Comments on: Tracking my spending the old-fashioned way

By: Emily @ Taking Charge

Emily @ Taking Charge — Wed, 18 Jun 2008 20:46:23 +0000

Even if you don’t keep track with your spending every day for the rest of your life, even just spending a few weeks of writing down every purchase is a great reality check. It is a way to quantitatively view exactly how much money you are spending on things that aren’t necessary. I don’t notice when I waste money on little day-to-day things, but when I check my bank account a week or two later, I’m horrified how much it added up to. So I think you’re onto something.

By: mike d

mike d — Wed, 18 Jun 2008 19:24:15 +0000

David, you’re right about relativity, and I only advocate for percentages because it’s a good guideline for maintaining the standard of living you get accustomed to given your current income. And it’s likely that Chuck makes more than me - but he’s clearly also smart enough to know that if he keeps his spending in check, he can sock away that much more too.

My main point was that telling folks to “max out” all their retirement options is a formula for many middle class folks to save too much (not that many of them have that problem). Maxing out (say $10,000 per couple in 2 Roths and $15,000 in one 401k) is an unreasonable goal for many incomes, while a floor percentage like 10% or 15% is usually attainable with discipline. Yes, if you get an employer match, you should definitely try to max that, because it’s doubling your money right off the bat. But for folks that don’t get a match or get a measly match, sticking with a percentage as a guideline instead of trying to max the allowable contributions makes more sense.

The concrete goals are still there, though! For us, we just use the Dinkytown calculators to figure out percentages and get a total that we can aim for!

By: David

David — Wed, 18 Jun 2008 04:20:16 +0000

I’m with bsimon: save less to pay off debt and therefore increase future cash flow. Saving in terms of percentages is relative: it may be easier for the family making 250K to save 25% of their income than the family making 100K - assuming the former keeps their costs in check. It may be easier to set concrete goals instead of relying on percentages.

By: Amy F

Amy F — Wed, 18 Jun 2008 01:49:15 +0000

We had the same “hey, when did our checking balance start dipping?” realization a couple months ago. In my case, we decided that earning more was part of the solution (we were mostly a one-income family, so I found a parttime position from home), we cut the cell phone, switched our home phone to a non-Qwest package with the DSL, shopped around and cut our car insurance in half, and began an all-in-cash envelope approach. We hadn’t been saving like you, though. I’m really surprised how much more carefully I examine unit prices and get the Buster Bar instead of a Blizzard now.

By: anon2

anon2 — Tue, 17 Jun 2008 18:54:44 +0000

^ this.

We stress out about saving, because we always want to save more. But we save a LOT. I want to continue to do so, but we also need a reminder to keep it in perspective.

By: mike d

mike d — Tue, 17 Jun 2008 18:27:29 +0000

Thank you for bringing this up, Kara, because I think it’s a topic rarely covered, probably because most folks aren’t saving enough. Those of us saving 15% or more of our incomes are rare indeed. But even if we’re rare, shouldn’t we have some guidance as to when we’re saving TOO much? I think so.

That’s why I get peeved about traditional advice. I find it simplistic to simply suggest “maxing out” your retirement contributions (across tax-deferred and Roths). If we did that, we’d be saving about 35% of our income. That just seems ridiculous to me, and I feel comfortable in saying that because we save about 18% of our income. Congrats to Chuck for having that capability to hit 30% (and welcome to busriderhood - great move), but I hope he’s also taking some time and money once in a while to enjoy himself.

What’s the risk of saving too much? Missing out on life. What if you die before you can spend that retirement money? What if you have to work 60 hours a week to make that kind of money?

To be clear, I’m not advocating pedicures every day (and that Maverick’s roast beef sandwich CAN add up - IF it’s every day) or mindless purchases. But if you’ve denied yourself a montly lunch out or the occasional vacation in pursuit of massive savings, I feel you might want to assess your priorities.

I’m comfortable on our spending, and definitely look to cut costs before cutting savings in the current inflationary environment. But if my savings rate has to dip from 18% to 15%, I’m still going to feel ahead of the game.

By: LDH

LDH — Tue, 17 Jun 2008 14:00:52 +0000

In the quest to make sure we’re not working just to pay bills, that we’re not so overextended that we can’t enjoy life, don’t make the mistake of going the other way, that you’re working like the savings account is a creditor with the same kind of pressure that debt can bring. We recently upgraded the cat food we buy. It’s 2-3 times more than what we were buying, but a bag of cat food for $30 instead of $10 is very different from a car payment that’s $600 instead of $200. It’s the same reason I stopped cutting coupons for toothpaste and just buy my favorite even if it’s not on sale: $3.50 a few times a year is a splurge I can afford (and enjoy twice every day). Is cutting back on roast beef sandwiches really going to pad your savings that much more? Keep your modest house, modest car, modest expenditures in every other way, and buy that roast beef sandwich.

Nice work on the bus riding Chuck…we sold our second extra car over a year ago. I take public transit nearly everywhere and would never go back. The pleasures of mass transit are deeper than just the money saved.

By: bsimon

bsimon — Tue, 17 Jun 2008 13:34:28 +0000

“Or with an uncertain job market and the economy, am I totally nuts to even consider putting less away?”

Yes; or it depends on what you’d spend it on. Save less but pay off high-interest rate loans? That’s not totally nuts. Save less and get more pedicures - that’s a little nuts.

By: Chuck

Chuck — Tue, 17 Jun 2008 02:27:59 +0000

I would personally only cutback on savings as an absolute LAST resort if you have done a thorough analysis and feel you have cut spending as much as possible. I would do this regardless of your current level of savings because, in my opinion, it will only make it easier to cut savings again the next time you face a shortfall. My wife and I have managed to save about 30% of our income, and now that gas and food (and electric) prices have gone up, our first reaction was to look for more ways to cut spending. I am proud to say that I am now riding the bus, turned our hot water temp down, and we have been enjoying $2 movies and coupons/specials when dining out. We continue to save 30% and I even upped a DRIP plan I am in by $5/month just for the psychological benefit of knowing I am saving even more now than before.
(One side benefit: now that I ride the bus, I not only am more productive by reading or working on my laptop, but I arrive at work and home very relaxed after not having to deal with the bad drivers out there!)

By: Heather

Heather — Tue, 17 Jun 2008 01:03:27 +0000

I think that it might make sense to put away less, but it depends on how much you are putting away now. We try to balance our savings for the future with our enjoyment of the present. Currently, that means we save ~18% of our income, but it can be flexible, depending on what we are saving for and any spending that we need/want to do.

It sounds to me like you are doing the right thing by evaluating how much you are saving first and then making the jump if you need to.