Author Topic: How do I maintain momentum & lessen the pain of adopting new spending habits?  (Read 2744 times)

red_pill

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Hi all,

I found the MMM blog in December (approx.).  Since then I've had a number of accomplishments, but I'm at six months now and honestly I thought I'd be further ahead.  I'm not even striving for an ultra-frugal existence, I just don't want to be in this rat race forever.  Although I've slashed over $12,000 in annual spending, our lifestyle still costs around $100,000 per year (that does not include any savings or mortgage principle - that's just money out the door to sustain our lifestyle).  Yeah, I know - insane.

So, my question is: how long did it take people to go from Mr. Spendy McSpenderson to some semblance of actually rational behaviour?  How did you maintain momentum and not stall out?

I have pursued incremental changes in the hopes they would be more sustainable than yelling at my wife, "honey, I sold the car, from now on, we're Mustachians!"  But, still, each change is painful (in the short term, anyway) and takes quite a bit of work.  For each problem I have to:

1. identify the issue (hmmm, why do I have no idea what we spend on vacations every year?),
2. understand the underlying causation (oh, it's because I don't keep good records which lets me lie to myself about what I actually spend.)
3. implement a solution (guess I better create an autowithdrawal to a dedicated savings account), and then
4. adjust to the new reality (we don't have trip X in the budget, but I've never not done something I wanted, and it sucks depriving myself of this when before I wouldn't have worried about it...I guess I need to figure out what can we replace it with that fits the budget). 

It's HARD! Honestly, I didn't think it would be this hard.  Especially when I stumble across clear evidence of seriously deficient decision making skills, or have to confront years of stomach-churning waste, or realize I have to challenge deeply ingrained behavioural patterns that are based on social constructs that I have been mindlessly subscribing to.  Those are the worst! 

Can anyone offer some guidance on if this is to be expected?  I imagine it is similar to getting in shape where you just gotta know you're going to be sore for a while when you start exercising a new muscle.  Any strategies to lessening the pain?

I want to think that this is like when I cancelled cable tv - a bit of withdrawal but now I'll know I'll never go back and when I look at other people who watch 4 hours of tv a night it just seems strange to me.  Is that what my $100K per year lifestyle will seem like after this transition period (however long that will be)?

Any stories you can offer to bolster my motivation?



JLee

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Start one step at a time -- first, figure out what you spend.  Can you pull data from the last 3 months and build a list of what you have spent (and where)?

terran

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We just never really got started on the hedonic treadmill, so every step up the income ladder has come with more extravagances for us. We could have inflated our lifestyle a lot more so we're doing great on the savings front, but even so it's never been too painful because we've never had to go backwards on consumption. It's a heck of a lot easier that way.

How on board is your wife with this thing? If she's totally on board I think I would go scorched earth and cut EVERYTHING. Maybe do the Frugalwoods Uber Frugal Month Challenge. Then you'll see just how little you can do without and from there you'll have closer to the experience that my wife and I do in that you're just adding things (but less than you can afford) instead of slowly taking things away. I guess this is the rip off the bandaid approach.

Of course, if your wife is less than fully on board then that's probably a good way to get her to leave you. If that's more where you are, probably a process more like the getting your spouse on board sticky is the way to go: https://forum.mrmoneymustache.com/ask-a-mustachian/how-to-convert-your-so-to-mmm-in-50-awesome-steps/

Kyle Schuant

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You're approaching yourself in an adversarial way, which is depressing. Don't do that. You're doing an objective assessment.

Every dollar you spend, write it down. Obviously there are credit card bills to go through and all that, but maybe there's small stuff too that you can write in a notebook, coffees or filling a fuel tank. After a month or so you'll be able to see what the spending is each year.

You can put each bit of spending in various categories, like transport, food, entertainment and so on. Now you do two passes through. I like a spreadsheet so I can just select the stuff and move it to another column, I have three columns, "necessary", "desireable" and "waste."

The first thing to do is to stop doing the things you consider to be outright waste. That's usually going to save a heap. People will argue over what is and isn't wasteful, but there are some obvious things, like if you have a "no interest for 60 days" credit card, and you can actually afford to pay it off within 60 days but because you're not paying attention and planning your spending you don't - well, that's definitely wasteful.

Now you go through the things which are "desireable." That means you like having them but can live without them. If your income is $20,000 then you probably have to cut these entirely, if it's $200,000 then you can get rid of them, or you could just minimise them. Instead of 5 lunches out a week you have 3, that sort of thing.

If and only if these things are dealt with, you look at your necessities and reducing the spending on them.

What I want to stress is that it's up to you what is necessary, desireable and waste. For example, at one point I added it up and was spending $1,500 annually on coffees and sweet buns near my workplace. But this early morning stuff helped me get through my 0530 starts working at the gym and keep me perky enough that people wanted to do personal training with me at $80/hr - so for me it was worth it. For someone else it might not be.

The point of the exercise is not to spend no money at all, but to never spend money thoughtlessly. When spending, you should get something out of it.
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Sun Hat

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Kyle Schuant mentionned tracking your spending - I'll second that one. When I started tracking my spending, I deliberately didn't try to change my spending at first, since I wanted to see what my "normal" spending patterns were. I learned that I have really predictable weaknesses such as I buy fast food and get delivery much more often when I don't have anything yummy in the fridge at home.

I was able to pare down my spending quite a bit once I started paying more attention to my outlays. For a while, I worked in a building attached to a shopping mall. When I passed through the mall, I bought clothes, when I came to work via a different door, no shopping. I also never paid attention to my grocery costs, utility and other bills - they just were what they were. When I learned that I spent MUCH more than the average Mustachian on food, I became more deliberate with what I bought, and was able to slash my grocery bill in half without impacting the quality of my diet. Same with my entertainment costs - once I looked at what I spent and considered how much enjoyment I got from various activities, I prioritized the high-fun, low cost activities.

Learn what your spending habits are by tracking your outlays. Identify whether you can get similar or better value by tweaking your habits. If you identify an area where you spend more than you'd like, but don't know how to save on it, make a post to get oodles of specific advice. People here LOVE to share tips.
"You need a little bit of insanity to do great things." ~ Henry Rollins

datu925

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In the interest of demonstrating consensus - yes, track your spending. I've used mint.com for years, because it does a decent job auto-categorizing all electronic transactions, which for me (and ideally for you) is pretty much all spending. Then you will have easy source of evidence of what your problem areas are.

The necessity categories are housing/lodging, transportation, and food - you need to have some way of fulfilling these needs. Of course, there's tons of variation in how cheaply you fulfill them. Housing is usually the hardest to change in the short term, followed by transportation and then food, though it'll be a bit different for every person. Then there's more discretionary categories - entertainment, travel, etc. After a couple months of this, you'll have more information on where the greatest opportunities are and can act accordingly. You can also feel free to get started with your best guesses, though I really do recommend some kind of tracking that you can maintain perpetually - that helps a lot with the motivation. I review each month's spending at the start of the next month to see whether I want to make any changes (and because I find it kinda fun).

If you're comfortable with it, you can also share the details of this spending and get lots of well-meaning advice/facepunches from others on the forum.

I was lucky enough to find this blog first year out of college. That made it easier to resist lifestyle inflation and build habits more gradually. It is definitely much harder to get rid of things that are already in your life and not feel some sense of loss, worry that you're becoming stingy, etc.

One book that might provide some emotional support here is The Life Changing Magic of Tidying Up by Marie Kondo - I think the process of letting go of possessions has a lot in common with letting go of spending patterns. For instance, it's important to forgive yourself for past mistakes, appreciate the role the possession/spending has had in your life, and then use it as an opportunity to live more presently. You are trying to do the financial equivalent of a house clean, and you may find this book puts you in the right mindset for it.

MDM

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Kyle Schuant mentionned tracking your spending - I'll second that one.
Another vote for this.

One way is using a credit card for purchases instead of cash, then downloading and categorizing into something like Quicken. 

Of course, one way to restrain spending is to use cash instead of credit....

Note that both of the above mention "one way" so there are others.

As suggested in How To: Write a "Case Study" Topic,
Quote
Aim to have ďMiscellaneousĒ somewhere ~2.5%.  Much lower and you may be providing too much detail, much higher and you have an obvious problem of not understanding your spending.

Kyle Schuant

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Again, this is not about abusing yourself, nor praising yourself. It's simply objectively measuring things. As the saying goes: measure twice, cut once. This isn't carpentry but finances, so the first measuring is simply noting the number, the second measuring is assessing if what you get from that spending is worth it to you, or if you could get the same or better result with less. That's the cut. And again, this will be different for each person.
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red_pill

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Some very good feedback. 

To address some questions - My wife is not a jump into things with gusto kinda lady.  But, lucky for me, sheís not high maintenance in the clothes etc department and couldnít give a shit about what people think of her. (I cherish that woman).  So, no big sell job needed on the wife front but Iím also not sure how far sheíll go with things (Iím not sure how far I want to go for that matter)

Our income is $170,000 take home, with $30,000 going to mortgage principle (will be paid off this year) and savings. We have (on paper), $40,000 buffer that just seems to have vanished in previous years. But, I now have tracking mechanisms in place to correct that going forward. So, yes, I am tracking and now have categories of spending set up. Like everyone is saying, just tracking in and of itself yields benefits.  But Iím finding that shining the light of truth on my spending has been an unsettling exercise - the cold, hard truth is that Iíve pissed away boatloads of cash while convincing myself Iím frugal. It has been an uncomfortable realization and one that Iím still trying to wrap my head around.

We donít drink, donít eat out, arenít clothes people.  But pricey  vacations. A way too fancy car.  Expensive recreational  activities.  Weíre all over that shit.  The challenge is that we *can* afford them (according to conventional thinking anyway) So my struggle is rationalizing cutting these things when I donít ďneed toĒ and when we are doing great financially according to conventional rat-race thinking. Get what Iím saying? 

Itís like Neo waking up from the matrix and realizing he was living a lie. 

lhamo

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Heartily endorse the idea of tracking your spending more diligently, even if you don't make any immediate changes.  You can't fix a problem you don't understand.

Another excellent strategy is to find lower cost but still high quality ways to replace some of your high spending habits.  Start a friends and family potluck or barbecue night at your place once or twice a month rather than going out for an expensive meal -- even if you host it, it will probably cost less than eating out, and you'll have a more relaxed time.  If everyone enjoys it, see if others would be willing to rotate hosting duties.

Same with vacations.  Instead of an expensive trip involving flights and hotels, try a "staycation" close to home -- buy a parks pass and go on day hikes every day for a week.  Or borrow camping equipment and see if your family likes it. 

You can trim a LOT off of ridiculous grocery bills by simply being more careful/mindful of sales when you shop.  Make your weekly meal plan AFTER consulting the sales fliers -- focus on meals based on loss leader items. 
Wherever you go, there you are

Kyle Schuant

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Again, it's your money, your choice. But choices should be informed choices. You never have to FIRE at all if you don't want to. But supposing you do, the choice may be: FIRE in 20 years with vacations overseas, or FIRE in 10 years with vacations in-country, or FIRE in 5 years with no vacations at all. All those are legitimate choices, because it's your money.

But until you look at the numbers your choices are not informed.

As for your wife, all relationships work better when you discuss things and agree on the general direction you're going together, even if not on all the specific details. Scott Pape of Barefoot Investor fame has a slightly different approach to MMM, but they would agree on: have a monthly "date night" where you sit down together with the finance numbers and discuss things. Talking about finances doesn't seem very romantic, but one of the leading causes of divorce is financial stress, so indirectly it's very romantic indeed - and anyway the conversation shouldn't take three hours, so you deal with the money nonsense and then start talking dirty to each-other, or about stamp collecting, or whatever you're into.
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Villanelle

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Some very good feedback. 

To address some questions - My wife is not a jump into things with gusto kinda lady.  But, lucky for me, sheís not high maintenance in the clothes etc department and couldnít give a shit about what people think of her. (I cherish that woman).  So, no big sell job needed on the wife front but Iím also not sure how far sheíll go with things (Iím not sure how far I want to go for that matter)

Our income is $170,000 take home, with $30,000 going to mortgage principle (will be paid off this year) and savings. We have (on paper), $40,000 buffer that just seems to have vanished in previous years. But, I now have tracking mechanisms in place to correct that going forward. So, yes, I am tracking and now have categories of spending set up. Like everyone is saying, just tracking in and of itself yields benefits.  But Iím finding that shining the light of truth on my spending has been an unsettling exercise - the cold, hard truth is that Iíve pissed away boatloads of cash while convincing myself Iím frugal. It has been an uncomfortable realization and one that Iím still trying to wrap my head around.

We donít drink, donít eat out, arenít clothes people.  But pricey  vacations. A way too fancy car.  Expensive recreational  activities.  Weíre all over that shit.  The challenge is that we *can* afford them (according to conventional thinking anyway) So my struggle is rationalizing cutting these things when I donít ďneed toĒ and when we are doing great financially according to conventional rat-race thinking. Get what Iím saying? 

Itís like Neo waking up from the matrix and realizing he was living a lie.

If you aren't interested in going super-Mustachian, I'd probably look at those major categories and make changes there.  Sell the fancy car and buy something modest and drive it for 10 years. 

Set a vacation budget for the year, and stick to it, no exceptions. Perhaps you make every other year a big year (whatever that tends to mean for you, but cut slightly) and then the off years you stay semi-local and stay in moderate hotels.  It's hard to give specific advice without knowing what kinds of things you are doing and how often, but something along those lines allows for cuts without the sense of deprivation that comes from restricting yourself to never going on another Western European adventure (or whatever)

 Look at the recreational activities, keep a couple, ditch the rest, and find ways to make those you keep cheaper. (And look around for some cheaper hobbies to fill the time.) 

Do those three things.  If you aren't looking to get down to a $35k spend, that's going to be far more effective than calling around to save $200 a year on car insurance or cutting your grocery bill by $50/mo.  And it will be less overwhelming than suddenly evaluating every single category or spending. 

It sounds like you know where you are really overspending, so focus on those three area.  Tracking your spending makes sense, but you don't sound like you are looking to optimize every penny, so just go for the low-hanging fruit. 


MonkeyJenga

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We donít drink, donít eat out, arenít clothes people.  But pricey  vacations. A way too fancy car.  Expensive recreational  activities.  Weíre all over that shit.  The challenge is that we *can* afford them (according to conventional thinking anyway) So my struggle is rationalizing cutting these things when I donít ďneed toĒ and when we are doing great financially according to conventional rat-race thinking. Get what Iím saying? 

I would suggest reading this post.

https://www.mrmoneymustache.com/2012/09/18/is-it-convenient-would-i-enjoy-it-wrong-question/

This is the "jump to the end" part, but worth reading the whole thing:

Quote
You just need a new definition of ďcan I afford it?Ē

If you still need to work for money, or at the very least, if youíre not saving at least 50% of your take-home pay, you can not afford it. Where ďitĒ is anything.

In certain cases, you will still buy things you canít afford. Groceries are a good example. A bike is another one, because like all good investments it earns you money rather than costing you. Housing, clothing, and plain old FUN with your friends and family are also things worth buying when you canít afford them. But your decision-making process will simply be made differently Ė youíll be maximizing the Lifetime Wealth delivered by each spending decision, rather than the convenience or short-term pleasure.

Youíll have more fun in both the short term and the long term. You just wonít have as much of that catheter-and-bedpan ďconvenienceĒ weíve all been spending our money on up to this point.

Only by gaining control of your mind and the conveyor belt of false desires it serves up, can you get true freedom in your life. Freedom, unlike convenience, can really bring happiness. Itís a bit dizzying, and maybe even a bit difficult. But once again, it is the good kind of difficulty.

So who is up for some difficulty?

red_pill

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@Kyle Schuant - you're dropping some knowledge bombs here, brother!

Okay, so I am on the right track.... I am actually tracking our expenses now, with the primary goal at this point being just to have some honesty about what we are spending and where.  Like has been said, maybe at the end of this exercise we'll decide not to cut a single thing, but at least it will be a conscious choice instead of mindless consumption. 

But, we have found some areas to target for reduction, and are chipping away at them.  We have a menu / grocery shopping meeting before we buy groceries now and actually make a list (to combat our $400 per week bill for 4 people).  For the last few weeks, we have had a budget meeting before payday to decide where we want our money to go (although we have blown some of our budget categories, I'm still counting it as a (small) win because before I wouldn't even have been tracking it and wouldn't have even known of the impact.) Growing pains in this regard for sure, but progress none the less.

At the risk of straying into case study territory, since you've all been so kind to offer me great feedback, I'll attach our annual income / spending to satisfy some questions.  The things crossed out are changes I've made since engaging in this exercise.  Feel free to eviscerate !

Gross Salary:
Me: $128,000
Wife: $105,000

Pension Contributions:
Me:  $12,600 / yr   Employer Contribution: $12,600 / yr
DW: $10,350 / yr   Employer Contribution: $10,350 /yr

Federal Taxes & Social Security Deductions:
Me:  $32,100
DW: $71,450

Take Home:
Me: $83,300 + $16,000 net bonus
DW: $71,450

Total (after taxes & deductions) cash inflow = $170,750

PROJECTED ANNUAL EXPENSES FOR THE NEXT YEAR:

Housing
Mortgage Principal   $26,500  (And that's the entire balance of our mortgage!)
Mortgage Interest    $464
Property Tax           $3,480   ($290 / month)
House Insurance   $1,644 $1,500  ($125 / month - reduced by $144/yr by raising deductible etc)
Electricity:            $1440  $720 ($60/month - 50% reduction through tracking and small changes)
Natural Gas:     $720  ($60/month)
Utilities:         $600  ($50/month)
Internet / home phone:  $1,400 $1,200  (found a better cheaper package, could cancel the phone for another $120 off)
Netflix:       $130  ($11/month)
My cell:      $900  ($75/month - on contract for 7 more months, then can change plans)
DW cell:     $600  ($50/month)


Transportation:
Car lease:        $5,880 ($490/month - see notes below)
SUV depreciation (approx):  $3,000   ($250/month)
Parking:    $1,840 $920  ($76/month - started commuting together with wife)
Gas:  $4,500  $3,900   ($325 / month - same as above, shared commuting saved 144 km / week of driving)
Car insurance:   $2,150   ($180/month)
SUV insurance:  $2,150   ($180/month)


Recreation:
Family Crossfit:       $3,600  ($300/month)
Boxing gym:  $1,300   ($108 / month - cancelled post MMM)
Kid's circus classes:  $2,820  $2,220   ($185/month - reduced from 2 nights per week to 1)
Kid's BJJ:  $960   ($80/month)
Kid's music:  $720  ($60/month)

Other:
Housecleaning:  $2,400  ($200/ month) - cancelled because I actually like cleaning
Banking Fee:  $180  ($15/month) ) - turns out we qualified for free banking if I got a slightly different account
Childcare:    $11,000 $8,250  ($950/month over summer, $500/month in school year, reduced with scheduling juggle)
Life Insurance:  $2,800   ($233/month)  (mix of work group plan and personal term insurance.  We are probably over-insured, but I'm scared to touch it.)
Kid's education fund: $2,400  ($200/month - RESP, so 20% additional contribution from gov't.) 
Groceries:      $20,800  ($400/week - currently focus of BIG reduction efforts, standby on this front)
Cash spending: $13,000  $10,400  (we went to a cash system for restaurants, clothing, and personal expenses because we found that we spent way less with cash than on plastic.  But, we usually don't spend it, often don't take cash out the week after because we still have a bunch in our wallets, and then use that as an excuse to overspend in other areas)

Stuff I didn't track before so this is an estimate:

Home improvement:  $6,000 ($250/biweekly)
Vacations:  $10,400  ($400 biweekly - have a big tropical trip this year)
Kid clothes and stuff:  $1,200   ($100/ month - this is probably an underestimate)
Gifts:  $1,200 ($100/month - I'd say this is for Christmas, birthday parties, etc.  I bet if we included Mothers Day and anniversaries it's more than that. Damn, I'm lying to myself again.)


Total Spending:  $99,300
Total Forced Savings:  $29,700
Into the Black hole:$41,600  (not all of it, we usually double up our mortgage payments most weeks, but beyond a very low mortgage, I don't have anything to show for this.)

ASSETS:
Cash:  $10,000
House:  $960,000 (assessed value.  no, I didn't pay anything close to that for it.  It's no mansion - 2700 sq ft. HCOL area.)
Kid's education fund: $36,000
My pension: Defined benefit that will pay out approx NET $65,000 / year in 2025 if I work until then.
DW's pension: Defined benefit that will pay out approx NET $40,000 / year in 2021.
Total after-tax pension income = $105,000

LIABILITIES
Mortgage:  $26,400 (yay!)
Credit Card:  $0
Line of Credit:  $0

VEHICLES:
2011 Santa Fe w/ 101,000km (value = $10,000)
2017 Audi A3 with 35 months lease remaining  (My albatross.  This was a present for my wife for going through breast cancer. After we finished treatment we went a little nuts and actually ran up a lot of debt which is odd for us. We had a "now or never" mentality.  That has waned thankfully as we put that awful year behind us, and now we regret the car. It's fun as hell to drive, but it's not very practical and is a gas pig.)

Because the Audi will come up as an obvious area of analysis for you eagle eyes, the buyout on it would be $36,000 plus $4,000 tax.  The trade-in at a dealership would be $30,000 plus a tax credit on whatever I bought next for $3,600.  Or I could sell it privately for maybe $36,000.  Either way, the "get rid of it" equation seems to be, can I replace it with something that will save me more than the $6,400ish I would lose in ditching it now.  Cashflow wise I don't need to sell it.  My wife wants to sell it now with a brand new electric vehicle. To me, the big move would be to go down to one vehicle. I've thought about maybe posting this as a question.


Anyway, you can see above where I've made progress, where I've stalled out, and where I have blindspots and am not seeing obvious solutions. 

Punch away.

 



SoftwareGoddess

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Electricity:            $1440  $720 ($60/month - 50% reduction through tracking and small changes)
Natural Gas:     $720  ($60/month)
Utilities:         $600  ($50/month)
Internet / home phone:  $1,400 $1,200  (found a better cheaper package, could cancel the phone for another $120 off)

Just curious: since you have broken out electricity, natural gas, and internet, what is "Utilities"? Water and sewer?
"It's not the 80s. Nobody says 'hack' anymore."

red_pill

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Electricity:            $1440  $720 ($60/month - 50% reduction through tracking and small changes)
Natural Gas:     $720  ($60/month)
Utilities:         $600  ($50/month)
Internet / home phone:  $1,400 $1,200  (found a better cheaper package, could cancel the phone for another $120 off)

Just curious: since you have broken out electricity, natural gas, and internet, what is "Utilities"? Water and sewer?

Yes, exactly.

Miss Piggy

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red_pill, what is your ultimate goal with this change in spending/saving?

In our family, the mantra goes something like: "We're going to say no to this because we have a bigger yes."  With that frame of mind, what's your "bigger yes"? For us, first it was paying off our mortgage while still maxing out both of our 401ks. Done, and I have no regrets about it. Now, it's retiring before I turn 50. That's a way bigger yes than 98% of the crap we could be spending our money on. (We could FIRE today...just getting out some OMY (one more year) kinks.)

I find it FAR more satisfying to track our savings instead of tracking our spending. The mantra above ensures that we make smart decisions with our money, so tracking our savings helps the spending sort of "take care of itself." Many people, on the other hand, benefit more by tracking their spending; I just don't find it to be motivating. If you're good with Excel, you can make graphs that show your spending going down and/or your savings/investments going up. The visual effect of that is addicting and rewarding, because you want to keep seeing more of the same. That's what works for me, anyway.

Sorinth

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Some very good feedback. 

To address some questions - My wife is not a jump into things with gusto kinda lady.  But, lucky for me, sheís not high maintenance in the clothes etc department and couldnít give a shit about what people think of her. (I cherish that woman).  So, no big sell job needed on the wife front but Iím also not sure how far sheíll go with things (Iím not sure how far I want to go for that matter)

Our income is $170,000 take home, with $30,000 going to mortgage principle (will be paid off this year) and savings. We have (on paper), $40,000 buffer that just seems to have vanished in previous years. But, I now have tracking mechanisms in place to correct that going forward. So, yes, I am tracking and now have categories of spending set up. Like everyone is saying, just tracking in and of itself yields benefits.  But Iím finding that shining the light of truth on my spending has been an unsettling exercise - the cold, hard truth is that Iíve pissed away boatloads of cash while convincing myself Iím frugal. It has been an uncomfortable realization and one that Iím still trying to wrap my head around.

We donít drink, donít eat out, arenít clothes people.  But pricey  vacations. A way too fancy car.  Expensive recreational  activities.  Weíre all over that shit.  The challenge is that we *can* afford them (according to conventional thinking anyway) So my struggle is rationalizing cutting these things when I donít ďneed toĒ and when we are doing great financially according to conventional rat-race thinking. Get what Iím saying? 

Itís like Neo waking up from the matrix and realizing he was living a lie.

The biggest trick is to avoid lifestyle inflation, you may have missed the boat on that one but you also have a great opportunity ahead of you. When the mortgage is paid off you'll have a lot more money, it's key that this isn't lost to lifestyle inflation.

You might already have access to several years worth of your spending through your bank. You should be able to get a copy of all your transactions for a certain amount of time, I think I got something like 7 years of data exported to an excel sheet using internet banking when I started digging into it.

It might be a bit painful at first to go through it all. But that's also a good exercise to do as a way of figuring out which trips/spending you actually enjoyed and which didn't live up to the price tag. That should help avoiding spendy mistakes that you won't really enjoy anyways.

terran

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So it sounds like you'll have around $73k expenses once your house is paid of, $45k pension starting in 3 years and another $65k pension starting in 8 years? How confident are you in the health of the pensions? Are they inflation adjusted? What happens to the $65k pension if you stop working earlier (all or nothing vesting or will you get some part of it)? What other large expenses (like kids college) are you planning to pay for? How would you feel about moving to a lower cost of living area once you stop working and taking some of the equity from your house?

It sounds like you mostly need to cover any large expenses like college, and then save up enough to pay for any time between when your pension starts and when you retire, any shortfall in your pension from stopping work early and to cover cost of living increases if your pensions are inflation adjusted. Those pensions seem to mean you don't really need to save up that much or cut that much.

Allie

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Like @Miss Piggy said, you have to frame it as working towards something!  That goes for both the money you aren't spending and the things you are giving up.  Because you aren't just not spending, you are saving for a bigger goal.  Along those lines, you aren't giving things up, you are choosing other activities (and food and exercise and vehicles and on and on) that align with your goals and provide you with different (in fact often better) experiences. 

At some point your thinking will shift from "I guess I'll give up this thing I enjoy..." to things like, "I'm so happy I found this awesome recipe because it's filling and delicious!" Or "Thank goodness I found the local buy nothing group and will no longer be using my dollars for _____!" 

It just takes time and lots of exploring. 

It's kind of a fun process of figuring out what you are getting out of each previous choice you made and figuring out if there is a better way to get that need met.  So, if you like vacations, think about what you get out of them.  Is it the forced (cause you are usually busy) family time?  The adventure?  Exploring new cultures?  Getting away from responsibility?  Getting pampered?  Are there are ways travel that can meet these needs without a spendy vacation on a tropical island?  If the answer is genuinely no, then look into ways to travel hack the spendy vacation.

Plus, if you can start to distill out what you are getting out of your spending choices, you can find ways to meet those needs more regularly in everyday life!  For example, I love traveling to new places and experiencing different cultures.  This has been limited by having small kids, but there are other ways to meet this need right now.  I can also do this by learning new cuisines (YouTube is amazing for cooking tutorials from other places - hot Thai kitchen taught me all sorts of Thai recipes a couple years ago that are awesome!) or practicing new languages (mango is available for free through our library - I've started to learn Korean phrases cause my son's friend has a grandmother who only speaks Korean) or minimizing our stuff (we just returned from a trip and being in a hotel where things were sparse has reenergized me to minimize my life, which leads to that clean, simple, feeling where I can spend more time on fun stuff and less time on chores!).

Just keep taking stock and posting here, there are so many amazing ways to get things done that don't involve lots of cash!

koshtra

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Yeah, you really need the "bigger yes" to be clear in your mind.

I was reading MMM for about a year, and lurking here in the forum for six months after that, before I started making the really important changes. It really is a huge shift and for most of us it doesn't happen overnight. I'd say that you are, if anything, ahead of schedule -- you're moving faster than I did, anyway.

And again, the point is not to suffer: the point is to get off the hamster wheel. I've been amazed at how fast I've adjusted to things like taking transit and cooking my own meals. I've changed a bunch of decades-ingrained habits -- and I'm just fine. I'm just as happy/unhappy entertained/bored as I was before. Those responses really do just tune to the new normal.

red_pill

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Thanks, all - you are really helping me clarify my thinking on this.

The WHY has been the topic of discussion for the last few date nights.   There are a few parts to it. 

A) Get out of the city, ideally to some smaller town coastal living (this creates a financial opportunity as we will sell the house and downsize).

B) Get out of this 9 to 5 working for the weekend BS that we are in now.  We loathe traffic, and resent fighting crowds on weekends. We hate the feeling that we're just more chumps who are too stupid to get out of the rat race.  I've had a lot of that feeling lately.

C) Adventure, but not having to wait for our rationed vacation time to find it, but rather have it closer at hand and in greater quantity.  For now, this need is met by our our trips. We aren't go-to-Vegas-and-hit-the-spa kind of people. We are find a shack on the beach or in the mountains kind of people.  What I've noticed is that when I'm doing things that are consistent with my values, I don't worry about what it's costing as much.  But that trip to Vegas we took - different story. 

D) Security for ourselves and our child.  My parents have very few resources, and I don't want that to be me.

E) Environmental.  We know the average North American lifestyle is unsustainable, so we have to change cultural norms to something that is.  Part of that is changing our individual behaviour which will then influence others to do the same. That's a big draw for us.

F) Freedom.  A guy at work has been toiling away for 35 years. When I asked him why he said he couldn't afford to retire, even though he hated work. That scared the crap out of me.  I want to work because I want to be there, not because I have to be there. I want the freedom to explore other things in life.

G) (partially)  The intellectual challenge of finding optimal solutions and (if I'm honest) the resulting bragging rights from implementing them.  For example, I slayed my electricity bill by 60%, and it was already way lower than my neighbours.  The other day my neighbour was complaining about his $500 bill he just got and asked how much mine was. I said it was around $50 and his jaw dropped.  Kind of made me snicker a little.  It's just fun to see how low I can get it. So there's an aspect of that in there as well. 

Hmm...kinda interesting to actually list it out like this.  I'm going to show this to my wife and see if we can clarify it some more, and really make it "tangible".

But one thing that we have also talked about is not being so intent on the future that we wish away the present, or grow resentful of our current situation.  We had a glimpse of how quickly things can change, and we want to make sure we are living in the present.

Would love to hear some thoughts on this....

red_pill

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So it sounds like you'll have around $73k expenses once your house is paid of, $45k pension starting in 3 years and another $65k pension starting in 8 years? How confident are you in the health of the pensions? Are they inflation adjusted? What happens to the $65k pension if you stop working earlier (all or nothing vesting or will you get some part of it)? What other large expenses (like kids college) are you planning to pay for? How would you feel about moving to a lower cost of living area once you stop working and taking some of the equity from your house?

It sounds like you mostly need to cover any large expenses like college, and then save up enough to pay for any time between when your pension starts and when you retire, any shortfall in your pension from stopping work early and to cover cost of living increases if your pensions are inflation adjusted. Those pensions seem to mean you don't really need to save up that much or cut that much.

Great questions!

The pensions are federal government pensions, so I would say they are on the upper end of the stability spectrum.  I don't want them to be the only thing I'm relying on, but I'm not about to start stocking gold and silver in a fallout shelter in my back yard.   They are fully indexed after an "85 factor" (years worked + age = 85).  So for us, because we will retire at age 48 with 25 years work, they will be set for 12 years...and then when we hit 60 they will "catch up" and then be indexed after that.  So 12 years of declining buying power.

My wife will certainly work another 3 years.  I could consider leaving early, but each year I do is a 5% reduction in pension.  Ouch.  Plus, my career trajectory is such that if I do the next 7.5 years I could get another few pay bumps (the pension is based off your best 5.)  That means I could retire at 48 with a damn fine pension.  And, if I'm still working of course she has the option of continuing working, accruing an additional 2% of her salary to her pension each additional year she works.   Maybe there's a sweet spot in there where her pension accrual makes up enough that we could survive my pension penalty for leaving early.

Yes, moving to a LCOL is absolutely in the plans!  So I will be able to reduce our costs while also freeing up some capital.

Our kid's university fund should be $50,000 by the time she hits that age.  That's pretty healthy for Canadian tuition costs, but I'm not going to say that's all we will end up contributing. 

Is there anything else I need to be calculating at this point?

Yasha

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I am in no way an authority on the subject (just look at my post count! mega newbie!) but some things that jump out at me:

- Crossfit: is this negotiable at all? Do you get a referral bonus? Can you request a loyalty discount? Also, the 'family' bit - does this mean your kid is doing crossfit, circus, AND BJJ? Is that a double/triple up?
- Yay carpool! Now that only one car is leaving the garage can the stay-at-home car be insured for less?
- Groceries (yikes, and we are at a similar face-punching level!) one of my co-workers is doing an "Act for Peace" challenge where for a week she eats only the same rations as a refugee, and tries to fundraise in that week - is there a similar challenge you could do to make it 'fun' to reduce your grocery spend? I have been using the grocery loyalty points pretty firmly as well, if I can get $20 a month off just by remembering to swipe my loyalty card then that's a win... another thing worth checking is food wastage - do you throw out a lot of groceries each week/month? Can you join the 'eat everything in your house' challenge for a month, or try to have as close to $0 grocery spend for one week to see what you really actually need (I'm planning to do something like this).

Regarding the 'black hole' - yikes! If you can find just half that money then your mortgage will be paid out in six months! Some thoughts as to where it could maybe be going...

- Lunches out (parents and kidlet), snacks at the gas station, coffees at work meetings
- How often do the kids get pocket money? what are they spending it on?
- Kids clothes, you mentioned this is an area where money might be disappearing - is there a good second-hand shop option? Could you get gently used hand-me-downs from an older cousin etc?
- When the kid is at circus/BJJ/music practice what is the taxi-parent doing? Drinking bought coffee/eating at the next door coffee shop/ going into the local shopping center to use that time 'effectively' aka spend heaps of money on 'groceries' because they are bored?
- Any pets?
-Medications for DW's recovery?
 
« Last Edit: June 03, 2018, 10:28:00 PM by Yasha »

red_pill

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I am in no way an authority on the subject (just look at my post count! mega newbie!) but some things that jump out at me:

- Crossfit: is this negotiable at all? Do you get a referral bonus? Can you request a loyalty discount? Also, the 'family' bit - does this mean your kid is doing crossfit, circus, AND BJJ? Is that a double/triple up?


Yes, the kid  does all three. And sheís a BEAST!   The crossfit is for me, my wife, daughter and our 19 year old live in au pair.  The au pair is going back to germnany soon and Iím thinking of switching g things up a bit and might axe the crossfit for a bit.

- Yay carpool! Now that only one car is leaving the garage can the stay-at-home car be insured for less?

Yes and no.  I did decrease the insurance on it to eliminate the commuting but the insurance to allow the au pair to drive was added on. So it was a wash.  Good grab, though!


Regarding the 'black hole' - yikes! If you can find just half that money then your mortgage will be paid out in six months! Some thoughts as to where it could maybe be going...

- Lunches out (parents and kidlet), snacks at the gas station, coffees at work meetings
- How often do the kids get pocket money? what are they spending it on?
- Kids clothes, you mentioned this is an area where money might be disappearing - is there a good second-hand shop option? Could you get gently used hand-me-downs from an older cousin etc?
- When the kid is at circus/BJJ/music practice what is the taxi-parent doing? Drinking bought coffee/eating at the next door coffee shop/ going into the local shopping center to use that time 'effectively' aka spend heaps of money on 'groceries' because they are bored?
- Any pets?

Yeah no shit itís a black hole of epic proportions!  Itís not all flushed away, a lot of it went to mortgage prepayments (15 year mortgage done in 8).  . For the insane amount of spending we manage to churn out we donít eat out hardly at all (as in maybe once every two months), my wardrobe sucks, my wife buys hers second hand (higher end stuff but still).  As best I can tell itís short trips, crap for the house that we donít need, and probably kid stuff.  And just the death by a thousand cuts - little overages here and there that add up on top of regular larger purchases done on a whim.  Youíd think I would have something to show for it - nice furniture, custom garage shelves....something.  But nope. Just a big question mark of where the hell did it go?  Must have seemed like a good idea to spend it at the time. But sure as hell couldnt tell you now. (In fairness, too, our income has increased by about $20,000 over the last year and I did cut $10,000 from last years spending so the black hole wasnít as big as Iím making it out to be. But itís still a damn pit of quicksand.

Villanelle

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Why have you decided to pay off your mortgage?  I know this is a topic of intense debate around her.  While the numbers are almost always in favor of keeping it (you don't list an interest rate unless I missed it, and I have no idea what those look like in Canada), I can see the argument for the other, less rational side as well.  However, in your case where overspending is a problem, it seems even less justifiable.  After this year, you are going to have an extra $26k available to you annually.  Can you really be certain that money isn't just going to get swept up into those mystery expenses you can't name?  Or that you aren't just going to look at your increased savings rate, decide than an extra $10k going to investments is great!, and then spend the rest?

I think if you are hell bent on paying off the mortgage even though it probably doesn't make financial sense, you need to 100% commit to taking the entire amount you spent on that this year (interest and principal) and automating an monthly investment in that amount, or it will just get folded into the black hole and become another rationalization for continuing your mindless spending.

Also you might benefit from running some numbers.  If we save X per year, at our current spending levels of A we can retire in 20XX.  If you increase that to Y savings, that means we decrease spending to B, which means retirement in 20YY.  And increasing to Z by decreasing spending to C means we can reture in 20ZZ.  Make it concrete.  Another $5k saved per year grows the savings faster and reduces the amount needed in retirement.  Knowing that it buys you about X years can be pretty good motivation.   

flower_girl

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Great thread.  Miss Piggy, I love your idea of tracking savings, not just spending.

red_pill I too was going to say,  as others before me now have,  that I think it's important to know exactly what you're aiming for, not just giving up and you've given us a great list there now.

Also yeah, I know all too well that feeling of now going "oh lordie, how could I have been so STUPID wasting all that money on xxx" or not saving enough when I was younger etc and feeling like I want to beat myself up, but in the words of the late, great Maya Angelou "when we know better we do better".  You don't know what you don't know - so maybe think of the past as a school and congratulate yourself that you now have a much better plan!

You're being very thoughtful about this now and as Kyle so eloquently said that is really the key element of this, ergo taking control, well done!

Malkynn

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Okay.... here goes

You seem to be missing the most important point of this whole thing...
This is about living your best life.

When you are high income, itís very easy to fall into a logical trap that your best life includes expensive luxuries because you ďcan afford themĒ. Except that what you ďcan affordĒ is completely predicated on how much you want to work, not what you can earn in a given year.

It all depends on what your yard-sticks of value are.
What matters most to you? And what does that cost?
Money isnít anything in and of itself, itís a representation of time and energy whose values change as you age.

To put it simply: everything is a trade off.
Mustachianism is about negotiating every trade off to get the best deal for your particular circumstances. For every single cent you spend, you need to evaluate the time/energy/money exchange and decide if the trade is worthwhile.

For high income earners, this is a very big question because the possibilities are tremendous.
If your household income is over 200K, you can afford almost any luxury you want short of mega-rich territory stuff like private planes.
You *could* afford a huge luxurious 1M+ house, an Astin Martin, luxury travel, high fashion, expensive restaurants, wine collections, private school for your kids, a country home, a huge retirement nest egg, or an extremely early retirement, or fund some amazing projects, or buy a seat on an important committee, etc, etc...you just canít afford them all. You have to choose.

Okay, so you like expensive activities and expensive travel. Thatís cool.
Do you like it more than every other single thing that that money could buy you? Is it more satisfying than any alternative including more free time? Earlier retirement? Literally everything else in the world?

The statement ďI can afford itĒ directly translates to ďIím happy to work more for itĒ not ďoh well, Iím working super hard and generating this income anyway, so I might as well spend some of it to make the whole thing worthwhileĒ
See how insane the second one is when you actually look at it???

This is where you need to know yourself.
You need to know your own needs and values to be able to use your big incomes to craft your best life because if you piss away your money, you are pissing away your time, your energy, and all of the incredible opportunities that go along with your situation.
The opportunity cost of your current lifestyle is astronomical, and you donít even feel like you live a rich or spendy life! Do you see how crazy that is?

Itís not about not spending.
Itís not about adjusting to depriving yourself of things.
Itís not about learning to live on less.
Itís about learning to live more, learning what truly makes you happy, and using the time/energy/money balance to generate the best life possible.
You have every resource at your disposal to live amazingly well and you are wasting it.

One of the most valuable messages that MMM has shared is that your best life probably doesnít cost nearly as much as your mediocre life.

Personally, I make more money than you do, but it takes something pretty fucking spectacular to get me to part with my cash. Iím not cheap, Iím just a snob about spending. My bar for spending is very high. Iím not at all the most frugal person, I spend on plenty of things that others wouldnít, but they are things that matter to me. They have value disproportionate to their cost in terms of time/energy/money/opportunity cost for me personally. I feel very good about everything I spend on. If it doesnít feel like Iím getting an amazing deal on the trade-off, I donít make the trade.

Hold your life to a higher standard and you wonít find it a struggle to spend less.





Freedomin5

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If you havenít read Your Money or Your Life yet, I would strongly recommend it. It suggests three questions to ask yourself before any money leaves your hands towards a purchase:

1. Did I receive fulfillment, satisfaction, and value in proportion to the life energy spent?
2. Is this expenditure of life energy in alignment with my values and life purpose?
3. How might this expenditure change if I didnít have to work for money?

First, calculate your real hourly wage. Not your salary divided by number of hours worked. You need to deduct all work-related expenses (work clothing, commuting costs such as car maintenance and gas so you can drive to work, income taxes, eating out because too tired from work to cook, etc.) from your net salary. Your real hourly wage will likely be surprisingly low. Mine is $35/hr even though my firm charges consulting clients over $300/hr.

Then you convert that to life energy. So for me, every dollar is worth about 2 minutes of life energy. That is, given my real hourly wage, I need to work 2 minutes for every dollar I spend.

Before every purchase, I convert the price into life energy units. So for example, if I want to buy an iPhone X for $1000, I ask myself if it is worth 2000 minutes (33.3 hours or around one week) of my life. Basically, am I willing to give up one week of my life for an iPhone X? If the answer is yes, then I buy it.
« Last Edit: June 04, 2018, 06:40:50 AM by Freedomin5 »

Linda_Norway

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<...>

Personally, I make more money than you do, but it takes something pretty fucking spectacular to get me to part with my cash. Iím not cheap, Iím just a snob about spending. My bar for spending is very high. Iím not at all the most frugal person, I spend on plenty of things that others wouldnít, but they are things that matter to me. They have value disproportionate to their cost in terms of time/energy/money/opportunity cost for me personally. I feel very good about everything I spend on. If it doesnít feel like Iím getting an amazing deal on the trade-off, I donít make the trade.

Hold your life to a higher standard and you wonít find it a struggle to spend less.

Quoted your whole post as best post of the day.
https://forum.mrmoneymustache.com/welcome-to-the-forum/the-best-post-i-saw-today-on-the-mr-money-mustache-forums-was/

I have also become to dislike spending money. At least spending it on unnecessary things. You always need to think: is it worth working longer for this spending? The answer is usually no.

My biggest thinking at this moment is about a vacation to Argentina in 2020. I would love to see a solar eclipse. I had some idea of how much such a vacation might cost. DH has once been in New Zealand for 2 weeks and told me what that had cost (60% of the budget I had in mind). Therefore he estimated that if we go to Argentina for 4 weeks, with 2 people, we might spend double of what I had in mind.
Today I am coming to my senses and have started thinking that maybe the solar eclipse is not worth that insane amount of money... I have nothing else with Argentina. I don't want to spend a lot of extra time working for such a vacation.

So this post resonated extra well with me exactly today.

Malkynn

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<...>

Personally, I make more money than you do, but it takes something pretty fucking spectacular to get me to part with my cash. Iím not cheap, Iím just a snob about spending. My bar for spending is very high. Iím not at all the most frugal person, I spend on plenty of things that others wouldnít, but they are things that matter to me. They have value disproportionate to their cost in terms of time/energy/money/opportunity cost for me personally. I feel very good about everything I spend on. If it doesnít feel like Iím getting an amazing deal on the trade-off, I donít make the trade.

Hold your life to a higher standard and you wonít find it a struggle to spend less.

Quoted your whole post as best post of the day.
https://forum.mrmoneymustache.com/welcome-to-the-forum/the-best-post-i-saw-today-on-the-mr-money-mustache-forums-was/

I have also become to dislike spending money. At least spending it on unnecessary things. You always need to think: is it worth working longer for this spending? The answer is usually no.

My biggest thinking at this moment is about a vacation to Argentina in 2020. I would love to see a solar eclipse. I had some idea of how much such a vacation might cost. DH has once been in New Zealand for 2 weeks and told me what that had cost (60% of the budget I had in mind). Therefore he estimated that if we go to Argentina for 4 weeks, with 2 people, we might spend double of what I had in mind.
Today I am coming to my senses and have started thinking that maybe the solar eclipse is not worth that insane amount of money... I have nothing else with Argentina. I don't want to spend a lot of extra time working for such a vacation.

So this post resonated extra well with me exactly today.

Oh cool. Thanks!

FWIW, Iíve seen two total solar eclipses, and it never crossed my mind as something that people would pay a lot of money to see. Only you can decide for you if itís worth it, but for me, the most entertaining part was watching my pets go nuts for about an hour, and that was with them inside with the curtains closed.

Itís certainky an odd experience, but not one that I would pay for.
I happened to have the day off last year when it happened, and I had to be outside running a few errands and I found it more unpleasant than anything. The orangey light gave me a wicked headache.

Overall I categorize it as a kind-of-neat experience, but not one that I would have even booked a day off of work for, much less paid premium for a vacation to a destination that I have no other pressing need to go to.

Just my 2c on eclipses. For others it might be the most amazing thing to witness. Who knows.

OtherJen

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<...>

Personally, I make more money than you do, but it takes something pretty fucking spectacular to get me to part with my cash. Iím not cheap, Iím just a snob about spending. My bar for spending is very high. Iím not at all the most frugal person, I spend on plenty of things that others wouldnít, but they are things that matter to me. They have value disproportionate to their cost in terms of time/energy/money/opportunity cost for me personally. I feel very good about everything I spend on. If it doesnít feel like Iím getting an amazing deal on the trade-off, I donít make the trade.

Hold your life to a higher standard and you wonít find it a struggle to spend less.

Quoted your whole post as best post of the day.
https://forum.mrmoneymustache.com/welcome-to-the-forum/the-best-post-i-saw-today-on-the-mr-money-mustache-forums-was/

I have also become to dislike spending money. At least spending it on unnecessary things. You always need to think: is it worth working longer for this spending? The answer is usually no.

My biggest thinking at this moment is about a vacation to Argentina in 2020. I would love to see a solar eclipse. I had some idea of how much such a vacation might cost. DH has once been in New Zealand for 2 weeks and told me what that had cost (60% of the budget I had in mind). Therefore he estimated that if we go to Argentina for 4 weeks, with 2 people, we might spend double of what I had in mind.
Today I am coming to my senses and have started thinking that maybe the solar eclipse is not worth that insane amount of money... I have nothing else with Argentina. I don't want to spend a lot of extra time working for such a vacation.

So this post resonated extra well with me exactly today.

Side note: Eastern US in 2024 would probably be cheaper in terms of flights from Norway, etc. https://www.cleveland.com/weather/blog/index.ssf/2017/08/missed_mondays_solar_eclipse_i.html

OtherJen

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For the insane amount of spending we manage to churn out we donít eat out hardly at all (as in maybe once every two months), my wardrobe sucks, my wife buys hers second hand (higher end stuff but still).  As best I can tell itís short trips, crap for the house that we donít need, and probably kid stuff.  And just the death by a thousand cuts - little overages here and there that add up on top of regular larger purchases done on a whim.  Youíd think I would have something to show for it - nice furniture, custom garage shelves....something.  But nope. Just a big question mark of where the hell did it go?

I think many people could say the same. Hell, my household income is less than half of yours and I could still say the same. Our finances have gotten considerably easier just in the last few months of paying close attention and not spending mindlessly. We really haven't felt discomfort from the cutbacks and haven't missed much of anything, which tells me that we were basically throwing money into a black hole. The few extra things we have bought recently are visible and tangible and actually give us a sense of satisfaction.

Sibley

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OP, there's a quick and dirty way to stop the bleeding while you figure out the rest. It's a bandaid, not a fix.

Step 1: stop using credit cards (critical)
Step 2: ensure that your payroll deductions for tax advantaged accounts are maxed out
Step 3: Add a second account to your direct deposit. Savings, investments, etc - NOT an account that is "available" for spending.
Step 4: Divert however much of your paycheck that you wish you were saving but aren't to that 2nd account.
Step 5: Pay all bills first - mortgage, utilities, car, etc. Whatever's left is for everything else - food, clothing, entertainment, activities, gym, etc.

For a lot of people, if you have money in your account, it's available to spend. Keep it from ever hitting your checking account and you won't spend it. It's a mental game. It'll help you stop the bleeding from those thousand cuts while you figure out how to actually stop wasting money. This is not actual budgetary discipline, but it can have the same effect.

SunnyDays

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This may be a drastic solution, but I'll say it anyway.  Live on just your salary, which is pretty generous, and bank/invest your wife's.  Your lifestyle is VERY luxurious, and if you're serious about getting out of the rat race, this will be a faster and simpler (note I didn't say "easy") way to do it than nickle and diming a hundred different categories of spending.  Obviously this assumes your wife's buy-in, which is a whole other issue, but if she's unhappy with her current work demands, she just might be willing.  Maybe try it for 6 months to a year and see what happens.  If all goes well, then consider turning it around and living on her salary and banking/investing yours.

ElleFiji

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When I've adapted in one area, I find that I do reverse hedonic adaptation to get me to break the habit. I make a small change at a time...once that's normal, I cut a little more.  But sometimes ripping off the bandaid works better.

It sounds like you're driven by optimizing...so why not pick the next thing to optimize. Maybe getting the best vacation for the least money

red_pill

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Wow , some awesome suggestions coming. You guys are amazing.  I love the pre planning vacations - both from a maximization of the enjoyment of it because planning it is fun and also from an optimizing standpoint.  Iím afraid my wife wouldnít bite on the living off of one income, but I think the ultimate result of these efforts will be exactly that. 

I did make one new cut that was a sacred cow - Crossfit.  Yesterday I suspended our membership. $3,600 a year. This wasnít purely a financial decision -for  the last year I was competing and it was a big drain physically and mentally.  I kinda was getting sick of it and the ultra competitive environment (that was of my choosing to engage in).  The changes in how I thought about this is very instructive:

Before cutting it:   I like crossfit, itís my thing and I get to have my thing.   My friends are there and itís good to do social stuff.  Iím in the best  shape of my life because of crossfit and I donít want to give that up. No way Iím cutting it.

Now: it wasnít crossfit that got me in great shape, it was me that got me in great shape - it was me working hard and putting out day after to day.  It was from internal discipline, not something I bought.  And getting out of shape wonít be because I quit crossfit, it will because I lacked the discipline to keep training. Itís completely within my control and I have a free gym at my office with showers so I have no excuse.  My friends are there but really thereís only two dudes I do things with outside the gym, and that doesnít have to stop they can still be my buddies. And I can do drop ins for $20 once every couple weeks anyway if I want.  And now Iím free to do more running and other programming that I like to do but that my crossfit training was interfering with before. And even if Iím totally wrong, I can always join back up again.

Anyway, I share that because this was near and dear to my heart and one of my ďnon NegotiablesĒ.

Now I have to adapt to my new reality....


« Last Edit: June 06, 2018, 06:12:26 PM by red_pill »

Gremlin

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red_pill, I see in you what I saw in me a few years ago... 

There's a couple of things I'd say that might help.

  • Work out the lifestyle YOU (and Mrs red_pill) want.  Not what your colleagues expect, not what media and marketing tell you, not what the MMM crowd (me included!) think is right.  Many of my expense categories have become mustachian because my mindless spending was on things I didn't value, but there's a bunch of spending we've retained (and some we actually increased slightly when we freed up enough from elsewhere!) that would get me face punched many times over by many on this forum.  Travel is big for me.  Mrs Gremlin and I budget a lot more than you do for travel, but we also work hard to optimise our spend.  You talked about shacks by the beach and getting back to nature.  You can optimise these sorts of holidays easier than you can the "first class to Vegas" style or "exclusive resort in the South Pacific"
  • Recognise your successes.  You've culled $12k of spending from your annual spend already.  Okay, that may be long hanging fruit, but it's success nevertheless.  If you need 25x your annual spend to maintain a future lifestyle, you've saved future red_pill $300k.  If that's been invested and starts generating a return, that number is even better
  • Continue to track your spending.  Really track it.  Every. Last. Dollar.  The scariest number you have there is the "black hole".
     There's your path to success or your road to ruin right there.  Your choice.
  • Plan (and agree with Mrs red_pill) what you'll do with your excess cash when you kill that mortgage. (HINT:  Don't automatically move to spend it!).  Once you get compounding work FOR you, instead of AGAINST you, things will really start to move in your finances
  • Fat-FIRE can be a great target, if that what works for you.  But back to the first point, make sure that's what works for YOU.  And the trade-offs between FIRE and Fat-FIRE are ones that YOU are prepared to make
  • Make sure you are both aligned.  Don't end up "resenting" your "sacrifices" or have Mrs red_pill resenting the "sacrifices" you've "forced upon her".  Compromise is very important

Finally, I love planning for vacations too.  My wife thinks I'm such a nerd when I spreadsheet-up planning for travel.  Sounds like you are Canadian-me. 

red_pill

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red_pill, I see in you what I saw in me a few years ago... 

There's a couple of things I'd say that might help.

  • Work out the lifestyle YOU (and Mrs red_pill) want.  Not what your colleagues expect, not what media and marketing tell you, not what the MMM crowd (me included!) think is right.  Many of my expense categories have become mustachian because my mindless spending was on things I didn't value, but there's a bunch of spending we've retained (and some we actually increased slightly when we freed up enough from elsewhere!) that would get me face punched many times over by many on this forum.  Travel is big for me.  Mrs Gremlin and I budget a lot more than you do for travel, but we also work hard to optimise our spend.  You talked about shacks by the beach and getting back to nature.  You can optimise these sorts of holidays easier than you can the "first class to Vegas" style or "exclusive resort in the South Pacific"
  • Recognise your successes.  You've culled $12k of spending from your annual spend already.  Okay, that may be long hanging fruit, but it's success nevertheless.  If you need 25x your annual spend to maintain a future lifestyle, you've saved future red_pill $300k.  If that's been invested and starts generating a return, that number is even better
  • Continue to track your spending.  Really track it.  Every. Last. Dollar.  The scariest number you have there is the "black hole".
     There's your path to success or your road to ruin right there.  Your choice.
  • Plan (and agree with Mrs red_pill) what you'll do with your excess cash when you kill that mortgage. (HINT:  Don't automatically move to spend it!).  Once you get compounding work FOR you, instead of AGAINST you, things will really start to move in your finances
  • Fat-FIRE can be a great target, if that what works for you.  But back to the first point, make sure that's what works for YOU.  And the trade-offs between FIRE and Fat-FIRE are ones that YOU are prepared to make
  • Make sure you are both aligned.  Don't end up "resenting" your "sacrifices" or have Mrs red_pill resenting the "sacrifices" you've "forced upon her".  Compromise is very important

Finally, I love planning for vacations too.  My wife thinks I'm such a nerd when I spreadsheet-up planning for travel.  Sounds like you are Canadian-me.

Bro, this is super helpful.  Iíve never said that my goal is ultra frugality. My only goal at this point is to move from mindless consumption to conscious spending.  If we want to spend $10K on vacations, thatís cool, but I just want to be honest about it.  I suspect the natural result will be a pain free reduction of expenditures, but thatís not the primary goal (at this point).

Mrs Red Pill is a bit ambivalent about my budgeting efforts.  For some reason she doesnít like to talk about it or think about it, and I let myself adopt the same pattern for far too long.  It takes a bit of work to pin her down to a solid number on what she wants to spend on X, but once we arrive at a number sheís good with keeping to it.

And Iím not sure if you found this, but it seems to me that now that we have our spending categories set up, itís actually LESS effort to keep to them.  Itís either in the budget or itís not.  We donít have to spend any time or effort justifying an expense - itís a yes or no or wait until next pay day.  The freedom of a locked room so to speak. 

Anyway, Iím at around $15,000 of reductions i think and curious to see whatís next. :)

Gremlin

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Bro, this is super helpful.  Iíve never said that my goal is ultra frugality. My only goal at this point is to move from mindless consumption to conscious spending.  If we want to spend $10K on vacations, thatís cool, but I just want to be honest about it.  I suspect the natural result will be a pain free reduction of expenditures, but thatís not the primary goal (at this point).

Mrs Red Pill is a bit ambivalent about my budgeting efforts.  For some reason she doesnít like to talk about it or think about it, and I let myself adopt the same pattern for far too long.  It takes a bit of work to pin her down to a solid number on what she wants to spend on X, but once we arrive at a number sheís good with keeping to it.

And Iím not sure if you found this, but it seems to me that now that we have our spending categories set up, itís actually LESS effort to keep to them.  Itís either in the budget or itís not.  We donít have to spend any time or effort justifying an expense - itís a yes or no or wait until next pay day.  The freedom of a locked room so to speak. 

Anyway, Iím at around $15,000 of reductions i think and curious to see whatís next. :)

We're not into ultra frugality either.  For us, the path was to conscious expenditure and an investing mindset that would give us choices down the track.  I don't think any of our spend categories would now be ultra frugal, but some are definitely frugal.  But the ones that are frugal are not things we value highly anyway.  The ones that aren't are where we choose to play more often.

I'm not sure if this is the same with you and Mrs red_pill, but Mrs Gremlin struggles to understand what "let's spend $Y a month on X" looks like when translated to outcomes.  It took me a while to appreciate this.  So instead we debate outcomes - "at $Y a month, this is what X looks like for us. If it were $Z a month, this is what we would cut back on.  If instead it was $W a month, this is what more we could do, but we might have to find the difference somewhere else".

And yes, to the fact that once the budget is set it's easier to keep to it.  I also find it's less mentally draining.  Justifying stuff is hard - even if it's just to yourself.  But following rules you've set for yourself is much easier.  And the tracking then just becomes a habit.

CindyBS

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One thing we do is that I have an adult coloring book page (literally just a googled image printed) that is posted in a well trafficked area of the kitchen.  For us, FI is a bouquet of flowers.  Every $50,000 saved towards FI and a flower gets colored in.  We also have a geometric design that is another goal. 

I look at these pages every day, multiple times per day.   It is a very obvious way of reminding myself constantly what I am working on while at the same time not letting the kids or anyone know my personal numbers.  There is also a small (cheap) thrill coloring in spaces with each incremental victory and I keep a separate set of coloring pencils just for that. 

red_pill

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Bro, this is super helpful.  Iíve never said that my goal is ultra frugality. My only goal at this point is to move from mindless consumption to conscious spending.  If we want to spend $10K on vacations, thatís cool, but I just want to be honest about it.  I suspect the natural result will be a pain free reduction of expenditures, but thatís not the primary goal (at this point).

Mrs Red Pill is a bit ambivalent about my budgeting efforts.  For some reason she doesnít like to talk about it or think about it, and I let myself adopt the same pattern for far too long.  It takes a bit of work to pin her down to a solid number on what she wants to spend on X, but once we arrive at a number sheís good with keeping to it.

And Iím not sure if you found this, but it seems to me that now that we have our spending categories set up, itís actually LESS effort to keep to them.  Itís either in the budget or itís not.  We donít have to spend any time or effort justifying an expense - itís a yes or no or wait until next pay day.  The freedom of a locked room so to speak. 

Anyway, Iím at around $15,000 of reductions i think and curious to see whatís next. :)

We're not into ultra frugality either.  For us, the path was to conscious expenditure and an investing mindset that would give us choices down the track.  I don't think any of our spend categories would now be ultra frugal, but some are definitely frugal.  But the ones that are frugal are not things we value highly anyway.  The ones that aren't are where we choose to play more often.

I'm not sure if this is the same with you and Mrs red_pill, but Mrs Gremlin struggles to understand what "let's spend $Y a month on X" looks like when translated to outcomes.  It took me a while to appreciate this.  So instead we debate outcomes - "at $Y a month, this is what X looks like for us. If it were $Z a month, this is what we would cut back on.  If instead it was $W a month, this is what more we could do, but we might have to find the difference somewhere else".

And yes, to the fact that once the budget is set it's easier to keep to it.  I also find it's less mentally draining.  Justifying stuff is hard - even if it's just to yourself.  But following rules you've set for yourself is much easier.  And the tracking then just becomes a habit.

Yeah, kind of the same.  Mrs RP would never in a million years do a spreadsheet.  I had to experiment with different formats to convince her for the need to change our ways.  What ended up working was writing down how much our pay was and then how much in bills was coming out in the next two weeks and showing that some weeks we were in the red.  She immediately understood what I was saying at that point whereas before that she thought since we didnít carry consumer debt and had pensions we were all good.  Finding a way to communicate that made sense to her  was key!    Also, I found that if I calculate things on a yearly basis  she sees the impact more (as do I).

red_pill

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One thing we do is that I have an adult coloring book page (literally just a googled image printed) that is posted in a well trafficked area of the kitchen.  For us, FI is a bouquet of flowers.  Every $50,000 saved towards FI and a flower gets colored in.  We also have a geometric design that is another goal. 

I look at these pages every day, multiple times per day.   It is a very obvious way of reminding myself constantly what I am working on while at the same time not letting the kids or anyone know my personal numbers.  There is also a small (cheap) thrill coloring in spaces with each incremental victory and I keep a separate set of coloring pencils just for that.

Iíve been thinking about doing something like this.  We have 26 mortgage payments left.  Or 13 if I double them all up.  Charting that visually would be awesome.  The next goal is to save $114,000 in TFSAs. Then who knows what.  You know what, based on your suggestion weíll give it a try!  Iíll set it up right now.

expatartist

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You seem to be missing the most important point of this whole thing...
This is about living your best life.
...

Hold your life to a higher standard and you wonít find it a struggle to spend less.

Brilliant post Malkynn. Well deserved as post of the day. Thanks for the reminder, this is why I started following the site years ago.

Miss Piggy

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One thing we do is that I have an adult coloring book page (literally just a googled image printed) that is posted in a well trafficked area of the kitchen.  For us, FI is a bouquet of flowers.  Every $50,000 saved towards FI and a flower gets colored in.  We also have a geometric design that is another goal. 

I look at these pages every day, multiple times per day.   It is a very obvious way of reminding myself constantly what I am working on while at the same time not letting the kids or anyone know my personal numbers.  There is also a small (cheap) thrill coloring in spaces with each incremental victory and I keep a separate set of coloring pencils just for that.

I love this idea!!! I had monthly calendar pages posted in my cube at work, and they stopped at July 2019. A few people asked if the world was ending then. I took the pages down as to not reveal my evil FIRE plans. (Okay, they're not evil.)  I could totally do a coloring page instead!

AnnaGrowsAMustache

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You don't have to do everything all at once. This whole thing is a journey, not a destination. Cheesy but true. Start with one area and improve that. When that no longer hurts, move onto the next area. Some areas will be harder than others and take longer than others to adjust to.

ginjaninja

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They crazy thing about this thread is that you seem to have answered your questions just with a bit of discussion.  Now that you have your bigger yes it should be easier to see your little green soldiers walking away from those goals when you make purchases that don't support them.  It is crazy how just listing everything on paper and stating goals helps so much.
You have something to learn from everyone.

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