I spend a of this blog focusing on extreme saving, which I would consider to be anything above 20%. Why? Because extreme saving is an extremely powerful tool for achieving early financial independence or retirement. Without it, you’re going to resort to such fallback plans as rich dead relatives, becoming a drug kingpin, winning the lotto, or starting an unusually successful business. However, most people don’t have tons of money at their disposal, so pushing their savings rates above 20% is challenging to say the least. As part of my policy of not bullshitting my readers, I want to lay those downsides on the table.
If you’re into saving, extreme or otherwise, you’ve met delayed gratification. Expect that gratification to become painfully delayed if you walk the path of extreme saving.
I currently do not have a TV. I watch movies and the like via my computer. I would very much like to buy a nice large TV for the apartment, just to be able to crash on the lay on the couch while watching movies on an appropriately sized screen. And wouldn’t it be nice to host a movie night? Unfortunately, reasonably sized TVs cost around $500. This is too much for my blood, so I’m waiting. Thankfully with electronics, prices always drop. If I’m patient enough I can live the dream.
I also have a very old laptop that is in desperate need of replacing. But it still works… slowly, but it works. So I’m waiting to buy a new one. I’m not so much waiting for prices to drop with this purchase, but rather waiting for the laptop to finally go to that great Best Buy in the sky.
The fact is that I could buy both of them right now. This instant. I could open up Amazon and break out my credit card and buy them. No problem. No debt. Just wait a week and enjoy my new electronics. Or screw the waiting. I could just drive down to Best Buy (assuming it stays in business long enough for me to get there) and pick them up.
I chose to delay gratification to spend less money so that I can keep my savings rate up. Instead of buying things that I want and will provide me with some added happiness, I’m waiting. Waiting for prices to drop. Or for enough points to accumulate in one of my several rewards programs.
There are plenty of other examples of similar things I could discuss.
Making Due with Less and Having a Lower Standard of Living than My Peers
Sometimes you still get to have what you want, but in exchange for keeping your savings rate elevated, you just get to have less.
For example I have a nice apartment, but it’s a one bedroom apartment in a middling place to live. I’m not renting a single family home in an upscale neighborhood. I’ve also got a reliable car, but it’s old and far less glamorous than the cars driven by my peers.
I like to go out to eat. And I have friends who like to go out to eat. Anyone who knows me, knows that I love food. When I go out to eat, I like to break out some hardcore gluttony. Despite being the smallest person at the table, I can out eat almost anyone else. Unfortunately, gluttony usually costs money (buffets don’t count as most are poor quality and not worth the money), so I need to keep my eating to more manageable levels. I also need to keep my drinking down despite having a deep seated love for wine, cocktails, and sake. Drinks at a restaurant have a ridiculous markup compared to just buying a bottle for yourself.
I love working out and one thing that I would love to splurge on is a personal trainer. Having a professional coach me could really help me make gains in strength and flexibility. But personal trainers are expensive, so I resort to working out by myself and taking free classes at the gym.
But a large portion of extreme saving entails doing without. Just passing by things you would otherwise like to spend money on in favor of keeping that savings rate up.
I won’t enumerate every hobby and interest that I have, but suffice it to say that most of them never get funded. There are also plenty of things that I would love to collect, but those don’t happen, because most collections just take up space and collect dust.
There are also lots of things that I would like to buy simply because I can, for example an iPad. I actually think I may be the only person in the country without an iPad. But I’m doing without, because I don’t think it’s worth the $500 minimum price tag.
I have always been a frugal individual and an aggressive saver. Certainly this has benefits. The more I save the less time it takes to get to financial independence. I’m currently trying to save at least 50% of my after-tax income (which is pretty extreme) with the intent of achieving financial independence by the time I’m 45. I’m not much of a Pollyanna, who likes to pretend that pushing the boundaries of frugality is some kind of magical and wonderful lifestyle. Instead I chose to acknowledge the downsides of my choice to be an extreme saver and work towards mitigating things as much as possible.
I work hard at trying to focus my spending towards those things that are important to me. While I may have to do without some things, it’s better to do without those things that I don’t care as much about than those that I do.
Readers: If you are an extreme saver, what have you delayed, scaled down, or done without in order to reach your savings goals? If you aren’t an extreme saver, what do you think you could give up in order to reach your goals?