Extreme Frugality vs Living Life - Where do you draw the line?

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luckybamboo
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Extreme Frugality vs Living Life - Where do you draw the line?

Post by luckybamboo » Tue Apr 11, 2017 11:53 am

I would like to know the opinions of the fellow BHs on this matter.
Let me give you some examples of my family
1. My Dad - Lived very frugally, owned his business, saved more than enough for retirement and died of sudden heart attack at 62 yrs of age. Mom has a lot of money but can't spend it now because she doesn't feel like it. Her regrets - when she wanted to spend on 'kids, clothes, travel' etc. in their youth, she couldn't as dad didn't let her and now she doesn't have any wish to spend beyond basic necessities.
2. My Uncle - Lived extremely frugally, is retired, has a net worth of more than 100 times his annual expenses but wouldn't let my aunt spend money on domestic help or other things that would be 'luxury' in his eyes but would add comfort. Wouldn't buy a flight ticket and drive for vacations etc. Wouldn't travel in a business class when traveling internationally etc. All of his kids are well-settled and don't need any money from him, but he can't make himself use his own hard earned money for himself and his wife.

So, my question is where do you draw the line and decide that is my frugality stopping me from living. Does the 'high' I get from seeing my net worth grow stop me from living life? If yes, then how do you decide. I am very frugal by nature, but DH likes to enjoy life and values comfort over saving money by comp-shopping/coupons etc. He believes that this is the age when we should live life a little bit because who knows how healthy we will be when we retire. We certainly aren't spending more than we make and we have diligently saved for retirement and other life needs but I still would love to save more and he would love to enjoy life.
My next question is - What are your suggestions on finding the balance? At what point does frugality become counter productive ?

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by KlangFool » Tue Apr 11, 2017 12:07 pm

OP,

In order to answer your question, I would need several data points from you.

1) Your gross saving rate.

2) Your net worth as a multiple of your annual expense

3) You and your husband age.

4) Your annual expense.

Let's take an example. US median household income is around 60K. Let's say that person X's annual expense is 60K and X save 60K per year.

A) X is frugal aka X save a lot of money.

B) Can we say that X are extremely frugal? The annual expense is the same as the US median household income. X is spending a lot more than a typical household.

Whatever your dad or your uncle do with their lives has no relevant to you. You have to look into your own circumstances in order to decide what is right for you.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by EATaxGuy » Tue Apr 11, 2017 12:12 pm

Everyone is different.
IMO, this is where financial planning can be very useful. One of the most important aspects of planning is determining what the GOAL is, (or goals). And they need to be articulated very specifically. I want to be comfortable when I retire is almost useless as a goal. You need to define it. I want to retire at age 62 and be able to spend $120,000 per year in retirement, while leaving behind a million dollar inheritance for my cat.

Or whatever your goal(s) is/are.

Then you make your plan to achieve that goal. That is how you know how much to save. Because if you save too much (as your examples illustrate) you will under-live your life for no reason because you've overshot your goal. And if you save too little you will not reach your goal.

My $0.02
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by uchuu » Tue Apr 11, 2017 12:37 pm

It really depends... for me being frugal is meaning I get a lot of enjoyment out of my life for the least amount of cash.
  • Make sure I use all my vacation days
  • Spend all those vacation days either traveling or visiting family (both which I do on the cheap)
  • I don't deny myself things I want, but I do usually wait a while (sometimes up to 6 months or more) before making a decision. Often I decide against it
  • I go outside and enjoy nature as often as possible. I find those weeks I go hiking are the ones where I'm productive and energized
  • I make sure I wear clothes without holes in them
  • I cherish my friends and family


But during my day to day life, I just have fulfilling but cheap hobbies. Over the last year I have spent considerable time studying a second language which has been awesome. It develops me as well as allows me to enjoy tv, books and games in another language.... which I can enjoy without any guilt as it doubles as studying :wink:


I'm young, single and no kids so this is different than someone with a family. But I plan to spend as much time as possible with my future kids. But memories aren't made with money. My favorite times with my family was when we were together and enjoying eachother. My fondest memories are of all of us watching through a Star Trek series every night for about 3 months. Which cost maybe $30 total in (early DVD only) Netflix fees. All my siblings and I are still Star Trek fans today and still talk about it :D

Also, as Mr. EATaxGuy said, having financial goals help. It meana I budget for those things I want (I love overseas vacations), as well as have something to work towards. It also lets me know when I can spend and enjoy myself.
Last edited by uchuu on Tue Apr 11, 2017 12:39 pm, edited 1 time in total.

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JDCarpenter
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by JDCarpenter » Tue Apr 11, 2017 12:39 pm

Much depends on your income, both now and projected. So too, what are your goals? Hopefully you don't want to join your uncle in being the richest person in the graveyard.

For us, when we had kids at home, as long as we maxed 401k/profit_sharing plans, we didn't hesitate to spend a good chunk of our remaining revenue, including fairly expensive dive trips most years. That gave us the foundation for mid-50s retirement once we added in the turbocharged savings after kids finished college.

Assuming your savings are on track as indicated, I think your husband has a valid point (within reason, of course!).
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by NibbanaBanana » Tue Apr 11, 2017 12:52 pm

It depends on if you think buying things, experiences, etc, or consumerism and materialism, is going to bring you lasting happiness.

luckybamboo
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by luckybamboo » Tue Apr 11, 2017 1:27 pm

KlangFool wrote:OP,

In order to answer your question, I would need several data points from you.
KlangFool


Please see the answers below:
1) Your gross saving rate.
In the last 5 years, it has ranged from 15%-25% depending on the year. In last 3 years, we had to replace a 17 year old car, replace roof, replace HVAC, paint home and remodel living room, so the savings rate was 15%.

2) Your net worth as a multiple of your annual expense - 17 times the annual expense.

3) You and your husband age. - I am 43 and husband is 44

4) Your annual expense - Ranges from 85000 - 125000 based on the big ticket expenses that we encounter in the year. I do not work and my husband makes $247,000 a year.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by AlohaJoe » Tue Apr 11, 2017 1:28 pm

luckybamboo wrote:So, my question is where do you draw the line and decide that is my frugality stopping me from living. Does the 'high' I get from seeing my net worth grow stop me from living life?


That you get a high from that is a problem. It is a tool, a means to an end, and you have let it become an end in and of itself.

At least, that's how the post comes across.

You should get a high from the goals that your net worth allow you to achieve.

luckybamboo
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by luckybamboo » Tue Apr 11, 2017 1:29 pm

EATaxGuy wrote:Everyone is different.
IMO, this is where financial planning can be very useful. One of the most important aspects of planning is determining what the GOAL is, (or goals). And they need to be articulated very specifically. I want to be comfortable when I retire is almost useless as a goal. You need to define it. [i]I want to retire at age 62 and be able to spend $120,000 per year in retirement, while leaving behind a million dollar inheritance for my cat.


That is a great way of looking at the financial planning. I think figuring out the comfortable spending level might eliminate the confusion and the friction.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Vanguard Fan 1367 » Tue Apr 11, 2017 1:31 pm

I think that if you pay cash for your cars, have no mortgage, have enough saved that your retirement is taken care of, no debt of any other kind, then it might be time to consider loosening up a little and if there is something you want to spend money on, go for it.

I like the thought that "don't make someone else rich when you die," although the wife and I are hoping to have something left for the kids when we pass on.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by wolf359 » Tue Apr 11, 2017 1:37 pm

Extreme is in the eye of the beholder. If it works for you, and you're happy, then that's good enough.

I maintain balance by leaving that up to my wife. I'm more frugal than she is, but she keeps me balanced. Without her there, I would have achieved my financial goals much sooner, but it wouldn't have been as much fun, nor would our family have had the same experiences.

I am very frugal by nature, but DH likes to enjoy life and values comfort over saving money by comp-shopping/coupons etc. He believes that this is the age when we should live life a little bit because who knows how healthy we will be when we retire. We certainly aren't spending more than we make and we have diligently saved for retirement and other life needs but I still would love to save more and he would love to enjoy life.


This describes my relationship with my DW. I solved it by adding two line items for luxury item/vacation spending. We do something every year, and every other year we are able to do something that is more special. Meanwhile, we still meet our savings goals.

The cost is that we extended out our FI date.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by MrNewEngland » Tue Apr 11, 2017 1:37 pm

This is not meant to be snarky at all but it might give some perspective:

Your annual expenses are more than I make in a year. I still save for retirement, have toys, and take a couple vacations a year.

Neither of us are exactly "mustacheian" in terms of frugality.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by KlangFool » Tue Apr 11, 2017 1:41 pm

luckybamboo wrote:
KlangFool wrote:OP,

In order to answer your question, I would need several data points from you.
KlangFool


Please see the answers below:
1) Your gross saving rate.
In the last 5 years, it has ranged from 15%-25% depending on the year. In last 3 years, we had to replace a 17 year old car, replace roof, replace HVAC, paint home and remodel living room, so the savings rate was 15%.

2) Your net worth as a multiple of your annual expense - 17 times the annual expense.

3) You and your husband age. - I am 43 and husband is 44

4) Your annual expense - Ranges from 85000 - 125000 based on the big ticket expenses that we encounter in the year. I do not work and my husband makes $247,000 a year.


luckybamboo,

1) Do you have kids? How old are them?

2) If I am in your shoes, I would look into spending time and money sharing experience with my children. For example, travel to somewhere. I would not spend more money on the house. Buy more experience and spend less on things.

3) There are limited time windows in our children's lives that they could spend with us. So, this might be the time to spend money to gain more shared experience.

KlangFool

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by luckybamboo » Tue Apr 11, 2017 1:52 pm

MrNewEngland wrote:This is not meant to be snarky at all but it might give some perspective:

Your annual expenses are more than I make in a year. I still save for retirement, have toys, and take a couple vacations a year.

Neither of us are exactly "mustacheian" in terms of frugality.


I respect your point of view but our expenses seem high because we pay 2.5 times our typical mortgage payment (home will be paid off in 3 years), we have special medical needs for some family members and the expenses for that are more than $6000 a year, property taxes are very high in our state and we financially support my mother in law. We do not live an extravagant life, but there certainly is some room for improvement.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Sandtrap » Tue Apr 11, 2017 1:53 pm

IMHO and long term experience. "Extreme frugality" is relative and for many, a necessity, with absolutely no choice as a means of survival.
IMHO simply being able to choose between "frugality" levels and "living life" levels is a luxury for those with an income stream and means to base it on. For others, most folks perhaps, it is simply "life".
Actionably, per forum guidelines: there is no "line to draw" that will not be an artificial construct and temporary at best.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by luckybamboo » Tue Apr 11, 2017 1:56 pm

KlangFool wrote:
luckybamboo wrote:
KlangFool wrote:OP,

In order to answer your question, I would need several data points from you.
KlangFool


Please see the answers below:
1) Your gross saving rate.
In the last 5 years, it has ranged from 15%-25% depending on the year. In last 3 years, we had to replace a 17 year old car, replace roof, replace HVAC, paint home and remodel living room, so the savings rate was 15%.

2) Your net worth as a multiple of your annual expense - 17 times the annual expense.

3) You and your husband age. - I am 43 and husband is 44

4) Your annual expense - Ranges from 85000 - 125000 based on the big ticket expenses that we encounter in the year. I do not work and my husband makes $247,000 a year.


luckybamboo,

1) Do you have kids? How old are them?

2) If I am in your shoes, I would look into spending time and money sharing experience with my children. For example, travel to somewhere. I would not spend more money on the house. Buy more experience and spend less on things.

3) There are limited time windows in our children's lives that they could spend with us. So, this might be the time to spend money to gain more shared experience.

KlangFool


1) we have two kids - 14 and 17.
2) That is what we want to spend on - taking vacations with them. My husband likes luxury travel and I would prefer to travel more often than to spend more on a single vacation. so there is conflict in that regards.
3) We are saving up currently for a trip to Europe next year before DD goes to college.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by NotWhoYouThink » Tue Apr 11, 2017 2:09 pm

2. My Uncle - Lived extremely frugally, is retired, has a net worth of more than 100 times his annual expenses but wouldn't let my aunt spend money on domestic help or other things that would be 'luxury' in his eyes but would add comfort. Wouldn't buy a flight ticket and drive for vacations etc. Wouldn't travel in a business class when traveling internationally etc. All of his kids are well-settled and don't need any money from him, but he can't make himself use his own hard earned money for himself and his wife.


This is sad. I have little respect for misers who deny their life partners affordable comforts. No one is impressed with their pile of money. If he wants to deny himself, that's his choice, as long as that choice doesn't mean that his family members have to contort their schedules to do chores for him that he can no longer do himself and refuses to pay for.

As to how to draw the line, we
- Were able and willing and lucky enough to have MegaCorp careers that enabled high earnings
- Decided how much to save (of salary and bonuses) for college and retirement, given a goal of retirement date and lifestyle
- Felt no guilt or reluctance to spend the rest as we chose. Sometimes we didn't have time to spend so much, so retirement got earlier

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Fallible » Tue Apr 11, 2017 2:11 pm

luckybamboo wrote: ... We certainly aren't spending more than we make and we have diligently saved for retirement and other life needs but I still would love to save more and he would love to enjoy life. ...


How exactly does he want to enjoy life and how expensive are the enjoyments?
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by KlangFool » Tue Apr 11, 2017 2:13 pm

luckybamboo wrote:
1) we have two kids - 14 and 17.
2) That is what we want to spend on - taking vacations with them. My husband likes luxury travel and I would prefer to travel more often than to spend more on a single vacation. so there is conflict in that regards.
3) We are saving up currently for a trip to Europe next year before DD goes to college.


luckybamboo,

<< 2) That is what we want to spend on - taking vacations with them. My husband likes luxury travel and I would prefer to travel more often than to spend more on a single vacation. so there is conflict in that regards.>>

Split 50% and compromise. For example, he gets to plan for one year and you take the next year. Or, he gets 50% of the travel budget and you get to decide the other 50%.

<< 3) We are saving up currently for a trip to Europe next year before DD goes to college.>>

Good deal!

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Lexi » Tue Apr 11, 2017 4:28 pm

My experience --
Being cheap vs. being frugal is the difference between deciding by price vs. deciding by value. For example, a cheap person may have a price limit on what he will spend for x while a frugal person decides based on value to him. I first decide if I like something, then look at the price, and then decide if the value to me is enough to spend that amount. Budget constraints enter in but are not the sole determinant. I have lived in both types of families. Frugal is much nicer than cheap, and income and assets have only a minor effect on this way of viewing transactions.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by gouverneur » Tue Apr 11, 2017 4:54 pm

I've been thinking along these lines myself and would distinguish between a few situations.

The most fortunate among us have a retirement goal (say, $100k in retirement spending, anticipating retirement by age 60) and know that they need to save a certain amount to achieve that goal (say, $36,000 a year in two earners' 401ks and $11,000 in Roth IRAs). But then all of their needs and wants may be satisfied by the remainder of their income. In that case, there is no tradeoff between being frugal, living life, and the time that they want financial independence.

Most people probably fall into the situation where they face some tradeoffs at the margins between adequate savings and spending on things that they cannot afford without reducing savings. Here, I'd distinguish between people who aren't taking full advantage of tax-advantaged savings (401ks, Roths, etc.) and those who are. If you are maxing out those tax-advantaged savings, then you draw the line by balancing out the value of extra spending now vs. achieving financial independence earlier.

If you end up spending so much that you can't max out tax-advantaged space, then you're paying more than sticker price for your purchases/spending because you're also losing out on tax savings that can't be recovered. In that case, you should draw the line by balancing the value of the extra spending now vs. both the lost tax advantage and achieving financial independence earlier.

There is a danger in being too "mustachian" or even too frugal/proud of savings in that you might invert the curve, so to speak, and end up having way more wealth and spending capacity in old age (with diminished capacity to enjoy it) then in your youth. I generally take the attitude that if my family's retirement savings are going to exceed our current spending (which I project they will), I don't need to sweat any particular luxury my wife or I want in the moment. We tend to live frugally by nature, with occasional splurges here and there, and I'd only take conscious aims to reduce our spending if I felt we couldn't reach financial independence by our target date (around 57).

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by mrsytf » Tue Apr 11, 2017 6:46 pm

This is where the concept of "fun money" should come into play. You have seen from both your parents and your aunt/uncle how one spouse's extreme frugality can negatively impact the life of the other spouse. The white coat investor and I apologize I don't have a link for you describes his monthly budget meeting with his wife. They discuss their monthly income, evaluate expenses, review goals and then grant each other a certain amount of "fun money." The fun money carries over to the next month if not spent in the previous month. They have a large income both from his medical practice and his blog so I believe they each have $5000/month! But you can do whatever makes sense to you. You may opt to invest your fun money and that is fine, but allow your husband the freedom to do whatever with his. My husband and I both have fun money. My husband hasn't done anything with his - it sits in his checking account and periodically I sweep it into our joint taxable. He simply doesn't spend money. If he has any "wants" he hasn't shared them with me at all. His sense of delayed gratification is also very well developed, probably from years of practice. I used to dabble in real estate peer lending and in individual stocks with my share. This year I am taking the money to buy furniture and to do frivolous home renovations. When I think of how much I am spending, I freak out every now and then, but it's just money and we have enough. The ground is not going to drop from underneath us if this year our savings rate falls from 50% to 40%.

I also like klangfool's suggestion that in terms of vacations, you choose one year and spouse chooses the other. I think is an excellent equitable approach.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by anoop » Tue Apr 11, 2017 7:03 pm

This is an extremely complex question.

Being crazy frugal guarantees that at the end of your life if you're broke it's wasn't due to poor money management.

Figuring out how to be slightly loose while still getting to retirement goals is a very hard problem. There are too many variables
- Health
- Income stability
- Inflation costs
- Investment returns (or losses)
- Whether one gets married and/or divorced and/or has kids and/or health of spouse/kids
- ...

It's nearly impossible to engineer that perfect landing.

As the middle class disappears and wealth concentration increases, I think financial planning gets harder and harder.

The people I see enjoying life are those who took risks in their career AND made it in one way or another (whether rising to the top of their profession or starting a successful business) or those that were born into wealth. Those plodding along in a predictable job or that took a risk but didn't make it seem like they are always struggling with money.
Last edited by anoop on Tue Apr 11, 2017 7:21 pm, edited 1 time in total.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by VictoriaF » Tue Apr 11, 2017 7:14 pm

luckybamboo wrote:2) That is what we want to spend on - taking vacations with them. My husband likes luxury travel and I would prefer to travel more often than to spend more on a single vacation. so there is conflict in that regards.


I can see a problem here. Similarly to you, I like to travel a lot and inexpensively, but all travel rewards related blogs emphasize upper-cabin flights, nice hotels, and prize-winning restaurants. Even in the Bogleheads Forum you will see more discussions of using reward miles for first-class upgrades than staying at hostels.

In contrast, in 2015 and 2016, each, I spent over 120 days outside home at about $13.5k per year. I don't consider my travel "extreme frugality" but it's closer to student travel than Boglehead travel.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by TX_Man » Tue Apr 11, 2017 7:28 pm

One thing that extreme frugality taught me was my limits. If the economy ever gets terrible or other worse case scenarios occur, e.g. Health issues, I will not feel like I am sacrificing by cutting back.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Sandtrap » Tue Apr 11, 2017 7:32 pm

AlohaJoe wrote:
luckybamboo wrote:So, my question is where do you draw the line and decide that is my frugality stopping me from living. Does the 'high' I get from seeing my net worth grow stop me from living life?


That you get a high from that is a problem. It is a tool, a means to an end, and you have let it become an end in and of itself.

At least, that's how the post comes across.

You should get a high from the goals that your net worth allow you to achieve.

+1

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Cyclesafe » Tue Apr 11, 2017 7:39 pm

I like the frugal vs cheap distinction. Frugal means making the most with what you have. Nothing wrong with that.

Travel doesn't have to be expensive. After retiring, I spent many months riding my bike around the western US and Canada eating out of supermarkets and camping. Leaving from my home in San Diego, I could reach Vancouver BC in about three weeks, then wind my way through the western mountains back to home in a more sane six weeks. Once, I kept going to Alaska via Banff, the Yellowhead, the Cassiar, the Robert Campbell, and the Top-of-the-World to Alaska. Twice!

Cycling like this isn't for everyone, but I've also recently discovered self-guided walking in Europe where a company books B&B's and schlepps your stuff. Not nearly as cheap as cycling, but frugal none-the-less. Did Irish Sea to the North Sea (C2C) in 2016 and am leaving soon to go 'round the Cornish peninsula. This sort of thing could make a wonderful vacation for a family with teens.

After a lifetime of living frugally, one of the most difficult things to do is to open the spigot and not do so (as much). It's as if things cost on the increment not just marginally more, but exponentially more, so much so that one's frugal side objects. Case in point. I want a sports car, DW wants a new kitchen - both are financially stupid. But we can "afford" both and each is reluctant to pull the trigger. In fact, we each try to wheedle the other to buy what the other wants. No luck yet.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Grt2bOutdoors » Tue Apr 11, 2017 7:43 pm

anoop wrote:This is an extremely complex question.

Being crazy frugal guarantees that at the end of your life if you're broke it's wasn't due to poor money management.

Figuring out how to be slightly loose while still getting to retirement goals is a very hard problem. There are too many variables
- Health
- Income stability
- Inflation costs
- Investment returns (or losses)
- Whether one gets married and/or divorced and/or has kids and/or health of spouse/kids
- ...

It's nearly impossible to engineer that perfect landing.

As the middle class disappears and wealth concentration increases, I think financial planning gets harder and harder.

The people I see enjoying life are those who took risks in their career AND made it in one way or another (whether rising to the top of their profession or starting a successful business) or those that were born into wealth. Those plodding along in a predictable job or that took a risk but didn't make it seem like they are always struggling with money.


You mean those who are tortoises just plodding along as opposed to the hare? Seems to me it is those who are "enjoying life" are the ones who are all flash and no substance. It is they who likely don't have their financial act together.
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by anoop » Tue Apr 11, 2017 7:50 pm

Grt2bOutdoors wrote:You mean those who are tortoises just plodding along as opposed to the hare? Seems to me it is those who are "enjoying life" are the ones who are all flash and no substance. It is they who likely don't have their financial act together.


I don't think the current economic climate is conducive to the tortoise lifestyle. There was a time when that worked, but it is over.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by mrsytf » Tue Apr 11, 2017 7:51 pm

AlohaJoe wrote:
luckybamboo wrote:
So, my question is where do you draw the line and decide that is my frugality stopping me from living. Does the 'high' I get from seeing my net worth grow stop me from living life?


That you get a high from that is a problem. It is a tool, a means to an end, and you have let it become an end in and of itself.

At least, that's how the post comes across.

You should get a high from the goals that your net worth allow you to achieve.


+2

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Pajamas » Tue Apr 11, 2017 7:56 pm

As long as someone has enough to eat, has adequate clothing, shelter, and healthcare, etc., then how they choose to spend their money is their business.

Criticizing someone because they fly economy rather than business or first class seems wrong to me. Step back and put things in perspective. There are a lot of people in the world who would really appreciate a bowl of rice to feed their hungry children. It would make more sense to me to criticize someone who has a big house that they don't need and closets full of clothing that they don't wear, who stay in expensive hotels when all they really need is a clean room with a comfortable bed and a hot shower, etc., but it's really none of my business.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Grt2bOutdoors » Tue Apr 11, 2017 7:57 pm

anoop wrote:
Grt2bOutdoors wrote:You mean those who are tortoises just plodding along as opposed to the hare? Seems to me it is those who are "enjoying life" are the ones who are all flash and no substance. It is they who likely don't have their financial act together.


I don't think the current economic climate is conducive to the tortoise lifestyle. There was a time when that worked, but it is over.


Go back and read some more history then. What you're talking about resulted in revolutionary outcomes, it could happen again so don't count your chickens yet. It's not different this time, depends what your objective is. Those who swing for the fences are apt to strike out more often or fall flat on their face before they even make it to first base, let alone cross home plate. Climate changes, much like the seasons.
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by digarei » Tue Apr 11, 2017 8:04 pm

.
Frugality has been well-defined by previous posters.

This is what is means to me:

    • No more $100 lunches... eat at home or brown-bag it. Get a job closer to home to reduce commute/parking costs.

    • Suspend new purchases in support of expensive hobbies (collecting, art, antiques, wine). Get accustomed to grocery-store bottled wine if you consume this product during the week.

    • Buy the most economical car one can buy... then keep it.

    • Learn the pleasures of delayed gratification (here's one: watching one's savings and investments grow quickly).

    • Reduce vacation costs. Fewer tourist acitives (zip-lining, guided tours, helicopter rides, souvenirs) and more travel.

I had been spending $1000 a day for air travel / hotel / meals (for 2). We found that we actually enjoyed ourselves more by eating lower on the food chain—I don't mean fast food! Think food trucks and very casual restaurants. Avoid heavily advertised luxury hotels.

Our next trip to Hawaii should come in at less than $700 @day. I can afford more but see no reason to spend more. The very nicest accommodations, right on the beach.
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by delamer » Tue Apr 11, 2017 8:06 pm

We are rapidly reaching the de-cumulation (or maybe steady-state) phase in our savings. One of us is retired and the last college bill has been paid. When we were still in the accumulating savings phase, my mental exercise was:

1. If we buy this thing/vacation, can we still pay the mortgage, put food on the table, and get any needed healthcare?
2. If we buy this thing/vacation, can we still sufficiently fund our retirement plans?
3. If we buy this thing/vacation, can we still contribute enough to the kids' college funds?

As long as I could say "yes" to all of the above (and had an emergency fund), then I was comfortable spending the money.
Last edited by delamer on Tue Apr 11, 2017 8:08 pm, edited 1 time in total.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by joe8d » Tue Apr 11, 2017 8:07 pm

It's an OCD.
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by malabargold » Tue Apr 11, 2017 8:07 pm

We have a NW just around $25m right now, believe me we've tried the lavish lifestyle, it brought us no joy, just diversion that was short-lived.
Our main cars are a 1997 and two 2000 models, for example.
We still buy indulgent things every once in a while, but typically sell them soon after.
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by rkkid » Tue Apr 11, 2017 8:12 pm

I came across this article a couple years ago on frugality it was a good read. http://www.businessinsider.com/why-i-keep-saving-money-every-day-even-though-i-have-more-than-enough-2015-6

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by TimeRunner » Tue Apr 11, 2017 8:41 pm

We live close to the beach on a 7,000-something square foot lot in a cottage in a small beach town. The previous owner built property line fences with non-pressure treated posts. All the fences are falling over, and full of termites. Although I have the skills to remove the old fence and build anew, I no longer have a truck, and I'm retired. Do I really want to spend several months hauling old fence to the dump, buying materials, and building anew? Here's a challenge to frugality where I've drawn the line. Hiring a fence contractor who can do it all, quickly, while I enjoy a beautiful Spring and Summer. :beer
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by finite_difference » Tue Apr 11, 2017 9:00 pm

NibbanaBanana wrote:It depends on if you think buying things, experiences, etc, or consumerism and materialism, is going to bring you lasting happiness.


As opposed to hoarding money? If you advocate giving away all your money then I think your argument holds more water.

I think that some people on here, perhaps myself included, are overly worried about eating cat food in retirement. I am much less worried about it now though, thanks to becoming educated about finance here.

But I think that hoarding money can be a form of greed. It's something I'll have to watch. That is, extreme frugality can be a form of greed. It could also be an expresssion of extreme anxiety too. There is nothing wrong with spending money as long as you don't overspend. Every $ goes to someone else who may need it more than you do.

Edit: So after automatically subtracting retirement savings, and having already built an emergency fund, I spend the remainder. That's my way of dealing with it.
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by luckybamboo » Tue Apr 11, 2017 9:37 pm

mrsytf wrote:
AlohaJoe wrote:
luckybamboo wrote:
So, my question is where do you draw the line and decide that is my frugality stopping me from living. Does the 'high' I get from seeing my net worth grow stop me from living life?


That you get a high from that is a problem. It is a tool, a means to an end, and you have let it become an end in and of itself.

At least, that's how the post comes across.

You should get a high from the goals that your net worth allow you to achieve.


+2


Thanks for giving me clarity about this. I understand that focusing on goals that we have both agreed on is the only thing that should be the priority and he has stayed committed to it which it great.
I also love the idea of fun money and I can use my share to save/invest whereas he can enjoy his share for his hobbies.

Thanks everybody for your thought provoking feedback and input. Greatly appreciate it

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Dottie57 » Tue Apr 11, 2017 9:51 pm

You and your spouse decide on your saving targets for each year. The rest is yours to spend on necessities and then the "I wants".

The key is you both agree. And you don't move all the "I Wants" to the future.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Pasaxoi » Wed Apr 12, 2017 12:12 am

IMHO the line is not to make you unhappy. And yes it's strictly personally.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by rosylenm » Wed Apr 12, 2017 12:49 am

The line keeps moving for me that is for sure.

I have seen my oldest nephew off to college every year. Yeah, I am that crotchety "old" auntie who flies up north and then drives five very long hours east to his school, but I do it because I love that kid and want him to have what he needs/wants when he gets to school.

Now that he is going to grad school in TX, the road trip is going to be a bit longer and will involve a lot more (either road trip with my mother who I love dearly, but she's my mom or flight with car rental with my beloved mommy). For two maybe ten seconds, I thought of gifting said nephew my travel costs because I was dancing that line between frugal and cheap.

My point--you know it when you cross that line. I am sure he would appreciate a few grand for school, but a trip with my mom and sister(s) and dear nephew--priceless.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by triceratop » Wed Apr 12, 2017 12:54 am

I currently make $36,000/yr. I define as a success any year I save more than $16,000 (~45% gross). I have found that with a bit of extra frugality I can save 50-55% of gross. I never sacrifice my lifestyle for frugality. It has worked well for me.

One observation: it helps to have inexpensive hobbies: reading, dancing, academics, studying tax code, music, cooking with friends. Another hobby is well-executed investing; that hobby should pay off well.
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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by KATNYC » Wed Apr 12, 2017 1:34 am

luckybamboo wrote:
KlangFool wrote:
luckybamboo wrote:
KlangFool wrote:OP,

In order to answer your question, I would need several data points from you.
KlangFool


Please see the answers below:
1) Your gross saving rate.
In the last 5 years, it has ranged from 15%-25% depending on the year. In last 3 years, we had to replace a 17 year old car, replace roof, replace HVAC, paint home and remodel living room, so the savings rate was 15%.

2) Your net worth as a multiple of your annual expense - 17 times the annual expense.

3) You and your husband age. - I am 43 and husband is 44

4) Your annual expense - Ranges from 85000 - 125000 based on the big ticket expenses that we encounter in the year. I do not work and my husband makes $247,000 a year.


luckybamboo,

1) Do you have kids? How old are them?

2) If I am in your shoes, I would look into spending time and money sharing experience with my children. For example, travel to somewhere. I would not spend more money on the house. Buy more experience and spend less on things.

3) There are limited time windows in our children's lives that they could spend with us. So, this might be the time to spend money to gain more shared experience.

KlangFool


1) we have two kids - 14 and 17.
2) That is what we want to spend on - taking vacations with them. My husband likes luxury travel and I would prefer to travel more often than to spend more on a single vacation. so there is conflict in that regards.
3) We are saving up currently for a trip to Europe next year before DD goes to college.


Some would call us frugal while others would call us lavish. It's all perspective. We value experiences over possessions.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Dandy » Wed Apr 12, 2017 6:37 am

frugality can become a sickness like hoarding. Life can pass by while the assets grow and an overly frugal person won't really know how to spend/enjoy their good fortune because they haven't done it.

The problem comes when you can afford, by any reasonable measure, to spend/enjoy a bit more but your frugal habits prevent you from doing it. I am/was a bit too frugal. Drove a Pinto for 11 years, changed my oil, rotated my tires, skimped on home improvements, etc. I saved/invested and was lucky to do well. I did have enough "wisdom" to enjoy nice vacations with family and spend money on dance lessons for the kids, etc. I am so glad I did. You and your kids are only young once and time passes by so, before you know it. the kids are adults and you are a grandpa.

Going from frugal to a better life balance is hard. It takes discipline to be good at frugality. You need to use that to increase life balance. e.g. set up some discretionary spending goals e.g. a nicer vacation, segregating some portion of your finances for spending not savings - yes mental accounting if necessary.

I have set up a money market account balance for home improvements and am trying to use that to prod me into doing things I would normally not do. I am doubling my charity contributions as another way to shed my old ways, adding a second vacation, buying season tickets to the theater, gifts to children/grandchildren, etc. The enjoyment that comes from spending money helps turn the tide toward life balance. In the past that type of spending was 3/4 enjoyment 1/4 regret. Now it is all enjoyment.

In retirement I am trying to not be as focused on seeing my assets grow. RMDs will be a challenge since I have spent decades taking satisfaction on seeing assets grow it will be hard to see them drop. I think that will be the major challenge to those who are frugal. The reward for being frugal had a lot to do with pride in asset level growth.

For me it has been a work in progress -- but there has been progress.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by simplesimon » Wed Apr 12, 2017 8:06 am

Creating a budget has helped me loosen up a bit. I set savings goals and then allow myself to spend the rest.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by stan1 » Wed Apr 12, 2017 8:13 am

For us the realization set in during our 40s that we had a substantial nest egg saved up in our younger years and could spend a little more to enjoy life. That meant business class seats when we travel internationally for vacation about once each year and upgrades to the house but we still keep our cars for 10+ years. Since your net worth is 17 times your annual expenses and you have a good income I'd say you are close to being able to make similar decisions. Focus on things that give you enjoyment, give you free time back to do something important to you, or simplify your life. At some point time is more valuable than money.

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by KlangFool » Wed Apr 12, 2017 8:22 am

luckybamboo wrote:
KlangFool wrote:OP,

In order to answer your question, I would need several data points from you.
KlangFool


Please see the answers below:
1) Your gross saving rate.
In the last 5 years, it has ranged from 15%-25% depending on the year. In last 3 years, we had to replace a 17 year old car, replace roof, replace HVAC, paint home and remodel living room, so the savings rate was 15%.

2) Your net worth as a multiple of your annual expense - 17 times the annual expense.

3) You and your husband age. - I am 43 and husband is 44

4) Your annual expense - Ranges from 85000 - 125000 based on the big ticket expenses that we encounter in the year. I do not work and my husband makes $247,000 a year.


luckybamboo,

<< 2) Your net worth as a multiple of your annual expense - 17 times the annual expense.>>

FYI. Assuming the number is correct, you are reaching a phase where even if you save nothing every year, your portfolio growth will get you there around 10 years. Let's assume that 34 times the annual expense is the end goal. With the rule of 72, 6% ROI will get you there in 72/6 = 12 years. With 8% ROI, you will get there in 72/8 = 9 years.

KlangFool

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Re: Extreme Frugality vs Living Life - Where do you draw the line?

Post by Vanguard Fan 1367 » Wed Apr 12, 2017 8:24 am

finite_difference wrote:
NibbanaBanana wrote:It depends on if you think buying things, experiences, etc, or consumerism and materialism, is going to bring you lasting happiness.


As opposed to hoarding money? If you advocate giving away all your money then I think your argument holds more water.

I think that some people on here, perhaps myself included, are overly worried about eating cat food in retirement. I am much less worried about it now though, thanks to becoming educated about finance here.

But I think that hoarding money can be a form of greed. It's something I'll have to watch. That is, extreme frugality can be a form of greed. It could also be an expresssion of extreme anxiety too. There is nothing wrong with spending money as long as you don't overspend. Every $ goes to someone else who may need it more than you do.

Edit: So after automatically subtracting retirement savings, and having already built an emergency fund, I spend the remainder. That's my way of dealing with it.


I would expect that if things get really bad that beans and rice would be a really cheap way to eat rather than cat food! I wonder if the media uses that illustration to try to extract sympathy for whomever they say is eating the cat food. :?

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