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My Financial Independence Journey » Reflections » Downsides of Extreme Saving

Downsides of Extreme Saving

965414_euro_dollar_3I 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.

Delayed Gratification

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.

Doing Without

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?

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25 Responses to "Downsides of Extreme Saving"

  1. sriki says:

    I am also an extreme saver, by forced choice. I get paid twice a month(biweekly paychecks). Starting from Jan 2012, I was able to use only 1 paycheck for living/recurring expenses. However, the wife started going back to school and tuition ate up a lot of the other one until Jan 2013 when she got funding. Now, I use this savings to pay my student & other debt. We moved from a nice, big gated apartment community to smaller,shady neighborhood closer to wife’s school. This has been a great money saver. I gave up shopping for clothes & electronics for a two years. I make do with what I have. Wife do shop occasionally, but, she is very mindful of what she buys. However, I do spend a lot of food. I go out for lunch at least once a week which I do not give up and We do pay a good bit for cable/internet/telephone rounding up to $100 per month.I bought a car that was 3 years old and its been two years since and I plan to run it into the ground. The cable and lunch part can be looked at high spending behavior by some, but, we prefer these and cut spending on other stuff.

    1. sriki says:

      Forgot to mention I paid off $10000 in debt(almsot 2000 a month) using these savings and on track to be debt free(except for my car) by the end of July.

  2. We’re not extreme savers, but we are definitely frugal and save quite a bit. I am sure that we have a number of things that we could cut to get us there, but are doing fine as we run a very tight ship overall. That said, delayed gratification is huge especially as it can really help us think over really what the cost of buying whatever item it is.

  3. You bring up a lot of good points. Extreme saving does require delayed gratification, but normally it’s worth it. My wife and I are on the border of being extreme saving, but we do have a tough time saying no every once and awhile. We’re trying to find the right balance of living rich today vs. living rich in the future.

  4. We might have a different definition of extreme mate as I encourage my readers to start at 20% and move up towards as painful a saving rate as possibile e.g. 70-80%.

    The only thing I’m aware of sacrificing has been my car, Moose. I’ve had him for 8 years now and refuse to buy something new and nicer. He’s 13 years old and still looks and drives good.

  5. Part of extreme saving also has to do with your income. Saving 50% of $3k per month in after tax income is admirable, saving $1,500 on $6-10K per month isn’t all that great. While I keep my savings rate really high thanks to a great combination of low expenses and high income, I honestly don’t think I could spend at the average American’s rate unless I was buying property, cars, boats, houses… A slow month for me is about $3k going straight to investing.

    There are drawbacks to saving this much but I think it really boils down to what your long-term plan is. Personally I don’t want to work full-time until I’m 65+. There’s many more important and interesting things to do in this world than spending it behind a desk.

  6. I am not an aggressive saver by any stretch of the imagination. I like to use some of my money to work on my project car. I don’t have any issues with those doing extreme savings, but I would rather save and enjoy my money at the same time.

  7. Pauline says:

    I have been saving aggressively until age 30, but there was stuff I refused to skimp on. Mostly travel, good eats, alcohol with friends. It looks like you really want that TV and I am sure you have once lost more than $500 on the stock market, so why not look for a gently used one on craigslist or splurge for once? In the grand scheme of things it won’t delay you much. The problem comes when it is a weekly occurrence.

  8. E.M. says:

    I wouldn’t consider myself an *extreme* saver, but that’s mostly because my income is pretty low and with all my expenses added up it’s more than one paycheck (I get paid biweekly). Last year was my first full year of full-time work and I lived with my parents to save what I could. It ended up being a little under 50% and I wasn’t even buckling down. Unfortunately I just moved into an apartment so there goes that!

    Delayed gratification is so important! My laptop is basically unusable right now (4 yrs old), but I have a desktop (also close to 4 yrs old) so I’m using that instead. I’ve been trying to simplify as much as possible and wanting less helps. I definitely drive close to one of the oldest cars at my job, but everyone else leases and I definitely wouldn’t want to do that.

  9. greg says:

    “I have a nice apartment, but it’s a one bedroom” – no studio?

    “I have friends who like to go out to eat” – I do, too, but either they value me for more than spend-y company or they’re no longer my friends.

    “a very old laptop” – I replaced my 7 year-old laptop (for a CS major) with a desktop so it would be more upgrade-able and need less frequent replacing of expensive parts

    “one thing that I would love to splurge on is a personal trainer” – I consider myself in excellent shape (half marathons every weekend, deadlifting > 225% body weight) and never had a personal trainer. Unless you want to get really clutch at olympic lifts, you’ll probably be fine. Based purely on anecdotal evidence, those I see with trainers are only rarely actually someone I’d consider legitimately strong or in-shape.

    “There are also lots of things that I would like to buy simply because I can” – to me, that is fruitless on all levels I value. The way I view it, such things are quite irrational. If you want it for the status, then at least it’s logical. But just “because you can”? You can also do a lot of fatal things for the same reason and never have to worry about money again!

    “rying to save at least 50% of my after-tax income (which is pretty extreme)” – relative to an abysmal baseline provided by Society; I’m in Sam’s (above) boat – 80% or bust! Actually, it has simply happened quite naturally.

    “work towards mitigating things as much as possible” – I know many people who would suggest that this is a stressful attitude to take towards things, and would agree given my experience with frugality. For my personal case (which may not at all be applicable to anybody else), it was simply deciding not to care about others’ pressures to do or consume some arbitrary thing and actually follow what made me happy — I don’t need to mitigate the “despair” of not eating out like a king because I simply don’t value it, and if people don’t like that, then I simply **don’t value them**. Not having to have everybody like one’s self is quite liberating!

  10. The Stoic says:

    I didn’t realize how much we are alike. I’ve been without a T.V. for four years now and honestly do not miss it. I don’t have an ipad either, so you’re not alone. I did upgrade my computer last month. I had a small netbook from ’09 when I was overseas. It was painfully slow and the tiny screen just wasn’t doing it for me any longer.

    I think the key is I changing our desires. If frugality is looked upon as some cruel imposition that we must endure for the sake of paying off debt, saving for a home,or achieving FI then we will always feel like we’re being punished. Frugality has enriched my life and I really can’t see myself going back to my former ways.

    Wish you the best in your journey to finding the middle ground…

    The Stoic

  11. While I don’t disagree with any of your points, I think this is more of an eyes and stomach thing. Even if you’re not an extreme saver but just have a lower income, you might feel you are delaying gratification, and no matter what your income level if you live without debt you will feel “behind” your peers. Even if you have a high income and don’t save there is always more to buy! I think the best thing to do is not make spending your entire income a standard that you have to scale back from. Just find a level of spending that is comfortable for you and save the rest no matter what your income. :) (Easier said than done, right?)

  12. [...] Fi Journey has a very transparent post about the downsides to extreme saving. Putting enough money aside can be tough but it is the only way for many of us to reach [...]

  13. This is so true. I’ve had periods of high spending and high savings over my life and there is no question the high savings eras were much tougher. Funny thing is after one of my stupid, high spending phases, there was always a hangover. I think perhaps I was too aggressive on my savings periods at times, which led me to go a little crazy when I eased up a little. It may be wise to give yourself an occasional reward to prevent an explosion of pent-up spending. Although you’re very disciplined so maybe it won’t be necessary for you.

    1. MFIJ says:

      I’m pretty disciplined. But I’m also very cognizant that this whole financial independence thing is a long-game. So I’m spending a lot of time struggling with when to loosen and tighten the reins on my spending so that I keep from doing something stupid in the future.

  14. Evan says:

    Are you married? Don’t think you are – do you think that would change things?

    1. MFIJ says:

      No. I’m not married, but I hope to be some day. I do think that marriage would change a lot of things. I’d probably wind up saving a bit less, but hopefully because my wife is encouraging me to spend money on those things that make me happy rather than being a cheap bastard.

  15. [...] My Financial Independence Journey: Downsides of Extreme Saving [...]

  16. 50% savings rate is incredible…only way I could pull that off would be to ask for a nice juicy raise at work…

    I hover around the mid 20%’s I figure. Higher if you consider mortgage payments as a form of savings.

    What do I defer? I have wanted a new car for a few years, but my current ride is still doing fine. For the third year in a row, I think I once again saying maybe next year…since my current car is paid off, I can invest in myself rather than pay off another car loan.

    Wish you best of luck

  17. I don’t know about you but I workout at 24hr Fitness and the trainers there make the members do the stupidest exercises ever. Total waste of money at that gym anyway.

  18. Integrator says:

    I couldn’t do extreme saving, but there are definite advantages to baselining on a lower level of expenses to protect against expense inflation and an increase in your expenses with increases in income

  19. I flip flop. I go from one extreme to another. I try to pull myself back when I spend too much, but if I save too much, I leave myself be (then I binge on spending).

    It’s a horrible cycle… but somehow it evens out to a nice average. It’s just all this yo-yoing back and forth!

    1. MFIJ says:

      At least you can pull off the flip-flop successfully. I couldn’t pull that off if I tried.

  20. I don’t consider 20% to be extreme at all. Maybe its because I’ve always been a good saver, but I’ve always saved between 20-30% since I left college. Like you I’m trying to save 50% this year and I’m finding that to be really difficult. I’ve had to make a lot of cutbacks and really watch my spending, but it will all be worth it if I can maintain that rate.

    1. MFIJ says:

      The extremeness of 20% depends on the questions “20% of what?” and “How high is your cost of living?” I used 20% as a starting point because I’ve made a range of salaries in my life and I remember a point where 20% was hard because my salary was so low.


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