White Coat Investor: Enough is Enough!

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willthrill81
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White Coat Investor: Enough is Enough!

Post by willthrill81 »

Jim Dahle of the White Coat Investor reposted a very good blog post from 2012 with some updates today. Basically, it lays out what makes someone a 'compulsive saver' (e.g. spending money is literally painful, cannot fully enjoy activities that cost money) and tries to lay out ways that such a person can be 'treated' (e.g. remembering that different stages of life have different priorities and letting your significant other spend money on you).

While I don't think that I or my DW quite meet the 'compulsive saver' critieria, I must say that we do try to wring out a lot of value from the money we spend, though we're not as successful at this as some, like Justin at the Root of Good. Personally, I think of us as just being very frugal, not cheap. If we think that something that's 'expensive' will really provide us with a lot of value, we don't mind spending money for it.

What do you think makes someone a compulsive saver? How do we avoid becoming one?
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
KlangFool
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Re: White Coat Investor: Enough is Enough!

Post by KlangFool »

willthrill81 wrote: Tue Dec 24, 2019 11:16 pm
What do you think makes someone a compulsive saver? How do we avoid becoming one?

willthrill81,

Somebody does not use the "Pay Yourself First" saving method. People that use that method save first and spend the rest. They do not have to be obsessively and compulsively save anything. They save enough and spend the rest.

KlangFool
HEDGEFUNDIE
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Re: White Coat Investor: Enough is Enough!

Post by HEDGEFUNDIE »

1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
jsapiandante
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Re: White Coat Investor: Enough is Enough!

Post by jsapiandante »

We have a specific amount we want to save after maxing out our retirement accounts. I figured any higher amount saved won’t get us to financial independence any faster. So this year we started spending everything else outside of what we save/invest. We have absolutely increased our quality of life thinking this way. Before, we’d save every penny we can and keep our budget at the bare minimum. It has done well for us in the past, but now it’s time to start throttling back a bit with our savings since we will reach FI possibly within 5-7 years.
Dottie57
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Re: White Coat Investor: Enough is Enough!

Post by Dottie57 »

My main focus was to set a percent to save and the rest was mine to spend. As my earnings went up, after spending what I wanted I would revert to saving.

I sometimes feel guilty for spending, but get over it fast.
MathIsMyWayr
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Re: White Coat Investor: Enough is Enough!

Post by MathIsMyWayr »

A compulsive saver suffers from the victim mentality. Whenever he spends money, he feels he is taken advantage of by the other party. For example, if a dish of spaghetti costs $15 and an extra $5 for meatballs, he hesitates ordering spaghetti with meatball because he is not happy to let the restaurant owner take extra $5 from his pocket.

How to get out of this metal trap: To realize that his own happiness is much more important than a little monetary gain by these little guys.
AlphaLess
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Re: White Coat Investor: Enough is Enough!

Post by AlphaLess »

HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
AlohaJoe
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Re: White Coat Investor: Enough is Enough!

Post by AlohaJoe »

AlphaLess wrote: Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Taxes of 45% require an income of $750,000 a year for a single person or $1,500,000 a year for a married couple (assuming California state taxes).

I would assume the standard answer is that you negotiate with your employer to get a salary of less than $1.5 million a year in exchange for more equity or deferred compensation.

Either that, or realize that rules of thumb on the internet are worth what you paid for them.
dekecarver
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Re: White Coat Investor: Enough is Enough!

Post by dekecarver »

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grettman
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Re: White Coat Investor: Enough is Enough!

Post by grettman »

KlangFool wrote: Tue Dec 24, 2019 11:19 pm
willthrill81 wrote: Tue Dec 24, 2019 11:16 pm
What do you think makes someone a compulsive saver? How do we avoid becoming one?

willthrill81,

Somebody does not use the "Pay Yourself First" saving method. People that use that method save first and spend the rest. They do not have to be obsessively and compulsively save anything. They save enough and spend the rest.

KlangFool
Easy to say. Hard to do for some. The amount one decides to pay themselves first has no limit. A compulsive saver will rationalize this to be a very high rate. As they get older many will become more protective of their resources.
Dandy
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Re: White Coat Investor: Enough is Enough!

Post by Dandy »

I was/am? a compulsive saver. Saw my parents having to move to a Florida mobile home community (it was pretty nice) when my father was forced into retirement just short of getting his full pension. My mom also started me off very young with opening a savings account.

Despite being forced into retirement twice :oops: I amassed sufficient assets/retirement income. I painted my house twice inside and out, changed my oil, rotated my tires etc. was on the cheap side of being fugal. When I finally retired at age 60 I used to walk every morning toward any place that served coffee and would fret just a bit when the price went up. I was facing 30 years or so of retirement. Of course retiring in 2008 - 9 was full of fear due to the market plunge.

It took awhile but I did baby steps as far as loosening the purse strings. More dining out, an extra vacation, season tickets to the theater, a new vs used car, etc. With each baby step I and my wife enjoyed life a bit better. Having a 10+ year bull market was also a major tail wind.

I'm still not a easy spender but realize that life is short, I have been very fortunate, and you can't take it with you. I even got to a point where we are gifting "early inheritance" to our children.

So my path to change was baby steps and realizing the rewards of loosening up.
Ferdinand2014
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Re: White Coat Investor: Enough is Enough!

Post by Ferdinand2014 »

I make it a rule to maximize my tax deferred space and match that amount in taxable every year. I spend anything left over. Setting a percent or amount might keep a perspective.
“You only find out who is swimming naked when the tide goes out.“ — Warren Buffett
goblue100
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Re: White Coat Investor: Enough is Enough!

Post by goblue100 »

MathIsMyWayr wrote: Wed Dec 25, 2019 2:51 am For example, if a dish of spaghetti costs $15 and an extra $5 for meatballs, he hesitates ordering spaghetti with meatball because he is not happy to let the restaurant owner take extra $5 from his pocket.
How to get out of this metal trap: To realize that his own happiness is much more important than a little monetary gain by these little guys.
I like this, and agree. It is good to get value from your money, but if you set the bar too high you run the risk if being a miser. I've loosened up, especially if we are traveling somewhere and it makes my life easier. And I've enjoyed things more.
Some examples:
Sometimes paying for valet instead of self park
Sometimes having the bell hop handle the bags
Not ordering the cheaper thing on the menu
Buying better concert tickets

There are probably more, but those come to mind.
Financial planners are savers. They want us to be 95 percent confident we can finance a 30-year retirement even though there is an 82 percent probability of being dead by then. - Scott Burns
HEDGEFUNDIE
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Re: White Coat Investor: Enough is Enough!

Post by HEDGEFUNDIE »

AlphaLess wrote: Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Increase your itemized deductions
Jags4186
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Re: White Coat Investor: Enough is Enough!

Post by Jags4186 »

AlphaLess wrote: Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Make less money. I can't wait until I'm paying 33% of my gross in taxes. That means I got a big raise.
HEDGEFUNDIE
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Re: White Coat Investor: Enough is Enough!

Post by HEDGEFUNDIE »

Jags4186 wrote: Wed Dec 25, 2019 8:45 am
AlphaLess wrote: Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Make less money. I can't wait until I'm paying 33% of my gross in taxes. That means I got a big raise.
It means you’re currently not donating enough to charity.
Broken Man 1999
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Re: White Coat Investor: Enough is Enough!

Post by Broken Man 1999 »

KlangFool wrote: Tue Dec 24, 2019 11:19 pm
willthrill81 wrote: Tue Dec 24, 2019 11:16 pm
What do you think makes someone a compulsive saver? How do we avoid becoming one?

willthrill81,

Somebody does not use the "Pay Yourself First" saving method. People that use that method save first and spend the rest. They do not have to be obsessively and compulsively save anything. They save enough and spend the rest.

KlangFool
Yep!

That is what DW and I did. I often told people we lived "paycheck to paycheck", but it honestly was the truth.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven then I shall not go. " -Mark Twain
Helo80
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Re: White Coat Investor: Enough is Enough!

Post by Helo80 »

To be blunt --- the issue this article addresses in honestly why I resent certain members and schools of thought on this thread.

On the BH.org top page, a quick overlook shows the "Flaunt your high mileage car", "Talk me out of a Tesla Model 3", and "What frugal thing did you do today?" We're not AA members that have been burned by the bottle before (and I do not mean that to be deragatory against those seeking help for addiction issues, rather it's the mental analogy).... Yes, living paycheck to paycheck is bad, and a dangerous thing to do long-term.... but what is the psychological damage done by people that never spend anything?

I get the comfort that having a nest egg provides... 100%... I totally get it. But what happens if you grow your brokerage account and liquid assets to a point you can replace all of your hard assets (house, furniture, kitchen stuff, cars, etc.) 4-10x over? Are we allowed to enjoy the fruits of our labor or are we worried the market is going to crash 80-90% because it happened during the Great Depression? (Let me tell you something, if that DID happen, there are a lot of people that would be in a world of hurt, and I think A LOT of politicians that are going to capitalize on that) Generally the thoughts are generational wealth or donation/legacy type stuff... Let me tell you something about that.... generational wealth, I think studies have been done on it, and it's really not a thing. People tend to blow assets that farther they get from Daddy Rockefeller. Also, with donation and charity type stuff, you may have learned the value of earning and saving a buck, but the people running these charities don't always appreciate that.

To come first circle, I guess the saving grace of the people I resent is that they are sidelined to the materialistic and consumerism culture we live in.... and I appreciate that... but hot damn, on Christmas 2019, it makes me difficult to like some of y'all when we have endless threads about saving and maximizing every penny for our beloved 3 fund portfolios.
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JoMoney
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Re: White Coat Investor: Enough is Enough!

Post by JoMoney »

Jags4186 wrote: Wed Dec 25, 2019 8:45 am
AlphaLess wrote: Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Make less money. I can't wait until I'm paying 33% of my gross in taxes. That means I got a big raise.
If OASDI/Medicare and state taxes count as taxes, the "charity" would owe me money too :(
Even worse if I start looking at sales taxes, regulatory fees, etc...
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham
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changingtimes
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Re: White Coat Investor: Enough is Enough!

Post by changingtimes »

Also, something may happen to you or your spouse a lot earlier than your plans assume. Would you be happier looking back knowing what a good saver you were, or that you and your spouse took that dream trip to Paris that you had both enjoyed so much?

Don't spend like there's no tomorrow, but don't save like there's a million tomorrows ahead of you.
KlangFool
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Re: White Coat Investor: Enough is Enough!

Post by KlangFool »

grettman wrote: Wed Dec 25, 2019 7:25 am
KlangFool wrote: Tue Dec 24, 2019 11:19 pm
willthrill81 wrote: Tue Dec 24, 2019 11:16 pm
What do you think makes someone a compulsive saver? How do we avoid becoming one?

willthrill81,

Somebody does not use the "Pay Yourself First" saving method. People that use that method save first and spend the rest. They do not have to be obsessively and compulsively save anything. They save enough and spend the rest.

KlangFool
Easy to say. Hard to do for some. The amount one decides to pay themselves first has no limit. A compulsive saver will rationalize this to be a very high rate. As they get older many will become more protective of their resources.
grettman,

In the "Pay Yourself First" saving method, you have to decide how much to save and set a limit. This is impossible for a compulsive saver. If the person can set a limit, they are on their way to solve the problem.

KlangFool
frugalecon
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Re: White Coat Investor: Enough is Enough!

Post by frugalecon »

KlangFool wrote: Wed Dec 25, 2019 9:44 am
grettman wrote: Wed Dec 25, 2019 7:25 am
KlangFool wrote: Tue Dec 24, 2019 11:19 pm
willthrill81 wrote: Tue Dec 24, 2019 11:16 pm
What do you think makes someone a compulsive saver? How do we avoid becoming one?

willthrill81,

Somebody does not use the "Pay Yourself First" saving method. People that use that method save first and spend the rest. They do not have to be obsessively and compulsively save anything. They save enough and spend the rest.

KlangFool
Easy to say. Hard to do for some. The amount one decides to pay themselves first has no limit. A compulsive saver will rationalize this to be a very high rate. As they get older many will become more protective of their resources.
grettman,

In the "Pay Yourself First" saving method, you have to decide how much to save and set a limit. This is impossible for a compulsive saver. If the person can set a limit, they are on their way to solve the problem.

KlangFool
I think that there is a lot of freedom in KlangFool's approach. There can be a lot of wasting of mental energy on miscellaneous things that don't move the needle much. In another thread, someone was giving KlangFool advice on how to shave tiny amounts from his budget, and he wisely said that he used his approach so that he didn't waste time on "small money." The key is not to love money for its own sake, but rather for the freedom it affords. One aspect of that freedom is being able to spend it on things that are important.
MathIsMyWayr
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Re: White Coat Investor: Enough is Enough!

Post by MathIsMyWayr »

KlangFool wrote: Wed Dec 25, 2019 9:44 am
grettman wrote: Wed Dec 25, 2019 7:25 am
KlangFool wrote: Tue Dec 24, 2019 11:19 pm
willthrill81 wrote: Tue Dec 24, 2019 11:16 pm
What do you think makes someone a compulsive saver? How do we avoid becoming one?

willthrill81,

Somebody does not use the "Pay Yourself First" saving method. People that use that method save first and spend the rest. They do not have to be obsessively and compulsively save anything. They save enough and spend the rest.

KlangFool
Easy to say. Hard to do for some. The amount one decides to pay themselves first has no limit. A compulsive saver will rationalize this to be a very high rate. As they get older many will become more protective of their resources.
grettman,

In the "Pay Yourself First" saving method, you have to decide how much to save and set a limit. This is impossible for a compulsive saver. If the person can set a limit, they are on their way to solve the problem.

KlangFool
Setting a hard limit to how much you are going to save? I have more faith in the Munich Agreement.
KlangFool
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Re: White Coat Investor: Enough is Enough!

Post by KlangFool »

MathIsMyWayr wrote: Wed Dec 25, 2019 9:52 am
KlangFool wrote: Wed Dec 25, 2019 9:44 am
grettman wrote: Wed Dec 25, 2019 7:25 am
KlangFool wrote: Tue Dec 24, 2019 11:19 pm
willthrill81 wrote: Tue Dec 24, 2019 11:16 pm
What do you think makes someone a compulsive saver? How do we avoid becoming one?

willthrill81,

Somebody does not use the "Pay Yourself First" saving method. People that use that method save first and spend the rest. They do not have to be obsessively and compulsively save anything. They save enough and spend the rest.

KlangFool
Easy to say. Hard to do for some. The amount one decides to pay themselves first has no limit. A compulsive saver will rationalize this to be a very high rate. As they get older many will become more protective of their resources.
grettman,

In the "Pay Yourself First" saving method, you have to decide how much to save and set a limit. This is impossible for a compulsive saver. If the person can set a limit, they are on their way to solve the problem.

KlangFool
Setting a hard limit to how much you are going to save? I have more faith in the Munich Agreement.
MathIsMyWayr,

I have been doing this for my whole life. So does many others. But, it is impossible for some people.

KlangFool
flyingaway
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Re: White Coat Investor: Enough is Enough!

Post by flyingaway »

Dandy wrote: Wed Dec 25, 2019 7:39 am
Despite being forced into retirement twice :oops: I amassed sufficient assets/retirement income. I painted my house twice inside and out, changed my oil, rotated my tires etc. was on the cheap side of being fugal. When I finally retired at age 60 I used to walk every morning toward any place that served coffee and would fret just a bit when the price went up. I was facing 30 years or so of retirement. Of course retiring in 2008 - 9 was full of fear due to the market plunge.
You cannot be a model of frugality, I don't even drink coffee in a store, I drink tea at home in the morning.
HEDGEFUNDIE
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Re: White Coat Investor: Enough is Enough!

Post by HEDGEFUNDIE »

JoMoney wrote: Wed Dec 25, 2019 9:21 am
Jags4186 wrote: Wed Dec 25, 2019 8:45 am
AlphaLess wrote: Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Make less money. I can't wait until I'm paying 33% of my gross in taxes. That means I got a big raise.
If OASDI/Medicare and state taxes count as taxes, the "charity" would owe me money too :(
Even worse if I start looking at sales taxes, regulatory fees, etc...
Everyone can self-categorize to fit their own situation.

The point of my philosophy is to not save too much (or too little), spend too much (or too little), or shoulder the burden of the common good too much (or too little).
flyingaway
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Re: White Coat Investor: Enough is Enough!

Post by flyingaway »

willthrill81 wrote: Tue Dec 24, 2019 11:16 pm Jim Dahle of the White Coat Investor reposted a very good blog post from 2012 with some updates today. Basically, it lays out what makes someone a 'compulsive saver' (e.g. spending money is literally painful, cannot fully enjoy activities that cost money) and tries to lay out ways that such a person can be 'treated' (e.g. remembering that different stages of life have different priorities and letting your significant other spend money on you).

While I don't think that I or my DW quite meet the 'compulsive saver' critieria, I must say that we do try to wring out a lot of value from the money we spend, though we're not as successful at this as some, like Justin at the Root of Good. Personally, I think of us as just being very frugal, not cheap. If we think that something that's 'expensive' will really provide us with a lot of value, we don't mind spending money for it.

What do you think makes someone a compulsive saver? How do we avoid becoming one?
I am thinking about adjusting my lifestyle according to the size of my portfolio, with a 3% rule. In this way, I can spend more money when I have enough. What do you think?
Lastrun
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Re: White Coat Investor: Enough is Enough!

Post by Lastrun »

KlangFool wrote: Wed Dec 25, 2019 10:09 am I have been doing this for my whole life. So does many others. But, it is impossible for some people.

+1. This was actually the great compromise with DW. We set our savings goals and don’t worry about the rest of the budget. Makes the financial partnership much easier. But I appreciate the fact that this is harder for those on a tight budget, those who are very frugal, and compulsive savers.
smitcat
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Re: White Coat Investor: Enough is Enough!

Post by smitcat »

MathIsMyWayr wrote: Wed Dec 25, 2019 9:52 am
KlangFool wrote: Wed Dec 25, 2019 9:44 am
grettman wrote: Wed Dec 25, 2019 7:25 am
KlangFool wrote: Tue Dec 24, 2019 11:19 pm
willthrill81 wrote: Tue Dec 24, 2019 11:16 pm
What do you think makes someone a compulsive saver? How do we avoid becoming one?

willthrill81,

Somebody does not use the "Pay Yourself First" saving method. People that use that method save first and spend the rest. They do not have to be obsessively and compulsively save anything. They save enough and spend the rest.

KlangFool
Easy to say. Hard to do for some. The amount one decides to pay themselves first has no limit. A compulsive saver will rationalize this to be a very high rate. As they get older many will become more protective of their resources.
grettman,

In the "Pay Yourself First" saving method, you have to decide how much to save and set a limit. This is impossible for a compulsive saver. If the person can set a limit, they are on their way to solve the problem.

KlangFool
Setting a hard limit to how much you are going to save? I have more faith in the Munich Agreement.
Long ago we had an annual savings goal per year and also A goal to increase income and then divide the increase proportionally to savings and current spending.
It worked for us.
Losing sight that the only purpose of money is to spend in likely one of the first problems of over savers.
Balance is the key and figuring out how not to spend all for today or save all for tomorrow can yield great rewards.
KlangFool
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Joined: Sat Oct 11, 2008 12:35 pm

Re: White Coat Investor: Enough is Enough!

Post by KlangFool »

flyingaway wrote: Wed Dec 25, 2019 11:03 am
willthrill81 wrote: Tue Dec 24, 2019 11:16 pm Jim Dahle of the White Coat Investor reposted a very good blog post from 2012 with some updates today. Basically, it lays out what makes someone a 'compulsive saver' (e.g. spending money is literally painful, cannot fully enjoy activities that cost money) and tries to lay out ways that such a person can be 'treated' (e.g. remembering that different stages of life have different priorities and letting your significant other spend money on you).

While I don't think that I or my DW quite meet the 'compulsive saver' critieria, I must say that we do try to wring out a lot of value from the money we spend, though we're not as successful at this as some, like Justin at the Root of Good. Personally, I think of us as just being very frugal, not cheap. If we think that something that's 'expensive' will really provide us with a lot of value, we don't mind spending money for it.

What do you think makes someone a compulsive saver? How do we avoid becoming one?
I am thinking about adjusting my lifestyle according to the size of my portfolio, with a 3% rule. In this way, I can spend more money when I have enough. What do you think?
flyingaway,

You probably want to do something like

A) 3% of the average size of the portfolio over the last 3 years.

Or,

B) Put 3% of the portfolio into a pool and spend the average of the last 3 years.

Or else, the spending will oscillate too much.

KlangFool
smitcat
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Re: White Coat Investor: Enough is Enough!

Post by smitcat »

flyingaway wrote: Wed Dec 25, 2019 11:03 am
willthrill81 wrote: Tue Dec 24, 2019 11:16 pm Jim Dahle of the White Coat Investor reposted a very good blog post from 2012 with some updates today. Basically, it lays out what makes someone a 'compulsive saver' (e.g. spending money is literally painful, cannot fully enjoy activities that cost money) and tries to lay out ways that such a person can be 'treated' (e.g. remembering that different stages of life have different priorities and letting your significant other spend money on you).

While I don't think that I or my DW quite meet the 'compulsive saver' critieria, I must say that we do try to wring out a lot of value from the money we spend, though we're not as successful at this as some, like Justin at the Root of Good. Personally, I think of us as just being very frugal, not cheap. If we think that something that's 'expensive' will really provide us with a lot of value, we don't mind spending money for it.

What do you think makes someone a compulsive saver? How do we avoid becoming one?
I am thinking about adjusting my lifestyle according to the size of my portfolio, with a 3% rule. In this way, I can spend more money when I have enough. What do you think?
"I can spend more money when I have enough. What do you think?"
I think when you have enough you do not need to spend more....
MathIsMyWayr
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Re: White Coat Investor: Enough is Enough!

Post by MathIsMyWayr »

flyingaway wrote: Wed Dec 25, 2019 11:03 am I am thinking about adjusting my lifestyle according to the size of my portfolio, with a 3% rule. In this way, I can spend more money when I have enough. What do you think?
All the spending is not the same. Spending is not the same as consumption. Buying or upgrading a house is spending, but consumption. Eating out or travel is consumption. If 3% is for true consumption, it is quite high.
Jags4186
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Re: White Coat Investor: Enough is Enough!

Post by Jags4186 »

HEDGEFUNDIE wrote: Wed Dec 25, 2019 8:52 am
Jags4186 wrote: Wed Dec 25, 2019 8:45 am
AlphaLess wrote: Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Make less money. I can't wait until I'm paying 33% of my gross in taxes. That means I got a big raise.
It means you’re currently not donating enough to charity.
I'm my favorite charity.

Edit: it also makes no sense that you believe people who pay less in taxes give more to charity. Under normal situations folks who pay more in taxes make more money and therefore can afford to donate more.
AlphaLess
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Re: White Coat Investor: Enough is Enough!

Post by AlphaLess »

HEDGEFUNDIE wrote: Wed Dec 25, 2019 8:29 am
AlphaLess wrote: Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Increase your itemized deductions
There are not that many ways to do it.

The only straightforward way is charity, but in your guideline, tax and charity are in the same category.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
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Re: White Coat Investor: Enough is Enough!

Post by AlphaLess »

AlohaJoe wrote: Wed Dec 25, 2019 7:06 am
AlphaLess wrote: Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Taxes of 45% require an income of $750,000 a year for a single person or $1,500,000 a year for a married couple (assuming California state taxes).

I would assume the standard answer is that you negotiate with your employer to get a salary of less than $1.5 million a year in exchange for more equity or deferred compensation.

Either that, or realize that rules of thumb on the internet are worth what you paid for them.
Equity and deferred comp are just as bad, they way they are structured.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
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Re: White Coat Investor: Enough is Enough!

Post by HEDGEFUNDIE »

AlphaLess wrote: Wed Dec 25, 2019 11:36 am
HEDGEFUNDIE wrote: Wed Dec 25, 2019 8:29 am
AlphaLess wrote: Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Increase your itemized deductions
There are not that many ways to do it.

The only straightforward way is charity, but in your guideline, tax and charity are in the same category.
Loans for real estate and investments.
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Re: White Coat Investor: Enough is Enough!

Post by HEDGEFUNDIE »

Jags4186 wrote: Wed Dec 25, 2019 11:18 am
HEDGEFUNDIE wrote: Wed Dec 25, 2019 8:52 am
Jags4186 wrote: Wed Dec 25, 2019 8:45 am
AlphaLess wrote: Wed Dec 25, 2019 3:12 am
HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Make less money. I can't wait until I'm paying 33% of my gross in taxes. That means I got a big raise.
It means you’re currently not donating enough to charity.
I'm my favorite charity.

Edit: it also makes no sense that you believe people who pay less in taxes give more to charity. Under normal situations folks who pay more in taxes make more money and therefore can afford to donate more.
It makes perfect sense to me. Those who make less and therefore owe less to the State should make it up in their charitable giving. Just my opinion.
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1789
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Re: White Coat Investor: Enough is Enough!

Post by 1789 »

Just come up with an estimate and try to reach that. Spend the rest. Drink your latte folks, that will not make you poor. There is no real latte factor in life. Life is too short for calculating every detail. This type of mindset will cause stress and shorten one's life, imo (I am not doctor btw :D )
"My conscience wants vegetarianism to win over the world. And my subconscious is yearning for a piece of juicy meat. But what do i want?" (Andrei Tarkovsky)
BanquetBeer
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Re: White Coat Investor: Enough is Enough!

Post by BanquetBeer »

I’m curious about the ~45%’ers here. Can you provide some details?

SSI is only 6.2% on first $130k?
Medicare is 1.45-2.35%
Property tax/state income tax?
Federal is pretty low.

Without prop/state on an income of $500k W2 (standard deductions and two 401k) gets you around $110k it tax or 22%

Are people saying they have another $120k of state/property? Or are they upset that they earn LOTS of money and spend most of it annually requiring high tax?
jmk
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Re: White Coat Investor: Enough is Enough!

Post by jmk »

HEDGEFUNDIE wrote: Tue Dec 24, 2019 11:22 pm 1/3 spending
1/3 savings
1/3 taxes / charity

Just like with my portfolio, I try to rebalance if any piece becomes too large or small.
This is nice and follows the Boglehead philosophy of simplicity.
Jags4186
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Re: White Coat Investor: Enough is Enough!

Post by Jags4186 »

HEDGEFUNDIE wrote: Wed Dec 25, 2019 12:30 pm
Jags4186 wrote: Wed Dec 25, 2019 11:18 am
HEDGEFUNDIE wrote: Wed Dec 25, 2019 8:52 am
Jags4186 wrote: Wed Dec 25, 2019 8:45 am
AlphaLess wrote: Wed Dec 25, 2019 3:12 am

How do you rebalance the tax piece?

Taxes are closer to 45% for us.
Make less money. I can't wait until I'm paying 33% of my gross in taxes. That means I got a big raise.
It means you’re currently not donating enough to charity.
I'm my favorite charity.

Edit: it also makes no sense that you believe people who pay less in taxes give more to charity. Under normal situations folks who pay more in taxes make more money and therefore can afford to donate more.
It makes perfect sense to me. Those who make less and therefore owe less to the State should make it up in their charitable giving. Just my opinion.
Merry Christmas :sharebeer
Random Poster
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Re: White Coat Investor: Enough is Enough!

Post by Random Poster »

Helo80 wrote: Wed Dec 25, 2019 9:16 amI get the comfort that having a nest egg provides... 100%... I totally get it. But what happens if you grow your brokerage account and liquid assets to a point you can replace all of your hard assets (house, furniture, kitchen stuff, cars, etc.) 4-10x over? Are we allowed to enjoy the fruits of our labor or are we worried the market is going to crash 80-90% because it happened during the Great Depression? * * * * Generally the thoughts are generational wealth or donation/legacy type stuff... Let me tell you something about that.... generational wealth, I think studies have been done on it, and it's really not a thing. People tend to blow assets that farther they get from Daddy Rockefeller. Also, with donation and charity type stuff, you may have learned the value of earning and saving a buck, but the people running these charities don't always appreciate that.
There is quite a bit of truth in your writing, and I appreciate how it has made me think about some things.
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Re: White Coat Investor: Enough is Enough!

Post by MathWizard »

My goal was to match my disposal income before retirement with that after retirement adjusting for benefits like medical, taking taxes into consideration, and some extra for initial extra travel early on in retirement,for a different home more appropriate for elderly, and items for which I self insure.

I will be there in a few months when I turn 62 except for the extra, which should take about 12 to 18 months after that.

Then I am set for never having to work for pay again, which frees me to either stay in my current position or volunteer someplace else.
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Re: White Coat Investor: Enough is Enough!

Post by willthrill81 »

flyingaway wrote: Wed Dec 25, 2019 11:03 am
willthrill81 wrote: Tue Dec 24, 2019 11:16 pm Jim Dahle of the White Coat Investor reposted a very good blog post from 2012 with some updates today. Basically, it lays out what makes someone a 'compulsive saver' (e.g. spending money is literally painful, cannot fully enjoy activities that cost money) and tries to lay out ways that such a person can be 'treated' (e.g. remembering that different stages of life have different priorities and letting your significant other spend money on you).

While I don't think that I or my DW quite meet the 'compulsive saver' critieria, I must say that we do try to wring out a lot of value from the money we spend, though we're not as successful at this as some, like Justin at the Root of Good. Personally, I think of us as just being very frugal, not cheap. If we think that something that's 'expensive' will really provide us with a lot of value, we don't mind spending money for it.

What do you think makes someone a compulsive saver? How do we avoid becoming one?
I am thinking about adjusting my lifestyle according to the size of my portfolio, with a 3% rule. In this way, I can spend more money when I have enough. What do you think?
Yes, it's certainly not prudent to spend more than what your portfolio can reasonably provide.

I never recommend that anyone actually use fixed real dollar withdrawal rates (e.g. '4% rule'). It's only a guideline to indicate when you have enough to fund a typical (i.e. 30 year) retirement. If you're planning on retiring earlier than age 60, 3% is a reasonable starting point, but you will almost certainly be able to adjust this upward as time goes on, due to the market's probably doing better than 'worst case' and your own life expectancy decreasing.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings
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Re: White Coat Investor: Enough is Enough!

Post by Pomegranate »

willthrill81 wrote: Tue Dec 24, 2019 11:16 pm

What do you think makes someone a compulsive saver? How do we avoid becoming one?
Having a plan is the key. We save our 1 year expenses annually, once we reach the target I tell my wife that we have some extra $. Then we book extra travelling stuff for the next year or simply put it into her 'dream car account' :sharebeer
bling
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Re: White Coat Investor: Enough is Enough!

Post by bling »

i think for some of us it's just....ingrained into us. i grew up lower-middle class. my parents didn't make a lot of money but they managed to make things meet. i certainly never felt poor growing up, but being a parent now and knowing how much things actually cost, it really puts things into perspective.

that mindset of being frugal and delayed gratification, to the point where you realized that you actually don't even need that thing anymore, is very much a part of me. and this is something i'm struggling to relax, because from a logical perspective it can be pretty absurd. e.g. i want to get the best value for my money, except that i would literally spend hours researching for the best product. so, to save $50 i would spend maybe 5 hours to research it. the average contractor charges $100 an hour. my 5 hours of time is certainly worth more than $50, but i also don't get paid overtime, so maybe i'm saving in the end. argggh!!

and then i compare that $50 to the daily market fluctuations of my portfolio and i'm like...why do i even bother?
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Re: White Coat Investor: Enough is Enough!

Post by Xrayman69 »

Lastrun wrote: Wed Dec 25, 2019 11:06 am
KlangFool wrote: Wed Dec 25, 2019 10:09 am I have been doing this for my whole life. So does many others. But, it is impossible for some people.

+1. This was actually the great compromise with DW. We set our savings goals and don’t worry about the rest of the budget. Makes the financial partnership much easier. But I appreciate the fact that this is harder for those on a tight budget, those who are very frugal, and compulsive savers.
The safety net or latitude to ratchet up or down spending is highly influenced by savings (current), potential earning going forward as well as stability for economic situation. A person earning a high income on year 1 vs the 20th year has a totally different reasonable spending profile. A person whom accidentally has a high income one year vs a person who is in a stable income situation has a different spending profile, and a person with 10, 20, or more years of annual spending saved has a different tolerance profile.

It’s one of the core tenants of BH is to risk adjust your portfolio. One can do the same comfortably for spending as well, and most of this is so self dependent. Slowly adjust spending upwards as the savings, stability and maturity of an individual is likely a more fulfilling and sustainable path on the journey.

Our families income from 20 years ago was significantly lower than today. Our spending as well as our safety net was also lower. Despite our income and savings significantly higher currently the absolute amount we spend is so much higher but much lower proportionally to what we make in comparison. The amount we are able to spend does not limit our decisions on what can make life more comfortable, Nor would spending a lot more to stay with proportion percentage from income 20 years ago add any additional value.

In summary as we progress we also mature mentally as we would mature financially. Those that are ultra-savers may have different maturity progress from a spending and financial security standpoint. Hard to evolve without self reflection and being open to evolve. It’s not a personal attack in these individuals but rather sharing with them that it’s OK to spend more and enjoy that journey.
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Re: White Coat Investor: Enough is Enough!

Post by Godot »

flyingaway wrote: Wed Dec 25, 2019 11:01 am
Dandy wrote: Wed Dec 25, 2019 7:39 am
Despite being forced into retirement twice :oops: I amassed sufficient assets/retirement income. I painted my house twice inside and out, changed my oil, rotated my tires etc. was on the cheap side of being fugal. When I finally retired at age 60 I used to walk every morning toward any place that served coffee and would fret just a bit when the price went up. I was facing 30 years or so of retirement. Of course retiring in 2008 - 9 was full of fear due to the market plunge.
You cannot be a model of frugality, I don't even drink coffee in a store, I drink tea at home in the morning.
Water for me, and I get it from my neighbor's hose when he's still sleeping. Utilities are going up!
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Re: White Coat Investor: Enough is Enough!

Post by rich126 »

While I do find it a bit sad or annoying that some are so tight with money, I think it isn’t worth the effort to change them because that is simply what they are. And I’d rather have someone who saves too much than someone who spends too much. The latter can become a burden to family and society.

I worked with an engineer decades ago and still know him. He wouldn’t use the AC in his car, would let the car coast as much as possible and even to this day, in his mid 50s mostly bikes to work. He would stay at the end of parties and picnics to take the leftovers home. Nice guy and his brothers were normal but spending money just wasn’t in his dna.
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telemark
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Re: White Coat Investor: Enough is Enough!

Post by telemark »

Biking to work is just plain more enjoyable than driving.

Personally, I got hooked on ballroom dancing in my 20s, and that put paid to any chance of my ever being a compulsive saver :wink:
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