Why do you LBYM? Why do you save and invest?

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KlangFool
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Why do you LBYM? Why do you save and invest?

Post by KlangFool » Wed Sep 27, 2017 10:32 pm

Hi,

Once I was at a McDonald, the person in front of me was buying 20 pieces of chicken Nugget and paying about $6 from the main menu. To the right of the main menu is the dollar menu. The person could buy the same 20 pieces of chicken nugget for $4. But, he paid $6. Ditto on many other items that he bought that day, he could save at least $5 to $10 just by looking to the right and order from the dollar menu.

I told my son and daughter about this story. Then, they ask around among their classmates. It turns out most of them do not know dollar menu existed. They never look to the right when they are in McDonald. So, it turns out that we are not normal. We look for bargains and we found them. But, others don't do that.

The common explanation from others is they do not believe it matters. They do not believe they can save and invest and make a difference in their lives. So, they could not bother to save and invest.

My question to the member of the forum is this. What makes you different from others? What makes you believe that you could be LBYM, save and invest to make a difference in your life? I believe this will be a very interesting topic to discuss.

Thanks in advance.

KlangFool

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Pajamas
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Re: Why do you LBYM? Why do you save and invest?

Post by Pajamas » Wed Sep 27, 2017 10:33 pm

I learned to live below my means and invest from my family.

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Re: Why do you LBYM? Why do you save and invest?

Post by JBTX » Wed Sep 27, 2017 11:03 pm

KlangFool wrote:
Wed Sep 27, 2017 10:32 pm
Hi,

Once I was at a McDonald, the person in front of me was buying 20 pieces of chicken Nugget and paying about $6 from the main menu. To the right of the main menu is the dollar menu. The person could buy the same 20 pieces of chicken nugget for $4. But, he paid $6. Ditto on many other items that he bought that day, he could save at least $5 to $10 just by looking to the right and order from the dollar menu.

I told my son and daughter about this story. Then, they ask around among their classmates. It turns out most of them do not know dollar menu existed. They never look to the right when they are in McDonald. So, it turns out that we are not normal. We look for bargains and we found them. But, others don't do that.

The common explanation from others is they do not believe it matters. They do not believe they can save and invest and make a difference in their lives. So, they could not bother to save and invest.

My question to the member of the forum is this. What makes you different from others? What makes you believe that you could be LBYM, save and invest to make a difference in your life? I believe this will be a very interesting topic to discuss.

Thanks in advance.

KlangFool
We unfortunately consume our share of fast food. I think your conclusion above is grossly simplistic. More recently, since we are on one income, I have become very frugal at fast foods, ordering dollar menu items, trying to figure out the optimal combination of entree/side/drink to save a buck or two. My DW never does that, and until recently I didn't always do it unless it was obvious. When you have two people working, and you are meeting your savings goals, sweating about what combinations of items will save $1.00 may not be worth your time. For me, it is now that we are on single income, but hasn't always been that way.

So for us in the past whether or not we saved that $1-$2 had no material impact on our savings goals. I think for others many times it just isn't obvious to them. They order a combo thinking that is the cheapest combination, when in reality it often isn't. Then there are others who may not have that much but don't really realize how that extra dollar or two a day adds up. The same can be said for people who live paycheck to paycheck but run through starbucks every day.

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Re: Why do you LBYM? Why do you save and invest?

Post by randomguy » Wed Sep 27, 2017 11:44 pm

Optimizing spending and iiving below your means are not the same issue. I live below my means but as I have gotten richer I have stopped sweating the small stuff. The difference isn't worth the time cost. The key to saving in my life is just not buying stuff cause I don't need it.

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Re: Why do you LBYM? Why do you save and invest?

Post by DVMResident » Wed Sep 27, 2017 11:52 pm

LBYM was enough and didn't have a desire for more stuff.

I lived an average $608*/mo for 3 years while grossing $38k/yr as a resident. When my savings account swelled to 5 digits after few months, I thought "I should learn how to manage this." I never thought "oh, I money so I should buy stuff." Just no interest in owning much material stuff. That learning quest turned into Bogleheads, learning about taxes, saving rates, AA, etc which crystallized into the FI path. The process was just organic growth of frugal facet that I nurtured, refined and directed with a large help from this forum :beer

Ironically, the forum made me less frugal because I realized I was saving too much.

I'd favor a guess that most forum members are more frugal than average before they hit the BH forums. Non-frugal people generally don't like to hear they're spending too much and that's first issue you have to address before starting to invest.

*Excludes some employer benefits, e.g. health care, bus pass, 403(b) match, and the alike.

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Re: Why do you LBYM? Why do you save and invest?

Post by letsgobobby » Thu Sep 28, 2017 12:17 am

some are ants. some are grasshoppers.

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Re: Why do you LBYM? Why do you save and invest?

Post by FIREchief » Thu Sep 28, 2017 12:30 am

KlangFool wrote:
Wed Sep 27, 2017 10:32 pm
My question to the member of the forum is this. What makes you different from others?
There are three groups of people:
a) don't understand math
b) understand math but don't want to be bothered with it
c) understand math and use it to their powerful advantage

What makes some/all of us different is that we fall into category "c." 8-)
I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

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Re: Why do you LBYM? Why do you save and invest?

Post by magneto » Thu Sep 28, 2017 2:08 am

Why do we save and invest :-

+ Anxiety about future security
+ Ammunition to enable unrestricted free choices in life
+ Delayed gratification
+ An interest in numbers
+ Other?

Could be something in our genes perhaps?
'There is a tide in the affairs of men ...', Brutus (Market Timer)

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Re: Why do you LBYM? Why do you save and invest?

Post by rosylenm » Thu Sep 28, 2017 2:46 am

My question to the member of the forum is this. What makes you different from others? What makes you believe that you could be LBYM, save and invest to make a difference in your life?

I grew up in a live beyond your means household and lived that way for a while after that. It took a career change and turning 40 to see what I was doing wrong to future me. Future me will never have a pension or guaranteed health care so present me has to save for future me.

The only thing that makes me different is knowing I am on my own (no kids, no family money) and the drive for self preservation/self sufficiency. I prefer the term anarchist myself.

I have been called feral on more than one occasion. I don’t disagree.

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Re: Why do you LBYM? Why do you save and invest?

Post by smesman » Thu Sep 28, 2017 2:50 am

For me, there are three reasons I save:
  • I've been somewhat poor large parts of my life, so I translate expenses into how much groceries I could buy or how much rent I could pay from that. Any dollar I save may need to be used for that goal someday.
  • I've seen first-hand how much some old people struggle with money. When I talk to them how much things cost literally come up every 3 minutes. I never ever want to worry about money like that.
  • I like to reward places that fairly price goods. If they have any products with large profit margins I feel they are cheating customers. With places like fast-food joints I feel like they don't care about their workers and customers. I would never buy a $6 coffee.
I'm trying to keep an eye on the big picture though. Saving small amounts add up but I think it's better to focus on the big gains first such as getting raises and reducing your static monthly expenses. And when I'm out with friends I try to see it as the price of the experience and not refuse to buy drinks when we're at the movies or something.

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Re: Why do you LBYM? Why do you save and invest?

Post by Expro » Thu Sep 28, 2017 3:45 am

I'm a simple guy with simple wants/needs. It's really that simple.

Simple. That's a funny sounding word, isn't it?

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Re: Why do you LBYM? Why do you save and invest?

Post by FlyingMoose » Thu Sep 28, 2017 3:58 am

I'm a bit of a hoarder, of both money and things. I got over hoarding things, so now I just hoard money.

Incidentally, the way I broke myself of the hoarding habit was to go through all my stuff and ask 3 questions about each item:

1. Does it have sentimental value?
2. Is it worth money?
3. Will I need it in the future?

If the answer to all three is no, then I get rid of that item, and so I ended up getting rid of about 99% of my stuff. I'm occasionally wrong about needing something, but it turns out it only costs me about $50 a year to replace things I need that I've gotten rid of but later end up needing. It's well worth it to not have a house full of junk.

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Re: Why do you LBYM? Why do you save and invest?

Post by Longdog » Thu Sep 28, 2017 4:05 am

Well this is a fun topic. I think for me, it is largely the recognition that more $$$ in the bank equates to more security. Secondarily is the recognition that most spending doesn’t bring as much happiness as I used to expect. Or, another way to say that is that the initial sense of “fulfillment” is only temporary, and if you continue down the path of spending to achieve happiness, you never get there. If everyone felt this way, it would be bad for the economy! Glad I’m an exception. :happy
Steve

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Re: Why do you LBYM? Why do you save and invest?

Post by grettman » Thu Sep 28, 2017 4:23 am

I certainly didn't learn about saving and investing from my family. My parents barely made by on what they made -- which wasn't much.

But maybe I learned from their situation.

I am driven by FEAR. The more I accumulate, the more comfortable I feel and my fear is contained. For me fear is the single best motivating factor.

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Re: Why do you LBYM? Why do you save and invest?

Post by UncleBen » Thu Sep 28, 2017 5:04 am

We live below our means because:

1. It was modeled by our families.
2. One day we will become capitalist not laborers.
3. Debt = slavery, debt-free = freedom, allowing us the freedom to live where we want, buy what we want, eat what we want, work where we want, etc.
4. It allows us to share generously with others.

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Re: Why do you LBYM? Why do you save and invest?

Post by Daryl » Thu Sep 28, 2017 5:50 am

One simple word: Contentment.

I'm content with my current lifestyle. I have the time/energy to volunteer in my community and the resources to pursue some incredible hobbies. If I wasn't content, I'd probably spend some more! I've been very lucky in life in that I have a career that has provided more than enough to maintain this lifestyle.

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Re: Why do you LBYM? Why do you save and invest?

Post by bayview » Thu Sep 28, 2017 5:58 am

We save to reduce anxiety about our retirement years. We want to remain independent as long as we can.

It's easy to do because neither of us are into Stuff. We own one car, a 2002 Accord. He's retired; I'm shifting to working from home and can live happily with the clothes I have. We picked the house we live in because it makes sense and it makes us happy. Two people do just fine in less than 1200 square feet. Although I still would like a second bathroom, or half bath... :D
The continuous execution of a sound strategy gives you the benefit of the strategy. That's what it's all about. --Rick Ferri

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Re: Why do you LBYM? Why do you save and invest?

Post by bottlecap » Thu Sep 28, 2017 6:07 am

Because my parents taught me to. I've done well, but I wish I had been a faster learner...

My parents did not teach me about investing. So no matter who you are, I guess you have to figure something's out for yourself.

My kids are the one's who will luck out. They get to be taught about both!

JT

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Re: Why do you LBYM? Why do you save and invest?

Post by HongKonger » Thu Sep 28, 2017 6:18 am

Expro wrote:
Thu Sep 28, 2017 3:45 am
I'm a simple guy with simple wants/needs. It's really that simple.

Simple. That's a funny sounding word, isn't it?
Same here. I would have to make a concerted effort to live above my means. I have just never really wanted stuff. I don't deny myself what I want but it just happens that it's never been anything but well below my means.

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Re: Why do you LBYM? Why do you save and invest?

Post by aristotelian » Thu Sep 28, 2017 6:21 am

I was brought up frugal. Single mom with a good job, but not wealthy.

Encountered DIY punk/indie music scene as a teenager. Learned to think freedom/DIY is "cool" and detest consumerism.

Inherited some money from legal settlement involving my dad. Not enough to make me independently wealthy, significant enough to give me a cushion in life. I did not want to fritter it away so I learned about investing at a young age.

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Re: Why do you LBYM? Why do you save and invest?

Post by simmias » Thu Sep 28, 2017 6:35 am

I started life as a profligate spender, had an epiphany right before I turned 30 that the lifestyle was unsustainable, and have been LBMM ever since.

But that wasn't enough. Going through the recession in constant fear of losing my job made me never want to be in that position again, so I started refining my budget to maximize savings while keeping the things that make me happy. Luckily, I've discovered that the things that make me happy aren't that expensive.

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Re: Why do you LBYM? Why do you save and invest?

Post by Dagda » Thu Sep 28, 2017 6:38 am

Because I've lived the "other way" - spending all my money, not saving and investing for the future, not setting myself to be able to have financial independence. I heard about financial independence, and it sounded pretty nice. I saw where my previous lifestyle was getting me, the stress it was causing that didn't need to be there. I realized I could be really happy without spending so much on stuff, focusing on meaningful things. The sparseness of this makes me appreciate it even more.

I've seen what happens when you follow this path, specifically for my mother in law and father in law. One will work til they die, the other is "lucky" to have qualified for disability after working backbreaking jobs (almost literally) for 40 years. I've also seen it work, through my parents who saved and invested regularly, and are now comfortably retired. Luckily, my wife doesn't take after her parents and was onboard when we made changes.

I've seen it work, I've heard stories of others on both sides, and I know which side of the fence I want to be on.

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Re: Why do you LBYM? Why do you save and invest?

Post by 10YearPlan » Thu Sep 28, 2017 6:42 am

I've always been an aspirer: I like nice things. I like stuff. I enjoy spending money. When people come on here and talk about not liking stuff, I simply cannot relate. So in that regard, living below my means is not what you would call a natural fit.

When my "means" were a lot lower, many moons ago, I lived slightly above my means and amassed some credit card debt (gasp!) in the process. So, what changed? My means, for one. Because I am an aspirer, rather than reduce spending, I have always to increase income. That meant more than one job for several years. Today it means trying my hardest to get the largest increases/bonuses available. Due to good fortune, hard work, and time, my means are now sufficient enough that I can still live below them and still enjoy some of the finer things at the same time. Which is a really nice position to be in and I truly appreciate it because I have been poor and I didn't like it much.

What forces me to continue to live below my means is an interesting thought, I guess it is a powerful combo of habit, financial anxiety and pride.

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Re: Why do you LBYM? Why do you save and invest?

Post by nisiprius » Thu Sep 28, 2017 6:57 am

KlangFool wrote:
Wed Sep 27, 2017 10:32 pm
...The person could buy the same 20 pieces of chicken nugget for $4. But, he paid $6.... So, it turns out that we are not normal. We look for bargains and we found them. But, others don't do that. The common explanation from others is they do not believe it matters.
They do not believe that small savings of this kind matter enough to justify taking the trouble to find and act on it.
They do not believe they can save and invest and make a difference in their lives.
That does not follow at all.

I would say that decisions on what kinds of savings and bargain-hunting "matter" are both very individual and, if we look at our own behavior as coolly as possible, very obviously irrational.

In my opinion, one of the keys to living harmoniously in a household is to acknowledge that we are all irrational, and need to tolerate each others' choices as long as they are not so grotesquely and obviously bad on a large scale.

To begin with, you, obviously, have made the decision to buy chicken McNuggets at McDonald's at a price of 20 for $4. But did you comparison-shop Burger King? Did you weigh Burger King's nuggets and McDonald's and assess the relative amount of breading? Did you deal with the possibility that you actually only need, let's say, sixteen nuggets and that by buying twenty you are wasting four?

You paid $4 for twenty nuggets, but you could have bought a package of fifty Tyson's frozen chicken nuggets at a supermarket for $8.95, or you could have bought an entire rotisserie chicken for $4.95 at Costco. You could have cooked a chicken, cut it into snack-sized portions, put it into zip-lock bags and frozen them. Well, you get my point.

Your frugality in your chicken purchasing is someone else's extravagance.

When it comes to dealing with large items and tiny items I think everybody is irrational and inconsistent. To begin with, there is always some kind of cost of saving money. It takes twenty seconds to stop, bend over, pick up the penny, straighten up, and put it in your pocket.

I used to leave the light on in my room when I was a kid, and when my parents would yell at me I would drive them nuts by calculating the price of the electricity--100 watts times one hour = 0.100 kilowatt hours at $0.10 per kwh = $0.01--and offering to pay them the penny.

There are, as usual, two contradictory proverbs. Both are partly true.

1) Take care of the pennies and the pounds will take care of themselves.
2) Penny wise, pound foolish.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: Why do you LBYM? Why do you save and invest?

Post by remomnyc » Thu Sep 28, 2017 7:01 am

My parents spent every cent and got into debt. I started contributing to pay off their debts off when I graduated from college until 15 yrs ago when they retired debt free and I started supporting them in their retirement since they had no savings. I started LBYM, saving and investing because I didn't want to end up like my parents and burden my children.

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Re: Why do you LBYM? Why do you save and invest?

Post by Tamarind » Thu Sep 28, 2017 7:05 am

My parents raised me to understand "enough". They also encouraged me to take advantage of a Roth IRA when I worked my first summer job, and taught me never to carry a credit card balance. They were not great investors or super-savers, but they saved and invested and so did I.

I became much more serious about it as I watched my mother approach retirement. She would have liked to stop years ago as her job conditions changed for the worse, but she did not know if she could afford to retire.

I am a person who "works to live", and I have many interests (both volunteer and recreational) that I can't explore fully due to the time spent working. I also enjoy my job and find satisfaction in it, but I realized that my major goal is to have the flexibility to try a new career, or reduce or stop work well before traditional retirement age.

I would LBYM out of habit and upbringing. But I save and invest and live well below my means so that I can have more control over what I do with my time and energy.

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Re: Why do you LBYM? Why do you save and invest?

Post by simmias » Thu Sep 28, 2017 7:06 am

nisiprius wrote:
Thu Sep 28, 2017 6:57 am
It takes twenty seconds to stop, bend over, pick up the penny, straighten up, and put it in your pocket.
Whenever anyone asks the average age of the bogleheads user, I'm going to reference this post. :D

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Re: Why do you LBYM? Why do you save and invest?

Post by Dottie57 » Thu Sep 28, 2017 7:06 am

My grandfather died in 1987 at age 90. He worked as a janitor and a ham packing factory. Yet He left 250k in Cd's.

I learned from grandpa and also inherited his saving gene.

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Re: Why do you LBYM? Why do you save and invest?

Post by Dandy » Thu Sep 28, 2017 7:11 am

1. My mother took me to the bank when I was about 7 and opened a savings account for me and encouraged me to save some allowance in it for the future. She pointed out that my money would earn more money than sitting in a jar at home.

2. My dad was forced to retire at 59 a year short of a full pension. (maybe he could have sued but didn't). That eventually forced my parents to live in a Florida mobile home far from us. That made an impression on me that you couldn't rely on a pension. Ironically, I was forced to retire at age 52 from one company and at age 60 from another. Luckily, I got pensions from both, termination payments and retiree health insurance.

3. When I started work in 1971 the company had plan similar to a 401k with a 3% match and a nice Stable Value Fund. An old timer gave me the advice of every time you get a raise put a bit more in savings - you will never get used to having it so you won't miss it. I did that and it has paid off.

4. My parents set a good example of spending money wisely. e.g. we never had a new car and dad drove it until it gave out. They were not embarrassed to say we can't afford that e.g. we went to college but the more reasonable state college.

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Re: Why do you LBYM? Why do you save and invest?

Post by TheTimeLord » Thu Sep 28, 2017 7:24 am

To me it was never really about LBYM, which I have pretty much always done, it was a matter of understanding and knowing what had value to me and what didn't and focusing on obtaining what had value to me while avoiding purchases that did not. As such I am not really frugal but I am willing to wait until I can afford to get what I want. I just realized if I settled and bought something less than what I wanted I would just be displeased with it and eventually replace it and that would end up costing more than financially and mentally than buying what I wanted in the first place. Also when I was just starting out I added up the interest from my credit cards one month and realized what that could buy me if I was paying it to the credit card company, that essentially began my march towards eliminating the vast majority of debt in my life. Without debt the minimum amount of money you need to live each month is considerably lower and you are far less effected by the ups and downs of the economy imho.
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Re: Why do you LBYM? Why do you save and invest?

Post by oldcomputerguy » Thu Sep 28, 2017 7:34 am

DW and I got married back in the late 70's. At the time we were dating, I was criminally stupid when it came to money management. As just one example, I habitually would go to the ATM, check my balance, and if it showed a positive balance, I would withdraw cash to run with even if I had outstanding checks. As a result, I ended up bouncing way too many checks.

When DW heard about this, she undertook to teach me the error of my ways. I now know better. If anything, I've gone off in the other direction; I've been known to spend over an hour trying to find and correct a 12 cent error in the checkbook.

So the biggest influence on me in the LYBM area, I'd have to say, was having someone have the patience to help me see the error of my ways.

As for investing, I'd have to give credit to a former boss, the guy who back in 1980 hired me at the establishment from which I just retired. He was a good role model for smart money management, but also strongly encouraged me to join the company 401k back when it was initially offered. I had (and still have) great respect for his acumen and his discipline in financial matters.

To sum up, I'd have to say that the biggest influencing factor in any financial success I have achieved in my lifetime has been being fortunate enough to have smarter people than I to help and advise when I needed it.

Which, by the way, is why I appreciate this forum so much.
Anybody know why there's a 20-pound frozen turkey up in the light grid?

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Re: Why do you LBYM? Why do you save and invest?

Post by awval999 » Thu Sep 28, 2017 7:43 am

I save/pay off debt because it is freeing.

No matter how well I can do my job, I'm at risk until I'm debt-free and financially independent.

I truthfully do not understand how others can borrow for a larger house, nicer car, max out the credit card. To me you are selling yourself further into servitude to your master.

To me, I imagine a world, where I serve no master. Where if God forbid I lose my highly paid job, I can pay the bills on a "regular" job because there is no car payment, no student loans, no house payment. I can have this life by 40. The math doesn't lie.

Now, I'm not like many on this board that needs millions of dollars at 2% SWR. I just need to have my debt paid, I would be able to service utilities, food, and property taxes on minimum wage. That is free. Because I'm not beholden to a single master with one specialized career.

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Re: Why do you LBYM? Why do you save and invest?

Post by lostdog » Thu Sep 28, 2017 8:19 am

We started LBYM when I experienced my first "bad boss". I was miserable every day because of this person. At the time I was with the company for a long time and making a lot of money. I knew the only way out was saving hard. I learned about FI and knew the only way to get back at your bad employer was to reach FI. I knew when investing in broad market index funds my bad boss would still be working hard to fatten my wallet after I left.
Last edited by lostdog on Thu Sep 28, 2017 8:27 am, edited 1 time in total.
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Re: Why do you LBYM? Why do you save and invest?

Post by KlangFool » Thu Sep 28, 2017 8:26 am

nisiprius wrote:
Thu Sep 28, 2017 6:57 am
KlangFool wrote:
Wed Sep 27, 2017 10:32 pm
...The person could buy the same 20 pieces of chicken nugget for $4. But, he paid $6.... So, it turns out that we are not normal. We look for bargains and we found them. But, others don't do that. The common explanation from others is they do not believe it matters.
They do not believe that small savings of this kind matter enough to justify taking the trouble to find and act on it.
They do not believe they can save and invest and make a difference in their lives.
That does not follow at all.

I would say that decisions on what kinds of savings and bargain-hunting "matter" are both very individual and, if we look at our own behavior as coolly as possible, very obviously irrational.

In my opinion, one of the keys to living harmoniously in a household is to acknowledge that we are all irrational, and need to tolerate each others' choices as long as they are not so grotesquely and obviously bad on a large scale.

To begin with, you, obviously, have made the decision to buy chicken McNuggets at McDonald's at a price of 20 for $4. But did you comparison-shop Burger King? Did you weigh Burger King's nuggets and McDonald's and assess the relative amount of breading? Did you deal with the possibility that you actually only need, let's say, sixteen nuggets and that by buying twenty you are wasting four?

You paid $4 for twenty nuggets, but you could have bought a package of fifty Tyson's frozen chicken nuggets at a supermarket for $8.95, or you could have bought an entire rotisserie chicken for $4.95 at Costco. You could have cooked a chicken, cut it into snack-sized portions, put it into zip-lock bags and frozen them. Well, you get my point.

Your frugality in your chicken purchasing is someone else's extravagance.

When it comes to dealing with large items and tiny items I think everybody is irrational and inconsistent. To begin with, there is always some kind of cost of saving money. It takes twenty seconds to stop, bend over, pick up the penny, straighten up, and put it in your pocket.

I used to leave the light on in my room when I was a kid, and when my parents would yell at me I would drive them nuts by calculating the price of the electricity--100 watts times one hour = 0.100 kilowatt hours at $0.10 per kwh = $0.01--and offering to pay them the penny.

There are, as usual, two contradictory proverbs. Both are partly true.

1) Take care of the pennies and the pounds will take care of themselves.
2) Penny wise, pound foolish.
nisiprius,

That is just an example. It is more pervasive than this.

As per my peers in the 25% marginal tax brackets:

1) Many of them are engineers. Some of them with graduate degrees. So, math is not a problem.

2) But, they are not interested in finding out the 401K plan and Employer match. So, they do not contribute. Many of them do not know that employer match existed. This is at least a few thousands a year. And, even for those that know, some say this is too much trouble to enroll.

3) Many pay tax preparers to do tax. And, they have absolutely no idea on some basic idea to save tax. This is another few thousands a year.

In summary, why spend time and energy studying and managing personal finance? It is not going to matter anyhow. This is the attitude.

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Re: Why do you LBYM? Why do you save and invest?

Post by KlangFool » Thu Sep 28, 2017 8:32 am

Folks,

I started this topic because in my case, this is normal.

1) The average gross saving rate in my country is 30+%.

2) Looking for the bargain is part of the culture.

3) My family is multi-generations business family. Investing is part of the regular dining table discussion.

This is part of my community/culture. It extends beyond my family. This is the norm. So, I wonder how a person in a culture that this is not normally done come to this path.

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Re: Why do you LBYM? Why do you save and invest?

Post by dbr » Thu Sep 28, 2017 8:34 am

Well, now I invest and spend so I guess that was why we started out saving and investing.

PS This has nothing to do with simple minded examples of saving a buck here and there on what one buys.

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Re: Why do you LBYM? Why do you save and invest?

Post by Da5id » Thu Sep 28, 2017 8:39 am

dbr wrote:
Thu Sep 28, 2017 8:34 am
Well, now I invest and spend so I guess that was why we started out saving and investing.

PS This has nothing to do with simple minded examples of saving a buck here and there on what one buys.
I agree the MacDonalds thing is a bit of a red herring. I'd tend to notice such price disparities (if I went to MacDonalds, which is I only do if there are no alternatives). But I don't think that is key to LBYM or savings as such.

Not sure where my LBYM came from. My parents were always careful with money and savers, guess that is part of it. I'm also naturally conservative/cautious about the future by nature, so that feeds into desire to be financially secure come what may. I'm also not that into buying fancy things. I'm generally content with what I have until it breaks. I tend to splurge on vacations some, but not on stuff.
Last edited by Da5id on Thu Sep 28, 2017 9:09 am, edited 1 time in total.

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Re: Why do you LBYM? Why do you save and invest?

Post by ekarpuz » Thu Sep 28, 2017 8:48 am

Good Topic for my first post in this forum.

For me, the biggest factor is the fear. The numbers i see in my checking/savings account always gives me level of security that i am looking for. I am coming from a middle class family (both teacher parents in a 3rd world developing country) and grew up not having much and always watching our spending. That had some adverse effect on me during my teenage years where i was dreaming about buying luxury cars and nice clothes and... wrongfully thinking that it will impress girls who will come to me running :oops:

Fast forward to the years i started making above the average income... For some reason i could not make myself spend my hard-earned money on the items that I believe cost more than it should be. And i just started saving.

When it comes to the OP with respect to the $6 vs $4 math, IMO this definitely has something to with the perception of math in most people. Math is an art for me (I am an engineer) and something i enjoy very much while others might find it intimidating and don't bother to do this calculation. I should also admit that satisfaction of finding a better/smarter deal is better for me than saving couple bucks at that moment. :P

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Re: Why do you LBYM? Why do you save and invest?

Post by goodenyou » Thu Sep 28, 2017 8:49 am

It's simple. Freedom and choices. Money is earned with hard work. I will be damned if I will give away my hard work by being a fool. I feel like a fool if I overpay. I do not like feeling like a fool. LBYM is a strategy that leads to economic freedom, a reverence for simplicity (the things that actually have value in life) and having time for yourself. LBYM and saving and investing are a challenge. I like challenges. That's why I like to play golf too.

Full disclosure: I have a lot of means. Extraordinary by many standards. It is not a hardship for my family to LBYM. Much different than how I was raised. I admire those from very modest means that find a way to LBYM. I think the attitude of many from very little or modest means is "why should I save, it doesn't matter anyway. The little I can save won't make a difference".
Last edited by goodenyou on Thu Sep 28, 2017 9:04 am, edited 1 time in total.
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Re: Why do you LBYM? Why do you save and invest?

Post by Fallible » Thu Sep 28, 2017 9:03 am

KlangFool wrote:
Wed Sep 27, 2017 10:32 pm
Hi,

Once I was at a McDonald, the person in front of me was buying 20 pieces of chicken Nugget and paying about $6 from the main menu. To the right of the main menu is the dollar menu. The person could buy the same 20 pieces of chicken nugget for $4. But, he paid $6. Ditto on many other items that he bought that day, he could save at least $5 to $10 just by looking to the right and order from the dollar menu.

I told my son and daughter about this story. Then, they ask around among their classmates. It turns out most of them do not know dollar menu existed. They never look to the right when they are in McDonald. So, it turns out that we are not normal. We look for bargains and we found them. But, others don't do that.

The common explanation from others is they do not believe it matters. They do not believe they can save and invest and make a difference in their lives. So, they could not bother to save and invest.

My question to the member of the forum is this. What makes you different from others? What makes you believe that you could be LBYM, save and invest to make a difference in your life? ...
Can you really tell how people will invest and save throughout their lives based on how they read a McDonald's menu? Maybe, but it's quite a leap. Whatever, individual differences are generally thought to be a matter of genes and environment, nature and nurture, and it's hard to apply that to individual cases. I grew up in a family that was frugal in most ways, but not all. I am frugal, but in ways that sometimes differ from theirs.
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Re: Why do you LBYM? Why do you save and invest?

Post by goodenyou » Thu Sep 28, 2017 9:08 am

Can you really tell how people will invest and save throughout their lives based on how they read a McDonald's menu?
It may be the new Mischel Marshmallow Study.
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Re: Why do you LBYM? Why do you save and invest?

Post by Broken Man 1999 » Thu Sep 28, 2017 9:12 am

Pajamas wrote:
Wed Sep 27, 2017 10:33 pm
I learned to live below my means and invest from my family.
Best place of all to learn by example. Though sometimes you have to use your observations as a bad example, what NOT to do.

I grew up while my father was building his business. We didn't have a TV for the longest time, but as a result I am a voracious reader. We never missed a meal, and we always had clean cloths to wear. I learned the difference early between a want and a need. Our needs were always met, our wants sometimes met.

The sparse lifestyle during my childhood benefited me greatly, IMO. If for no other reason it provided a life lesson watching a man build a business while earning poor wages.

And, as a result of family sacrifices, our financial lives were all richly rewarded when my father passed on.

Saving has always been easy for me. I had a good example to emulate. Investing took some life lessons. My father and I entered the market during the early 1970s, when the DOW was a lower three digits. My investments were a loaded mutual fund, and a couple of individual stocks. I soon became impatient with my investments, sold them for a small gain or two, and a loss on another. My father never sold any of his stocks, mainly utilities, and plowed his dividends back into new shares. As his executor, I sold the original stocks shares, which had grown greatly in number and share price over the long period held. If only I had have been as patient. :oops:

My next foray into investing was when my company set up the 401k plan. I had much better success at that style of investing. Investments $$$ were taken from my paycheck and the balance grew. Never missed the deductions plus never had to worry about when I had the $$$ to invest. Every dollar I made had a portion dedicated to my 401k plan. Great way to build a retirement fund.

Broken Man 1999
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Re: Why do you LBYM? Why do you save and invest?

Post by bigred77 » Thu Sep 28, 2017 9:33 am

Probably a combination of fear and opportunity.

I was lucky enough to land a well paying entry level role in corporate america that started one week after graduation. That was in 2008 so I was quite fortunate. I had seen my parents struggle with money and make many, many bad financial decisions. It was just ignorance, they didn't know what they didn't know (well, ignorance and divorce). I did not want to emulate that behavior and all of a sudden, even though I was pretty deep in debt from student loans and car loans, I had more money than I knew what to do with (anything over 2k a month was more than I knew what to do with at the time :mrgreen: ). So I split all my excess funds between paying down debt and investing. Then as I learned more I realized just how great a trajectory I was on because I started so young, so I really committed to it. Now it just feels natural and prudent. Save between a quarter and a third of your income over your entire career, invest reasonably, and end up rich.

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Re: Why do you LBYM? Why do you save and invest?

Post by DrGoogle2017 » Thu Sep 28, 2017 9:43 am

I focus on big items, not small potatoes because it's stressful for me to pinch pennies. Stress can kill you. Why do you buy food at McDonalds? You may save a few bucks, but what about your health? What about long term consequences? Bad health costs money in the long run.

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Re: Why do you LBYM? Why do you save and invest?

Post by JohnFiscal » Thu Sep 28, 2017 9:50 am

"Why do you LBYM? Why do you save and invest?"

I do this so that I can balance out my "comfort" over my lifetime. So "time" is another dimension in my investing universe.

Point being that if I fully lived to my means (not LBYM) then I wouldn't have much, if any, money to save for the future. In that case then in the future my "means" would be pretty puny and I would not be happy to live with those circumstances.

So the idea is to somehow balance or optimize savings for future comfort and living for today. Some things are indeed better "done today" while one has some youth and energy to participate and enjoy and it's likely worth spending the money to do them "now" while still making certain that there is savings for the future.
Last edited by JohnFiscal on Thu Sep 28, 2017 9:50 am, edited 1 time in total.

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Re: Why do you LBYM? Why do you save and invest?

Post by SimplicityNow » Thu Sep 28, 2017 9:50 am

I think nature vs nurture plays a lot into the answer to your question.

Some of us has parents that LBYM and some did not. And some of us followed their example and some of them did not.

My parents were always thrifty. Worked hard, saved as much as they could. Even in their retirement they LBYM. They had/have a long and happy retirement. The few times they spent more (on cruises or other items) didn't seem to bring them any additional joy. They were content.

My spouse's parents were different. They are spenders, especially my father in law. The funny thing is he though he was the most frugal man on the planet. He would keep a 25 cent can of touch up paint for 30 years in case he needed it but spent thousands every year on multiple time shares he never used. They had higher salaries and received support from their parents. Yet there financial situation is far worse then my parents was.

My spouse and I are both LBYM and she takes great pleasure in getting an item on sale. She has passed these traits onto our children to some extent. We don't eat fast food for the most part so I couldn't tell you honestly if we would have looked at the dollar menu.

I also feel it is easier for us to LBYM because we have "enough" then perhaps someone who doesn't. That said, I also think the culture of this country for the most part is to be a spender. It is promoted through advertising and instilled in people. Many feel they "deserve" it, are entitled to it and
others should pay for it. It is a shame to see two families in similar circumstances where one will do great and the other will struggle because of this mentality.

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Re: Why do you LBYM? Why do you save and invest?

Post by KlangFool » Thu Sep 28, 2017 9:52 am

DrGoogle2017 wrote:
Thu Sep 28, 2017 9:43 am
I focus on big items, not small potatoes because it's stressful for me to pinch pennies. Stress can kill you. Why do you buy food at McDonalds? You may save a few bucks, but what about your health? What about long term consequences? Bad health costs money in the long run.
DrGoogle2017,

My question on this topic is why do you focus on saving at all? Big or small item is besides the point. Normal folks do not care about saving and investing at all.

KlangFool

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Re: Why do you LBYM? Why do you save and invest?

Post by eleighj » Thu Sep 28, 2017 9:55 am

We LBYM so that we can live independently and not be beholden to anyone. If you save and invest, you get there very quickly.

Ed
Edward

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Re: Why do you LBYM? Why do you save and invest?

Post by KlangFool » Thu Sep 28, 2017 9:55 am

JohnFiscal wrote:
Thu Sep 28, 2017 9:50 am
"Why do you LBYM? Why do you save and invest?"

I do this so that I can balance out my "comfort" over my lifetime. So "time" is another dimension in my investing universe.
JohnFiscal,

You believe that it matters. But, the normal folks do not believe it matters. What makes you different from normal folks?

It takes a while before we see any results from our savings and investing. Al we have is faith that it works. Why some have it and some don't?

KlangFool

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Re: Why do you LBYM? Why do you save and invest?

Post by keystone » Thu Sep 28, 2017 9:57 am

LBYM is very simple to me. I've never particularly liked working any of the jobs that I've had, or to put it a different way, if I was ever given a choice between working and not working (assuming money and health were not a concern), I would choose not working 100 out of 100 times. So LBYM and investing seem like the best way out for me.

As for the McDonald's scenario, I too would have done the comparison with the dollar menu and chosen the more economical option. I think it's because my parents are that way and I remember them comparison shopping at the grocery store and looking at price per ounce. So it just seemed natural to me when I became old enough to buy things on my own.

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