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One of my biggest struggles is living in the present and also keeping my eye on the future. Usually, I do a better job of one or the other but struggle to balance both in different circumstances.
My Sweet Tooth
I’m at a point where delaying gratification in most areas in my life just comes naturally to me. Although, I have not learned how to delay my gratification when it comes to putting chocolate and other sugary treats in my stomach. It’s hard to shake off that sugar addiction, but I’m working on it. I still have a long way to go when it comes to improving my diet.
I definitely wish I had my wife’s will power. My wife may be just as tempted as me, but she is able to abstain from the bad stuff and gravitate toward healthier options. Maybe it’s because her mindset is just different from mine. She’s much more nutrition-focused and views food firstly as fuel. Oh well, I’m trying. Saying no, one cookie at a time!
Ever since I graduated from college, I’ve been pretty good with my money. I have been able to save at least 15% of take-home pay and that figure has creeped up every year since, until we finally reached a 65% savings rate in 2016. We hope to get past a 70% savings rate this year with a little bit of belt tightening.
Recently, I was curious to see how others were doing. According to the latest data from the U.S. Bureau of Economic Analysis, the personal saving rate in the US is 5.7%. The average personal savings rate in the US has averaged 8.3% from 1959-2017. The all-time-high for savings rate was 17% in May 1975, while a record low of 1.90% occurred in July 2005.
Why did the savings rate spike to 17% in 1975? During most recessions, people get scared and become tight-fisted with money. So during the 1973-1975 recession, people started to save their money again. This also occurred during the Great Recession in 2009, when the savings rate exceeded 8% after hitting a low of 1.9% in 2005.
I don’t think most of you need a refresher on 2005, but this was when tons of people were plowing their excess cash into real estate “investments” as home prices were on the rise. Of course in 2009, housing prices plummeted. Not a good time for some people whose homes went underwater.
Now the scary part is that even with a personal savings rate of 5.7%, 46% of adults say they either could not cover an emergency expense that costed $400. This just goes to show you how important it is to set up an emergency fund.
A while back, I was caught not being able to pay for an emergency expense when my car died. It was the worst feeling in the world. I had to borrow my sister’s car until I could save up enough money to buy a used car. So ever since, I make sure I always have sufficient emergency funds available so that a situation like that never occurs again.
I had a conversation the other day with my Dad about finances. I shared with him how we were trying to increase our savings to 70%, and he thought it was great but asked if we were having fun.
On face value, I thought, of course we are having fun. We have everything we need. My son has more than enough toys, we’ve gone on great vacations, and we’re spending money in areas that we value. Quick side note: My son’s ball pit is by far his favorite. He has so much fun giggling and throwing around the colorful balls (usually out of the pit).
But, I don’t know why it nagged at me. Am I so focused on FIRE and making sure that I’m never in a compromising financial situation that I can’t see the forest for the trees?
I have a love/hate relationship with Facebook. I see all the great things that my friends are doing. It makes me think, should I loosen up the purse strings a bit and spend on experiences that my peers do? I go back and forth from time to time. But, I’ve gotten to the point of knowing what would actually bring us joy versus just emulating a peer’s pursuit of joy.
Sure, there are things that I would love to buy, like a Jeep Wrangler, or even get a classic car to drive around in on the weekends. But I thought to myself, is it really going to be $30,000+ worth of fun? If I was a big car guy, I might feel differently, but it’s never really been my thing. I’ve had roommates and friends that drove Porsches and BMWs, and they’ve let me drive them. Of course, they were fun to drive for a couple of minutes, but I’m not sure I’d have the same thrill day in and day out.
Now, travel is one area that I get immense joy from. I am all about spending money on memories over material stuff. I’d love to travel more, but with a young son that doesn’t travel very well, we are somewhat constrained, such that Iceland and the Galapagos Islands will have to wait. Hopefully in the years to come when he is a bit older, we can all appreciate travel a little bit more together.
I had a conversation with my wife and asked her if she thought we were having fun. She agreed that we were basically doing everything that we wanted to, and sure, we could spend more money if we wanted to on things. But why? We just don’t get any joy out of spending for the sake of spending.
So readers, do you ever struggle with living in the moment versus long-term perspective? How do you find a sound middle ground? Share your thoughts below.