Is 70% right for me?

[somebody8198]

I'm still trying to decide if the hardcore Mustachian lifestyle is for me. I am currently aiming at 50% saved. This is doable for me, as I have a decent software engineer salary and don't have any student loans or a car. However, a few things seem "wrong" for me if I try to move to a hardcore 70% savings rate.

1. I am unmarried and single, and I live alone. I don't have anyone to split expenses with. I've considered moving back in with roommates but I would have to wait for my lease to end before doing that. I probably won't get married, partly to avoid having to support someone else financially which might put my plans in jeopardy, but this makes it slightly harder to save with only one income.

2. I don't own a home. I might want to someday, but right now renting probably makes more sense. So I'll have to factor in rent as a cost indefinitely. I'd also like to save for a down-payment (I'd probably try to get at least 50%) before buying because I don't want to be paying down a mortgage my whole life. Until then, I have to pay rent.

3. I want to relocate in the near future. I don't like where I live (midwest) and the economic outlook is worse in my area compared to some growing areas in other regions (even some other areas in the midwest). So I'm a little uncertain of what my savings rate will be in a new city, where the cost of living will be different.

4. Okay, it's great that I could be retired in seven years, but what am I going to do for seven years? Sit around reading by candlelight? Do you budget in a certain amount of money for "fun" or do you view all this spending as wasteful? I'm a single person living alone, I would be BORED OUT OF MY MIND if I couldn't go meet a friend for coffee now and then or get involved in some activities outside of work. In the past I have enjoyed taking classes and training in martial arts, but does the "hardcore" lifestyle see this as wasteful?

[4tify]

hi

would be curious to know how old you are. beyond that there are no "rules." you have to decide what you VALUE. just having $XX in the bank doesn't mean anything beyond the number. after that you have to decide what the purpose of that money is, and what it affords you to do.

1. buying a house isn't for everyone. i'm 48 and i've been a renter all my life. sometimes i've had roommates, sometimes i've lived alone. both have their advantages. someday you may find a partner who shares your financial pov--or not. everything changes.

2. if you're not sure about buying a home, i'd just keep investing. that's my plan anyway. i feel i'll know when the 'right' place & time comes.

3. more reason to keep renting. check out this post if you haven't : http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/

4. the whole point of FI in my view is to create freedom, not leisure. also, there's nothing wrong with spending money & enjoying life. i spend WAY more than most people would here on a gym & yoga studio because that's what i VALUE and love. i'd rather die poor than not enjoy using my body. some folks want to travel or eat good food/wine. that's ok. the key, i think, is being able to choose to do this consciously i think, without becoming a slave to the 'man' in the meantime.

again here: http://jlcollinsnh.com/2011/06/06/why-you-need-f-you-money/

[steveo]

Its your choice how much you save and how quickly you retire and even if you retire. I'd just state that spending money doesn't have to equal to fun and happiness. Its up to you to figure out though what makes you happy.

[powskier]

Money is a tool.
Not having too work means you have freedom of the use of your short time on the planet.
What is enjoyable to you? What turns your crank? what kind of person do you want to be?
Does saving 70% get you closer or further?

[marty998]

you've got a very morbid and depressing username mate. Get uncomfortable just reading it!

Nobody is forcing you to save at 70%. Live life the way you want to, and save whatever you feel comfortable with.

What is enjoyable to you? What turns your crank? what kind of person do you want to be?

Find the answer to those questions and you'll be much happier.

[Shiernian]

I think you should give yourself a pat on the back for such a high savings rate. Don't worry about hitting 70 percent - maybe that's just not for you. Now is a good time to start focusing on what you want to do for fun. If you move and your expenses go up, or you start saving for a downpayment and then use that money to buy a place, those are both ok scenarios. Having money in the bank is just a tool to give yourself freedom and free time. But don't wait until seven years from now; you can start enjoying yourself more now while you are working. Don't be too hard on yourself! As you pointed out we are all in completely different situations. You are doing great. Also doing martial arts is great - it's not wasteful in my opinion at all. We all get to choose where we spend our money. I love gym time and pay for classes too - couldn't have it any other way.

[happy]

This isn't a rule written down anywhere, but in my mind, if you are earning a good income, saving 50% should come without too much pain.  And again in my mind is the minimum goal I set myself. 70% is probably out of the question for me right now, but I've worked up to 60% over 3 years or so, just because I wanted to see if I can do it. I can, and I'm still comfortable.

Saving 50% will give you peace of mind and freedom, in a reasonable time frame. 70% will get you there faster. But you have to figure out the "why" for yourself and just how hard you wish to go depending on how urgent your "why" seems.  I think most of us budget for hobbies/fun stuff, but a lot of us focus on activities that are free, or nearly free.  How much you wish to spend is up to you. My hobbies resolve around simple living …so its things like swim at the beach (free), walk  in the bush (free) and gardening and growing vege - some annual expenses but typically only a few hundred $ for material/seeds/manure etc.  Martial arts is not wasteful - it contributes to your physical and mental well-being, and gives you valuable self-defence skills, all of which contribute to your overall mustachian life. 

[Giro]

Your focusing on the wrong things...what you DON'T want.  Focus on your goals for your life.   switch your mentality to the positive perspective.  e.g.  You said you can't save much because you are single.  And then you said, you don't want a spouse because you would have to support him/her.  Those both can't be true.  If being in a relationship means you can save more, then you aren't supporting someone else.  There are equal partnerships.  Or, stay single and enjoy the benefits of cheaper groceries, toiletries, smaller house, etc.  But, by all means, smile it up a bit.

What do you want? 

It's a much harder question than it appears to be. 

[Thegoblinchief]

Money by itself is worthless.

What do you value?

Is your spending aligned with those values? Mustachianism is much more about a "wake up call" and avoiding mindless consumption than it is about wholesale expense reduction.

When answering #2 for yourself, remember that saving for retirement can be seen as 'spending on your future self' NOT merely deferred gratification.

It's a balance. Most of us are still finding it for ourselves, which is part of the fun.

Your comment about avoiding marriage just so you wouldn't have to support someone else is a very cynical outlook, IMHO. Long-term relationships aren't for everyone, but there's so much intangible value in a good one. And, heck, for all you know you'd find a partner that would kick your ASS in the badassity department.

[Apples]

If it makes you feel better, we're saving 40% this year.  And we're spending on "fun" things 23% of our income, so there's several items of low-hanging fruit we could do without, but choose to keep because we enjoy them.  The point to this whole thing is to spend on what you value.  Your savings rate will go up and down over your lifetime; unless that 7 years to retirement thing is really really important to you, then 8 or 9 (or 15) might fit better with your budget.  I know when I've started obsessing over savings rates and cutting expenses in the past, a step away from MMM for a week or two helped immensely to even out my mindset.

[zephyr911]

Don't get the cart before the horse. First, determine what makes you happy in life. Next, find the most efficient way to have it.

I'm not saying never to set an SR goal - I've set percentage goals myself - but comparing a 50% lifestyle to a 70% lifestyle is purely academic. As you noted, a change in job or location could dramatically affect your SR without changing your lifestyle at all, which underscores the fact that SR alone does not define your approach (or your relative level of success). Better to focus on developing a new mindset (MMM would say "flexing the Badassity muscle", etc) and becoming more mindful and deliberate about spending choices.

I'm currently working toward 75% for specific reasons - if I get there quickly, and hold it for a year, it'll allow me to meet my earliest possible FIRE date (saving more won't move it up any earlier, for reasons unrelated to Stash size). Regardless of whether I reach that goal, it's important to have eaten well, exercised often, treated my wife, family, and co-workers well, and generally found happiness in the moment throughout that year. None of that changes with SR, so SR remains subordinate to all of those things. But the beauty of what is taught and discussed here is that you can often have your cake and eat it too.

Mmm... cake....

[Eric]

I'll agree with everything Thegoblinchief said above.

4. Okay, it's great that I could be retired in seven years, but what am I going to do for seven years? Sit around reading by candlelight? Do you budget in a certain amount of money for "fun" or do you view all this spending as wasteful? I'm a single person living alone, I would be BORED OUT OF MY MIND if I couldn't go meet a friend for coffee now and then or get involved in some activities outside of work. In the past I have enjoyed taking classes and training in martial arts, but does the "hardcore" lifestyle see this as wasteful?

Why not focus on living the life you'd like to live after FIRE right now?  If that means you get there a little slower, then so be it.  Instead of cutting everything to the bone, spend now how you'd like to spend in FIRE.  Do things now that you plan to do then.  Obviously you won't be able to do them at the same rate now, but you can extrapolate.  This will result in two benefits.  One, your current lifestyle will improve and two, you'll have a really good idea of how much you'll want to spend in FIRE and can plan your "number" accordingly.

[zephyr911]

I'll agree with everything Thegoblinchief said above.

4. Okay, it's great that I could be retired in seven years, but what am I going to do for seven years? Sit around reading by candlelight? Do you budget in a certain amount of money for "fun" or do you view all this spending as wasteful? I'm a single person living alone, I would be BORED OUT OF MY MIND if I couldn't go meet a friend for coffee now and then or get involved in some activities outside of work. In the past I have enjoyed taking classes and training in martial arts, but does the "hardcore" lifestyle see this as wasteful?

Why not focus on living the life you'd like to live after FIRE right now?  If that means you get there a little slower, then so be it.  Instead of cutting everything to the bone, spend now how you'd like to spend in FIRE.  Do things now that you plan to do then.  Obviously you won't be able to do them at the same rate now, but you can extrapolate.  This will result in two benefits.  One, your current lifestyle will improve and two, you'll have a really good idea of how much you'll want to spend in FIRE and can plan your "number" accordingly.

I've been thinking about that. I try to get home at a reasonable hour and do the things I'd do if I didn't have to work. I'm even thinking about periodically taking partial or full days off and pretending I'm FIREd, just to get a better feel for how I'd prioritize and use my time.

[Kaspian]

I'm still trying to decide if the hardcore Mustachian lifestyle is for me. I am currently aiming at 50% saved. This is doable for me, as I have a decent software engineer salary and don't have any student loans or a car. However, a few things seem "wrong" for me if I try to move to a hardcore 70% savings rate.

One step at a time, brother, one step at a time.  Don't rush yourself.  Nothing is carved in stone.  Just tweak here and there and the 50% will take care of itself.  Try new approaches, and if they don't fit, roll them back.  You might save 48% one year, 56% the next, 49% the next, 62% the next....  I'm pretty much in the same life spot you are (but way older, I imagine).  Things (and even your own personality) will fluctuate--you have to keep your goal in mind yet be flexible at the same time.  And don't beat yourself up too much if you miss a target.  It's not a "failure" because really--anything over 20% is "success" compared with your peer group.

[Eric]

I'll agree with everything Thegoblinchief said above.

4. Okay, it's great that I could be retired in seven years, but what am I going to do for seven years? Sit around reading by candlelight? Do you budget in a certain amount of money for "fun" or do you view all this spending as wasteful? I'm a single person living alone, I would be BORED OUT OF MY MIND if I couldn't go meet a friend for coffee now and then or get involved in some activities outside of work. In the past I have enjoyed taking classes and training in martial arts, but does the "hardcore" lifestyle see this as wasteful?

Why not focus on living the life you'd like to live after FIRE right now?  If that means you get there a little slower, then so be it.  Instead of cutting everything to the bone, spend now how you'd like to spend in FIRE.  Do things now that you plan to do then.  Obviously you won't be able to do them at the same rate now, but you can extrapolate.  This will result in two benefits.  One, your current lifestyle will improve and two, you'll have a really good idea of how much you'll want to spend in FIRE and can plan your "number" accordingly.

I've been thinking about that. I try to get home at a reasonable hour and do the things I'd do if I didn't have to work. I'm even thinking about periodically taking partial or full days off and pretending I'm FIREd, just to get a better feel for how I'd prioritize and use my time.

In all honesty, I'm better at giving this advice than following it.  But hey, at least I know I should!!

[somebody8198]

you've got a very morbid and depressing username mate. Get uncomfortable just reading it!

Nobody is forcing you to save at 70%. Live life the way you want to, and save whatever you feel comfortable with.

What is enjoyable to you? What turns your crank? what kind of person do you want to be?

Find the answer to those questions and you'll be much happier.

Not depressed! "Death panels" is a reference to a humorous conservative talking point from the 2008 US presidential election. :)

[somebody8198]

Your focusing on the wrong things...what you DON'T want.  Focus on your goals for your life.   switch your mentality to the positive perspective.  e.g.  You said you can't save much because you are single.  And then you said, you don't want a spouse because you would have to support him/her.  Those both can't be true.  If being in a relationship means you can save more, then you aren't supporting someone else.  There are equal partnerships.  Or, stay single and enjoy the benefits of cheaper groceries, toiletries, smaller house, etc.  But, by all means, smile it up a bit.

What do you want? 

It's a much harder question than it appears to be.

"What do you want" is a really hard question! I enjoy learning new skills, travel, working out, biking, hiking, spending time in nature, reading, and writing. I am actually writing a novel at the moment and I have published a number of short stories. One of my goals is to publish professionally at some point. I don't care about the money, it's just a very strong love that I've had for my entire life. Though I can't say I "love" going to work, I actually am interested in my career field as well. I spend most of my free time outside of work training, writing, reading, or biking for fun. I think I'd be happier living in a greener area with lots of hiking and biking – my area is dense and urban and has no nearby natural spaces.

[zephyr911]

Your name is hilarious. Don't let anyone give you shit for it.
It's great that you know what you like to do. The best thing about FIRE is getting to do more of all of that tomorrow. Optimizing now means not giving up more of it than necessary today. :D

[Lski'stash]

I honestly wouldn't stress too much about trying to keep up 70%, unless you want to get to FI that badly. Also, you sound younger. You just never know what life is going to throw at you. You could end up finding a wonderful person and getting married in a year, who really knows?? Give yourself an 'I don't give a fuck' allowance (maybe $100 a week or so? Maybe $50?) and I think you'll be a lot happier and still will save a bundle.

[Melody]

I think everyone has made most of the right points. The one thing I will raise (and it crosses my mind as a single living alone) can you engage in rent arbitrage. E.g. here the going price of a 3x1 rental house is $400-$500 a week. As what is "nice" can be largely subjective, the $500 house may not be nicer than the $400 house. I've had a few friends rent a $400 house and then find roomates at 1/3 of the cost of a $500 house - $167 per week, the amount puts your rooms in the normal range for the area when compared to other rooms on gumtree (like Craigslist). The roommates who are not on the lease do not know (and even if they do find out, you are providing the furniture etc, so it's only fair you pay less) and the lessor then only pays $67/week. I've also seen variations on this where the lessor pays no rent (but typically involves a 5x2 house). [NB: ensure your lease is written up as "deathpanels + 2" so you don't have to add new room mates to the lease each time they move and make sure you use a valid sub-lease agreement... the MMMers on the landlording part of the forum can help you with this stuff].
Obviously to do this you need to not hate living with people. But a trick like this could get you from 50% to 70% savings rate without sacrificing all the activities you enjoy.
You could also then consider using some of the freed up cash flow to buy a condo as an investment with your tenant paying the mortgage for you. Then you only need to plan for 25 years of rental expenses.

[somebody8198]

While reading the latest MMM post about saving in your 20s, I kept shouting in my head, "OH YES, YES, THAT'S WHAT I DID!"

I turned 30 about 9 months ago, but I lived my twenties way below my possible "standard of living" (which is really just code for "spending"). I didn't really have retirement in mind when I started working and saving, this just seemed a natural and intelligent thing to do with my money. So I have a fair amount of savings now, but I was too reluctant to invest it, so it hasn't grown as much as it could have. Still, I'm not beating myself up about it too much, since I know I have much more savings than the average thirty year old.

Right now, my housing expenses (including heat!) are at about 20% of my income. I save 50%, and the other 30% goes to food, home supplies, public transit, gym membership, and a bunch of non-essentials. My goal for October is to push my limits until I can save 60%. If I can consistently pull that off, I think 70% will seem more achievable to me, although I still think it's going to be painful. I'm a big city apartment dweller, so I can't grow my own food or build a home gym to cut costs. But I'll consider it a challenge to see how close I can get.

[Bob W]

Would like to see a case study on this one?

Remember also that in retirement your expenses can go up or down depending on your lifestyle choices. 

[Gone Fishing]

We started our careers with a plan for ER (unheard of at the time). We landed on a 50% savings rate only because our spending seemed pretty natural at that point, not because we were chasing some numerical goal.  We hit 70%+ much later in the game thanks to pay increases and a decision to weed out some hedonic adaptation that had crept in over the years, but our current spending is still pretty close to that original "natural" point which includes plenty for fun activities.

One of my personal budgeting goals was to crush what I refer to as "structural" spending (housing, utilities, transportation) to free up as much cash as possible for new experiences (mostly travel, entertainment, socializing with friends, etc.) and hobbies, with the idea that I would get more lasting joy out of having more discretionary money to spend each month vs. money that was locked up in a basic necessity, that one readily adapted to, and could be easily be filled by a less expensive option.  So, would I move in with roommates to have more fun money? Absolutely. Would I move in with roommates (assuming the move resulted in some reduction in happiness)  just to shave a year or two off of my FIRE date?  Probably not. 

You got to live a little along the way or you are going to show up for FIRE unprepared for all it has to offer.  Remember, unless your hair is on fire, badassity is about enjoying your life on less, possibly enduring a bit of discomfort for massive savings, but not punishing yourself on a daily basis just to save a dime. Otherwise, just like a crash diet, you are likely to fall off the wagon, and possibly end up worse than you started.