Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Our savings rate is reasonable. Why do I still feel guilty of our high spending?
In 2024, we managed to save about 1.3X our annual expenses. However, due to a permanent drop in income, we expect to save only 0.8X in 2025. Right now, we have about 12X saved, meaning we need another 13X to reach the "magic" 25X for financial independence. If the market stays relatively stable, we should be able to get there in 10 to 15 years at our current savings rate.
When I review our spending, there’s nothing I regret—if anything, I’d actually like to spend more on short weekend trips to nearby cities and parks. Yet, when I see our total annual spending well into the $200K, it terrifies me.
Why do I feel this way? Why do I worry so much, even though logically, I know we’re on track?
When I review our spending, there’s nothing I regret—if anything, I’d actually like to spend more on short weekend trips to nearby cities and parks. Yet, when I see our total annual spending well into the $200K, it terrifies me.
Why do I feel this way? Why do I worry so much, even though logically, I know we’re on track?
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
I don't know. You tell me.
Your approach is exactly what we did (starting in the 1980s). We had a savings and investment plan and the rest was up for grabs. I never had any problems. Our situation was a little different in a couple of respects. One, we never had "a number." That whole concept just wasn't a thing back then; as well, I had made a decision when I started my career in the late 70s that I simply wasn't going to measure myself with money. Two, visibility of what we actually had was very limited. The majority of our holdings were in my wife's pension and profit sharing scheme and the partnership she was in only issued financial statements for that scheme once a year -- generally in March, as of the prior December 31. So we were largely flying blind until we rolled it out in the mid-2000s.
Your approach is exactly what we did (starting in the 1980s). We had a savings and investment plan and the rest was up for grabs. I never had any problems. Our situation was a little different in a couple of respects. One, we never had "a number." That whole concept just wasn't a thing back then; as well, I had made a decision when I started my career in the late 70s that I simply wasn't going to measure myself with money. Two, visibility of what we actually had was very limited. The majority of our holdings were in my wife's pension and profit sharing scheme and the partnership she was in only issued financial statements for that scheme once a year -- generally in March, as of the prior December 31. So we were largely flying blind until we rolled it out in the mid-2000s.
Don't trust me, look it up. https://www.irs.gov/forms-instructions-and-publications
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
IDK. Perhaps you worry because the market may not stay "relatively stable" and it might take you longer to hit your magic number?
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Poor job security? Further loss of income?TroyS wrote: Mon Feb 03, 2025 3:13 pm In 2024, we managed to save about 1.3X our annual expenses. However, due to a permanent drop in income, we expect to save only 0.8X in 2025. Right now, we have about 12X saved, meaning we need another 13X to reach the "magic" 25X for financial independence. If the market stays relatively stable, we should be able to get there in 10 to 15 years at our current savings rate.
When I review our spending, there’s nothing I regret—if anything, I’d actually like to spend more on short weekend trips to nearby cities and parks. Yet, when I see our total annual spending well into the $200K, it terrifies me.
Why do I feel this way? Why do I worry so much, even though logically, I know we’re on track?
When I was younger, that compelled me to save more. As the only earner in my household, It used to feel like I could be just a job loss away from financial ruin. Things worked out fine though.
The words you use are confusing. You don't "regret" your spending. But your spending "terrifies" you and you feel "guilty" about it. Huh?
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
TroyS,TroyS wrote: Mon Feb 03, 2025 3:13 pm In 2024, we managed to save about 1.3X our annual expenses. However, due to a permanent drop in income, we expect to save only 0.8X in 2025. Right now, we have about 12X saved, meaning we need another 13X to reach the "magic" 25X for financial independence. If the market stays relatively stable, we should be able to get there in 10 to 15 years at our current savings rate.
A) How old are you?
"Right now, we have about 12X saved, meaning we need another 13X to reach the "magic" 25X for financial independence. If the market stays relatively stable, we should be able to get there in 10 to 15 years at our current savings rate. "
B) Great news! This is false! It is significantly shorter than that.
Starting at 12X and saving 0.8X per year
With an average annual return of 5%, you will reach 25X in 8 years.
With an average annual return of 7%, you will reach 25X in 6+ years.
Starting Net Worth 1200%
Annual Savings 80%
Years
Annual Return Rate 5 6 7 8
5.00% 1974% 2152% 2340% 2537%
6.00% 2057% 2260% 2476% 2704%
7.00% 2143% 2373% 2619% 2883%
C) Does this make you feel better?
KlangFool
Last edited by KlangFool on Mon Feb 03, 2025 3:37 pm, edited 1 time in total.
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
is it because you have...money vigilance?TroyS wrote: Mon Feb 03, 2025 3:13 pm Why do I feel this way? Why do I worry so much, even though logically, I know we’re on track?
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions |


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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Probably because of how you were raised. Fortunately it is something you can work on and change. I did. Check out Ramit Sethi's content about money psychology.TroyS wrote: Mon Feb 03, 2025 3:13 pm Why do I feel this way? Why do I worry so much, even though logically, I know we’re on track?
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
TroyS,TroyS wrote: Mon Feb 03, 2025 3:13 pm
When I review our spending, there’s nothing I regret—if anything, I’d actually like to spend more on short weekend trips to nearby cities and parks. Yet, when I see our total annual spending well into the $200K, it terrifies me.
The answer is obvious and you may not like what I say. If someone spend 200K per year and cannot afford more weekend trips, it is usually the house.
What is the price of your house?
KlangFool
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
If it really terrifies you seek a mental health councilor versus looking for advise here.
There is nothing wrong with chatting with a professional about your feelings. Bogleheads is good for financial advise - other non-financial advise here is quite bad sometimes.
There is nothing wrong with chatting with a professional about your feelings. Bogleheads is good for financial advise - other non-financial advise here is quite bad sometimes.
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Perhaps you do not donate enough to charity?
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
I dont think so. Dual income, split half and half. Both are in a very stable industry.
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Good to know. Thank you KF!KlangFool wrote: Mon Feb 03, 2025 3:29 pm TroyS,
A) How old are you?
"Right now, we have about 12X saved, meaning we need another 13X to reach the "magic" 25X for financial independence. If the market stays relatively stable, we should be able to get there in 10 to 15 years at our current savings rate. "
B) Great news! This is false! It is significantly shorter than that.
Starting at 12X and saving 0.8X per year
With an average annual return of 5%, you will reach 25X in 8 years.
With an average annual return of 7%, you will reach 25X in 6+ years.
Starting Net Worth 1200%
Annual Savings 80%
Years
Annual Return Rate 5 6 7 8
5.00% 1974% 2152% 2340% 2537%
6.00% 2057% 2260% 2476% 2704%
7.00% 2143% 2373% 2619% 2883%
C) Does this make you feel better?
KlangFool
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Can you say more about "how you were raised" part? Both of us came from a very stable and loving family. Growing up, we did not know we were poor but, now looking back, we were very very poor.simplesimon wrote: Mon Feb 03, 2025 3:34 pmProbably because of how you were raised. Fortunately it is something you can work on and change. I did. Check out Ramit Sethi's content about money psychology.TroyS wrote: Mon Feb 03, 2025 3:13 pm Why do I feel this way? Why do I worry so much, even though logically, I know we’re on track?
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
That is not what I meant. We do take trips, both local and international. I just wish we took more. We were busy up until now but we changed our go-go style of work in 2025 and now we are more relaxed and can take even more trips.KlangFool wrote: Mon Feb 03, 2025 3:39 pm TroyS,
The answer is obvious and you may not like what I say. If someone spend 200K per year and cannot afford more weekend trips, it is usually the house.
What is the price of your house?
KlangFool
edit to add: valued at 700k
Last edited by TroyS on Mon Feb 03, 2025 4:01 pm, edited 1 time in total.
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Seek therapy if this is disrupting your life. You can afford it.
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Sounds like you're doing ok from my standpoint. I worry too about stuff. I think it is normal. You will get posts from everything from Eckart Tolle to the Buddha but everything is personal. Take comfort in that you seem like you are in good shape.
If someone asks you the time, why are you telling them how to build a watch?
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Oh I get this.
For me OP the behavioral "quirks" that made me an aggressive saver and got me to financial independence are hard to turn off. They're constructive - to a point.
I try to take an incremental approach. A few small (what I'd call) extravagances here or there. My wife has a more balanced mindset than I do - high earner, high saver, medium spender. She's been a positive influence on my mindset... and a slight negative influence on my saving
Our trips to Europe were splurges and I loved 'em. And pretty soon we're buying a car whereas on my own I'd delay that purchase for a few more decades.
Good luck OP!
For me OP the behavioral "quirks" that made me an aggressive saver and got me to financial independence are hard to turn off. They're constructive - to a point.
I try to take an incremental approach. A few small (what I'd call) extravagances here or there. My wife has a more balanced mindset than I do - high earner, high saver, medium spender. She's been a positive influence on my mindset... and a slight negative influence on my saving

Good luck OP!
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
we donate about 15% of the X.
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Money is simply something that should never be squandered irrespective of your savings rate. The world is often an unforgiving place, and during hard times everyone wishes that they had been a better steward of funds in the past. Thrift is good and feeling guilty helps you spend less. Be glad you have that guilt, many people lack it to their detriment.
Society grows great when old men plant trees whose shade they shall never sit in
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
You live NOW. Not in the past and not in the future. What could have been done is long passed.TroyS wrote: Mon Feb 03, 2025 4:01 pmThat is not what I meant. We do take trips, both local and international. I just wish we took more. We were busy up until now but we changed our go-go style of work in 2025 and now we are more relaxed and can take even more trips.KlangFool wrote: Mon Feb 03, 2025 3:39 pm TroyS,
The answer is obvious and you may not like what I say. If someone spend 200K per year and cannot afford more weekend trips, it is usually the house.
What is the price of your house?
KlangFool
edit to add: valued at 700k
I gambled and lost 50% of my portfolio in Telecom Bust. It delayed my financially independence by 8 to 10 years. I made my peace with my mistake.
"We were busy up until now but we changed our go-go style of work in 2025"
Please count your blessings. My brother-in-law had to work away from the family for many years. He only get to see his family for 2 weeks out of a year.
KlangFool
Last edited by KlangFool on Mon Feb 03, 2025 4:21 pm, edited 1 time in total.
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Save 25% and spend the rest. Don’t miss out on life experiences while still young.
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
If you have a $700k house $200k - $300 / year spending does seem like a high amount, although seems like you are earning and saving plenty so okay to do.
You could post your spending and get some critiques. Are you paying a large amount for private school?
It seems like extra local trips should only be a small percentage of that amount of spending so there is something going on sucking up a large amount of money. Are you counting mortgage prepayments as spending?
You could post your spending and get some critiques. Are you paying a large amount for private school?
It seems like extra local trips should only be a small percentage of that amount of spending so there is something going on sucking up a large amount of money. Are you counting mortgage prepayments as spending?
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
My numbers are different -- we spend and save less -- but I understand what you're saying and generally feel the same way.
I find it helpful to look at my spreadsheet with projections out to age 80+ and see, again, that my wife and I will likely die with a larger net worth (adjusted for inflation) than we enter retirement with, even if we retire very early and increase our spending and err on the conservative side for many assumptions. So then spending less would mean what? Dying with an even larger net worth? There's nothing appealing about the "richest guy in the graveyard," so we might as well do some spending, right?
Well, the rational part of my brain can agree with that but it still goes against what the more primitive parts of my brain scream at me. I've said many times that being married and having kids is what really keeps me in check. If I were single I'd probably be doing some questionable things to keep my spending below $30k and save 3x that per year, even when I'm also in line for a pension of 2x that, plus SS eventually, etc.
I've often said that I don't understand what motivates ultra wealthy people to keep going, trying to build more wealth, as many of them seem to do, but I guess it's the same sort of pathology in a way.
I find it helpful to look at my spreadsheet with projections out to age 80+ and see, again, that my wife and I will likely die with a larger net worth (adjusted for inflation) than we enter retirement with, even if we retire very early and increase our spending and err on the conservative side for many assumptions. So then spending less would mean what? Dying with an even larger net worth? There's nothing appealing about the "richest guy in the graveyard," so we might as well do some spending, right?
Well, the rational part of my brain can agree with that but it still goes against what the more primitive parts of my brain scream at me. I've said many times that being married and having kids is what really keeps me in check. If I were single I'd probably be doing some questionable things to keep my spending below $30k and save 3x that per year, even when I'm also in line for a pension of 2x that, plus SS eventually, etc.
I've often said that I don't understand what motivates ultra wealthy people to keep going, trying to build more wealth, as many of them seem to do, but I guess it's the same sort of pathology in a way.
I still don't have an explanation for all this. I grew up in supremely ordinary circumstances. My dad ran a very small family business (small enough, for example, that he's still running it as the sole employee and probably couldn't sell it for anything, but it provided for us) and my mom was a public school teacher. They're retirement is mostly based on SS and my mom's pension. I went to public schools and then college on an ROTC scholarship and help from my parents with room and board. I might get $100k from their home equity as an inheritance one day. I came of age during the 2008 financial crisis and Great Recession, which I think had a profound effect on my outlook even if it didn't really impact my finances directly, but then so did many other people from my cohort.
Last edited by warner25 on Mon Feb 03, 2025 4:40 pm, edited 1 time in total.
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Internally, when you reach a certain age, you know that every dollar of spending is delaying retirement.
It may be too simple, but at 54, that is how it seems. More stuff, better stuff, more trips, better trips. Stuff and things and trips and blah blah blah.
Always a good time to evaluate what is important and what is fluff and stuff.
It may be too simple, but at 54, that is how it seems. More stuff, better stuff, more trips, better trips. Stuff and things and trips and blah blah blah.
Always a good time to evaluate what is important and what is fluff and stuff.
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
The key may to be to budget for things like these just like you budget for things like utility bills, house payments, cars, etc.TroyS wrote: Mon Feb 03, 2025 3:13 pm I’d actually like to spend more on short weekend trips to nearby cities and parks.
When I was around 30 I did not have anywhere near what you have but I knew that I could easily afford modest travel but I had a hard time spending money on things like vacations.
Something I did for a while was that I had a couple of percent of each paycheck automatically deposited into a seperate account which was my travel fund which was how I budgeted for travel. When it came time to take a vacation I had no trouble spending that money since that was what I budgeted and saved up for. Having a seperate bucket of money like that is pure mental accounting and in theory not all that different than just saving the money up in you main financial account but separating the money like that worked well for me.
You can choose your own numbers but you might try opening a new account at a financial instruction like a local credit union where you do not already have any accounts if you can find a money market or high yield saving account which will earn 4% or so. That can be your travel and splurge fund. If you have something like 5%(?) of your gross pay automatically deposited into that account with each paycheck it will quickly grow to be enough for short trips like you said that you wanted to start doing more of.
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Double check your math.TroyS wrote: Mon Feb 03, 2025 3:13 pm However, due to a permanent drop in income, we expect to save only 0.8X in 2025. Right now, we have about 12X saved, meaning we need another 13X to reach the "magic" 25X for financial independence. If the market stays relatively stable, we should be able to get there in 10 to 15 years at our current savings rate.
With any reasonable growth assumption your current savings will likely at least double(adjusted for inflation) and go from 12x to 25x your expenses in the next 10 to 15 years.
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
How about a growth assumption of 0? Will that double it? I would call that reasonable given how high returns have been lately.Watty wrote: Mon Feb 03, 2025 4:57 pmDouble check your math.TroyS wrote: Mon Feb 03, 2025 3:13 pm However, due to a permanent drop in income, we expect to save only 0.8X in 2025. Right now, we have about 12X saved, meaning we need another 13X to reach the "magic" 25X for financial independence. If the market stays relatively stable, we should be able to get there in 10 to 15 years at our current savings rate.
With any reasonable growth assumption your current savings will likely at least double(adjusted for inflation) and go from 12x to 25x your expenses in the next 10 to 15 years.
Society grows great when old men plant trees whose shade they shall never sit in
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Watty,Watty wrote: Mon Feb 03, 2025 4:57 pmDouble check your math.TroyS wrote: Mon Feb 03, 2025 3:13 pm However, due to a permanent drop in income, we expect to save only 0.8X in 2025. Right now, we have about 12X saved, meaning we need another 13X to reach the "magic" 25X for financial independence. If the market stays relatively stable, we should be able to get there in 10 to 15 years at our current savings rate.
With any reasonable growth assumption your current savings will likely at least double(adjusted for inflation) and go from 12x to 25x your expenses in the next 10 to 15 years.
I had provided the calculation to OP in earlier post.
"B) Great news! This is false! It is significantly shorter than that.
Starting at 12X and saving 0.8X per year
With an average annual return of 5%, you will reach 25X in 8 years.
With an average annual return of 7%, you will reach 25X in 6+ years."
KlangFool
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
rogue_economist,rogue_economist wrote: Mon Feb 03, 2025 4:59 pm
How about a growth assumption of 0? Will that double it? I would call that reasonable given how high returns have been lately.
A) May I know what do you actually mean by growth assumption of 0?
B) Even if the stock market's return is 0%, it does not mean that a 60/40 portfolio return is 0%.
C) And, if the stock market actually goes down and stays down for 5 to 8 years, it is no longer a financial problem.
KlangFool
Last edited by KlangFool on Mon Feb 03, 2025 5:37 pm, edited 1 time in total.
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Start with a small trip. Maybe a weekend stay in the downtown part of your city. When your more comfortable do a nice drive out of town for 2-3 days, and then slowly build on this.
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Assume 0% growth, the portfolio doesn't increase in real terms whatsoever.KlangFool wrote: Mon Feb 03, 2025 5:34 pmrogue_economist,rogue_economist wrote: Mon Feb 03, 2025 4:59 pm
How about a growth assumption of 0? Will that double it? I would call that reasonable given how high returns have been lately.
A) May I know what do you actually mean by growth assumption of 0?
B) Even if the stock market's return is 0%, it does not mean that a 60/40 portfolio return is 0%.
C) And, if the stock market actually goes down and stays down for 5 to 8 years, it is no longer a financial problem.
KlangFool
Bonds barely beat inflation as it is, if stocks are flat or somewhat down ina 60/40 bonds won't double the portfolio.
Why not? We've had lost decades before. It also doesn't even really need to go down significantly, just stagnate.
Reversion to the mean is going to require lower returns to offset the last decade.
Society grows great when old men plant trees whose shade they shall never sit in
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
rogue_economist,rogue_economist wrote: Mon Feb 03, 2025 5:55 pmAssume 0% growth, the portfolio doesn't increase in real terms whatsoever.KlangFool wrote: Mon Feb 03, 2025 5:34 pm
rogue_economist,
A) May I know what do you actually mean by growth assumption of 0?
B) Even if the stock market's return is 0%, it does not mean that a 60/40 portfolio return is 0%.
C) And, if the stock market actually goes down and stays down for 5 to 8 years, it is no longer a financial problem.
KlangFool
Bonds barely beat inflation as it is, if stocks are flat or somewhat down ina 60/40 bonds won't double the portfolio.
Why not? We've had lost decades before. It also doesn't even really need to go down significantly, just stagnate.
Reversion to the mean is going to require lower returns to offset the last decade.
A) I am not interested in "real" return. It is not "real" to me. What is your assumption of nominal return?
"Bonds barely beat inflation as it is, if stocks are flat or somewhat down ina 60/40 bonds won't double the portfolio."
B) 60/40 portfolio return is NOT the sum of the 60% stock return and 40% bond return.
C) OP's portfolio is at 12X and he is adding at 0.8X per year. He does not need a high nominal return rate to double.
"Starting at 12X and saving 0.8X per year
With an average annual return of 5%, you will reach 25X in 8 years.
With an average annual return of 7%, you will reach 25X in 6+ years."
KlangFool
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
I don't care about nominal return. Nominal return cannot buy anything. We can get a nominal return of 100% if tomorrow the Fed simply prints a $20T bill but that return would be meaningless. Nominal is irrelevant, and the past 5 years should be a prime example of why.KlangFool wrote: Mon Feb 03, 2025 6:02 pmrogue_economist,rogue_economist wrote: Mon Feb 03, 2025 5:55 pm
Assume 0% growth, the portfolio doesn't increase in real terms whatsoever.
Bonds barely beat inflation as it is, if stocks are flat or somewhat down ina 60/40 bonds won't double the portfolio.
Why not? We've had lost decades before. It also doesn't even really need to go down significantly, just stagnate.
Reversion to the mean is going to require lower returns to offset the last decade.
A) I am not interested in "real" return. What is your assumption of nominal return?
"Bonds barely beat inflation as it is, if stocks are flat or somewhat down ina 60/40 bonds won't double the portfolio."
B) 60/40 portfolio return is NOT the sum of the 60% stock return and 40% bond return.
C) OP's portfolio is at 12X and he is adding at 0.8X per year. He does not need a high nominal return rate to double.
"Starting at 12X and saving 0.8X per year
With an average annual return of 5%, you will reach 25X in 8 years.
With an average annual return of 7%, you will reach 25X in 6+ years."
KlangFool
It doesn't matter that it is not the sum. If bonds return a real 2% and stocks a real 0% thst won't double the portfolio in 5 years.
Contributions are a separate issue. If you want to double it in 8 years by contributing alone you need well over 1x a year.
Society grows great when old men plant trees whose shade they shall never sit in
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
rogue_economist,rogue_economist wrote: Mon Feb 03, 2025 6:09 pm
Nominal is irrelevant, and the past 5 years should be a prime example of why.
I disagreed! "Real" return is irrelevant to many people.
My annual expense over the last 10 years had shown that the official inflation rate is irrelevant to me. Perhaps, you are one of few people that actually have their annual expense changes as per the official inflation rate.
KlangFool
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
I get it. Unlike many on this board, I have a govt pension that will cover much more than 100% of my expenses when I retire sometime in the next 5 years. However, because of this, my retirement savings is much less than most Bogleheads relative to my current income and expenses. I think this plays with my head a bit despite the fact that I know spending $10K now on a family vacation is not going to matter one bit in terms quality of life in retirement. I can see this play out on my spreadsheets but I still have a hard time pulling the trigger on big cash outlays. In fact, if I don't take the vacation, I don't make the memories and I don't spend the limited time I have left with my kids. Luckily, my wife is there is talk sense into my irrational thinking.TroyS wrote: Mon Feb 03, 2025 3:13 pm In 2024, we managed to save about 1.3X our annual expenses. However, due to a permanent drop in income, we expect to save only 0.8X in 2025. Right now, we have about 12X saved, meaning we need another 13X to reach the "magic" 25X for financial independence. If the market stays relatively stable, we should be able to get there in 10 to 15 years at our current savings rate.
When I review our spending, there’s nothing I regret—if anything, I’d actually like to spend more on short weekend trips to nearby cities and parks. Yet, when I see our total annual spending well into the $200K, it terrifies me.
Why do I feel this way? Why do I worry so much, even though logically, I know we’re on track?
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Frankly that is so off the mark as to be amusing.KlangFool wrote: Mon Feb 03, 2025 6:20 pmrogue_economist,rogue_economist wrote: Mon Feb 03, 2025 6:09 pm
Nominal is irrelevant, and the past 5 years should be a prime example of why.
I disagreed! "Real" return is irrelevant to many people.
My annual expense over the last 10 years had shown that the official inflation rate is irrelevant to me. Perhaps, you are one of few people that actually have their annual expense changes as per the official inflation rate.
KlangFool
Ok, let's do my aforementioned experiment. I'll get Jerome and the crew to print up a $20T bill and get you a 100% nominal return.
Meanwhile, I will ask for a modest 5% real return. Let's see who can actually consume more goods and services with that return?
I agree official inflation rates often fail to capture the real rate of inflation, and of course some people are more exposed to it than others.
But none of that negates the fact that only a real return can improve your purchasing power. Quibbling over how to measure the real vs nominal is beside the point
Society grows great when old men plant trees whose shade they shall never sit in
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
rogue_economist,rogue_economist wrote: Mon Feb 03, 2025 6:30 pm
Frankly that is so off the mark as to be amusing.
Ok, let's do my aforementioned experiment.
We do not need to do any experiment. We just need to know our own actual annual expense. The money printing has been going on for a while. it is nothing new.
It is very simple.
Is our own annual expense has anything to do with the official inflation rate? We just need to know and make our own adjustment to the nominal rate based on our own actual situation. This is a personal finance forum.
"I'll get Jerome and the crew to print up a $20T bill and get you a 100% nominal return."
It had happened to a certain degree in 2020. How much money supply was increased in 2020? What was the official inflation rate?
https://tradingeconomics.com/united-sta ... lation-cpi
https://fred.stlouisfed.org/series/M1SL
https://fred.stlouisfed.org/series/M2SL
https://tradingeconomics.com/united-sta ... -data.html
KlangFool
Last edited by KlangFool on Mon Feb 03, 2025 7:04 pm, edited 3 times in total.
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
KlangFool seems to believe (see quote below) that if someone manages to maintain or reduce their spending over time, then they are not affected by inflation.rogue_economist wrote: Mon Feb 03, 2025 6:30 pmFrankly that is so off the mark as to be amusing.KlangFool wrote: Mon Feb 03, 2025 6:20 pm
rogue_economist,
I disagreed! "Real" return is irrelevant to many people.
My annual expense over the last 10 years had shown that the official inflation rate is irrelevant to me. Perhaps, you are one of few people that actually have their annual expense changes as per the official inflation rate.
KlangFool
Ok, let's do my aforementioned experiment. I'll get Jerome and the crew to print up a $20T bill and get you a 100% nominal return.
Meanwhile, I will ask for a modest 5% real return. Let's see who can actually consume more goods and services with that return?
I agree official inflation rates often fail to capture the real rate of inflation, and of course some people are more exposed to it than others.
But none of that negates the fact that only a real return can improve your purchasing power. Quibbling over how to measure the real vs nominal is beside the point
KlangFool, you seem like a smart guy. I recommend reading about inflation and TIPS. You might end up slightly changing your investment strategy. Or not. But it's worth reading about; knowledge is power.KlangFool wrote: Tue Oct 15, 2024 9:29 pmWhy should this be true?blortchplop wrote: Tue Oct 15, 2024 9:18 pm If you have the same nominal dollar amount to spend every year, then due to inflation, you will be able to purchase fewer goods and services in future years. Perhaps you keep your spending the same, but you'll have to buy less of something in order to do so. This is a very standard take on inflation.
For example, in 2022, I pay off my mortgage. I no longer have to pay 15K per year on my mortgage payment. So, even with same nominal 60K per year of expense in 2023, I have more money to spend on everything else.
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Yes your own expense is going to be related to the official inflation rate in one form or another. Might be higher, might be lower. But unless you live in a yurt and forage for food, you will be impacted by monetary inflation. I don't really care if you want to use a customized inflation rate, go for it. Guess what, if you want your actual purchasing power to grow you still need that real return even if you think your particular basket of goods and services has a different inflation rate.KlangFool wrote: Mon Feb 03, 2025 6:52 pm
Is our own annual expense has anything to do with the official inflation rate? We just need to know and make our own adjustment to the nominal rate based on our own actual situation. This is a personal finance forum.
And I think we do need my thought experiment because it demonstrates why nominal returns are meaningless.
Society grows great when old men plant trees whose shade they shall never sit in
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
If you want to debate real vs nominal returns, start your own topic and don't continue to derail this one.
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Some of this is personal psychology. What helped me personally was making sure I was optimizing what I was spending, so “knew” I had reduced the waste. That then left me happy with balance, even though I was choosing to spend more for things I valued having, like fancy cheeses, etc.
For example, making sure I didn’t have unused/barely used subscriptions, cycling through streaming services instead of being subscribed to 5 at the same time, taking the time every year to get the lower comcast rate after internet promo reset, etc. Once you’ve gone through this once in depth it’s usually a quick check once or twice a year to keep things in check.
For example, making sure I didn’t have unused/barely used subscriptions, cycling through streaming services instead of being subscribed to 5 at the same time, taking the time every year to get the lower comcast rate after internet promo reset, etc. Once you’ve gone through this once in depth it’s usually a quick check once or twice a year to keep things in check.
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
TroyS wrote: Mon Feb 03, 2025 3:58 pmCan you say more about "how you were raised" part? Both of us came from a very stable and loving family. Growing up, we did not know we were poor but, now looking back, we were very very poor.simplesimon wrote: Mon Feb 03, 2025 3:34 pm
Probably because of how you were raised. Fortunately it is something you can work on and change. I did. Check out Ramit Sethi's content about money psychology.
How did the people that raised you talk about money and what did they do with money? Where are they now? If it's behaviors you admire, you might mirror their actions. If it's something you want to avoid, you might do the opposite.
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
There is something known as an anchor price. Basically you in your head think that things should cost x. When really cost is 2x
. It works in other ways you might have it stuck in your head that spending more then Y means you must be spending willy nilly but really Y buys a lot less then Y bought years ago.
Sounds like you are spending well within your means and it might be time to plan a monthly 4 day weekend
. It works in other ways you might have it stuck in your head that spending more then Y means you must be spending willy nilly but really Y buys a lot less then Y bought years ago.
Sounds like you are spending well within your means and it might be time to plan a monthly 4 day weekend
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Perhaps you think there must be some optimal practice to this financial stuff that you don't know about.
Perhaps you worry about keeping on track.
Perhaps you ingest too much news.
Perhaps...
Perhaps you worry about keeping on track.
Perhaps you ingest too much news.
Perhaps...
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
I think the best way to fix this is to stop tracking everything so closely. Once you reach the point where you’re writing things like 12x, 13x and 25x and 10 to 15 years, you’re pretty much toast. You’ve lost the plot. And you’ve got potentially 20+ years to endure the knots you’ve tied yourself up into. It’s not going to be any fun, the journey to financial nirvana.TroyS wrote: Mon Feb 03, 2025 3:13 pm In 2024, we managed to save about 1.3X our annual expenses. However, due to a permanent drop in income, we expect to save only 0.8X in 2025. Right now, we have about 12X saved, meaning we need another 13X to reach the "magic" 25X for financial independence. If the market stays relatively stable, we should be able to get there in 10 to 15 years at our current savings rate.
When I review our spending, there’s nothing I regret—if anything, I’d actually like to spend more on short weekend trips to nearby cities and parks. Yet, when I see our total annual spending well into the $200K, it terrifies me.
Why do I feel this way? Why do I worry so much, even though logically, I know we’re on track?
I have a theory that most people who reach FI (nirvana!) without the sorts of problems you’re having did it basically by accident. That’s how we did it. We never tracked anything nor did we even know what 25x meant until we’d surpassed it. The closer you track stuff the more stress you’re going to feel. It’s unavoidable. It’s an unnatural way to live.
The FIRE movement is causing so much pain and suffering in households all over the world. It’s a shame. The silly 4% Rule is something that we’d all have been better off without, especially when you consider such a low percentage of those who fully understands it would dare trust it with their life savings.
Being wrong compounds forever.
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Why do you feel a certain way? Hard to say. What is your experience with your own feelings and emotions? What normally causes you to feel a certain way? Do you want to change the feeling or learn to accommodate it?
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Would it make you feel any better to know that your spending (assuming you're not putting it up your nose, exploiting workers, buying elections, etc.) is much saner than hoarding money you'll never use, and that it contributes to the well-being of other people? More money in circulation is a good thing.
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Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Only KlangFool does savings rates based on expenses, so I’ll translate for everyone else. If I’m doing math right, in 2024, you spent $200k, saved $260k and have roughly $2.5m saved, on what was probably about $600k compensation. That’s a 43% savings rate. In 2025, you’ll spend $200k, save $160k, on an income of maybe $500k? That’s still a 32% savings rate.
Money is a medium of exchange for goods and services, not something that’s supposed to be hoarded for its own sake. You have a very healthy savings rate, despite living, I assume, quite comfortably. Just enjoy it. Continue saving, invest sensibly, make sure you have enough insurance, and enjoy the rest.
Money is a medium of exchange for goods and services, not something that’s supposed to be hoarded for its own sake. You have a very healthy savings rate, despite living, I assume, quite comfortably. Just enjoy it. Continue saving, invest sensibly, make sure you have enough insurance, and enjoy the rest.
Re: Our savings rate is reasonable. Why do I still feel guilty of our high spending?
Dad says "money can't buy happiness." Mom points out how the wealthy people are "filthy rich." Your friend says how wealthy people get that way by cheating and screwing others. The businessperson character on the television show is usually stereotyped as a piranha. Your folks tell you, "that's not the kind of people we are."TroyS wrote: Mon Feb 03, 2025 3:58 pmCan you say more about "how you were raised" part? Both of us came from a very stable and loving family. Growing up, we did not know we were poor but, now looking back, we were very very poor.simplesimon wrote: Mon Feb 03, 2025 3:34 pm
Probably because of how you were raised. Fortunately it is something you can work on and change. I did. Check out Ramit Sethi's content about money psychology.
Your beliefs are shaped or influenced by others during your upbringing.
We have what you might say is an internal thermostat regarding money. If we're cold we raise the temperature to heat the house. If we're hot we lower the temperature. Similarly, we spend as long as we're comfortable about it but if we spend too much, we get uncomfortable and seek to spend less, making these adjustments according to out internal money thermostat. But it's all very arbitrary. I'd say as long as you're covering your bills and having a good time with life and saving a bunch for the future, you're doing well. So getting used to spending more is a matter of adjusting your internal feelings about it.
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