Keeping up with the neighbors and Balance

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stemikger
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Keeping up with the neighbors and Balance

Post by stemikger »

I am a Boglehead through and through. All of my investments are 100% indexed, I'm frugal and not wasteful, but generous when it counts. I don't really deprive myself, but due to the fact I don't carry debt of any kind, I have to wait to do things like home repairs, buy a car, etc. If I can't pay for things in cash, I just wait and save it.

I have been living in my house since 1993 and paid off my 30 year mortgage last year. My neighbor who I am friendly with has been living next door to me for the same amount of time. I live in a townhome that was new construction when I bought it and he bought at the same time.

Him and his wife drive two very nice cars, he has done numerous renovations inside his home (new kitchen, new bathrooms and he added a third bedroom because his two kids are getting older and wanted separate rooms). New big pool in his backyard with a beautiful deck.

In the course of our conversation, I asked him how he could afford to do all this and his response to me revealed he is in debt up to his eyeballs and he just kept taking out home equity loans. He owes the same amount on his mortgage that he owed on it back in 1993. He leases both cars and gets new cars every three years and he has nothing saved.

Now my snapshot looks something like this, I have no mortgage, my one 5 year old car has been paid off since I bought it with cash, and I fully fund my 401K.

However, I feel I'm missing out and would like to do things with my house while I'm still young enough to enjoy them. I feel I'm having trouble finding a balance with me being such an extreme Boglehead. In fact I turn 50 this year and I am thinking about using the catch-up provision to put an extra $5,500 in my 401K.

I would like to hear from some older Bogleheads who can guide me to a place where I may find a balance between enjoying my life today and still saving enough for the future. And not feel guilty about not saving that extra $5,500.

P.S. By coincidence, me and my neighbor make the same exact salary and are the same age.

Thanks for any advice you may offer.
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Achelois
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Re: Keeping up with the neighbors and Balance

Post by Achelois »

You said it yourself, balance.

It seems you are feeling a general dissatisfaction, so if you could pinpoint more closely what you would like to do, that would help. New paint spruces up a place and is not overly expensive. You could probably have the inside painted professionally for that $5500, that is about what it cost me. My house is 1800 sq ft with vaulted ceiling in living room.

Maybe new carpet. I recarpeted my entire house for $7000.

If you do not have debt and have been saving/investing like a good boglehead, you can afford to do a little something for yourself. Most of the people on here advocate balance in life from what I have seen.

You can be a boglehead without being a Scrooge.
Last edited by Achelois on Mon Jun 02, 2014 9:22 am, edited 1 time in total.
MrManlyMister
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Re: Keeping up with the neighbors and Balance

Post by MrManlyMister »

stemikger wrote:However, I feel I'm missing out and would like to do things with my house while I'm still young enough to enjoy them. I feel I'm having trouble finding a balance with me being such an extreme Boglehead.

I would like to hear from some older Bogleheads who can guide me to a place where I may find a balance between enjoying my life today and still saving enough for the future. And not feel guilty about not saving that extra $5,500.
If you truly feel like you are missing out on something important, then you have a ready model - just go in debt up to your eyeballs and you can live exactly like your neighbor.
If instead you want to be confident about your financial future, then continue on your current path.

Are you not enjoying your life today?

Although I'm a bit older than you are, I've followed a similar path - and I wouldn't change a thing. Over the years, I've learned to find satisfaction in doing things the way I believe they should be done, not in the way the neighbors have decided to do things. I have never felt a need to keep up with the Joneses (or anyone else who chose to go into debt up to their eyeballs).
Last edited by MrManlyMister on Mon Jun 02, 2014 9:24 am, edited 1 time in total.
mptfan
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Re: Keeping up with the neighbors and Balance

Post by mptfan »

This is a thread on a similar topic entitled "Do you regret saving too much?"...

http://www.bogleheads.org/forum/viewtop ... 10&t=98393
livesoft
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Re: Keeping up with the neighbors and Balance

Post by livesoft »

I don't bother to keep up with the neighbors. What's the point?

Instead I like them to feel sorry for me, so I make sure my kids look pretty ratty. My neighbors give my kids food, clothes, and odd jobs. I like that.

Then I like to make the neighbors jealous of what I do, so ….

I like to travel, so I go places. Lots. I never meet my neighbors in Hawaii, Australia, New Zealand, Europe, China, Japan, South Africa, LA, San Francisco, New York, Boston, Seattle, etc. My balance is that I get other people to pay for my travel.

Now that's the right kind of balance.
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DireWolf
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Re: Keeping up with the neighbors and Balance

Post by DireWolf »

I am younger than you but we share some similar values.

We just paid off our home. We bought it 3 years ago and it was built in 2007, so it's still a relatively new house. That being said, we are definitely "homebodies". We do travel a fair amount, but most of our time is spent at home. And we really take pride in our home... so we are not afraid to spend money on improving it. We are constantly doing little improvement projects to add to the quality and aesthetic of the home... landscaping, quality furniture, upgrades, repairs, etc. We feel this is money well spent because we are at home so often and it gives us satisfaction to be in a clean, quality, and beautiful environment. So if you are also a "homebody", then it makes sense to spend some money making it enjoyable.

As far as vehicles, my wife and I also value quality and aesthetics. We always buy new and pay with cash. We do spend more than average ($30-50k per vehicle) but nothing outrageous. We keep our vehicles for 10 years/120k miles and then replace. We also take VERY good care of them so they look like new at the end of the 10-year cycle. We park on the outskirts of parking lots, no eating/drinking/smoking in the car, keep up with scheduled maintenance, no harsh driving, wash them weekly, etc. So if you want to splurge on a nice vehicle, go for it. Just make sure you take good care of it and keep it for at least 10 years. That way your 7-year old car will always look just as nice as the neighbor's 2-year old car.

As your post implies... life is about priorities and balance. Priorities change. Hopefully balance remains constant. Pick out a few things that are most important to your well-being as a person and dedicate most of your resources there. The remaining resources can be used for non-priority but still-essential items.
michaelsieg
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Re: Keeping up with the neighbors and Balance

Post by michaelsieg »

I agree, you want to have a reasonable balance.
Also, if you decide to make a home improvement, it is not purely a "cost" to you, some of it will actually increase the value of your home. I quickly googled "home improvement value" and found this amongst many links: http://www.hgtv.com/home-improvement/wh ... index.html - so probably you will recapture around 85-90% of your home improvement once you sell your home.
So I would go for it, you deserve to life nicely and to have a good quality of life. Even if you have a HELOC for say 50k for some major project, the annual interest of a 2.99 APR (what I have) would cost you $1450 annualy- so I would seriously consider doing it.
magneto
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Re: Keeping up with the neighbors and Balance

Post by magneto »

Not neighbors but noticed colleagues who had fine cars, etc, up to their necks in debt. We lived frugally and wondered like you about whether we had the balance right. However when the well paid job came to a crunching end, we were able to retire early, (unlike those free spending colleagues) live comfortably and choose where and how we live.
Dependent on how you are balanced financially and job security wise, some expenditure is surely BH allowed, but make sure to choose an expenditure where the pleasure will endure!

Good Luck
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RunningRad
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Re: Keeping up with the neighbors and Balance

Post by RunningRad »

OP, I hear you. One thing that you have, that your neighbor is nowhere close to having, is a great degree of financial freedom. He is a slave to his "stuff", and will have to work long and hard to pay for it and no doubt has sleepless nights over the amount of debt.

I am 48, and while most of my physician partners, several of whom are younger and have earned less in the field, have fancy cars, country club memberships, second homes, and other trappings of high living. Me, a paid off house, a Prius, enough money saved to put two children through college, one nice trip per year (and no cutting corners!), and the ability to walk away from the job. Every time there is a change in reimbursement or referral patterns or other news that places our business at financial risk, they sweat a little more, as the noose tightens. Me? No worries!
Few decisions in life motivated by greed ever have happy outcomes--Peter Bernstein, The 60/40 Solution
Sconie
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Re: Keeping up with the neighbors and Balance

Post by Sconie »

So, your neighbor is in hock up to his "eyeballs" so that he could buy more "stuff." Sounds to me as though you have your priorities right----don't second guess yourself.
I know you think you understand what you thought I said but I'm not sure you realize that what you heard is not what I meant. - Alan Greenspan
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ResearchMed
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Re: Keeping up with the neighbors and Balance

Post by ResearchMed »

You wrote that "However, I feel I'm missing out and would like to do things with my house while I'm still young enough to enjoy them."

Is it just "things with your house" that you want to enjoy (more)?

It sort of sounds like there might be other things or life experiences that you feel you would like to enjoy.

Can you separate out what you see your neighbors "having" (including the debt!), and what YOU (and your family) would enjoy "having" or "experiencing"?

As pointed out Boglehead does not necessarily equal Scrooge. Opinions and practices by those here on Bogleheads.org vary considerably, in both lifestyle and investment "styles".

Is there something (home improvement, travel, or ?) that would make you feel that you were enjoying life more?

We only go on this trip once...
And the length of the trip isn't guaranteed.

RM
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swimirvine
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Re: Keeping up with the neighbors and Balance

Post by swimirvine »

That's a tough situation. I don't envy you. Just make sure anything you choose to spend money on is for you and not to "keep up" with your neighbors.
The way I invest my money is not the right way to invest, it's the right way for ME to invest.
Faith20879
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Re: Keeping up with the neighbors and Balance

Post by Faith20879 »

HI OP,

I understand what you are feeling.

I think it is normal to, from time to time, feel a little discontented about life, be it the house, the job, the family or what have you. It is important to figure out what is making you feel this way. If it is from not measuring up to the Joneses, be careful, there is no end to that chase. Once you catch up to Jones 1, there will be Jones 2 and so forth.

If you are just tired of the look (or feel) of the house, try something small - a new floor (carpet or wood something different) perhaps? as the other poster mentioned. It will bring a new visual effect thus, a new Zen to your daily mundane. If that's not it, try something else.

I learned this from George Costanza and it worked for me! :D :D :D
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UroloJay
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Re: Keeping up with the neighbors and Balance

Post by UroloJay »

I'm younger than you - mid to late 20s - but would like to offer an analogy: My wife is often subject to what I like to call the Facebook Effect (I have to admit I'm not 100% immune to this either!). There are always more than a few "friends" posting pictures of their trip to Europe, brand new car, kitchen renovation, or new puppy. It's easy to say, "Man, everyone else is having so much fun and all we're doing is working and saving, working and saving." The truth of the matter, though, is that yes, we're working and saving, but we also take vacations and put a little money into the house everyone once in a while. The problem is that we're constantly inundated with everyone else's consumption. Each individual is not constantly taking vacations or buying new things, but it can seem that way because of the... I don't know... 1,200 "friends" she has. Not quite the same thing as one guy living next door, but the effect is the same. It's all RELATIVE.

We save a good portion of our income, we are frugal, and ascribe to the Boglehead lifestyle. With that said, I do think it is possible to save too much. I think the key is setting a clear goal for where you want to be when you retire, save enough money that you're confident you can meet that goal, and then don't feel guilty about spending what is left over on things that can bring you a little satisfaction. It's very easy to fall into saving every last dime, and while there is something to be said for that, you've got to let yourself live while there is living left to do. You'll always be able to find someone spending more and in even more debt than your neighbor, just like you'll be able to find someone saving an even higher % of his/her income than you are now. Form a goal, make a plan, stick to that plan, and try not to make comparisons RELATIVE to someone else. To thine own self be true!
Too many people spend money they earned..to buy things they don't want..to impress people that they don't like. -Will Rogers
livesoft
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Re: Keeping up with the neighbors and Balance

Post by livesoft »

Hmmm, the Boglehead Effect meets the Facebook Effect. I don't know which is worse.
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EnjoyIt
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Re: Keeping up with the neighbors and Balance

Post by EnjoyIt »

UroloJay wrote:
. . . .I do think it is possible to save too much. I think the key is setting a clear goal for where you want to be when you retire, save enough money that you're confident you can meet that goal, and then don't feel guilty about spending what is left over on things that can bring you a little satisfaction. It's very easy to fall into saving every last dime, and while there is something to be said for that, you've got to let yourself live while there is living left to do. You'll always be able to find someone spending more and in even more debt than your neighbor, just like you'll be able to find someone saving an even higher % of his/her income than you are now. Form a goal, make a plan, stick to that plan, and try not to make comparisons RELATIVE to someone else. To thine own self be true!
I fully agree. Save what you need to retire in a timeframe you want, the rest is to have fun with.
May I suggest though that you spend your money on experiences instead of trinkets. Plenty of studies show that experiences bring you more joy than buying material things.

Good luck
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midareff
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Re: Keeping up with the neighbors and Balance

Post by midareff »

I'm 66 and retired two years now.... my Thai wifey is 50's and retired too. She actually retired at 48 in Bangkok (Advertising Executive and restaurant owner) )and we have been together (much back and forth) for about 6 years and live here now. She hates to spend money more than anyone I ever met, with the possible exception of my long passed mother. I was a thru and thru head with a very high savings rate.... maximum deferred comp, double up, Roth, taxable, etc., etc. If I didn't hit my savings goal for the year there was no vacation travel, no frills, nothing. 8 year old cars became ten or twelve year old cars. I always was careful to tell friends how much I liked their new cars and their travels.

By 2007 I was ahead enough of goal to start international travels........ I stayed through thick and thin and now we are looking to move to something more upscale in lodging and so forth which keeping the WR <3%. I'd rather have a nicer place when I am home to enjoy it rather than spend the money on instant gratification now, if it is going to make a difference later. I'm not debt free... have a 3% PenFed mortgage and a 1.49% car loan. ... and even with those payments the WR is <3%. If I ever think I can't make more than 3% on the money I'll pay off the mortgage and be done with it. When I was working I worked many hours weekly.. having a nicer kitchen than the one I wasn't even using but two or three times a week on weekends would not have been meaningful. Having a newer vehicle then a 10 year old Jeep Liberty sit in the parking lot, in the sun collecting bird poop, would have been meaningless, at least to me. .. then .. .

Your neighbor will obviously not be in a place to have an enjoyable retirement, if they can ever retire at all since they will probably never change their habits. If you feel any envy at their lifestyle now, trust me, you will get it back ten times over when you retire and they can't. .. maybe ever. Just remember... if you decide you have accumulated too much after you are retired there is always international tours, 75" TV's, new cars and other things to spend money on, not to omit charitable giving (Operation Smile my current favorite). Keeping up with the neighbors as far as home and cars or travel is not a concern of mine and wasn't then.
likegarden
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Re: Keeping up with the neighbors and Balance

Post by likegarden »

We are not on Facebook, don't have to see what all others are doing. We are retired comfortably, house is paid off, money is at V, have enough income to help out family. We also do not care what neighbors are doing, we are OK and secure.
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FelixTheCat
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Re: Keeping up with the neighbors and Balance

Post by FelixTheCat »

I remember in 2007/2008 when the stock market was going through the roof. My friends all had new homes, boats, motorcycles, motorhomes, etc. They were eating out all of the time. They were traveling 3 out of 4 weekends.

I thought was is wrong with me? Why don't I make as much as them? What can I do to improve myself. Whoa is me. When the crash happened, I found out the truth. They were spending every dime they made. They were using their homes as ATMs. A lot of them lost their homes.

I never think about keeping up with the Joneses. I only do what is best for me and my family.
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Calm Man
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Re: Keeping up with the neighbors and Balance

Post by Calm Man »

Stem, I can only offer you my view. Your posts are generally quite valuable and I view you as somebody with good insight. I would suggest you not care what your neighbor does. Or anybody else for that matter as long as it doesn't harm you. If your newly discovered thoughts about doing something for your house because your neighbor has gone into debt to do so (or even if he has no debt), then I suggest you have no need for it. If you have the need or desire to make renovations, then do it.
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Jazztonight
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Re: Keeping up with the neighbors and Balance

Post by Jazztonight »

If you have a wife or partner, is that person content with your house the way it is? Are you?

Would investing in a new kitchen, bath or "home facelift" make everyone a bit happier? (I'm not referring to your neighbors!)

Being a Boglehead does not necessarily mean depriving yourself. It's more about sensibility.

I'm older than you are, retired one year. DW retired 11years. Cars and home paid off, kids through college (I paid my kid's tuition, etc., with cash). We travel a couple of times a year. But when my wife wanted to re-do what she called a "tired" kitchen, etc., I did not argue. In fact, we took out a home equity loan as necessary, and paid it off. We were not extravagant, and shopped for materials carefully, got discounts, and so on.

Life is for living, and enjoying as much as is reasonable.

If you were asking us about leasing cars, my answer would be different.

You are a sensible guy. You'll do the right thing in the end.
"What does not destroy me, makes me stronger." Nietzsche
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Re: Keeping up with the neighbors and Balance

Post by Jack FFR1846 »

You and your neighbor sound like me and a neighbor of mine. My mortgage has been piad off for 14 years and I have zero debt, money for retirement and college for my kids. The neighbor was a highly paid lawyer and the family always had 3 mercedes in the driveway. Well, something happened and he lost his job and was disbarred. Now the wife is working at the grocery store and they are driving their son, car

This could happen to your friend pretty easily
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Longtimelurker
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Re: Keeping up with the neighbors and Balance

Post by Longtimelurker »

Will buying all of this stuff make you happier than the financial security you have "purchased"? The grass is rarely greener. After all, while your neighbor is out enjoying his deck, he has to come to terms with: retiring later, being less able to support his children's education, an impending degradation in his lifestyle, stress and worry about money, etc.

I have lived in some pretty great places, and I will tell you that view's, shinny kitchens, new flooring, all rarely improved my level of happiness. Creating spaces and experiences for myself and my loved ones did create happiness. So if I were to reallocate FROM financial security TO consumption, I personally would focus on things like: an outdoor deck and pool, trip to europe, etc.
Stay the course. If you can't resist greed, and fear is proven to be 2x as strong, you are doomed as an investor.
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Meg77
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Re: Keeping up with the neighbors and Balance

Post by Meg77 »

One very helpful way to deal with this is to compare yourself to people less fortunate than yourself, rather than looking at people who spend more or have more stuff. I have gone on several volunteer trips to places in Mexico, Peru and Guatemala and spent time with the truly impoverished. It really changes your perspective and is a good reminder of how fantastically lucky we all are. Not that we don't work for what we have, but simply being born in a country like America in this time period is like winning the lottery at birth.
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lululu
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Re: Keeping up with the neighbors and Balance

Post by lululu »

livesoft wrote:Instead I like them to feel sorry for me, so I make sure my kids look pretty ratty. My neighbors give my kids food, clothes, and odd jobs. I like that.
When I was a teenager I did all sorts of summer jobs. I cleaned one lady's house, and she insisted on giving me her old clothes, like my family was on its way to the poorhouse or something. What was anyone in my family going to do with a nice middle aged lady's old clothes...
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retiredjg
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Re: Keeping up with the neighbors and Balance

Post by retiredjg »

I sold my house last year after living there for 11 years. There were some things I needed to do before selling - some paint and fixing things here and there that I had let go for too long. It took about a year to get that stuff done.

Every time I finished a project I said to myself "I wish I had done this sooner so I could have enjoyed it longer". I'm not talking about huge projects like a remodel, but I think that feeling would have been even stronger for something that actually needed a remodel.

Not saying you should start doing dumb stuff, but maybe 1 project a year. If you have lived there since 1993, you very likely need a bit of an upgrade here and there. If your retirement is adequately funded already, try to find a middle way and spend a little bit on this type of thing. I bet you really will enjoy the results.
mptfan
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Re: Keeping up with the neighbors and Balance

Post by mptfan »

Meg77 wrote:One very helpful way to deal with this is to compare yourself to people less fortunate than yourself, rather than looking at people who spend more or have more stuff. I have gone on several volunteer trips to places in Mexico, Peru and Guatemala and spent time with the truly impoverished. It really changes your perspective and is a good reminder of how fantastically lucky we all are. Not that we don't work for what we have, but simply being born in a country like America in this time period is like winning the lottery at birth.
:thumbsup Those of us who live here but were born elsewhere appreciate it even more.
muddlehead
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Re: Keeping up with the neighbors and Balance

Post by muddlehead »

Am I the only one who thinks it's a bit weird for the OP and neighbor to have 1) bought his/her adjoining town homes at the same time 2) be the same age, and 3) make the same salary?
Dandy
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Re: Keeping up with the neighbors and Balance

Post by Dandy »

I feel your pain. Being frugal sometimes gets into your DNA that you miss opportunities to enjoy the fruits of frugalness. I am retired and feel that I have enough for retirement and no debt. Still hard to open up. A few days ago my wife's friend asked why don't you have a DVR? We had a VCR but I didn't like the lifetime rental of a DVR to be added to the lifetime Cable bill. Frugal? Cheap? Probably was frugal when the kids were young and college expenses loomed - now it feels like cheap.

I'll spend money sometimes - nice vacation, new car, helping the kids/grandkids. But we really could use to spend more on upgrading the house, getting a DVR (mostly for my wife) and maybe even upgrading our flip phones to I phones!! I may have to go to therapy if I have to spend $30k on a kitchen upgrade :oops:

I'm trying to change by having a separate account for spending. Each month any left over money goes there. Maybe if I know it is already targeted for spending it will be easier to move to a better balance.

Good luck
IlliniDave
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Re: Keeping up with the neighbors and Balance

Post by IlliniDave »

stemikger wrote:
However, I feel I'm missing out and would like to do things with my house while I'm still young enough to enjoy them. I feel I'm having trouble finding a balance with me being such an extreme Boglehead. In fact I turn 50 this year and I am thinking about using the catch-up provision to put an extra $5,500 in my 401K.

I would like to hear from some older Bogleheads who can guide me to a place where I may find a balance between enjoying my life today and still saving enough for the future. And not feel guilty about not saving that extra $5,500.

P.S. By coincidence, me and my neighbor make the same exact salary and are the same age.

Thanks for any advice you may offer.
Are there specific things your can write down that you feel you're missing out on, or is it just that you have some vague sense you should be doing "something" because your exact income "peer" neighbor is?

Really, as long as you feel as though you're on the right track for your retirement plans in the big picture sense w/out the catchup, then what you do with it is optional. I don't think anything I can say will assuage your potential "guilty" feeling. There's nothing to feel guilty about in trading excess future wealth for something you desire now (which is the trade you'd be making). Can you articulate the reason you would feel guilty?

Maybe as a compromise you could invest the 5500 (or post tax equivalent if your budget is tight) in a taxable account. Having a little tax diversity/flexibility isn't such a bad thing, and while it builds up you can contemplate what large home improvements you might want to make, explore the costs in detail, etc. When you have enough saved you can go ahead and do the improvement. If after thinking about it while the money accumulates it is still something you want to do, then that's a good sign that it would be a prudent lifestyle-improving expense. If you get cold feet, the money's invested and can complement your 401 later.

I just turned 50 last month, so I'm right there with you age-wise, and also an aggressive investor and typically prioritize that over lifestyle. But when I had a plumbing problem that forced some substantial repairs in 2 of my bathrooms, I went ahead and committed some extra money above the insurance to add some renovations/upgrades I would like. The work is ongoing. Hopefully I'll be happy with my decision when the work is complete. Not exactly the kind of thing you're contemplating, but I have been through the anguish! :wink:
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tyrion
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Re: Keeping up with the neighbors and Balance

Post by tyrion »

muddlehead wrote:Am I the only one who thinks it's a bit weird for the OP and neighbor to have 1) bought his/her adjoining town homes at the same time 2) be the same age, and 3) make the same salary?
I didn't think that was strange, but the thought of putting a pool in the backyard of a townhome seems strange to me. I guess they townhomes aren't the same everywhere. In my area the yards are too small and the complexes usually have a pool already.
PedsDoc
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Re: Keeping up with the neighbors and Balance

Post by PedsDoc »

So you have a feeling of discontent after looking across the fence at your neighbors "stuff". Sometimes it is best to put on some blinders to the neighbor's stuff. Most of this stuff is temporary and as you have noted already he has nothing saved for the future when his current income stops. We all have to find the balance between saving for the future and current consumption. I for one will not sacrifice future security for present day toys as long as I am taking care of daily "needs" (not wants).

With the above being said, I would add that if you have your future security funded that there is no reason not to upgrade for more comfortable living now. So look at you current level of savings and projected future saved amount. Compare this to projected future spending. If you are saving enough to support future spending then you don't really need to save more than you're currently saving. Spend some of that money on some upgrades for the house or whatever you would like. This type of savings to future spending analyses is likely something that your neighbor has never even thought of doing let alone done.
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Re: Keeping up with the neighbors and Balance

Post by sambb »

Its all about perspective. I thought i was frugal. One of my coworkers, who makes as much as me, takes the bus to work and rents an apartment while i live in a large house. Why does he do that? He saves his money to help out his parents and his brothers who are very low income. he lives far far more frugally than me, and I save 40% of my salary.

Do you think we are equally happy? I don't see him any less happy than me. In fact, he may be happier. When I buy a starbucks he must think i am spoiled - we have regular coffee in the office that he drinks.

He bought his kitchen table used. He packs a lunch every day. he is pleasant and successful.

There will always be people who spend far more and other who spend less than you. A third person in my office also makes as much as me, he is single with no kids, and has no savings whatsoever. He buys 90k cars and 20k watches, and every electronic thing he can.
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Re: Keeping up with the neighbors and Balance

Post by Dale_G »

Stemikger, as others have said, balance is the key. In your post you indicated that you are focused on saving, but you didn't provide any info about present expenses, or the size of your retirement nest egg. That's okay, but that is what you have to look at. If you are reasonably on target to fund retirement with somewhat reduced future savings, you are entitled to do some spending in the here and now.

I know it is difficult because the future is unknown, but at some point it is helpful to decide that enough is enough.

I am 77, and I probably "over saved". I am not sure that I would have enjoyed spending more, but I ended up with much more than I will ever need. Some might regret that, but I do not, I have total economic freedom given my aspirations.

My problem now is to convince my heirs to retire early. My hope is that they get more fun out out spending than I would have.

But what the neighbor is doing isn't important. You have to decide whether to spend "now or later". And if you end up with more "later" than you want or need, you may regret not spending some "now".

Dale

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Last edited by Dale_G on Mon Jun 02, 2014 9:45 pm, edited 1 time in total.
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hand
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Re: Keeping up with the neighbors and Balance

Post by hand »

muddlehead wrote:Am I the only one who thinks it's a bit weird for the OP and neighbor to have 1) bought his/her adjoining town homes at the same time 2) be the same age, and 3) make the same salary?
It is typical for buyers in new construction "communities" to have similar demographics (wealth, income, age, background, general career prospects), though probably less likely for ownership and demographic similarities to persist through 20+ years of ownership.
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Re: Keeping up with the neighbors and Balance

Post by Watty »

I would like to hear from some older Bogleheads who can guide me to a place where I may find a balance between enjoying my life today and still saving enough for the future. And not feel guilty about not saving that extra $5,500.
I am not retired yet but when I was just a few years older than you are I ended up going to three funerals of people that were roughly my age within about a year. I went to another one a few weeks ago of a co-worker who died two months short of his 65th birthday when he likely would have retired.

If you have lost touch with your high school class try to reconnect to find out how many people you went to school(or their spouses) with have already died or have serious health problems.

This life expectancy calculator is very simplistic but put your numbers into it to see the odds that either you and any spouse will die before you are 65.

http://lvtkt01/Rep/desktop/dashboard.aspx?ID=228

By that calculator there is probably a 10%+ chance that either you, or a spouse if you have one will not make it to be 65.

What to do really depends on the rest of your numbers but assuming that everything else is on track then one thing that you might do it so have some percentage of your paycheck (5% ??) automatically deposited into a seperate account that will be used for the extras that you might not have bought a few years ago. I did that with about 2% of my paycheck when I was in my 30's and it made it a lot easier to spend the money and it is surprising how quickly it adds up.

Now I have cut back on my retirment savings to be just just enough to get the company 401K match so I am now just saving 9% (6%+3% match) of my income and I am now spending more on things like travel. In about two more years I will have my house paid off and may spend more then too. One of the things that makes me feel comfortable doing this is that I have reached the stage where I have enough savings now that I would likely be able to do OK if had to stop working today and live off my savings. This would require cutting back on my lifestyle but I would still be OK. You might want to make a spreadsheet that would outline what sort of budget you would need to live on if you had to stop working today and if that, along with social security, is enough to cover your most basic needs then you might feel comfortable saving less.
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Re: Keeping up with the neighbors and Balance

Post by DTSC »

What are you missing out on?

The stomach ulcer which comes with the debt.
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Re: Keeping up with the neighbors and Balance

Post by stemikger »

tyrion wrote:
muddlehead wrote:Am I the only one who thinks it's a bit weird for the OP and neighbor to have 1) bought his/her adjoining town homes at the same time 2) be the same age, and 3) make the same salary?
I didn't think that was strange, but the thought of putting a pool in the backyard of a townhome seems strange to me. I guess they townhomes aren't the same everywhere. In my area the yards are too small and the complexes usually have a pool already.
First let me say I'm overwhelmed by how many responses this received and I will definitely take the time to read them all. I just skimmed through some of the short ones and for now I will answer the two below.

Thanks everyone, I appreciate all the advice and it will not go on deaf ears.

muddlehead and Tyrion, not sure why you might think that strange but my hand to God that is the case. If you were implying I made that part up, not sure why I would because it would have served no purpose, but nevertheless rest assured it's the truth. My house is only one of eight, it is not a development of Townhomes Just 8 of us and we do not even have a homeowner's association. Out of all the original eight that bought before they were even built (pre-construction prices) only 4 of us that were original remain. Tom and myself are two of the originals. We all have pretty big backyards for a townhome. I looked at some townhomes in developments that only gave you a small 8 ft deck area. Six of the townhomes have yards that are over 40 feet long and 18 feet wide. The two end units are much bigger and could easily put a built in pool if they wished. Tom has a small above ground 12 foot round pool.
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Re: Keeping up with the neighbors and Balance

Post by UroloJay »

livesoft wrote:Hmmm, the Boglehead Effect meets the Facebook Effect. I don't know which is worse.
Speaking of FaceBook, it's unsettling how many times I find myself trying to hit a "Like" button on others' posts. Guess we just have to settle for separate +1 post for now!
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Re: Keeping up with the neighbors and Balance

Post by afan »

You may well feel you are missing something in life, it is a common feeling.

But do not assume it is due to a lack of expensive toys. You sound like you are living a comfortable middle class life. Of course people vary, but it is not likely that spending money you don't have and accumulating a lot of junk will make you feel better. You may need to make better use of your free time to do things you find rewarding. That might be a hobby at home, volunteering in your community, biking/hiking/running, reading, writing, playing an instrument...

I know some people who spend lots of money, are unhappy, and figure they just have not spent enough money. Some stay in jobs they find oppressive and live where they do not want to be so they can earn the money to spend buying stuff to try to feel better about their lives. More money, more junk and the same feelings.

Happiness is unlikely to come from more possessions. Keep saving your money and spend it on things that are important to you. It does not sound like any of the stuff your neighbor has are particularly important. So look elsewhere for your satisfaction.
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Re: Keeping up with the neighbors and Balance

Post by White Coat Investor »

michaelsieg wrote: Also, if you decide to make a home improvement, it is not purely a "cost" to you, some of it will actually increase the value of your home. I quickly googled "home improvement value" and found this amongst many links: http://www.hgtv.com/home-improvement/wh ... index.html - so probably you will recapture around 85-90% of your home improvement once you sell your home.
That percentage is extremely optimistic. Some improvements are worth more than others, as I recall you can get a lot (and by this I mean 65-85%) of a kitchen or bathroom remodel, but very little back from landscaping etc.
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Re: Keeping up with the neighbors and Balance

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (financial planning).
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Re: Keeping up with the neighbors and Balance

Post by rayson »

UroloJay wrote:
livesoft wrote:Hmmm, the Boglehead Effect meets the Facebook Effect. I don't know which is worse.
Speaking of FaceBook, it's unsettling how many times I find myself trying to hit a "Like" button on others' posts. Guess we just have to settle for separate +1 post for now!
+1 :sharebeer
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Re: Keeping up with the neighbors and Balance

Post by fposte »

stemikger wrote: However, I feel I'm missing out and would like to do things with my house while I'm still young enough to enjoy them. I feel I'm having trouble finding a balance with me being such an extreme Boglehead. In fact I turn 50 this year and I am thinking about using the catch-up provision to put an extra $5,500 in my 401K.
[...]
I would like to hear from some older Bogleheads who can guide me to a place where I may find a balance between enjoying my life today and still saving enough for the future. And not feel guilty about not saving that extra $5,500.
I think that some of the responses are offering a false dichotomy, like there's nothing in between being in debt and maxing out your 401k contributions. How well do you think you're doing in saving for retirement? Are you using the max contribution amount as a guide because you don't have any sense of what "enough" would be otherwise?

I'm projecting a little here, in that the max contribution really calls to me (and I have both a 403b and a 457b, so when it calls it ain't fooling around). Contributing the max makes some sense at the moment for me, since I got to the plans a little late and retirement may come really early and not entirely by choice. But it's also because it's the maximum, and because it frees me from having to decide what I'd contribute otherwise. So I'm working on identifying an acceptable deviation from the maximum that I can spend on something enjoyable while knowing that I'm still saving enough.
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Re: Keeping up with the neighbors and Balance

Post by goodenyou »

It's a "Begin with the End in Mind". Do you want to be the guy who is 65 years old, in debt, trying to figure out how to maintain his lifestyle when he is tired and fed up? Or do you want to be the guy free of the shackles of debt with options and able to maintain your lifestyle without working? Saving is not sexy, but it does give you peace of mind and helps you to avoid the deep regret that many over spenders have late in life when it is too late. Balance is the answer. You don't have to be an OCD saver-miser or a reckless spender.
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Re: Keeping up with the neighbors and Balance

Post by Gattamelata »

Balance is important, but keeping up with that particular neighbor wouldn't be balance, it would be getting "in debt up to [your] eyeballs and [you] just kept taking out home equity loans. [You] owe the same amount on his mortgage that [you] owed on it back in 1993. [You] lease both cars and get new cars every three years and [you] have nothing saved."

I think you should go for the balanced approach :happy You clearly like to save, so maybe you like budgeting, too. Give yourself a small budget for fun that you wouldn't otherwise spend, and make yourself spend it each month on something you wouldn't otherwise buy. Do it for a few months, and then consider whether you're happier for it. If you are, keep it up. Maybe even give yourself an extra bonus on your birthday. If you're not happier, you've learned something about how you work. I think this approach might work well with your disciplined side, but also give you the opportunity to explore this regret and learn whether the way to leaving it behind is to indulge it or reject it. Neither conclusion is more right, by the way, but one might work better for you than the other. Why not try it? Saving doesn't have to mean living like a monk, and enjoying yourself doesn't have to mean being as destitute as your neighbor.
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Re: Keeping up with the neighbors and Balance

Post by Beth* »

It sounds like your neighbor wants to have everything at once and most of us can't do that. However, you probably don't need to save every last penny of discretionary income either. Figure out how much you need to save each year to get you comfortably to your retirement goals and then budget some of the excess to discretionary spending.

Everyone has different priorities for what is important to them. I don't care about cars. My husband and I drive good basic cars into the ground. Our current cars are 9 and 12 years old. The 12 year old car is starting to have some issues so we will probably replace it soon. The 9 year old car is going strong. I've never seen the point in buying a fancy car or replacing one that runs reliably. However, that is just me. Cars may be important to you.

On the other hand, I replaced my mid-1960s kitchen a couple of years ago and I did not scrimp in the least when doing that. I like to cook and I knew what I wanted to change about the old kitchen and I made those changes. The old kitchen was starting to fall apart (broken appliances in sizes that aren't standard anymore, drawers falling apart, etc.) but I could have put in a perfectly serviceable IKEA or builder's grade kitchen for half of what I spent. I didn't. You might not care that much about kitchens and just want to do a little aesthetic updating of yours (new counters and floor perhaps) or maybe you do really care.

I think the important thing is to prioritize what is important to you (and acknowledge it can't be everything) and then put together a budget that lets you have those things. I usually have one major discretionary project that I am budgeting/saving for.
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Re: Keeping up with the neighbors and Balance

Post by dumbbunny »

stemikger wrote:he has done numerous renovations inside his home (new kitchen, new bathrooms and he added a third bedroom because his two kids are getting older and wanted separate rooms). New big pool in his backyard with a beautiful deck.
However, I feel I'm missing out and would like to do things with my house while I'm still young enough to enjoy them.
I never did any remodeling in my house. The money was saved for maintenance instead. I would rather have the funds to fix something that was necessary for the function of the home than to update and add-on. If the house reflects your lifestyle why feel like you have to change it?
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Re: Keeping up with the neighbors and Balance

Post by lululu »

muddlehead wrote:Am I the only one who thinks it's a bit weird for the OP and neighbor to have 1) bought his/her adjoining town homes at the same time 2) be the same age, and 3) make the same salary?
Yes. I lived next door to similar neighbors for thirty years. Not in a townhouse, but in bungalows.
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Re: Keeping up with the neighbors and Balance

Post by stemikger »

O.K. You guys gave me a fair amount of reading to do and I'm more than half way through. I am going to print all of these replies out and make a little booklet for myself. Yes, your advice has been that valuable and I will refer to it when I need a reality check. There was some amazing insights here. Thanks for taking the time to share. Now for a bit of a confession. If it was just myself, I don't think I would even have written this post, but the truth is my wife is a house person (she takes after her mother) it is almost like an obsession. Not sure if all woman are like this, but I know many are.

So after years of not giving her what she wants, I feel bad and want to make her happy. There I said it, I'm feeling guilty. :?

I will continue reading the rest soon and again thanks! I will also have my wife read them.

:beer
Meg77 wrote:One very helpful way to deal with this is to compare yourself to people less fortunate than yourself, rather than looking at people who spend more or have more stuff. I have gone on several volunteer trips to places in Mexico, Peru and Guatemala and spent time with the truly impoverished. It really changes your perspective and is a good reminder of how fantastically lucky we all are. Not that we don't work for what we have, but simply being born in a country like America in this time period is like winning the lottery at birth.
I agree 100%! Something Warren Buffett says a lot and I love it every time I hear it.
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