chad: Good question. As a student with little money about 15 years ago, saving money became a sometimes unhealthy sport, to the point that I lived on less than $1 a day for food and weighed so little that friends thought I was sick.

Now, my take on maximising happiness and contentment is that you need to eliminate negative stress through financial, health-wise, and emotional security; you need frugality and discipline to give success, self-assurance, and contentment; you need some degree of social network for happiness and help; but you also need the occasional spikes of wild ectasy and even terror/stress, to shake things up. You can find great joy and beauty in almost every single moment if you take a step back from it all and find it, and you can have sex/do sport/climb a mountain/eat mushrooms/whatever for joy and positive mental overload through physical activity and sensations. Most of these things are available for free but when not, then they may well be worth even a high price. My most extravagant of such expenses cost about $5000 for a 5-day trip on my own, to fly to the middle of Australia, rent a dirt bike, and ride into the desert, stay there a couple of days, including New Years Eve 1999-2000, just thinking and getting a rush from the beauty and isolation. Crazy price tag perhaps but I've still got that trip (and others) on my mind: fully worth it. Go skiing (or whatever) if it gives you a worthwhile rush!


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