High savings rate = no motivation to save additional?

[fiveoh]

We are currently saving my income and living off my wifes income.  By my projections we should reach FI in approx 5 years.  There are a few areas we could cut back and save a little bit more.  Part of me wants to save every $$$ I can but when I look at the numbers, the extra $$ doesn't really move the needle.     I.e. we are saving 40k a year now and an additional 600 a year doesnt really do/seem like much. 

Does anyone else ever feel this way?  Do you push yourself to save that extra $600 or just not worry about every extra dollar and enjoy it now? 

[I'm a red panda]

I don't worry about every extra dollar. But I also don't go out of my way to spend it.

[soccerluvof4]

+1^   at the end of the day if the 40k savings reaches your goal then 600$ a year which is $11.54 a week to splurge isnt really much! Latte addicts spend that in a day!

[fiveoh]

It would probably go towards better meat/organic food or just be a buffer for our budget. 

[RexualChocolate]

The ever present concept of diminishing returns!

I stick with a 30% savings rate(on gross income) and spend the rest. This means many expenses are not optimized at all (rent, travel and entertainment). This is my 'efficient frontier' for saving/FI + current lifestyle. I honestly don't feel like I miss out on anything while still socking away a good chunk.

I think that's a good compromise on Grasshopper and Ant. However, the rare windfall goes directly into savings. I pay for everything out of cashflow.

[Fastfwd]

It's only bad if you get 100% enjoyment from early retirement and 0% retirement from spending any money now. Money is meant to be spent; the idea is the spend it on things and at a time that maximizes your enjoyment of it.

[StockBeard]

I'm in a similar situation.

And, as Fastfwd mentioned above, the right saving amount is the one that maximizes your enjoyment of life.
If saving more has become "your thing", you might be happy to save the extra 600. If not, spend it on something that means more to you than saving it.

Clearly, the more you save, the faster you'll retire, but in the grand scheme of things, maybe an additional month/week of work is not worth the effort it would take to squeeze an additional 1% of saving per year?

It would actually be interesting to do the math: how much additional work does this represent for you, and how much effort are you willing to spend to save more? It's not worth it if it makes your life miserable :)

[nanu]

An extra $600/year in saving isn't a whole lot when you're putting away $40K/year.
However, spending $600/year less means you'll need a stash that's $15K smaller than you would otherwise need (assuming 4% rule), which is almost six months of working given your current saving. To me that seems like the bigger win here.

[Jersey Brett]

It depends. I push to save as much as I can because I have a high rate of return.

At an average of 30% per year, every dollar I save now will be $19.36 in ten years.
At my current rate of return, in ten years your $600 per year would become $48,331 (compounded monthly)

[dandarc]

Where are you getting returns of 30% per year, if I dare ask?

[Jags4186]

An extra $600/year in saving isn't a whole lot when you're putting away $40K/year.
However, spending $600/year less means you'll need a stash that's $15K smaller than you would otherwise need (assuming 4% rule), which is almost six months of working given your current saving. To me that seems like the bigger win here.

15k on a FIRE ready stash is meaningless.  A $1,000,000 portfolio can swing in value $15k in a day.

[SuperSecretName]

you have reached equilibrium. 

If the 50/month was easy and worthwhile to cut, you would have done it already.  you have not done it, ergo, spending the $50/month is more important to you in your current budget.

It equates to a good six pack of beer a week.  If you are already saving 40K, relax a bit, and crack one open.

[sol]

Many off us here struggle with this problem, but it's still a problem.

$600/year?  My portfolio swings more than that before breakfast.
$20k for a new car? Would just mean working a few extra weeks.
Working for that big promotion?  I'd rather lower my stress level and keep my current position for an extra month at the end to make up the pay gap.
$10/day for fancy lunch from the deli? Seems totally inconsequential at this level.

But add all that up, and suddenly I'm working for a whole extra year when I could be home with my kids every day.  Each small decision contributes to lengthening your sentence at the cubicle farm.

[arebelspy]

+1 to sol.

I'd also add: Spend everything you want to, and save all the rest.

If you want to spend that $600, because it makes you happy, and you're spending it in line with your values, go for it!  If you don't need to spend it, save it.

If it's just extra money, of course you should be saving it, and not blowing it for no reason.

[scottish]

Every year I look for a spendy habit that isn't necessary.    Last year it was insurance.   This year it's DVDs.    Every $1000 I don't spend is $1000 I don't need to draw from the portfolio + it's an extra $1K for investing while I still work.   Habits are incredibly important.

Mostly our habits are good, so I don't worry about it beyond that.

[Jags4186]

Where are you getting returns of 30% per year, if I dare ask?

...Waits with bated breathe...

[firewalker]

It would take me about 8 working days to take home 600 bucks after taxes, ins, hsa etc. So, for me its worth saving.

[Cougar]

dont worry about that 600.

i'm about 3 years from fi and i figured i could save about 500 more money but that would really only cut a few months off my time and since i'm still in my 40s; its not worth it; maybe if i was in my 60s it would be worth it.

when your savings rate is as high as it is and youre relatively close to fi, that a small as percentage isnt worth worrying about.

[cerebus]

I'd say at a certain point it's no longer about the financial savings, but rather the constant lifestyle optimisation. If you're saving at a rate that you can FIRE in a comfortable time period, then maybe forget about looking at everything as a cost-cutting exercise. However, you should be evaluating yourself all the time and asking how you can do what you currently do in a better, leaner way that brings you greater happiness. For instance, it could be that you figure getting takeout a couple of times a week isn't a big deal and you'll just cause undue suffering for marginal savings by trying to cut it out. But if your cooking improved constantly, at some point you'd realize that takeout just makes you feel awful when you eat it because you're used to the taste of real food - so you just start cutting it out. Or, you know, aircon or something. Point being that this is not just about extreme frugality and it's worth taking a broader and more optimistic view.

[Retire-Canada]

Does anyone else ever feel this way?  Do you push yourself to save that extra $600 or just not worry about every extra dollar and enjoy it now?

I have a number of hobbies that require expenditures so I can pursue them. If I go crazy with them it will knock back my FIRE date and if I stop doing them it will negatively affect my quality of life.

So I focus as hard as I can on FIRE knowing that I am going to spend some money on my hobbies from time to time [like new tires for my mountain bike]. I don't sweat those purchases as long as they are needed and don't affect my FIRE terribly [ie. I'll put off buying a new mountain bike].

We are mortal and could die in 1hr. I don't assume I'll be around to enjoy my savings/FIRE.

OTOH I was not happier when I spent like a drunken sailor so saving and planning for FIRE isn't a hardship.

When I do spend I try to do so for experiences [hanging out with my friends] and fundamentals that support my life [got a store credit recently and bought 6prs of wool socks] as opposed to frivolous items [upgrading cellphone early].

So if the $600/month you could save is just leakage for stuff that doesn't matter to you I'd work on reducing it on principal. That is still an important skill in FIRE. OTOH if it's for something you enjoy and appreciate I wouldn't sweat it.

-- Vik

[brooklynguy]

Many off us here struggle with this problem, but it's still a problem.

Sol's insightful post is basically the inverse of the calculus the non-mustachian must perform in order to become mustachian.

"You mean, you're telling me just by saving 600 bucks here, 20 grand there, and one Alexander Hamilton a day, I can retire decades early?!"

Well, it may sound impossible, but it's true (the math doesn't lie) -- but it works both ways.  However, the beauty is, if you stick to the plan and keep adding small bits of snow to the compounding snowball, eventually it will grow so big that it can become practically impossible to completely melt down even if you step up your spending.  Or, you can adopt an extremely frugal plan, stick to it forever, and retire super-extremely-early, before your modest snowball has a chance to become a boulder.  Or you can choose any path in between.

[Jersey Brett]

Where do I get thirty percent? I make it myself trading commodities, mostly gold, silver, oil and indexes. Last time I posted the link to my website mods took it down. So if you want to know more you can PM me.

FYI If the OP had my rate of return for ten years he would turn his $40k per year into $3.2 million

[Retire-Canada]

Each small decision contributes to lengthening your sentence at the cubicle farm.

If:

- you work in a cubicle farm vs. an enjoyable/satisfying job
- your sole focus is not working

I'm a big proponent of not over saving/working, but if you spend all your metal energy worrying about every dollar in hopes of gaining your freedom from a cubicle you are just exchanging the shackles of a cubicle for the shackles of an obsession over your money.

Stuff gets reduced and simplified in some of these arguments to the point where it's pretty meaningless.

- You don't have to have a job you hate.

- You don't have to work full time if you want to spend more time with your kids today.

- there are other priorities in life beyond FIRE and getting there ASAP.

The OP has a plan. He's on track to meet it. Does saving more than needed to meet his plan so he can reach an arbitrary goal a little faster mean anything?

If it does virtually everyone of us could save more no matter that we have a killer savings rate. At some point you need to be present in your life and not focused on money.

-- Vik

[Dee 72013]

If it really bothers you save half and spend the other half and see how you feel. If it's pretty painless and makes you feel better then that might be the answer but it's also like a diet that you can't deprive yourself too much either without getting burnt out. 

[Davids]

If there is something you really want then go for it but if not then save it.