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September 26, 2008


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Keep on your current path. If anything, put more into your 401K.

It is great that you are saving do diligently, but do remember that life is a journey. Take some time and money to do the things you enjoy. Make sure that you are taking all the necessary deductions so you get the most out of your paycheck each month. I do think that you are doing well though. If anything, you could cut back on your Roth (but I am a huge proponent of saving for retirement). I guess you could try to get a raise so you could have some extra spending money, or get a 2nd job. Good job with saving and good luck!!

If saving for your future cheers you up and it's what truly makes you happy, then why are you stressed out about what they think?

If you really don't LIKE your chosen lifestyle, then you're free to choose another.

I'm no professional nor am I probably qualified to give advice, but just reading your post seems to me like you've answered your own question. As Emily said, life is a journey. But you are so concerned about saving (or not saving) that you are stressed about it and don't do anything fun. You are 28 years young but don't seem to really be enjoying the fact that you have your s*** together and are doing probably better than many people as far as saving and being responsible goes. I say you should cut yourself some slack, pat yourself on the back for being financially aware and responsible, and then find a nice balance of saving and enjoying life. I used to feel like you too until I realized I wanted to do more and take trips, etc. Doesn't mean that you can't do things frugally, but you don't want to arrive at your destination with plenty of savings but regrets about never having fun or spending a bit to enjoy yourself.

Since when is $350 in play money each month considered not enough to have a good time?

@Matt- It looks like the $350 is what is left after his bills and savings. Not including his groceries/gas. He also didn't list car insurance.

I guess a lot of it depends. How much do you have in your rainy day fund? How much do you have in your car replacement fund? If these are already well funded, you could probably lessen them a little to free up some entertainment money.

It sounds like figuring out your goals would solve this. If you have some retirement goal that you can't satisfy without saving at the rate that you currently are, then keep doing it. If you're just randomly putting money away because you figure you may need it one day, it might be time to sit down and plan out what your short-term and long-term goals are.

I had a problem with saving too much also so I set a 10 year goal for my net worth and I almost force myself to spend anything beyond that. I'm not suggesting you throw money away, but I figured out that after a certain point, I get more out of spending money now than I will in the future. As long as your savings goals are met, have fun with the rest of it.

I'm in a similar position where I'm young, making a better salary than 95% of the people I know my age, yet sometimes feel stressed because I live "paycheck-to-paycheck." Mind you, that's after funding my 401(k) up to my company match, paying all of my bills, rent, car payment (to my parents - an interest-free loan for a used car!), car insurance, as well as putting 25-30% of my paycheck in savings each month to build up an emergency fund. My checking account balance towards the end of each pay period seems low, and can be "stressful," especially as I see friends making near minimum wage who enjoy their flat screen tv's, new Wii's, and whatever fancy other purchases they have made (all paid for on credit, of course).

The key, which came from my dad, is to not drive yourself crazy. As other posters have pointed out, what's the purpose of a huge savings account if it just stresses you out trying to get there? If you have a particularly good savings month, the next month cut yourself and little slack and have some fun (I had saved really well for quite a few months, so I went to Florida and told myself I wouldn't worry about money for the duration of the trip - it was great!). If you have a month where you have "too much" fun, then cut back on the fun a little bit the next month (okay, maybe I went a little overboard in Florida, so this month I'm trying to make sure not to exceed any part of my budget, and throw any extras into savings). It's about the journey.

The other key, which I've come to realize, is to remind yourself that you'll have your day. As my friends rack up credit debt, and I slowly build up my emergency fund, and pay off my outstanding obligations, my comfort is that some day, I'll be able to enjoy all the things they have, and I'll be able to enjoy them without any debt taken on. I'll have worked hard, and actually earned those things, saving a little along the way in advance for the things I really want, instead of turning to credit for the quick gratification. When I get my new (and hopefully larger and better ;-]) flat-screen TV, or car, or whatever else it is, I'll be able to pay cash and be done, while my friends are STILL going to be paying off that dumb purchase they made years ago.

As a side note, I think it's pretty awesome that the original emailer has a "new car" fund. That's one of my future goals, after my emergency fund is nicely padded.

A few thoughts:

1. Great job with the savings!

2. Don't add to your rainy-day fund indefinitely; It should plateau at around 3-6 months worth of living expenses.

3. Have fun but be reasonable. I'm 28 too; guys our age find a lot dumb things to spend money on in the name of "fun". But then again, this may be the only time in your life to do certain things. Not many people climb Kilimanjaro after they've turned 59-1/2. In other words, weigh the benefits. If your friends think you're cheap because you won't spend $500 to fly to Vegas for the weekend, don't sweat it. (Maybe the problem is theirs...) But if it's because you won't pay $10 to see a movie with the crew, then perhaps you should cancel your $100 cable package and get off the couch.

I am in the same boat as you (also 28). You definitely should be maxing out your Roth and getting the full company match in your 401k, so don't cut back there. You are also smart to be saving for a new car and for emergencies, but I would take a look at what you realistically need to save for these things. A $7000 emergency fund would cover you for about 6 months at least, so if you are getting close to that, you can start cutting back. Also, take a look at when you might need to replace your car and how much you need to save to reach that. After 2 years of saving $200/mo you will have about $12,000, so cut back if your time horizon is longer than that.

I would budget some fun money so you aren't stressed all the time and can go out with your friends, but don't sacrifice your future to do it. Take comfort in the fact that you will be able to pay cash for your next car and will likely have the option of retiring long before your friends.

Also take a look at what you value. Think about whether you would rather go out with your friends a few times a month or spend that money on cable. Put your money toward things that mean the most to you, and future security should be a top priority as well.

Reallocating spending isn't the only solution to this problem. I don't think that you are saving excessively - you just don't make enough for your lifestyle, including savings to maintain that lifestyle. You should enjoy your youth but also remember that your ability to change your income becomes more difficult as you get older. You are your biggest investment and its not too late to increase your income. Take those savings and use it to get an advanced degree: MS, PHD, or MBA. You might even switch fields to a more lucrative one. You should try to find something that you like but if you have trouble, keep in mind that as you get older your expenses will go up (assuming you get married and have kids not to mention stagflation) and that you will have other things in life which can make up for a more boring career. Don't pick a career for the money but don't pick one without it either.

Perhaps you could decrease the 5% to the rainy day fund if it's already at 3-6 months worth of living expenses? I assume this acts as your emergency fund? Sounds like you're off to a great start in life, but you should enjoy some of that money too.

I can't believe how much your post sounds like my life (except I have the debt to prove I was once deeply in the "being stupid college phase").

What I did, to make myself feel better, was cut down on that rainy day fund. Leave it in your checking account once you have a padding in there you will feel better about your situation.

I know I will probably get the response but then you aren't earning interest. From a quick view of his situation, he isn't earning all that much if instead he put 3% instead of 5% - that 2% may Gross you an extra 50 bucks a year; 30 after taxes!

Why are you stressed? That's the first question to ask.

I have been in your situation. Sometimes I'm stressed because I would really like to have it all: a great retirement funded by me and lots of money now. Just because you are being diligent and saving doesn't mean that you are immune from the same pressures others face. If that's the case, then just look at it squarely? Are you comfortable with it, once you recognize that you are meeting your goals and that the natural consequence of aggressive savings is going to be some cash flow tightness in the present? Or do you feel stretched too thin, passing up many "living moments" in the present because they'd cost money (notice I'm talking here about money spent wisely, not wasteful spending because of a live life once philosophy)? Or are you actually good on both of those fronts and the stress coming from the simple fact that you have so little fudge room in the split of your cash flow between savings and spending that your checking account closing in on the $0 point is too much to handle?

I know the latter was a real issue for me. I knew, rationally, that I was just fine. I have plenty in emergency funds and was saving a healthy percentage. Yet, my act of moving my emergency funds to a separate account also created the problem that I didn't have much of a buffer in my checking account anymore. I came to recognize that I needed one psychologically. Resulted in an expansion of my "emergency funds" with some serving the purpose of a buffer in my checking account.

Ask yourself why it feels stressful.

Is it because you're struggling to find enough money for food, or is it because you really really want the latest technological gear so you can impress people? Is it because, after all that saving, you don't have enough left to afford basic necessities, or because you'd just like to be living a bit more extravagantly?

Once you've identified the source of the stress and decided where you want to be, plan accordingly. You're putting away 20% plus, including some into a "rainy day fund". Is that how much you want to be putting away? Would it make sense to, say, cut back the 5% to 3% in the rainy day fund, or perhaps just draw a few bucks out of it to do something nice for yourself once in a while?

Error. Error. "Saving too much." Error. Does not comprehend. Malfunction.

You have $350 of extra money per month. That's pretty good! Wait until you are married. That goes to zero.

If your rainy day fund or car fund is higher than it needs to be, consider funding your Roth all at once (you don't have to invest it immediately). That's one less line item per paycheck.

I agree that "fun" should be a budget item. Allow yourself some good times with friends and some new clothes every now and then. Also, part of your savings could be reserved for "long-term fun", if you will - travel and such. Build that up and you won't feel guilty splurging on plane tickets to somewhere fabulous.

You want to have a well-funded retirement, and you're certainly on the right track. But you won't be as spry by that age - some things you need to experience while you're young :)

If LC has a legit way to turn $200/mo into $12,000 in 2 years I'd like to hire him/her to handle my finances starting immediately. :)

If he has $350 a month in "fun money" and feels like he can't keep up, then his friends must really be spending some money. I salute him for saving so diligently and, after maxing out his emergency fund, hope he keeps it up. Perhaps he needs to examine what exactly is causing his stress.

Doing everything all at once might be stressing you out. The Dave Ramsey Baby Steps are a way that you can focus on one financial goal at a time, with intensity, in a logical order.

I went from Baby Step 2 to 7 this year! w00t

You would benefit from better cash flow planning, too. Yes, you have to budget for entertainment and clothing and travel. Your clothing is not immortal.

Don't put everything off until retirement. My Mom died before she retired. She and Dad were able to do fun things, travel internationally, have a decent home, raise a family, accumulate wealth and a secure retirement, but you don't get the end product immediately. If she didn't prioritize enjoyable activities and travel throughout her life, thinking "someday I'll..." then she would have died with a big bale of regret.

You can't live just for today, nor just for tomorrow. Get the balance right.

I honestly don't understand this guy. I make about the same and save about the same. He spends on a mortgage what I pay in rent. Is he spending too much on home maintenance? The answer might be that he purchased a house too young. I don't think it's good to be tied down to property that early.

Dude, relax. You own a home, you get your 401k match AND contribute to a Roth, and you have emergency savings. Therefore you are WAY ahead of the VAST majority of your peers. So you should feel great!

Here is what you should do: make a list of your top 10 specific life goals/dreams. List everything from getting married to retiring by X age to buying another car to visiting Thailand. Put it all down. If you end up with vague answers like "be financially independent" then think deeper and come up with a specific goal that goes along with that value. And if "having fun with your friends" is on there, then put down a dollar amount you wish you had to "blow" with them going out every month.

Then rank your goals by what is most important to YOU - not to the PF blogging community or your parents or Dave Ramsey. Then, tally up how much you're spending on each goal. You should be putting more money towards your more important goals (or savings accounts specifically designated for them). You're putting a LOT of money towards retirement, but make sure you don't shortchange your other goals, even if they are "less important" by PF standards. You can afford it. So smile and do it!

A lot of people would kill to be in your situation! A $700 a month mortgage? MAN! That's less than I pay for rent! Your situation is a model for your friends. Their situations are not models for you. Trust me.

In this shaky economy, I would prefer you set up at least a full year of monthly expenses in your emergency fund. There are lines at the unemployment office these days, so don't get too comfortable.

After that, go on vacation to some exotic locale, or lease a sports car for a year or two. Have some fun, buy some new clothes, and live a little. Money is for freedom to do what you want, not something that you have to hoarde until you get to be 67 years old.

Everyone is talking about the savings aspect of your situation. I'd like to comment on the spending side of the equation. It is possible to hang out with your friends on a regular basis and not spend that much money. I'm now 37 years old and married, but when I was 28, I would hang out with my friends 1-2 times per week and rarely spent more than 5 dollars per night. Eat before you go out and order one drink at the most when you're out. You'll save money and probably get in a lot less trouble. It's really about just hanging out with your friends anyway. Spending money didn't enhance my experience any. It just kept me hydrated.

FWIW- I would agree with the rainy day (emergency) being capped at 6mos living expenses. Would probably be fine at 3 mos since young and income level not that high to replace, but 6 mos should definitely ease the stress. Maybe consider pulling back on the Roth whatever the company match is on the 401K so total investment is 15% of gross. Agree with others that considering and planning goals other than financial would help help the focus and satisfaction level. I have read Dave Ramsey's "Total Money Makeover" and "Financial Peace" in the last 4 months. Currently reading his "More Than Enough". This reader (and obviously some of the responding posters) has his act together enough that this book may offer the most insight (of the 3) to him. I also agree that focusing on increasing income regularly may prove more beneficial, as FMF has himself done and detailed. This reader has yet to experience real compounding and the time value of money.

I'd strongly recommend cutting down on the cable/internet fees. Try different means to watch the programs you like: try OTA channels (they are free and digital now !), try internet (most shows have full episodes online), try netflix, invest in a DVR, try limiting yourself to basic cable (you will - and must - still receive local channels as QAM digital channels). Also, unlike popular opinion, a 768 kbps - 1.5 Mbps internet connection is sufficient for almost all of our browsing needs (I pay about $20/month for mine).

Thanks for the advice. The cable is high I know. I have just basic. Comcast is a rip off but it's all I can't get in the area I am in. I have no special channels. Remember that this is cable and internet.

Strange. Salary seems good, savings seems about right (solid for 28 years old, but not excessive for that salary), and bills seem low, but $350 seems tight for everything else including food, so the budget seems to have a leak:

Income 4K/month
After tax, ~3K/month

Mortgage + BIlls = $900
Savings (incl. car fund) = 1K

That should leave over 1K "after all the above is budgeted out", which would leave for a lot more fun than $350.

I'm proud to say that my overall savings rate is 60%. Although that essentially leaves me with next to nothing at the end of the day, it's also exactly what I wanted to do with my money and my life.

Yes, I've had a few rounds with my friends as well, and here's the deal: If they're truly your friends, they will respect your decision save or spend money as you see fit. Even if they don't understand it.

The beauty with early, aggressive saving and investing is that you can always have the luxury of easing up on it later if you want to. Such as the plateauing mentioned earlier with emergency savings. You can't always do that the other way around.

So, I applaud the email's author for saving so well. Keep up the good work! In fact, save more if it makes you feel better. Be who you are, not who your "friends" want you to be. In the end, it is you who will enjoy more out of life because you have the means to, not those who insist that they have to live life, right now, even if it's at the cost of their future.

Same, I work while taking classes as a student and earn 45k a year (it will go up a lot when school isn't taking up half my time, I am only working part time right now as well). Mortgage/utilities/food/little bit of play money ends up being 1k/month (I have a roommate). That leaves about 60% for savings (when using a 401k). Hasn't been too bad keeping it up, should be able to stop working in my late 30's at this pace.

All I can say is CONGRATULATIONS....i wish i had the same financial prudence you have at 28. It took me almost another ten years to understand the importance of savings and why we can't save enough. I can understand though your apprehensions on focusing much in the future, the key to everything is BALANCE... you can't die working just to ensure a better future.. but you cannot live recklessly (financially and otherwise) now since definitely you will have to suffer for it sometime.

You're still young and a lot can happen... you might get married within the next years,have kids, etc. and im sure that you will be very thankful for the amount you were able to save then.

You seem to be saving about 30% of your income which is pretty good. It sounds like your $350 figure is what you have left for the things like clothes, vacation and hanging out? That sounds OK to me too.

But what really matters here is what is most important to you. If you're really not enjoying life at this point then it won't hurt to spend a little more. But if your life is happy with your current spending level then it wouldn't hurt to save even more. What is more important to YOU? Saving a little more or spending a little more on fun stuff?


Congrats! You are being responsible. What I think you need to do to appease both sides of yourself is find a way to increase your income a little bit. Depending on the rest of your situation, maybe you could get a second job that is fun, like at a coffee shop or something, working like 10 hours per week. At $8 per hour for 40 hours per month, you could make an extra $250 - $300 per month that would be exclusively for fun stuff, like saving for a vacation. Plus you also get to meet people who are close to your age that way. You could also do it with a side job, such as graphic design, landscaping, photography, whatever.

Since you own your house, maybe you could take a roommate as well if you have another bedroom. One of your broke friends could pay you just $300 - $400 per month and you'd get to have fun with your friend and get some extra money.

Finally, when your emergency/rainy day fund reaches 6 months of living expenses, you could reasonably put that money to a fun stuff fund as well. If you have to spend that on something (car/home repair), you stop putting money in the fun fund and replace the rainy day fund money.

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