Case Study...How to know when to stop saving?

[DollarBill]

How do you know when to stop saving?
Background: I’m 38 (Single, no kids). I’m active duty Air Force (Enlisted), it will be 22yrs come July. I was planning on doing 24 yrs but they are cutting 25,000 people this year. They say my career field is over manned by 170 positions but only have 155 eligible, so it looks like I’ll get my pink slip this year (around Dec 1st). I’ve always been good with money and mostly lived below my means.

Ever since the market dropped and people were losing jobs I decided to take a more drastic approach to FI. I bought a house when I got stationed in Kansas (2009). In 2010 I was deployed and had a lot of thinking time on my hands. I decided to pay down my mortgage. I took everything I had out of the stock market and was making extra payments. My Reasoning behind this decision: I know a lot of people would say this is not a good decision and yes I agree to a certain point. Especially since I had about $10K in Amazon stock…missed out on about $30K. I did it because the stock market is a gamble and you should never gamble money that you can’t afford to lose. I wanted to pay off all my debt before I get back into the stock market. Plus, when I retire I will get a pension from the AF (Please don’t hate…I think I’ve earn it). It will be about $2100-2500 a month. My mortgage was $1200 a month so I decided it would be wise to pay it off so I could live off my retirement and not have to rely on a job.

During the time I was paying down the house I was quite militant about it and did not allow myself much fun money. Since I got it paid off (Nov 2012) I seem to keep the same savings mode to build up my investments again and it sometimes it’s painful. I recently I set up extra savings accounts and divert money into each account to cover my (Bills, House Taxes, Insurance, Travel, Ret, Slushy fund) and told myself whatever I have in the slush is mine to spend on anything I want…but I still tend to try and save it. How can I let myself to spend more freely? Can I stop saving as much? Can I call it quits and declare FIRE? How do you save but keep it from getting too painful? I don't even date because it's too expensive. Please help!

Here’s what my finances will look like when I leave the AF in Dec:
House worth $175K (Paid in full)
2005 Truck (Paid in Full)…runs great and I just hit 100K, lots of life left in her.
Retirement TSP $50K (Won’t touch this until age 62)
Savings for Stock Market $47K (This is what I will have come Dec)
Income:
$2100-2500 monthly pension
Expenses:
House Taxes/Insurance: 440
Bills: 700 (This includes phone, cable, net, food, gas, water, electric)
Travel: $160
Total : $1300

[dailycycle]

I feel compelled to point out that dating need not be expensive.  And, since you don't have expensive tastes, it's probably far better that you find someone who doesn't need expensive dates.  If they're into getting to know you, they should be down for something like a picnic and a hike.

[Jamesqf]

I think you still need a bit of attitude adjustment. You're mentally stuck in the old spending = fun trap, and have been saving by toughing it out through self-denial.  That's good up to a point, but now you need to look at all the free/inexpensive fun things out there and make them an everyday part of your life, so that saving becomes something that just happens, instead of something you have to work at.

[Cassie]

I agree with the above poster but also think that you should set aside some $ that you can spend guilt free on fun.  Spend that $ on the things that may cost but bring you pleasure. Is it eating out occasionally, going to a movie, a sport you enjoy, etc?  Too much self-denial can also be a bad thing just like too much spending.

[DollarBill]

I love the thought everyone puts into their comments on this site.
 
Dailycycle: I’d like to think that dating is inexpensive but dang it’s a tough being a guy. I know I’ll catch a little feedback on this but I’ll give you a little past experience. I dated a woman who was over 3 ½ hours away. Things were great, we had a lot in common but she made a lot more than me. It was costing me about $300 a weekend and I couldn’t keep up. She wanted to take trips together and even said she would pay for it. I’m the kind of person who doesn’t like having someone else paying for me, so I declined. Plus, we both had job we couldn’t leave, so eventually we had to go our separate ways. I think we could have been great together but I had to make the decision. I can go into a lot more detail but will leave it at that.

Jamesqf & Cassie: You guys are so right about the attitude adjustment. This whole thing is an attitude change. I think my problem is when I’m constantly being asked to go somewhere where I don’t find a value.

[Cassie]

I really think the key is finding things that do bring you value. It was terrible of your friend to call you cheap. To spend that much $ on a weekend it had better be something that you really valued.  Next time tell him that there is nothing worse then being old & poor. The first one everyone that is lucky will reach and the second is your choice. 

[DollarBill]

That's the difficult part I would love to be carefree about the decision. Not working and have enough money to go. I think we all deal with this on a daily bases. I think there are too many people who throw caution to the wind.

[Noodle]

There is actually some research that has been done about where spending leads to happiness and where it does not.

http://thebillfold.com/2013/11/why-do-we-spend-money-on-things-that-dont-make-us-happy/

Perhaps "Happy Money," the book mentioned in the article, might give you some insight into where you might most effectively spend your discretionary funds as part of a contented life.

[Jamesqf]

For example: just this past week my buddy from Texas wants me and all my friends to go to Austin for a Jimmy Buffett concert. I wrote him back saying that is a long trip and doesn’t sound like it would be worth it ($210 for gas, $100 hotel, $100 for dog kennel, plus tickets, plus food/beer) total about $600 I’m guessing.

You see, that's where the attitude adjustment comes in.  Instead of couching your refusal of the invitation in terms of money, you explain that 1) You don't enjoy/can't handle driving long distances (or commercial flights); 2) You don't like the crowds, noise, &c of concerts; and 3) Maybe you aren't all that into Jimmy Buffett anyway.  You might even add that you'd planned to be e.g. camping or something that weekend, and invite him.  This way, money never really enters into the conversation.

[soccerluvof4]

^+1  I agree totally, I find the more i get into The MM lifestyle i am thinking about every dollar that is spent however agree there are easy ways to say no to things by just being creative in your response so its not about the money and truthfully it might only be part of it.  And i also agree that there are so many things you can do that dont cost alot of money. I would sit down and make a list of everything you think you can do or would like to try or have interest in. Come up with as many ideas as you can individually and in a social environment. The more you get out and do things like biking, hiking and so on you will meet people that have similar interest and probably lifestyles. When i met my wife 18 years ago My life was Gym in the morning worked till 8pm back to the gym. I was divorced for 4 years so never wanted to get married but got enough social contact at the YMCA. After 4 years of being at the gym i met my wife and the rest is history but that one small cost of entertainment (for me and wellness) i met my wife and we got into that lifestyle more as time went on. Then an injury and i have been struggling on that part ever since! :-). Good luck to you! Think about spending your money but live your life as well.

DB

[DollarBill]

What about my situation? Would you slow down on the savings?

Thanks for the replies, it helps me verify my thoughts that I'm doing the right thing. I do need to find some new ways to enjoy time with others and not let my "intovertness" take over.

I know it's probably easier to come up with another story why we can't par take in the fun but I tend to be up front (Facepunch).

[DollarBill]

I read in another post when people listed other excuses. One that stood out for me was "I didn't budget for that". I know my friend would just like to see me and wants the time to be epic. I just wished epic didn't = $$$$$

[Pell mell]

Kudos to you for paying off your house and preparing well. It must be a great feeling.  I agree with the sentiment that you can date without spending a lot of money. The trick is finding people who value other things.  I remember seeing a Meet Up for people to have fun without spending (very much) money.  I think it's ok, too, to budget a certain amount of money for dates or social events per month.  Many times in my life I have found myself saving everything I possibly could and looking back and thinking, You know, maybe I could have gone out more and spent a bit more to do it.  I got into a bit of rut.  But you're in a good place to budget at least some money for dating or just social engagement.  It's healthy.

At the moment, I am dealing with someone who is the opposite of you, and it is wearing me down. I was going to write in with a case study, but after reading yours... lol

[2527]

Set a certain amount of money for fun every month and challenge yourself to have as much fun as possible with it.  That might build your mind muscles in the direction you want them to go.

[phred]

As you've discovered, to save just to save can be bewildering.  Better to save with a goal in mind such as buy enough DRIP stocks to give you $15,000 in dividend income each year, buy the contractor grade chop saw you always wanted, take that trip you've always wanted.  So, decide on your goals for the near term & the long term.
   Are you going to seek employment in the civilian world? 
   Dating will probably be easier if you date other retired military; they will better understand where you're coming from.  In any case, don't stay home all the time.  Join a bicycle riding club or hiking club, work out at the Y, teach something at adult ed, read the bulletin boards at the PX for things to do (avoid cruises).  Spend enough on food to eat a balanced diet.

[Nords]

How do you know when to stop saving?

First, congratulations on your retirement-- whenever it may happen!  Don't wait on the Air Force to make up their mind-- get yourself to the retirement class now so that you can start your own preps.  You might want to check your base library or public library for a copy of the book, or read the first six months of posts on the blog:
http://the-military-guide.com/post-titles-by-month/

Second, if you're not already doing so, make yourself a spending plan instead of a savings plan.  Give yourself 10%-20% of your income to spend on anything you want.  Put it into a separate savings account if you have to, but start tracking how much you have in your "entertainment savings" account and keep trying to either spend it on a goal or just spend it down to zero. 

Third, again if you're not already doing so, check your budget and make sure that you're tracking everything.  You'll feel much more secure knowing what you're planning to spend that month and how much more you have left over for surprises or emergencies.

Finally, consider throttling down your savings rate to as low an amount as you feel comfortable with-- at a minimum, try to save no more each month than you're trying to spend on entertainment each month.  That way you have the comfort (savings) as well as the flexibility (entertainment).  You can say to yourself "I'm already saving that amount this month anyway, so I can afford to spend at least that much."

Otherwise, you're right about your feelings.  You can keep tweaking your budget until you figure out what type of spending brings you value.  Until you get comfortable with your retirement spending, you could try a number of different activities to decide what's the right ratio of pleasure::expenses.  You seem to have plenty of room in the budget to explore your interests.

My spouse and I have been retired for nearly 12 years, and the balance in our checking account still rises almost every month.  However we're happy with our spending, we enjoy the activities that we're spending on, and we don't feel as if we're depriving ourselves of anything.  We may occasionally feel that we need to "earn" it, but we don't deprive ourselves.

You should go see a Buffett concert.  He's not going to be performing forever, and you'll kick yourself if you miss the chance.  Buy a DVD or stream a show and see what you could be doing in person.