Author Topic: Frugality in early 20's - Finding a balance  (Read 10808 times)

smisk

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Frugality in early 20's - Finding a balance
« on: January 22, 2015, 07:40:19 AM »
I first discovered MMM in late 2013 when I was a senior in college. I immediately loved all his advice and looked forward to using it when I got a job. I'm now 23 and have been working as a Software Engineer since October. Financially I'm in a really good situation; I have no debt, a fully paid off fuel-efficient car, and am still living for free with my parents (for now). Because my expenses are so low I'm able to easily save 2/3s of my 55k salary.

My problem is I sometimes feel like I'm too obsessed with all this stuff. I find myself looking up compound interest calculators trying to figure out how much I'll be able to save by a specific time in my life (which I realize is pretty dumb since it's impossible to completely map out your future..). I worry about whether I should give up on getting a motorcycle and just put the money towards retirement. I've also always wanted to spend some time traveling while I'm in my 20's but now find myself thinking maybe I should put that off. And I've also been fretting about whether it's more economical to buy a house or just rent an apartment when I move out.

Any advice on how to balance being frugal while still living in the present? I feel dumb worrying about these things so much even though I'm doing better than many people my age.

innerscorecard

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Re: Frugality in early 20's - Finding a balance
« Reply #1 on: January 22, 2015, 07:44:36 AM »
There's no balance, in the way that society defines it. Balance is mediocrity. Being weird or obsessive (to others) is what lets you come out ahead.

If you put in average inputs, you get average outputs. Which is working and dying for 50 years so that you can retire once you're too old to enjoy it.

NICE!

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Re: Frugality in early 20's - Finding a balance
« Reply #2 on: January 22, 2015, 07:57:24 AM »
Why can't you travel in your 20s? You're 23 and if you're saving that much you can FIRE before you're 30 then be ballin' worldwide.

I wish I had your head on my shoulders at that age...and I'm not even old (31).

GordonCopestake

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Re: Frugality in early 20's - Finding a balance
« Reply #3 on: January 22, 2015, 08:26:58 AM »
The most massive thing you have going for you is your age. Compound interest means saving now pays massive dividends in your future - the future you will thank you in the same way I curse my past me!

My advise is to spend on the things that you feel want - you still have to enjoy life, but be aware that every time you buy something, like a motorbike, it will put your retirement back by not just the amount you spend but also by the amount plus the compound interest for the rest of your life. Your motorbike might cost you hundreds of thousands of dollars in the long run. That might be fine as long as you are aware of it.

I would aim for retiring at 40, as by then you'll have had a good career and felt "productive" as well as having had enough time saving to have built up a sufficient pot.

YMMV

nobody123

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Re: Frugality in early 20's - Finding a balance
« Reply #4 on: January 22, 2015, 08:27:09 AM »
Any advice on how to balance being frugal while still living in the present? I feel dumb worrying about these things so much even though I'm doing better than many people my age.

You're ahead of the game already by not being in debt and having learned to evaluate how you spend your money.  If you want a motorcycle and understand what it will really cost you (bike, accessories, insurance, gas, foregone investment earnings, etc.) and you think it's worth it, go ahead.  If it turns out you only ride it 5 times in the first year you own it, sell it and consider it a lesson learned.  Critically thinking about expenditures and their value to you is the most important lesson you can learn from this site, IMHO.  Don't let the "I'm doing better than many people my age" become an excuse when you can't really justify the purchase otherwise.

I will never eat beans and rice 7X per week just to save a few bucks unless I find myself jobless and no alternative - I like steak too much.  I also pay $206/month for cable/internet/landline because my family finds value in it.  I am aware that these choices will mean I have to work a few extra years before I get my FU money built up.  I'm fine with that.  If my goal was to RE ASAP, I would probably make different choices.  Only you know what your values are, and as long as you have a plan to reach your goals and are executing it, you'll be fine.

The other thing you should learn from reading this site is to seek out a partner (if you plan on having a long-term relationship of some sort) who shares your views on money.  There are tons of posts here about people in conflict with their significant other because they have different views on how to spend the common resources.  If you can avoid that up front, you will be in great shape going forward.


Tetsuya Hondo

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Re: Frugality in early 20's - Finding a balance
« Reply #5 on: January 22, 2015, 08:37:24 AM »
The point of all this isn't to build wealth for its own sake. It's all built on the assumption that FIRE will enable you to be happy and fulfilled doing something other than the 9 to 5.

So, you'll either need to set a goal that is motivating and that you're willing to work and sacrifice towards (and this probably entails mapping out what you want to do at FIRE versus some magic number itself) or you'll need to find a balance that works for you. If all this makes you miserable, then you won't follow through on it.

Personally, if I were as hard core as many on this board, I could FIRE in 5 years or less. But instead, I've set a 10 year goal, which is comfortable and attainable for me and allows me to enjoy some luxuries and travel along the way. But, I enjoy my work, I've got a comfortable work from home situation (hell, I'm living the FIRE lifestyle in some ways already) and my hair is only slightly smoldering. So, that's what I do.

Also, from what I've seen on these boards, a lot of us go through the obsessive, Excel spreadsheet huffing phase of MMM zealotry in the beginning. But, I've realized that this is a waste of time. Things don't change that much from month to month. Another thing that works for me to is automate as much as possible with savings, etc. Set it and forget it. I now only allow myself to tally up my spreadsheets once at the end of the month. I try to focus instead on something more enriching, like learning a language or exercise.
« Last Edit: January 22, 2015, 08:39:53 AM by Tetsuya Hondo »

Future Lazy

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Re: Frugality in early 20's - Finding a balance
« Reply #6 on: January 22, 2015, 08:38:57 AM »
I honestly am struggling with this as well, and as such, I don't have any sage advice that isn't given above...

 - Don't skimp on the things that make you happy. A joyful life is priceless. /cliche
 - Find someone that is also frugal for support - that goes for friends and spouses!

I did just want to let you know you aren't alone. It's a unique struggle to start out with nothing, and to decide what to add to your life extremely carefully with such a long term goal in mind, vs. many whom ballooned out of control before cutting back in their 30's and 40's. Don't worry though, we can do it!

mxt0133

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Re: Frugality in early 20's - Finding a balance
« Reply #7 on: January 22, 2015, 08:57:32 AM »
I don't think it has to be one or the other.  If you want a motorbike there are ways to get it without spending an exorbitant amount of money.  Find ways to minimize the cost or even make money out of it.

If you want a motorcycle a popular used one like a Ninja 250 can be bought on craigslist pretty easily as most people use it as a starter bike and eventually upgrade to a bigger bike.  I got one for $3200 and sold it for $3000 after a year of use.  I spent money on gear, maintenance, insurance, and gas but I'm confident that if I had to I could have found an way to make it pay for it self.  Insurance and gas paid for itself as it lowered the cost of my commute.

If you want to travel there are a bunch of volunteer opportunities where if you can pay or get your airfare funded room and board will be taken care of.

Basically don't believe the false dichotomy between frugality and doing the things you enjoy.

SunshineGirl

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Re: Frugality in early 20's - Finding a balance
« Reply #8 on: January 22, 2015, 09:01:18 AM »
A couple helpful things you could do:

-- Spend some time figuring out what you value (besides a healthy bank account, but that would be part of it). I did this in my 20s and STILL refer to the exercise to make sure I'm living my life aligned with my values. Back in the old days before Covey bought it, there was a company called the Franklin Institute (creator of the Franklin Planner). Many people think time management is about putting together daily to-do lists, but with this system, you first figure out your values and THEN plan your day, week, month, life, based on your values, so you're spending your time in ways that matter to you. If you look on Amazon, you can still find Hyrum Smith's book, 10 Natural Laws of Successful Time and Life Management. I'd recommend it highly, and, in fact, any book you can still find about it, and any book by Hyrum Smith.

-- Part of one of my values is, "I live my life free from financial debt and obligation. Because I'm smart with my money, I am able to live life on my own terms rather than terms imposed upon me...." One decision I made early on that enabled this more than ANYTHING was to buy a four-plex as my first property I ever bought, and to live in it for free while having the tenants pay the mortgage. It allowed me to save tons of money, travel, buy more properties, stay home with my kids, and it's about to be paid off and it will then fund my kids' college educations, and THEN it will be pure gravy. That decision, as well as marrying the "right" partner who shares my values, has enabled me to do so much.

My point: You're in a great position to make some decisions that can affect your life positively for the rest of your life. Saving so much and living at home may help or hurt you - only you can decide. But it should be a deliberate decision and one made as "holistically" as possible.

I do believe travel has rewards far beyond simply seeing other cultures/places. Anytime I travel, I gain a good perspective on my life in a way I can't when I'm at home.

andy85

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Re: Frugality in early 20's - Finding a balance
« Reply #9 on: January 22, 2015, 09:07:52 AM »
Why can't you travel in your 20s? You're 23 and if you're saving that much you can FIRE before you're 30 then be ballin' worldwide.

I wish I had your head on my shoulders at that age...and I'm not even old (31).
so much this. i squandered everything at your age...i could probably retire in 2 years if i started at your age.

with that said...go do your thing...within reason. Set a stretch savings goal, an average savings goal, and a minimum goal. If you have a month or two during the summer full of concerts and vacations then so be it...just try and hit your minimum goal for the month or your average goal for the year. Don't spend money on stupid, frivolous, materialistic shit, but travel, vacation, do things 20 year olds should do.

smisk

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Re: Frugality in early 20's - Finding a balance
« Reply #10 on: January 22, 2015, 09:08:46 AM »
Thanks for the replies everyone, very insightful! It's good to know there are others in similar situations. I do agree that one of the most important things is just having a frugal mindset overall. You don't necessarily have to deprive yourself of everything, just be mindful of how it will impact you and whether it's worth it etc.
Also think I need to define my goals more. I read the post on MMM by Brandon Turner the other day where he mentioned "And then...", which really resonated with me. My immediate goal out of college was to get a good job. Now that I have that accomplished I'm a little lost as to what to focus on next. I guess I need to do a little soul searching and figure out what will make me happy.

aetherie

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Re: Frugality in early 20's - Finding a balance
« Reply #11 on: January 22, 2015, 12:11:19 PM »
Just chiming in to say I know how you feel - I'm also a fresh-out-of-college software engineer who found MMM before graduation. It's a real - but exciting - challenge to be building a life for myself and have pretty much complete control over what I want that life to be. The most helpful things for me have been knowing my priorities (i.e. family/relationships, work, dance) and remembering that I'm already in a really good place, financially and otherwise, and I can cut myself some slack. Good luck figuring out what makes you happy! :)

Gone Fishing

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Re: Frugality in early 20's - Finding a balance
« Reply #12 on: January 22, 2015, 12:12:42 PM »
There's no balance, in the way that society defines it. Balance is mediocrity. Being weird or obsessive (to others) is what lets you come out ahead.

If you put in average inputs, you get average outputs. Which is working and dying for 50 years so that you can retire once you're too old to enjoy it.

+1

Keep your eyes on the prize.  The money you are investing now has the most time to grow. There will be plenty of time and money for motorcycles and travel.  Most of the regrets you hear from older people about not doing things when they were young come from people who were relatively free but then got themselves trapped in a cycle of consumption or greed.  You are not going to get trapped.  What you need are some inexpensive distractions just to get your mind off of FIRE for a while and let it work, here are a few:

Side gig-make more, save more
Gardening-grow your own food
Fitness goals-run X miles, do X pushups/pullups, etc
Learn to play a (used) musical instrument
Learn another language
Job hunting-yes you have only worked a few months, but your income potential will grow quickly, never too early to start looking for your next opportunity.

As I bear down on FIRE, I can hardly push out of my mind some things that I HAD to have but if I had just waited would have pulled my FIRE date MONTHS closer.   

Don't forget you are striving to be a BADASS!!

« Last Edit: January 22, 2015, 12:18:05 PM by So Close »

arebelspy

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Re: Frugality in early 20's - Finding a balance
« Reply #13 on: January 22, 2015, 12:28:38 PM »
I say the opposite of a lot of the above: there is no balance because you shouldn't deprive yourself.  Enjoy life.  Be in the moment.  Plan for the future, but don't let that detract from current happiness in any way.

I think you'll find you can be happy now with a lot less than you think, and still be on the path for early FIRE.

In fact, I think the vast majority of those who are close to FIRE talk about how it's not a sacrifice at all, they're happier now, etc.

If you're in the "how do I find a balance" phase, you don't yet have the right mindset.  Get that right first, and just enjoy the hell out of life with less, not by depriving yourself, but by being happy with what you have.

Then what is there to balance?
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frugaldrummer

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Re: Frugality in early 20's - Finding a balance
« Reply #14 on: January 22, 2015, 03:10:29 PM »
AS for your question about buying or renting a home - I'd vote for renting right now (when and if you do move out from the folks - nor rush!).

I say this because you're so young, and your work or personal circumstances could change significantly in the next few years.  You might take a better job in another city in a couple of years.  Or you might get married and need a home that suits the two of you and is closer to her work than you would otherwise pick.

Now, if you've got a job at Apple or some place that you know you plan to stay at for a long time, AND if you can purchase a home that you can rent rooms out to friends and let that income pay most of the mortgage - it might be a good investment for you.  But as you've just started working, I'd wait and save up a good chunk of change before deciding about that.

MrMoogle

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Re: Frugality in early 20's - Finding a balance
« Reply #15 on: January 22, 2015, 03:35:05 PM »
I didn't find MMM before I graduated, but I was a lot like him when he did.  I was frugal, and I invested early on.  I've made money mistakes, but 8 years later, I'm pretty close to FI.  I know the value of money, it can buy me time, and what's more valuable than that?

I've always wanted a motorcycle, but there was never a good time for me to buy one.  I live overseas now, but hope to move back soon.  If everything goes as planned, I'll be able to walk to work and the grocery store, but family and friends will be 20 minutes away.  So a motorcycle might fit nicely. 

From what I've seen, motorcycles don't save you much (if any) money, driving less does.

I bought a house, and sold it when I moved out here.  It wasn't a horrible financial decision, but it took a lot of time to buy it and to sell it.  I would wait until you've made some more life decisions (like finding a SO, deciding to have or not to have kids, where you want to spend the rest of your life) before you get one.

My advice is to not worry about making mistakes, everyone does.  Be frugal for the sake of being frugal, and the money won't be an issue.  Being frugal is a mindset, you can certainly live in the moment and be frugal.  Work on building relationships (family, friends and SO), those are priceless, even if they don't last.  Find things outside of work that you really enjoy.

big_owl

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Re: Frugality in early 20's - Finding a balance
« Reply #16 on: January 22, 2015, 04:27:42 PM »
Props to a fellow engineer...

I have a saying that my wife hates: In life you only get one trip around the merry-go-round and then you have to get off.

Now I'm somewhat of a hardcore motorcyclist, so I'll only chime in on that.  A motorcycle can *most definitely* save you money, assuming you do it right.  You have to use it for commuting, displacing trips that would normally be done with a car.  You also need to buy a bike that fits the role.  I like the Ninja 250R (used to have one), but I wouldn't want to commute on it over the long run.  On the other end....I used to own a Hayabusa.  Twisting the throttle on that thing was like being pushed along by the hand of God.  Buuuut, each rear tire cost $200 and insurance and gas mileage wasn't really any better than a frugal car.  Now I ride a DL650 and I've found it to be extremely comfy for commuting and still has enough pep to get the blood flowing.  I've put 60k miles on the DL650 and all those miles are miles that would have otherwise been put on my car. 

Commuting is *a lot* more fun on a motorcycle as well.  The low temp tonight is supposed to be the mid 20s, but no snow or ice on the roads so I can't wait to fire up the Weestrom and ride in to work on a Friday....

That's all I have.  Buy a motorcycle, you won't regret it (unless you suck at riding...)


Wanna-Be-FI-Bri

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Re: Frugality in early 20's - Finding a balance
« Reply #17 on: January 24, 2015, 12:32:20 PM »
I'm in a very similar situation (I'm 24.5).  Once you hit that six-figure savings mark you'll breath pretty easily.  You'll be like me and have more savings than all your friends combined.  I'm definitely starting to spend more money on experiences (Vegas, California, Costa Rica) and don't regret it one bit.  If you travel with friends it's actually quite affordable when costs are split evenly. 

You're only unmarried without children for so long...live it up (frugally of course)!

Mortgage Free Mike

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Re: Frugality in early 20's - Finding a balance
« Reply #18 on: January 24, 2015, 01:10:58 PM »
It sounds as though you're off to a fantastic start. Just ask yourself this before you buy things: Can I afford it? Is this a need or a want? Will it make me happy?

I've found that resisting impulse purchases that don't contribute to happiness is the key.

daymare

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Re: Frugality in early 20's - Finding a balance
« Reply #19 on: January 24, 2015, 04:39:44 PM »
I think it's not uncommon to get obsessive with finances/mint/spreadsheets when you get started with the concept of FI.  A friend linked me to MMM when I was in my first year out of college, and I feel like I've final reached complete immersion in the concept of FI/Mustachianism.  I'm 25 now and I'm at the point where I track every single household expense on a spreadsheet, go on mint sometimes more than once a day (for no good reason), and read and think a lot about retirement and FI, and of course I know the amount of our investments to the penny.

I think it's really good that you are recognizing that you could be getting obsessive to the point of limiting yourself.  For me this concept is illustrated by kindof a silly, little thing: My mom & I are both obsessed with raspberries, and my dad (who did all the grocery shopping) would frequently buy us raspberries, and my mom would always talk about how they're expensive.  Then when I graduated college and started living completely (financially) independently from my parents and on my own, I basically decided that who cares if the raspberries are 'expensive' and cost $5 for a container - I fucking love raspberries and I can always afford to spend $5 on them, and so I do, even if it's 'expensive'.

I also find that sometimes I don't enjoy experiences if I feel like I'm over-paying: ie, a restaurant with really mediocre food that charged high prices.  It's good to know myself and try to avoid experiences like that - but also, it's important to know how to have a good attitude and make the best of things and not let sunk money affect you.

I'd echo the advice of others - think a lot about what brings you happiness, what you're good at, how you relax the best.  Sometimes what you do frequently isn't always the best thing - I love sitting on my computer, reading forums and being on the internet.  But doing it too much is not good for me, I need to get out and get some sun, and talk to real people who care about me.  Partly it's about getting the right balance of alone time and time with others.  I just know that after 2 days of sitting on the internet, I'm not feeling great.  On the other hand, one evening with a glass of wine & my computer when the rest of the week is full of work?  Totally heavenly.  I would suggest reading, a lot (that's what I do).  And then implementing the things you want to do.  I believe that people who don't have much going on besides work are likely to be bored when FIRE - you have to develop yourself as a person first, you won't have a rich (emotionally/intellectually) life if you're not an interesting, interested person.  And you become that by being nerdy about your passions, connecting with people around you, being open-minded and trying things.

Spondulix

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Re: Frugality in early 20's - Finding a balance
« Reply #20 on: January 24, 2015, 07:01:15 PM »
-- Spend some time figuring out what you value (besides a healthy bank account, but that would be part of it). I did this in my 20s and STILL refer to the exercise to make sure I'm living my life aligned with my values. Back in the old days before Covey bought it, there was a company called the Franklin Institute (creator of the Franklin Planner). Many people think time management is about putting together daily to-do lists, but with this system, you first figure out your values and THEN plan your day, week, month, life, based on your values, so you're spending your time in ways that matter to you. If you look on Amazon, you can still find Hyrum Smith's book, 10 Natural Laws of Successful Time and Life Management. I'd recommend it highly, and, in fact, any book you can still find about it, and any book by Hyrum Smith.
This book looks pretty interesting. I just found the outline, just to get an idea of the system: http://www.ouronlinepage.com/mlokesh1/The_10_Natural_Laws_of_Successful_Time_and_Life_Management.pdf

thedayisbrave

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Re: Frugality in early 20's - Finding a balance
« Reply #21 on: January 24, 2015, 07:52:43 PM »
I think it's not uncommon to get obsessive with finances/mint/spreadsheets when you get started with the concept of FI.  A friend linked me to MMM when I was in my first year out of college, and I feel like I've final reached complete immersion in the concept of FI/Mustachianism.  I'm 25 now and I'm at the point where I track every single household expense on a spreadsheet, go on mint sometimes more than once a day (for no good reason), and read and think a lot about retirement and FI, and of course I know the amount of our investments to the penny.

I think it's really good that you are recognizing that you could be getting obsessive to the point of limiting yourself.  For me this concept is illustrated by kindof a silly, little thing: My mom & I are both obsessed with raspberries, and my dad (who did all the grocery shopping) would frequently buy us raspberries, and my mom would always talk about how they're expensive.  Then when I graduated college and started living completely (financially) independently from my parents and on my own, I basically decided that who cares if the raspberries are 'expensive' and cost $5 for a container - I fucking love raspberries and I can always afford to spend $5 on them, and so I do, even if it's 'expensive'.

I also find that sometimes I don't enjoy experiences if I feel like I'm over-paying: ie, a restaurant with really mediocre food that charged high prices.  It's good to know myself and try to avoid experiences like that - but also, it's important to know how to have a good attitude and make the best of things and not let sunk money affect you.

I'd echo the advice of others - think a lot about what brings you happiness, what you're good at, how you relax the best.  Sometimes what you do frequently isn't always the best thing - I love sitting on my computer, reading forums and being on the internet.  But doing it too much is not good for me, I need to get out and get some sun, and talk to real people who care about me.  Partly it's about getting the right balance of alone time and time with others.  I just know that after 2 days of sitting on the internet, I'm not feeling great.  On the other hand, one evening with a glass of wine & my computer when the rest of the week is full of work?  Totally heavenly.  I would suggest reading, a lot (that's what I do).  And then implementing the things you want to do.  I believe that people who don't have much going on besides work are likely to be bored when FIRE - you have to develop yourself as a person first, you won't have a rich (emotionally/intellectually) life if you're not an interesting, interested person.  And you become that by being nerdy about your passions, connecting with people around you, being open-minded and trying things.
+1000

MrsPete

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Re: Frugality in early 20's - Finding a balance
« Reply #22 on: January 24, 2015, 07:53:29 PM »
Multiple thoughts:

First, when you're new to a new skill (and frugality is a skill), it's natural that it takes lots of energy, lots of time, even bordering on the point of obsession.  It'll become second nature, and then you won't have this "am I out of balance?" concern.

Second, you're living at home, no student loans, no car payments . . . why are you saving only 2/3 of your salary?  These could be your make-or-break years, and I suspect you could do better.

Another poster said you'll breathe more easily once you reach the six-figure mark.  An older, financially astute friend told us years ago, "The first 100,000 seems to take forever to earn; but once you reach that point, things start to move faster."  I don't know if it's true for everyone or not, but it was true for us.  We've had weeks in which our investments earned a year of our salary -- that wasn't true when we were young and were still watching smaller numbers add up.

Setting goals is a great idea at your age.  Figuring up where you can be at a certain point in your life is a good exercise -- but keep in mind that your circumstances will alter as things move on.  Plan, but be willing to be flexible.

It can be hard, while focusing on these things, to keep in mind that you need to live NOW too.  Someone else said, "Be in the moment".  That's not bad advice at all.  Spend on things that make you happy, but don't spend thoughtlessly, without a plan.  Mindless spending -- not the occasional splurge -- is the enemy.


dividendman

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Re: Frugality in early 20's - Finding a balance
« Reply #23 on: January 24, 2015, 08:13:07 PM »
You might want to consider looking for work that pays more than 55k. A software engineer, even straight out of school, can command much more salary than that. Consider moving.

This will give you a bit more cash - but I say be frugal even if you get a new gig.

I spent my early twenties partying it up and wasting a bit of money - I wish I hadn't now and I'm only 32 thanks to work being soul destroying. :)

acorn

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Re: Frugality in early 20's - Finding a balance
« Reply #24 on: January 24, 2015, 10:30:12 PM »
The price of things is determined by the market, but you decide on their value to you.

If you've thought it through, and have the money for it, go for it! Frugally of course. We are all trying to buy future time by saving as much as we can now, but we're still living in the present. The journey is as important as every milestone that we reach.

Twenty years from now you will be more disappointed by the things that you didn't do than by the ones you did do.  - Mark Twain

Also, you sound like you have a good head on you. It's not like buying a bike and traveling is going to set you on an irreversible path to lifestyle inflation and hedonism! Have faith in your frugality muscles!

rmendpara

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Re: Frugality in early 20's - Finding a balance
« Reply #25 on: January 24, 2015, 11:13:13 PM »
I first discovered MMM in late 2013 when I was a senior in college. I immediately loved all his advice and looked forward to using it when I got a job. I'm now 23 and have been working as a Software Engineer since October. Financially I'm in a really good situation; I have no debt, a fully paid off fuel-efficient car, and am still living for free with my parents (for now). Because my expenses are so low I'm able to easily save 2/3s of my 55k salary.

My problem is I sometimes feel like I'm too obsessed with all this stuff. I find myself looking up compound interest calculators trying to figure out how much I'll be able to save by a specific time in my life (which I realize is pretty dumb since it's impossible to completely map out your future..). I worry about whether I should give up on getting a motorcycle and just put the money towards retirement. I've also always wanted to spend some time traveling while I'm in my 20's but now find myself thinking maybe I should put that off. And I've also been fretting about whether it's more economical to buy a house or just rent an apartment when I move out.

Any advice on how to balance being frugal while still living in the present? I feel dumb worrying about these things so much even though I'm doing better than many people my age.

I play around with calculators, looking at investments, etc, probably a bit too much as well. Fortunately, I don't buy/sell in and out a lot so it's really just a habit now.

When I first started working in 2012, I very carefully tracked my budget each month and would look ahead often when I started spending more. Three years later, today, I can honestly say I could have spent some more on some things during the past few years, but it was all part of the experience of growing into the person and spending/investing style that I have today.

If you catch yourself being "cheap", like avoiding being out with friends all the time because you're too cheap to pay for a drink or dinner, then you're probably overdoing the frugal thing. Especially at your income level, you don't need to live like a hermit. Take advantage of your freedoms now because things like friends, travel, trying new activities, etc, won't always be as easy in the future.

Obviously, keep your spending in check and make sure you are broadly on track to meet your saving/investing goals, but don't fall into the habit of equating everything with money. Just this weekend, I spent ~$100 on a night out with a couple buddies. Even now I have to remind myself that it's perfectly fine to do so once in a while. By being mostly responsible, and perhaps a little obsessive early on, I have the privilege of having my investments work very hard for me and I can leave most of it on auto pilot and just live my life.

If I could go back, I would have probably gone on 1-2 more trips with friends. Those trips may have cost me 1-2k each, but today that's really just not that big of a deal for an occasional/infrequent expense. Don't get caught up in the details when you really just need to make sure that you take care of the big things:
- contribute to 401k/trad. ira/Roth... depending on your situation
- keep up a cash backup fund
- start investing in a taxable account with remainder
- be mindful of the big 3 expenses (housing, transportation, food/entertainment)

Watch the accounts fill up and grow and live your life!

dilinger

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Re: Frugality in early 20's - Finding a balance
« Reply #26 on: January 25, 2015, 12:21:27 AM »
You're a software engineer?  Travel on your company's dime.  They'll probably even put you in business class for international flights (unless you're at a startup).  The business trip that takes you to Taipei or Silicon Valley?  Extend it for a few days, take a mini-vacation, and check out the area.  Find international conferences that are related to whatever you're working on (programming languages, library/software communities/customers, etc).  Go to those conferences, attend a few talks, but also enjoy yourself and check out the locale.  It's also a great way to get a less tourist-y experience, since the locals may be involved with your company or the conference.  Your company probably has a budget for conferences; they typically want their staff to stay updated on the technologies they're working with.

When you decide that it's time to switch jobs, interview with companies in remote locations.  Even if you have no interest in living there (although, how do you know if you haven't visited?), they will fly you out for interviews on their dime.  They will handle flight arrangements, but ask the recruiter/HR to make the return flight a few days later.  Make something up; you have family in the area that you'd like to visit, or you just want to check out the area to see what it's like and if you could see yourself living there.  It really doesn't matter - they don't care when your return flight is booked for.  Take a few days off, enjoy the area, and get an offer that you can use to sweeten the deal at the job that you're *actually* strongly considering.

Just beware of the trips that are emergency trips to put out fires.  Those are the worst; flying internationally to deal with some stupid bug or customer who is freaking out, and then immediately flying back.
« Last Edit: January 25, 2015, 12:25:58 AM by dilinger »

aspiringnomad

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Re: Frugality in early 20's - Finding a balance
« Reply #27 on: January 25, 2015, 12:34:22 AM »
My advice is to travel a ton if you're saving at least 50% of your salary and to do it while you're young enough to enjoy staying in cheap hostels and meet other travelers. That will pay bigger dividends in happiness and perspective than saving an extra few percentage points in salary. Don't obsess over FIRE at your age (easier said than done, I know). With your degree and knowledge of the MMM path you'll cruise there by 40 at the latest, probably sooner. Try to enjoy the journey as much as you can, even if it means spending on a few experiences while you're young enough to really appreciate them.

lakemom

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Re: Frugality in early 20's - Finding a balance
« Reply #28 on: January 25, 2015, 05:55:10 AM »
I have a daughter I'd like to introduce you to LOL!!  Honestly you are doing great and learning any new skill does become an obsession for a while but will even out as it becomes more second nature to you.

On the bike, hold off on that for now and in the meantime start some conversations with your parents on THEIR expectations of if/when you move out of their home.  (unless you've already had these conversations)  They may be perfectly happy to have you there, they may be secretly counting the seconds until they have their home back to themselves.

Finding your balance will come with time.  I'd say most 20 somethings are out of balance but most are just out of balance in the opposite direction of you...huge student loans, car payments, living it up on credit.  It takes time to build a life and as a recent college graduate you ARE still building your life...just now as a full adult rather than as a student.  Spend your free time in pursuits you enjoy and the rest will naturally follow over time.

chasesfish

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Re: Frugality in early 20's - Finding a balance
« Reply #29 on: January 25, 2015, 06:21:53 AM »
I guarantee you that your 30 year old self will thank you for not buying that motorcycle when he looks at the brokerage account balances.

As for travelling, I think you should do quite a bit of this, but also learn how to do it cheap early.  There are things tolerable to you in your 20's that you'll hate in your 40's (like taking 2-3 connections for a low cost flight, low cost accommodations, splitting hotel rooms 3-4 ways).  Regardless of what folks on here may say, living out of a backpack is easier at 24 than it is at 40 or 50.  When you eventually move out, move to the places where 20 somethings all live and develop friendships that'll last forever.

You are already ahead of the game, I would just caution you to avoid some of the material purchases you can always enjoy later after you have FU money and use money for the experiences you can never get back due to age.

aschmidt2930

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Re: Frugality in early 20's - Finding a balance
« Reply #30 on: January 25, 2015, 08:55:49 AM »
I first discovered MMM in late 2013 when I was a senior in college. I immediately loved all his advice and looked forward to using it when I got a job. I'm now 23 and have been working as a Software Engineer since October. Financially I'm in a really good situation; I have no debt, a fully paid off fuel-efficient car, and am still living for free with my parents (for now). Because my expenses are so low I'm able to easily save 2/3s of my 55k salary.

My problem is I sometimes feel like I'm too obsessed with all this stuff. I find myself looking up compound interest calculators trying to figure out how much I'll be able to save by a specific time in my life (which I realize is pretty dumb since it's impossible to completely map out your future..). I worry about whether I should give up on getting a motorcycle and just put the money towards retirement. I've also always wanted to spend some time traveling while I'm in my 20's but now find myself thinking maybe I should put that off. And I've also been fretting about whether it's more economical to buy a house or just rent an apartment when I move out.

Any advice on how to balance being frugal while still living in the present? I feel dumb worrying about these things so much even though I'm doing better than many people my age.

I play around with calculators, looking at investments, etc, probably a bit too much as well. Fortunately, I don't buy/sell in and out a lot so it's really just a habit now.

When I first started working in 2012, I very carefully tracked my budget each month and would look ahead often when I started spending more. Three years later, today, I can honestly say I could have spent some more on some things during the past few years, but it was all part of the experience of growing into the person and spending/investing style that I have today.

If you catch yourself being "cheap", like avoiding being out with friends all the time because you're too cheap to pay for a drink or dinner, then you're probably overdoing the frugal thing. Especially at your income level, you don't need to live like a hermit. Take advantage of your freedoms now because things like friends, travel, trying new activities, etc, won't always be as easy in the future.

Obviously, keep your spending in check and make sure you are broadly on track to meet your saving/investing goals, but don't fall into the habit of equating everything with money. Just this weekend, I spent ~$100 on a night out with a couple buddies. Even now I have to remind myself that it's perfectly fine to do so once in a while. By being mostly responsible, and perhaps a little obsessive early on, I have the privilege of having my investments work very hard for me and I can leave most of it on auto pilot and just live my life.

If I could go back, I would have probably gone on 1-2 more trips with friends. Those trips may have cost me 1-2k each, but today that's really just not that big of a deal for an occasional/infrequent expense. Don't get caught up in the details when you really just need to make sure that you take care of the big things:
- contribute to 401k/trad. ira/Roth... depending on your situation
- keep up a cash backup fund
- start investing in a taxable account with remainder
- be mindful of the big 3 expenses (housing, transportation, food/entertainment)

Watch the accounts fill up and grow and live your life!

Very well said, and I completely agree.  One can put themselves on a fast track to FI while still enjoying their youth.  Personally, I'm willing to spend money on experiences , but many things.  Night out with friends? Explore Europe? Skydive? Yep!  Clothes I'll hardly wear? Cable TV? Nope.

NICE!

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Re: Frugality in early 20's - Finding a balance
« Reply #31 on: January 25, 2015, 09:41:26 AM »
I guarantee you that your 30 year old self will thank you for not buying that motorcycle when he looks at the brokerage account balances.

As for travelling, I think you should do quite a bit of this, but also learn how to do it cheap early.  There are things tolerable to you in your 20's that you'll hate in your 40's (like taking 2-3 connections for a low cost flight, low cost accommodations, splitting hotel rooms 3-4 ways).  Regardless of what folks on here may say, living out of a backpack is easier at 24 than it is at 40 or 50.  When you eventually move out, move to the places where 20 somethings all live and develop friendships that'll last forever.

100% agree. If you're single and young you have zero problems with hostels. Not only do you have no problems with them, you see them as an opportunity to meet foreigners, especially women. I wish I hadn't had a stupid aversion to hostels when I was your age. I've heard of people meeting their future spouses, making lifetime friends, or in general just having a total blast.

PS If you're ever in Nice (France), I can personally vouch for the hostel that is #1 on hostelworld's site (at least it was when I was there in 2013). Not terribly expensive, tons of young people, great location, and free pasta dinner every night if you bought a beer (which was 1 euro).

JuSp02

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Re: Frugality in early 20's - Finding a balance
« Reply #32 on: January 25, 2015, 10:08:26 AM »
It's good to go through an obsessive period when you first discover MMM as you need that to develop your frugality muscles. This stuff isn't natural to most of us and we need that time to rewire our brains to stop thinking that spending money = enjoying life. But the whole concept of MMM is that you don't need to spend money to be happy. Focus on developing hobbies and interests that are low cost. I also agree with everyone that has said traveling does not need to be expensive. If you plan well and utilize rewards credit cards with sign-up bonuses, stay in hostels, etc. you can travel for very little. When I was around your age, I once traveled for 48 hours to get to get to Asia (four flights plus an overnight in the Seoul airport). It took forever, but was dirt cheap. I have often found that the cheaper, more creative the method of travel, the better the story and experience.

Spondulix

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Re: Frugality in early 20's - Finding a balance
« Reply #33 on: January 25, 2015, 06:35:53 PM »
If you catch yourself being "cheap", like avoiding being out with friends all the time because you're too cheap to pay for a drink or dinner, then you're probably overdoing the frugal thing. Especially at your income level, you don't need to live like a hermit. Take advantage of your freedoms now because things like friends, travel, trying new activities, etc, won't always be as easy in the future.
I think there's a flip side to this... being cheap can be an easy excuse (to ourselves) to get out of social situations or activities. Say I get an invitation to a party at a loud restaurant in a busy part of town. The easy way to look at it is to say, "I'm not going cause drinks and parking are too expensive." In actuality, I hate loud/busy restaurants, I don't feel like I have to be there, AND I also hate paying $15 for a drink. I don't think that's being cheap - it's being smart about the value of your time, and who you give it to.

smisk

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Re: Frugality in early 20's - Finding a balance
« Reply #34 on: January 26, 2015, 08:04:12 AM »
you have to develop yourself as a person first, you won't have a rich (emotionally/intellectually) life if you're not an interesting, interested person.  And you become that by being nerdy about your passions, connecting with people around you, being open-minded and trying things.

Spend on things that make you happy, but don't spend thoughtlessly, without a plan.  Mindless spending -- not the occasional splurge -- is the enemy.

Thanks everyone, you've given me a lot of good advice, especially liked these two lines. I definitely agree about spending on experiences over possessions, I find doing something tends to make me a lot happier overall than just buying a thing.

Researcher

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Re: Frugality in early 20's - Finding a balance
« Reply #35 on: January 26, 2015, 09:22:50 AM »
I'm in the same boat and I'd also like to thank you guys for this advice! :)

KD

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Re: Frugality in early 20's - Finding a balance
« Reply #36 on: February 11, 2015, 08:36:49 AM »
May be late to the party.  Since I believe you are debt free you might want to figure out a percentage that you're comfortable with spending vs. savings - say 75% future 25% present, or 60/40 or 50/50.  For those still in debt try Past, Present and Future percentages and stick with it. 

For me spending my dollars has to equal VALUE received or I'm hacked off at myself.  Learn to weigh this out in private in some contemplative planning and not when standing in the motorcycle store.  Be prepared ahead of time to understand where your cost/value breaking point is.  Then, go buy what you have planned and earned and then enjoy it.  Over time you may discover the joy has worn off and it's time for a new passion.  That's life and is normal.  Just try to do the thinking/planning/researching up front and you'll still be way ahead of most folks. 

You are doing AWESOME!!!

Rosbif

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Re: Frugality in early 20's - Finding a balance
« Reply #37 on: February 11, 2015, 09:10:56 AM »
you have to develop yourself as a person first, you won't have a rich (emotionally/intellectually) life if you're not an interesting, interested person.  And you become that by being nerdy about your passions, connecting with people around you, being open-minded and trying things.

Spend on things that make you happy, but don't spend thoughtlessly, without a plan.  Mindless spending -- not the occasional splurge -- is the enemy.

Thanks everyone, you've given me a lot of good advice, especially liked these two lines. I definitely agree about spending on experiences over possessions, I find doing something tends to make me a lot happier overall than just buying a thing.

A motorbike is that rare beast that crosses the border between experience and possession. Yes, it's just a motor vehicle, but it is also a fantastic experience riding it around. Definitely pick up a cheapo second-hand one. Also much easier and cheaper to work on than a car.

No point pushing every single dream to a retirement (even an early one) that may never come. Just don't get sucked into spending loads on shiny bits for a new bike!

boarder42

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Re: Frugality in early 20's - Finding a balance
« Reply #38 on: February 11, 2015, 09:39:33 AM »
i didnt read thru everything but if you're only saving 66% and you dont have to pay rent.  you should be living a pretty baller lifestyle.  my wife and i save 65% and we lead baller lives with a boat and a house etc.   You should probably be evaluating where you're spending that 20k and ask your self if it really is giving you happiness.

Guesl982374

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Re: Frugality in early 20's - Finding a balance
« Reply #39 on: February 11, 2015, 10:03:33 AM »
I'm 30 years old, will most likely hit FI sometime around 37 or 38. Between my wife and I we've probably spent somewhere on the order of $50K on traveling in our late 20's and another $75K+ on city living the past few years. I also spend the first 2+ years after graduating with an engineering degree living at home.

Here's my advise:

-You are light years ahead of the game. Keep it up. Also take a few moments a week/month to basket in your badassity/awesomeness and enjoy your accomplishments (I still don't do this enough).
-Pay for value, not cost. For my wife and I, big city living and travel were calculated decisions and have increased our lifetime happiness. It sounds like you are spending $15K-$20K while living at home, make sure you are getting the biggest happiness bang for your buck or if you could fund travel by cutting other expenses.
-What you do in your 20s sets you up for the rest of your life. Use your 20's to build your income/assets/skillset/connections. While $55K is nothing to sneeze at, you still have some significant income growth potential. You'll get to a more stable FI if you focus on increasing your skills and eventually your income/assets. (by stable I mean a potentially higher FI income at a SWR of 3-4%: I'd personally rather have a FI income of $50K vs $25K for luxuries, college expenses, more travel, etc.) The people I know who had the most "fun" in high school and in their 20s are typically the ones who will be working 40+ years and complain they don't have money.
-Taking a couple of once-in-a-lifetime-trips won't significantly delay your FI plans, especially if you manage the costs. And if it does delay FI 0-2 years, make the personal decision if it's worth it or not.

eyesonthehorizon

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Re: Frugality in early 20's - Finding a balance
« Reply #40 on: February 12, 2015, 03:08:16 AM »
I haven't seen much of this in the thread yet - only the one comment really, see boarder42 - but I had the same thought: if you have no debt, no rent, and a paid-off vehicle already, how are you spending $18k per annum? Or to be more precise - it's bewilderment, not derision, so please don't take it the wrong way - but how on earth are you spending $18k per annum??!? Is that a figure including your past vehicle or debt payments by mistake?

It's important to say it's not an unreasonable amount to spend, if you're having an amazing life, the exact life you want to be having. Anything which is right for you is right for you. But - I'm hearing notes of dissatisfaction, which suggests this $18k a year life at home is probably not the best use of your time and money. You say you want to travel - on that kind of anticipated spending you could go all over the world, experience the life of royalty in myriad amazing places. How are you managing to disappear all that cash if you're staying at home? Literally, do you know where it goes?

If you want a direction you can take things to improve your progress without becoming too obsessive, the future will take care of itself if your savings rate is high enough. Right now you're saving two thirds, but I'd argue that an $18k lifestyle with extremely minimal "real" required overhead (food?) will probably balloon pretty painfully later if you then have rent to pay and more demands on your time. If that $18k spend isn't making you truly happy, why are you doing it? What would be more meaningful to you than whatever you're currently spending it on? E.g. - you could FIRE years earlier by saving it now, or you could be investing it in self-expanding experiences - meeting people, learning a language or skill, traveling. (And, frankly, still doing it with another $10k tucked away each year. No judgement, but seriously - how did you find a way to spend it all?)

I'll echo all the other comments of support and encouragement, as well as those pertaining to increasing your income. But my two cents on the quickest way to improve your chances: find a happier life living less expensively.

(Context/ full disclosure: I live on just about $15k/annum, no debts. Two thirds of my spending is on rent. My whole lifestyle after the rent - groceries, bills, and hobbies included - fits into $5k for a year. That includes interstate travel for various outdoorsy ventures in the mountains 800 miles away at least once a year. I lived in a couple of places in Asia for a stretch and aside from expensive rent in a big city life is absurdly cheap there, so the royalty comment is not exaggerated.)

lpep

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Re: Frugality in early 20's - Finding a balance
« Reply #41 on: February 12, 2015, 03:41:46 AM »
Thanks for the replies everyone, very insightful! It's good to know there are others in similar situations. I do agree that one of the most important things is just having a frugal mindset overall. You don't necessarily have to deprive yourself of everything, just be mindful of how it will impact you and whether it's worth it etc.
Also think I need to define my goals more. I read the post on MMM by Brandon Turner the other day where he mentioned "And then...", which really resonated with me. My immediate goal out of college was to get a good job. Now that I have that accomplished I'm a little lost as to what to focus on next. I guess I need to do a little soul searching and figure out what will make me happy.

Dear god, I know how this feels. My post-college-grad new-job what-now crisis was adopting a dog. He is now my parents' dog, and they're obsessed with him, so it's a happy ending - but that was not my brightest shining-est moment.

It's seriously off-putting to be working toward forseeable future goals - graduating high school, graduating college, finding your first job - to then have all your planned goals just end. I felt a bit lost, especially since I wasn't particularly motivated by the idea of a career aiming at more and more responsibility, power, money, etc. (and because that's not necessarily possible for our generation). I feel like now, at 26, I finally have more of an end goal with FIRE. It's given me something to design things around and for, and that's useful. I have a context for decisions and plans, and while it's not the be-all end-all, it's actually pretty freeing.

Sending solidarity your way!