Got busy, forgot about FIRE. How to get back on the gain train?

[TooMuchGlass]

Hi,

A few years ago, my wife (29) and I (31) were excited about the potential of FIREing in around 10 years or so, as she makes 100k and I stay at home with our two young children.

Since then, though, we've slowly slid toward ridiculousness. Over the last 2.5 years, we've managed to yearly max out her 401k (20k after company match), as well as our IRAs (12k), and . . . not much else.

Our spending is crazy. I want to put it up so you can give me the facepunches we deserve, but I don't even know what it is! We used to use Mint religiously, but when we switched banks and Mint got clunky, we quit.

Has anyone blown through potential savings like this before? How did you pull yourself out?

For now, here's my thoughts:
1) Track every damn transaction in Excel until I find a better way to track (or just stick with Excel if we like it).
2) Look at our CC statements for approximations of spending.
3) Sell excess possessions.

I think I'm just feeling encumbered by our waste. Ugh.

All advice appreciated.

[seattlecyclone]

It's a marathon, not a sprint. You have a 32% savings rate. Not the fastest runner out of the gate, but you're still making a pretty good pace even without trying very hard. My advice to you for how to improve would be to start by analyzing your spending over the past year or two. Pick some reasonable number of categories and put every expenditure into one of them. See where your money is going, and reconcile that with your values.

The shockingly simple math says that at your current savings rate, saving another 5% might shave three years off your journey. Can you find $5k worth of spending that you wouldn't work another three years to maintain on an ongoing basis? Cut that out. Once that becomes the new normal, look for another $5k.

All is not lost. You still have a much higher savings rate than the typical American, and a desire to improve. Use that.

[reeshau]

How does your wife feel about the situation?  While knowing the details is necessary, if she thinks you are in a good place now, you have more to do in terms of sharing your frustration and talking about joint goals than just finding fat to trim.

[Travis]

...
Since then, though, we've slowly slid toward ridiculousness. Over the last 2.5 years, we've managed to yearly max out her 401k (20k after company match), as well as our IRAs (12k), and . . . not much else.

Our spending is crazy. I want to put it up so you can give me the facepunches we deserve, but I don't even know what it is! We used to use Mint religiously, but when we switched banks and Mint got clunky, we quit.
...

All advice appreciated.

Maxing out your tax-advantaged accounts puts you above average so don't feel too bad.  If you want to find your bad spending and develop some new/better habits then throw your numbers up here and we'll be happy to help.  Was it something you bought, something you did, or something you ate?  That's where money tends to go.

What is it that you think caused you to backslide?  Don't blame it on Mint. Mint is just a tracker.  You made the decision to go to the store and swipe the card.

[Hadilly]

I really like Personal Capital for tracking.

Look forward to hearing the results of your analysis. Is it lifestyle creep or more structural?

Good luck!

[SwordGuy]

Set a budget for the month on how much to put on CC.

Clip a stiff piece of paper to the card with the amount on it.  As you spend, reduce the number.  Don't go below $0 unless it's a TRUE emergency.

Increase your automatic savings based on the planned savings rate.

If you spend too much one month, leave the automatic savings rate high and reduce the amount you are allowed to spend.  That may mean you do without that meal out, or that new gadget for another month or ten.


If you want to increase your savings rate to a really high number, the savings rate needs to come first and optional spending second.   

 

[SunnyDays]

Set a budget for the month on how much to put on CC.

Clip a stiff piece of paper to the card with the amount on it.  As you spend, reduce the number.  Don't go below $0 unless it's a TRUE emergency.

Increase your automatic savings based on the planned savings rate.

If you spend too much one month, leave the automatic savings rate high and reduce the amount you are allowed to spend.  That may mean you do without that meal out, or that new gadget for another month or ten.


If you want to increase your savings rate to a really high number, the savings rate needs to come first and optional spending second.   

 

This is the simplest (but not easiest) and fastest approach, and is basically what I did for many years.  Decide how much you want to save, arrange automatic deposits/transfers for it each pay cheque and live off the rest.  You can move money around from one category to the other, but you still have a fixed amount to spend in total.  Worked for me.

[TooMuchGlass]

Thanks for some feedback, everyone.

After sleeping on it, I've chilled out a bit. Still, I feel stupid for engaging in some serious lifestyle creep.

Here's some comments, in turn:

All is not lost. You still have a much higher savings rate than the typical American, and a desire to improve. Use that.

seattlecyclone: your practical tips are good, but I like this better. I tend to get hung up on things I can't do anything about. I need the reminder to fix what I can fix.

you might seriously consider switching to spending cash

We're going to take September and track everything. If we still don't like our results, we'll go with a cash only system.

How does your wife feel about the situation? 

Excellent question. In general, she's more frugal than me. Right now, she recognizes we've both been spending pretty indiscriminately. We're on the same page and she's totally amazing.

Was it something you bought, something you did, or something you ate?  That's where money tends to go.

What is it that you think caused you to backslide?  Don't blame it on Mint. Mint is just a tracker.  You made the decision to go to the store and swipe the card.

Short answer: I just don't know. I'll have to get serious about organizing the records. I think it's a combo of no explicit goal, lifestyle creep, buying a (modest) house (25k down on a 120k house), home renovations (7k), having a child (3k?), travel (ehh, 8k?).

Was it Mint's fault? No. It was ours. Which is nice, because that means we can fix it.

I really like Personal Capital for tracking.

Look forward to hearing the results of your analysis. Is it lifestyle creep or more structural?

Good luck!

I'll look into Personal Capital.
How would you divide between lifestyle creep and structural?

Clip a stiff piece of paper to the card with the amount on it. 

 

This is a great, practical tip. Thanks!

If you want to increase your savings rate to a really high number, the savings rate needs to come first and optional spending second.   

What pisses me off is that we knew that and were implementing it 3 years ago. We just got lazy. That's embarrassing.

Decide how much you want to save, arrange automatic deposits/transfers for it each pay cheque and live off the rest. 

I love the simplicity, and I think we're going to head this route. We've got a lot of possessions that I'm starting to feel seriously weighed down by. I think an aggressive savings rate will cut out our buying of bullshit.

[mistymoney]

Hi,

A few years ago, my wife (29) and I (31) were excited about the potential of FIREing in around 10 years or so, as she makes 100k and I stay at home with our two young children.

Since then, though, we've slowly slid toward ridiculousness. Over the last 2.5 years, we've managed to yearly max out her 401k (20k after company match), as well as our IRAs (12k), and . . . not much else.

Our spending is crazy. I want to put it up so you can give me the facepunches we deserve, but I don't even know what it is! We used to use Mint religiously, but when we switched banks and Mint got clunky, we quit.

Has anyone blown through potential savings like this before? How did you pull yourself out?

For now, here's my thoughts:
1) Track every damn transaction in Excel until I find a better way to track (or just stick with Excel if we like it).
2) Look at our CC statements for approximations of spending.
3) Sell excess possessions.

I think I'm just feeling encumbered by our waste. Ugh.

All advice appreciated.

Well, on the other side, your income is 100k, you are putting 19k into 401k and 12 into roths - 31k/31% of gross income. That is not too shabby! Don't kick yourself too much!!

So after taxes and benefits and the retirement savings, your take home is likely about 60-65k? Family of 4?

Plan to do better, definitely -  But feel good about what you are accomplishing/have accomplished right now!

Then start the tracking!

Try the pay yourself first method - it's been working for the 401k/roths - now just do it for your taxable account. Start small until you figure out your budget - but if you have a vague feeling you are spending a lot on unnecessary stuff, set up an account at vanguard or other brokerage, and start making monthly or every paycheck contributions through automatic deposits.

Start smallish just to put it in place, and then adjust as you get a better handle on necessary spending for your monthly budget.

[Dee18]

To slow down spending money on things, have a 30 day list.  If you want to buy something, put it on a list on your fridge.  If you still want it after 30 days (you could even use 90 days for purchases over a certain amount), then consider buying it.  I instituted this with myself and my daughter when she was in elementary school.  We were both amazed at how many things we no longer wanted after 30 days. 

[DeniseNJ]

To slow down spending money on things, have a 30 day list.  If you want to buy something, put it on a list on your fridge.  If you still want it after 30 days (you could even use 90 days for purchases over a certain amount), then consider buying it.  I instituted this with myself and my daughter when she was in elementary school.  We were both amazed at how many things we no longer wanted after 30 days.

oooh good one.  I will def try this.

Currently, we pay savings first, then bills, then blow the rest 'till we're outta dough.  The trick is that after savings and bills, there's not a lot left. 

To stretch what's left over I encourage family to look for bargains everywhere.  If you want something, you can probably have it but check if you really want or need it and check if there is a lower price or a way to get it cheaper.  I've put a hold on the cc since we just can't be trusted with them.  So when we are out of money then we just have to hold our breath until we get paid.  As long as the savings is being deposited (on auto) and the bills are paid and we have no debt besides the mortgage then we're good.  Eat a butter sandwich if you're hungry.