Am I on the verge of a spending spree?

[ginjaninja]

Hello Mustache Community!

A little background on me:  I graduated from college in 2016 and have been working full time since.  I travel for work ~70% of the time.  I am still living at home because I did not want to pay for expensive storage space and I wanted to save up for buying my own house.  I do not have any debts due to the generosity of my family and scholarships.  I drive a 2001 car with no intent of replacing it anytime soon.   

I want to detail my average spending in specific categories pre and post MMM.

PreMMM (Jan 2017-November 2017)

Saving
Invest - $1200/ month
Roth IRA - $458.33 / month
401k - $566.66 / month
HSA - $283.33 / month
Total - $2508.32/month

Spending
Auto and Transport - $102.86/month (all maintenance and gas for my car)
Entertainment - $239.09/month (includes a class that I took for $1500)
Food/Dining/Alcohol - $248.29/month
Health and Fitness - $18.47/month (I was paying for a gym that I cancelled later in the year)
Personal Care - $47.97/month
Shopping - $213.85/month (including gifts for others)
Travel - $449.93/month (not including work travel)
Charity - $34.78/month
Bills and Utilities - $113 (cellphone and car insurance)
Total - $1468.24/month

PostMMM (December 2017-March 2017)

Saving
Invest - $1700/ month
Roth IRA - $458.33 / month
401k - $1525 / month
HSA - $287.50 / month
Total - $3961.83/month

Spending
Auto and Transport - $36.80/month (all maintenance and gas for my car)
Entertainment - $17.18/month (spotify, pateron, fun events)
Food/Dining/Alcohol - $122.18/month
Health and Fitness - $0/month
Personal Care - $30.40/month
Shopping - $30.95/month (including gifts for others)
Travel - $296.40/month (not including work travel, this is including airfare and a cruise for me and my boyfriend in May)
Charity - $31.47/month
Bills and Utilities - $113 (cellphone and car insurance, my phone will be paid off in August reducing this to $83/month)
Total - $678.38/month

Comments:
Before MMM I had the attitude that as long as I was getting company match for my 401k, maxing out my RothIRA (I have done this every year since 2014), and putting away the equivalent of rent into savings ($1200) that I could spend the rest of my money freely.  I figured that as long as I was doing this I was better off than most of my peers and could let it become automatic.  Plus this is all of the advice that is given to young college grads.

Then I found MMM.  I started administering the face punches liberally and cut back on my spending quite significantly.  I also realized that there is so much more that I can be doing to prepare for my financial future and potential FIRE.

If you take out travel ($1500 in March that I am paying for the whole trip for my boyfriend and I) my spending is right around $400/month.  I realize that if I wasn't traveling so much for work my food, car, and entertainment categories would all increase due to me covering some of those expenses instead of my company.  I got a promotion in December and that in tandem with increasing my savings by $1458.34/month my bank account is still increasing by $700/month. 

Also, I would also like to mention that I am so incredibly grateful to my parents for letting me save for my financial future.  I sat them down before I moved home and told them "If my living at home ever negatively impacts your ability to retire, please let me know and I will move out asap."  Since moving home I have cut my parents cable bill by $170/month, installed a Nest system to help cut utilities, managed the food shopping and cut the grocery bill in half through planning of meals and not throwing away food.  I am trying to make sure they are only benefiting from my time here.

Should I keep to this shoe string budget even if my goals are being met?  I know that my expenses will increase when I move out so I do not want to have lifestyle inflation and be struggling when I do move out on my own.  I have tried many food diets in the past and the ones that always fail are when I am too restrictive and come to the breaking point where I eat everything but the kitchen sink.  I do not want this to be what happens with my current spending habits where I feel to restricted and spend like crazy just to come and regret it later.  I don't have many friends that are saving like I am, so I feel like the odd one out.

Finally, because this is a case study, are there any other face punches that I am missing?  Any other advice that you might have as I begin my journey to FIRE?

Thank you for your time :)

[savedough]

When diets don't work, it is often because the person does not intend to make the new diet a permanent lifestyle and cut back to unreasonable levels.    That is the question you need to ask yourself here:  Is this a permanent lifestyle?  Am I feeling deprived or does my spending align with what makes me happy?

If you are cutting back to meet a short-term goal like save for a down payment, then once you reach that goal you won't have the carrot to drive your motivation.  If you feel deprived, it may not be sustainable.   If you are happy, don't stress.   

Reflect on those questions: Talk it over with a trusted friend (if you are an extrovert that processes out loud like me) or journal (introvert) or whatever helps you navigate your thoughts.   You'll figure it out.

Good job though.   You are doing really well.  I don't see any face punches but am curious why you are footing the bill for the cruise.   My now husband graduated before me and provided me with a lot of dinners out since I was a broke college kid, but I don't think I would have let him pay for a vacation.   Maybe I would have.  Hard to decide now that we've been married for what feels like forever.

[ChpBstrd]

Sounds like you're doing great.

FIRE is an outcome that mathematically occurs after a period of time earning a certain amount and spending a lower amount. The math does not care about our lifestyle or our satisfaction with it. The math just spits out the time variable in years based on our inputs. Live like the guy on earlyretirementextreme.com and retire in 5 years? Or save 40% and retire in 25? The math is indifferent. It only provides points on a curve. Asking an equation what we "should" do is like talking to a wrench or a paintbrush instead of commanding those tools. We are the meaning-makers. We are the only ones who can answer a "should" question. Say it with me if you have to: "I am the meaning maker. I am the only authority about what I should do." Freedom is the refusal to let other people, ads, stuff, or abstractions such as money usurp our position as meaning makers.

I could say "if I were you, I'd do X and retire in 10 years" but that's just another voice in the crowd because I'm not your meaning maker. Only you are. You must insist on this.

Why are these points important? Because being a stubbornly authoritarian meaning maker of yourself is the only way you'll avoid lifestyle creep. While you are a young adult, your peers are living modestly and you too can easily do so. But soon they will be buying houses and new cars and iPhone XYZs. You'll visit them in their fancy homes and they'll visit you in your frugal home and your feelings toward these things will start to soften. At some point you'll realize that your longtime friends are drifting away to spend more time with others who are "enjoying" expensive subdivisions, restaurants, media consumption, and hobbies-for-sale such as golf. You'll join them or be left without them, and either way will hurt.

You might rationalize some of this, as I did, by pointing to your prowess as a bargain shopper or staying one lifestyle notch below your most spendy peers for purposes of self-reassurance, but any dreams of ER will nonetheless be the casualty. The math doesn't care. It just recalculates.

Moving out means you will soon define the baseline level of luxury that you will think you need for the rest of your life. Somewhere on the luxury continuum is a spot where your lifestyle is currently acceptable and where you FIRE in an acceptable timeframe. As the meaning maker, only you can define acceptable for either variable. Only by setting an explicit plan and being unreasonably stubborn about it can you hope to avoid lifestyle bloat. Without your own strong leadership, your life will float to where the wind blows it and you'll find yourself stuck in traffic in a late-model vehicle at age 60 somewhere between mind-numbing stressful job and an overpriced subdivision of double-mortgaged junk-warehouses where people fret about their lawns.

Good luck!

[YoungGranny]

Hey I graduated college in 2012 so just a few years older than you. What I've learned the last few years is that few people in their 20s save like we do but few people have the money and flexibility we do. As I've gotten older and been able to go on several awesome international trips, bought a house, bought 3 rental properties, and now am looking at being able to retire when I'm 30 I realize it was all worth it. The FOMO I felt not going out on weekends early on, the concerts I missed etc none of that matters to me anymore. I'm so glad I started saving when I was young and continued doing it even when it wasn't easy or cool. I'm not sure what your goals are and I don't recommend depriving yourself but if you are happy with your life don't change it for anyone else.

Anyways just wanted to comment to say keep up the good work and to show you a glimpse of what's possible when you save early =]

[jlcnuke]

Do you feel like you're savings rate is depriving you of happiness enjoyment? I'd guess not, since you're still willing to spend for things like a vacation with your BF so I'm guessing you aren't currently depressed and living like a pauper. IF it does, however, then adjust your spending as needed. Being financially set isn't worth anything if you're not happy. If you're happy, however, then there's no reason to think you're going to suddenly say "screw it, I'm spending this money!" either.

[alanB]

Not really much more you can do to save more at this point.  Make your boyfriend split the cost of the cruise? ;)  I would contribute to traditional IRA rather than Roth if you are under the income limit, hard to tell based on your numbers.  You might be better off investing your money now and giving more to charity later, the future tax advantages can be enormous and you will likely be able to give more in the long run (unless you have a decent employer match).

I would try to figure out how much your lifestyle is currently being subsidized by living at home so you know what to expect for a future budget.  That way it will be easier to tell if you are falling victim to lifestyle inflation.  I personally think you should live in such a way that your spending does not feel "restrictive," whatever that means to you.  You do not need to win the competition of world's fastest person to FIRE, just do your best. 

Your greatest asset is your youth - every dollar you save is twice as powerful as someone 10 years older.  If you keep saving like this you will be very rich in the future.

[bocopro]

Hey I graduated college in 2012 so just a few years older than you. What I've learned the last few years is that few people in their 20s save like we do but few people have the money and flexibility we do. As I've gotten older and been able to go on several awesome international trips, bought a house, bought 3 rental properties, and now am looking at being able to retire when I'm 30 I realize it was all worth it. The FOMO I felt not going out on weekends early on, the concerts I missed etc none of that matters to me anymore. I'm so glad I started saving when I was young and continued doing it even when it wasn't easy or cool. I'm not sure what your goals are and I don't recommend depriving yourself but if you are happy with your life don't change it for anyone else.

Anyways just wanted to comment to say keep up the good work and to show you a glimpse of what's possible when you save early =]

Hi!

As a 2014 graduate, I just wanted to reiterate this really nice point above. Once and a while, my husband and I get a bit dejected when thinking about the (mostly parent-funded, fake) upper middle class lifestyles of our peers - the weddings, the engagement rings, the alcohol and parties, the luxury travel, etc. and think of ourselves as somehow "less fun" or "boring." (Most of the time, we accept our introverted and low-cost lifestyle without much second-thought, but occasionally we have a bit of second-guessing - are we missing out? FOMO?) 

We did have family help for college, like you, and then went straight to adult jobs and saving a bunch. We bought a house in a HCOLA and are feeling like we're on very good investment footing, too. Not sure if we'll have the stomachs for retiring at 30, but not much past 33-34, for sure. I'm a wimp conservative about withdrawal rates.

During this second-guessing, I like to believe that as years pass, we'll be so far from the financial cliff, we'll have set up a really stable life, and be really thankful for the flexibility gained from this early groundwork. I see lots of friends pass 30 or so and then have a sudden desire to have kids/retire/meet someone/buy a house/other life milestone, but not much headway made after 8 years, which scares them. I encourage you to think about the amazing groundwork you're laying too - you're doing so well, clearly not taking advantage of your parents, and seem to wish for more reassurance this is okay. (Also, wow savings rate! impressive.) As a fellow young-person, I think we'll really reap rewards for this practicality down the line.

You're doing great - cheers!

(*edited for clarity/formatting*)

[ginjaninja]

Savedough: I will talk it over with a trusted friend, I don't want to let this turn into a stressful thing when it should be an exciting thing!  And I am covering his vacation as a graduation trip for him.  It really was not that expensive and I am more than happy to foot the bill.  I haven't really gotten a chance to truly spoil him in a while so it is fun for me to do this.

ChpBstrd: You're right I need to become the meaning maker in my life and I don't want my meaning to just collect more wealth.  I really appreciate your points that it is just math.  I always heard the advice growing up that you shouldn't should on yourself.  I didn't realize that I was doing this with my spending but you are right, I need to take the should's out of my life.

YoungGranny: The FOMO is so real!  I have learned to deal with it in other ways by suggesting alternative activities with friends that don't involve spending a ton of money (hiking, cooking dinner together, picnics, etc.).  I love this community for helping to show me what the benefits of this hard work will be in the future!

jlcnuke: You are correct that I am not depressed and living like a pauper, I just started to only spend money on things that I actually like instead of spending money on everything.  For example: I love to cook so spending money on eating out seems wasteful and pointless.  But I also love to travel so I will still find the best deal there but I will spend more money to enjoy the trip (take a direct flight for $200-$400 more than a 9 hour layover, etc.).  I think you're right too, if I am happy then there shouldn't be fear that I am suddenly going to blow it.

alanB: Why would you contribute to traditional over roth?  I am still under the income limits, I didn't know if with maxing my 401k if it made sense to have my IRA pretax as well. 

As far as giving to charity, my company has a give-a-day program that if I donate 1-day's worth of my salary I get an extra day of vacation and they will match my contribution.  Additionally, whenever I have a friend participating in a race or event (the MS150 is popular among my friends, or a fund for a local family who needs some help, etc.) if they ask me I will contribute to their efforts.  It makes me happy to support the good causes and my friends.  I plan to donate much more money in the future, so I figured $35-$50/month is a good range for now. 

I also already have a spreadsheet on how much my lifestyle is subsidized by living at home (it includes morgtage interest, utilities, taxes and insurance, 1% maintenance repair costs, extra food, and some slush numbers for when I forget something).  I would basically have to funnel a lot of the $1700 that I am currently investing towards housing expenses so my budget for fun money wouldn't have to change too much.  That is the main reason why I changed the amount taken from my bank account from $1200 to $1700 per month. 

You're also totally right and I don't need to be the first to FIRE, 30 seems like a good milestone, but if it is 40, or even 50 that would be okay too.  The world will not explode if I am not FIRE by 30. 

[ginjaninja]

bocopro: You might be right on the wishing for more reassurance.  I also see the parent funded lavish lifestyle of my friends and it is easy to feel like I am doing the wrong thing by "not living up my 20's."  I am happy to hear that you and your husband also share similar values and it seems like it is paying off!  I am excited to hear more stories like ours where we got a chance to start out on the right footing and didn't blow it.  It is so easy to hear friends and coworkers struggle when they hit 30 and wonder how they are going to start saving for a house, or get out of credit card debt.  Thank you so much for your kind words!

[Easye418]

bocopro: You might be right on the wishing for more reassurance.  I also see the parent funded lavish lifestyle of my friends and it is easy to feel like I am doing the wrong thing by "not living up my 20's."  I am happy to hear that you and your husband also share similar values and it seems like it is paying off!  I am excited to hear more stories like ours where we got a chance to start out on the right footing and didn't blow it.  It is so easy to hear friends and coworkers struggle when they hit 30 and wonder how they are going to start saving for a house, or get out of credit card debt.  Thank you so much for your kind words!

Your finances in your OP are great.  You came out of college make a really nice salary ($80Kish?).  You live at your parent's house, perfect for maximizing savings.

Hey I graduated college in 2012 so just a few years older than you. What I've learned the last few years is that few people in their 20s save like we do but few people have the money and flexibility we do. As I've gotten older and been able to go on several awesome international trips, bought a house, bought 3 rental properties, and now am looking at being able to retire when I'm 30 I realize it was all worth it. The FOMO I felt not going out on weekends early on, the concerts I missed etc none of that matters to me anymore. I'm so glad I started saving when I was young and continued doing it even when it wasn't easy or cool. I'm not sure what your goals are and I don't recommend depriving yourself but if you are happy with your life don't change it for anyone else.

Anyways just wanted to comment to say keep up the good work and to show you a glimpse of what's possible when you save early =]

This is a great post.  What I was going to get to exactly.

OP, you comment about listening to friends and their lavish lifestyle, blowing money etc, make sure the lifestyle you have chosen is what you really want. 

I feel this is a double edged sword:  you struggle saving all your money in your 20's by staying in the nest and living VERY conservatively OR you enjoy the youth of your life pushing off retirement for down the road.  Find the point in the spectrum that you want.

IMO, wasting your 20's is a catastrophic mistake, don't be an asshole about it spending cash you don't have but don't live so reserved.  Don't end up the person "guy saves $1MM assets by 35, dies next day, egg goes to next of kin" or "guy spends all money before 60, no retirement, works until he is dead, struggling with bills".

I do think it is healthy to take some level of lifestyle inflation. 

To put a personal touch to it, I am turning 29 next week (2012 grad), my income ramped up significantly from 22 to now with income approaching $185K-$200Kish, I did inherit money (would rather not have it and take my parents back, not a life changing amount) so life wasn't an essential struggle for me, I do carry debt (for now), but I regret nothing, I sit firmly in the middle of MMM and spender, I'm happy with that.  As time goes on, I move closer to MMM.  I like to target around 50 years old for retirement.

I am 1000 X wiser now then I was back when I was 22.  Life takes time.

Good luck, hope you have continued success.

[alanB]

alanB: Why would you contribute to traditional over roth?  I am still under the income limits, I didn't know if with maxing my 401k if it made sense to have my IRA pretax as well.

 

If you are going to retire early you could conceivably take the full tax deduction now, then convert to Roth after you retire.  It will count as taxable income at that point, but if you are living off low spending your effective tax rate could be as low a 0%.  Of course the laws could change in the meantime!! 

As far as giving to charity, my company has a give-a-day program that if I donate 1-day's worth of my salary I get an extra day of vacation and they will match my contribution.  Additionally, whenever I have a friend participating in a race or event (the MS150 is popular among my friends, or a fund for a local family who needs some help, etc.) if they ask me I will contribute to their efforts.  It makes me happy to support the good causes and my friends.  I plan to donate much more money in the future, so I figured $35-$50/month is a good range for now. 

Nice, cool company plan.

I also already have a spreadsheet on how much my lifestyle is subsidized by living at home (it includes morgtage interest, utilities, taxes and insurance, 1% maintenance repair costs, extra food, and some slush numbers for when I forget something).  I would basically have to funnel a lot of the $1700 that I am currently investing towards housing expenses so my budget for fun money wouldn't have to change too much.  That is the main reason why I changed the amount taken from my bank account from $1200 to $1700 per month. 

You're also totally right and I don't need to be the first to FIRE, 30 seems like a good milestone, but if it is 40, or even 50 that would be okay too.  The world will not explode if I am not FIRE by 30.

Nice spreadsheet, sounds like you will do just fine.