Can you save too much?
On the debt-free thread, people are talking about how they avoid debt. It occurred to me that some people are willing to "do without" a lot in order to save. But how much is too much? Dont you have to live now too?
I guess around here, many of us justify our horse expenses!
I am saving but I also decided to buy those things and do those things that I really enjoy rather than saving every last penny.
I guess this is colored by thoughts of my dad who saved and deprived himself of many things while working (yeah, we lived frugally too, but I wouldnt say I was deprived). Dad always planned to enjoy his money in retirement. But mom died and his Alzheimer progressed and much of his money is now going to the nursing home that would have cared for him if he had way less money...
My mom worked hard and invested and was always proud that she was going to leave me a tidy little sum. She has MS and I doubt a penny of it will be left.
Should she have lived higher on the hog and gotten more use out of the money? Well, she did get use out of it. She did a lot of fun stuff, some at my urging, like when she would watch the LPGA and I told her she should think about going to Palm Springs for a little vacation and be in the gallery, so she did. This was before her diagnosis, so I guess we just talked about it and she felt OK to spend a little of it as time went by.
We all need to save some for that rainy day, but I've heard too many stories about health failing etc to not encourage my family to enjoy life at least in little ways all the time.
Actually the phrase I used to use was you/we could get hit by a truck. Go have a good time, spend in moderation, you never know.
I find it bizarre in the extreme that our National Leadership considers "too much saving" to be a vice. Once upon a time it was a virtue.
My inlaws are super frugal. To the point where, even though they could afford it, my MIL was driving a really really unsafe car because my FIL didn't want to cough up the money to fix/replace it. They don't have cell phones/internet/tv. They seem happy enough, but it's hard to keep them up to date on DD, or even get in touch with them if we need them. They do have a house phone, but are hardly ever home.
DH and I save. I don't think that you can save too much, because you never know what's going to come up. We have a safety net that is large enough to replace a car and maintain that. We have a different account for the big things that we are saving for (i.e. new gun for hubby, new saddle for me). I wouldn't say that we go without, but we do look at our accounts each month and see where we can cut back. DH is ontop of every last dime. Do we REALLY need to go out to eat, coffee stops at the gas station, etc? Those little purchases that you don't think about really add up. Because of that, we're able to have some things that we enjoy, put money away, and save up for the bigger things that we want, without impacting our savings. :)
As an extreme, I have a situation in the family where it's a self-deprivation disorder. Yes, she has significant resources but sitting around alone in a house all day refusing to get any kind of medical help or buy new glasses or address mobility issues because it would cost money is a psychological disorder. Adult protective services agreed but nothing can be done until there is some kind of medical emergency.
It's very sad to take a 90 year old woman to the grocery store and she won't buy herself a jar of jelly because of the price.
At one point we tried to buy for her things she won't buy herself... but we can hardly take on signifcant medical bills for someone who is capable just unwilling to handle them herself.
The lesson to me is that we are not here to suffer. Savings are a safety net and are very important, but you can't forego the simple pleasures of living.
On an individual basis, having savings to cover emergency situations is definitely a virtue. But when government refers to "too much saving" as a vice they are talking about the aggregate -- meaning that the population as a whole is saving too much which means too little is being invested back into the economy. Ultimately this can slow growth. Especially after recessions people start to panic and save more/invest less which only slows recovery. Because this recession was caused by a financial crisis/investments bottoming-out that phenomenon has been way larger which only exacerbates slow growth.
Originally Posted by Guilherme
I think that in my generation especially (20's and younger) people save too little. Most of my friends have no concept of creating a savings buffer and then when some unexpected expense comes up they're at a loss and frequently get by through relying on credit cards. However I also know a successful lawyer who makes a couple hundred k a year and all he does is save, so he's just sitting on a pile of cash -- in my eyes that's too much saving. If you can safely face a "worst case scenario" emergency with your savings, then you're in a good place :) What that worse case is...well, that's pretty subjective!
It depends. It's always a good idea to be careful with you money. Once you have your credit card debt, car loans and misc small loans paid off I don't think you necessarily should pay off your mortgage by living an austere life. But it depends on your goals. If you can get your lifestyle expenses down to a bare minimum you can retire a lot earlier than average.
Individuals are all over the spectrum. There are people who wining the lottery is a retirement plan and people who want to leave a ton for their family to inherit.
Ultimately you can't take the money with you when you die and we only get one life to live and enjoy. But that's not an excuse for reckless spending.
My DH is the investment guru in our family. We own our house in Dry Ridge and own my home down in AL. We have savings for the perpetual rainy day.
When we were in our late 40's, we started taking vacations to use some of the money. We used the money to put two people (includiing our DIL) through college, who could not afford to go.
In our 50's, we were able to go on longer vacations. I began eventing my mare, which definitely took some money. Because my DH is frugal, we are able to enjoy our savings, without worry that it will run out.
Our boys did not learn anything from us. They do not budget. They buy what they want, as soon as the money comes, then ask us to bail them out when they have no money for bills. The thought that they will never learn how to save, if we keep bailing them out, has been too difficult for us to overcome. They get into trouble and we bail them out. If anyone has any thoughts on how to stop the insanity, please give it a go?
I do believe that you cannot save too much or do everything that you can to keep yourself within your means. Being debt free is liberating! :D
Depends on each persons' definition of self deprivation.
Some think going without more horses, showing often, new tack, multiple vacations or newer vehicles is self depriving.
Some think nutritional food or a car that won't kill you is a luxury.
There's a buttload of grey areas between the two.
IMO...having very little to no credit card debt, car loans, student loans etc and getting your mortgage paid off before retirement...while having a rainy day fund and 3-6 months salary in savings...is never a bad idea.
A good idea for avoiding silly debt is to wait on any purchase. When you have a strong hankering for something...wait 2 weeks and put aside the purchase price in cash if possible. If 2 weeks later you're not as gung-ho...don't get it. I think credit card debt is a tough one because so few equate it to actual cash.
Or at least figure out the price of the object (any object, not just big ticket items) in hours of pay. Is that new _____ worth _____ hours of work?
(Make sure in your calculations to first remove all necessary bills from your hourly pay...if 40% of your income goes to bills/utilities/etc then figure your hours of work to buy something new at 60% of your pay...you'd be surprised to see how many hours a saddle equals, LOL)
Oh, I don't have debt (I pay off the credit cards every month), minus the house, but I don't entirely see the point of hoarding everything. I'm never going to be able to retire anyway (by the time I hit my sixties, I doubt my IRAs will be enough to live off off for long, and social security and medicare will long since be bankrupt), and why on earth would I put off doing things I want to until I'm too old to enjoy them or look good doing them? Though it does lead to somewhat schizoid cheap vs. spendthrift--don't mind buying a horse or a ballroom gown, but I won't buy new clothes and get weird about what I buy at the grocery store (and forget stuff like Netflix, flatscreen TVs, smartphones, etc.)
I also don't (really) understand how you are bummed that your dad is paying full-price for his nursing care when, hey, he could have blown his money, turned out his pockets and still entered the same facility.
Originally Posted by Guilherme
Really? What was money for if not to pay for the stuff we need? In his case, it's very expensive care. Hardly a fun expense, but tell that to the person who didn't save and is now receiving sub-standard nursing care. IMO, you can do some suffering on a biological level if you end up outliving your money.
I have to say that, as I try to practice in everything I do - EVERYTHING IN MODERATION.
I'm all for saving, but LIFE IS FOR LIVING. Not over-the-top living, but how does it make sense to save to the point where your day-to-day living is so frugal that life is almost an unhappy struggle? YOU CAN'T TAKE IT WITH YOU.
So yes, save so that you have a safe cushion. Save so that you have enough for retirement or if/when you become infirmed. But to save simply out of fear or for saving's sake? That's almost a mental illness.
I don't mean to pick on you personally, but many think this way and I don't understand it.
Originally Posted by danceronice
So.... the logic is "spend it now because all will be in the sh!tter by the time I'm old (usually through no fault of my own) and I'll die with a shovel in my hand."
Fine. But what is the plan if biology dictates otherwise? Are you willing and capable of committing suicide that last day of work? Or will you continue to draw breath, not work any more because you can't and simply hold out your hand? My suspicion is that most of us will do the latter... no matter what kind of pontificating we did earlier. I'd just like everyone to be honest.
Yes, but. Lots of times the rationale behind saving is to leave something for the kids, so it's sort of a bitter pill when health fails and the money pays for nursing home care, even if it's a nicer nursing home.
Originally Posted by mvp
Well for me the idea is that dad didnt get to enjoy the money. Nice that he got into a nursing home of our choice, but when the money runs out he will still get the same care. So it is a tough balance to have enough for your needs yet spend enough to enjoy.
:sigh: I always told my parents that I wanted them to enjoy their lives and then quietly pass away at an ancient age as their last nickel was spent. Never wanted an inheritence - just for them to enjoy what they worked so hard for. Nature had other plans...
Yes, it is possible to save too much, particularly at a time in your life when it isn't cost-effective to do that.
When you're first starting out, things typically are tight and items that you actually need to live well enough to 'build your personal infrastructure' are worth far more to have in place than the tiny sliver of a negligible income that you might be able to put aside at that stage. It's like becoming dehydrated in an effort to buy insurance against becoming dehydrated.
Later on, when you have the necessities and your 'tools of the trade', whatever they may be, putting aside a significant chunk of what probably also will be a more significant income, makes good sense.
My wife then and I started saving [mainly funding a 401(k) with extra voluntary contributions to the maximum allowed] only after we had solid jobs and had the necessities to be able to focus on our careers without being distracted by needing things to make sure that life would go smoothly.
Until that point we made a deliberate decision not to think about retirement or long term savings, apart from trying to have a few hundred dollars on hand to cover inevitable but unplanned emergencies like auto repairs.
Also, if you have debt, getting it trimmed back yields a better return in the long run than investing anything (unless possibly there's a hefty company-match in your retirement plan.)
Originally Posted by ReSomething
I'm with you. The "spend-down" part of Medicare must really chap the hide of the person who worked hard and saved. But, again, one's money is first and foremost for paying one's own bills. Too damned bad if those get insane at the end of life.
OTOH, I think it would be socially and economically wise if an amount was reserved for passing onto one's heirs in that spend down scenario. Insofar as younger generations are getting poorer, it helps everyone in the long run if families are not bankrupted by the costs of elder care.
I feel the way you do. My mom's money is for her, first and foremost. I also think that living out your days in a sub-par nursing home is bad, like bed-sore bad, not getting basic biological needs met bad. When I put it into those stark terms and know that right now we don't have good ways to allow people to end their life when the money for adequate care runs out, I can't think that there is such at thing as too much saving.
Originally Posted by MsM
One thing that seems to be different now than even a few years back, is that lenders have practically thrown lavish credit in the faces of students, even as tuition has risen beyond the rate of inflation and student loan debt has gone out of sight. People finance living expenses and all sorts of unnecessary luxury items on ballooning credit card debt at high interest rates. Those people are so buried in debt that they won't even have a positive net worth until they are 45+ or anything material by way of net worth for maybe a dozen years after that. Even with no non-mortgage debt, good income, frugal habits and maximal retirement funding, I was surprised how little there was to show for it all by the time I was 45.
There needs to be a balance. If you choose to enjoy your money, but when a big vet expense hits you have to borrow, then you're probably enjoying your money too much too soon.
OTOH, sometimes I watch the Suze Orman show and she's waaayyy to the other extreme, like telling some young guy who's fully employed and already has nice savings that if only he invests the $500 he wants to spend in Item A, 40 years from now he'll have eleventy billion $$$. Uhhh...that's nice. But how about enjoying life a little in the meantime?
I don't worry about leaving money for anyone else. If there's money left over, that's great. But I do want to assure my own post-retirement lifestyle, including the possibility of needing some kind of assistive care. I have a financial advisor and I put away money as per my financial plan; with the rest, I enjoy my life now.
So yes, I think it is possible to "save too much", if a person is indeed saving what they plan to need in retirement/emergency fund/etc and more but depriving themselves in the meantime, provided they feel deprived.