Comments on: Living for today or living for tomorrow?

By: mike d

mike d — Wed, 10 Sep 2008 01:40:25 +0000

I’m glad this topic was posted and generated so much response. Financial planners and writers talk a lot about risk, but very infrequently ask the question “What’s the risk of saving TOO much?” It’s the risk of not living your live.

I’d say 15% is great for most of us in middle incomes, and since you’ve been doing that consistently for a while, I wouldn’t fret about dropping it back a percent or two if it meant getting some experiences that you value - but I like peter’s notes that help you understand those experiences in order to potentially defer them or find a cheaper alternative. But then I’d have a goal of trying to increase it either the next time a raise comes along or an expense gets dropped.

We sold our second car this summer and went down to one. I ride the bus to work every day and we just didn’t need the older one, even though it got better mileage. Our insurance almost got cut in half, and a good chunk of the cash went into the Roths.

But then another chunk went into short term savings as we’re starting the adoption process. So there’s an example of where we’re going to undertake a huge financial burden and hurt our savings, but it’s worth it to us because the family experience will be one that changes us forever.

“align your resources with your goals”. I like that, Dan D. Thanks for sharing everyone.

By: peter

peter — Tue, 09 Sep 2008 17:26:48 +0000

I think your worries are normal for this stage of your life and career. To the extent that your savings are not deferring family needs as opposed to family wants, the level is probably OK. There have been some suggestions on savings, but few on goal setting. What do you want from a trip to Mexico? A family experience, exposing the kids to another culture, and a break from the cold are all goals. If your goal is a family experience, there are a lot of other options that cost less (camping was mentioned). If you want the exposure to another culture, your kids would get more out of it (including having adult memories)if you waited until after age 10.

Sorry for the downer, but there is one concern you should think about. You are a professional working in an industry that is undergoing a lot of retrenchment. It may even be a dying industry. It would be best to direct some of those 15% savings to non tax deferred accounts.

By: David

David — Sat, 06 Sep 2008 02:09:05 +0000

LDH: 15% may be too little or too much - it’s relative to both income and expenses. I think it’s fine to save less - as DanD notes your lives may become more enjoyable now and well worth the cost of working a few more years when you are older.

By: LDH

LDH — Fri, 05 Sep 2008 17:32:04 +0000

I would seriously consider going to one car. My husband and I do it from a fringe suburb…one of the best things we’ve ever done. Granted, no children in our house, but if you live closer to downtown and become acquainted with Metro Transit, it may be surprising how little you need two cars (at least, for some amount of time). Even if my husband has to drive somewhere to pick me up and drive back home, though we used “extra” gas there for him to drive out and drive back, I have to balance that against everything I haven’t used for weeks before that when I didn’t need a ride at all.

Additionally, 15% sounds like an awful lot. While it’s good to save, it’s also good to bear in mind that you can’t take it with you, and you never know when you’ll be going. I would drop it back a few percents and have the experience of Mexico (skimp on margaritas while you’re there if you must) to have that experience.

I don’t know the reasons behind choosing a new neighborhood, but my personal situation is a very very very small townhome. We’ve thought about moving many times, but in the meantime, we’d rather travel and have disposable income than have the perfect house or neighborhood. In our eyes, the perfect house/neighborhood is not worth it if we can’t afford to ever do anything outside of it.

By: Steve

Steve — Fri, 05 Sep 2008 16:39:12 +0000

Kara,

Stay the course. Everyone has dreams,
but if you change to become a spender instead of a saver, you will lose credibility as a financial writer.

Some solutions:

- get a second job.
- cook even more at home and make
cheap meals that are healthy.
- Keep your cars longer. A car now,
maintained well, can run past 200,000 miles.
- don’t give into the spending mentality.
- Yes, you and your family have dreams.
Modify your dreams and be fine on less of trip - maybe your Mexico trip could be a camping trip in tents in the boundary waters.
- Don’t give in, otherwise you will have regrets later on.

By: slacker

slacker — Fri, 05 Sep 2008 15:52:54 +0000

If Obama is elected - I’m planning on living off entitlements…

By: bsimon

bsimon — Fri, 05 Sep 2008 15:31:32 +0000

She’s not yet into her prime earnings years. Those come in one’s 40s and 50s. The question is whether money saved now, leveraged by the beautiful magic of compound interest, is worth more than time spent in one’s relative youth with young children.

Do you
1) work hard, save, live frugally & enjoy retirement
or
2) play hard, spend time raising family, taking vacations & enjoying life now instead?

Subquestion: does the macro economic outlook change your decision?

I think, if you believe in buying low, the answer is to save now and buy into the market.

Still play with the family, but do it on the cheap. The other day my daughter chose to play with a roll of masking tape over various toys strewn about the house.

By: Dan D

Dan D — Fri, 05 Sep 2008 10:36:15 +0000

Kara - Your question is one I deal with on a daily basis from clients. How do folks of average (or even above average) means align their financial resources with their priorities and goals? Some save too little for the future and others save too much. How does one know? Without knowing anything about your situation, it is very possible you are saving too much money for the future and are feeling the frustration of being out of balance financially. Your commitment to saving 15% toward the future is commendable and you will certainly benefit by reaping what you sow down the road. However, it sounds like you are in the prime of your financial lives from the perspective of juggling financial priorities such as raising children, paying for your home, saving for retirement, accumulating a reserve, paying down debt, etc. Most people seem to think the value of financial planning is determining which mutual fund to pick, but the real value is determining how to align your resources with your goals. My advice is for you and your spouse to carefully consider what you are trying to accomplish together and determine what the consequences will be if you reduce saving for the future in order to meet todays needs. It is quite possible your financial life may become more balanced through this exercise, your frustration may diminish, and you might still feel secure in meeting your future goals.

By: Kevin from Minneapolis

Kevin from Minneapolis — Thu, 04 Sep 2008 23:59:10 +0000

Forget about politics. You’re in your prime earning years. When they’re gone, you’ll be glad you saved what you did.

By: bsimon

bsimon — Thu, 04 Sep 2008 20:09:40 +0000

“Anyone else have those thoughts? If so, what did you do?”

Wait and see what happens in November. January may bring more than a new year to the US.