Stuck in a Savings Groove

Habits in personal finance are your best friend and your worst enemy.  On one hand when you develop good habits like using low cost investments like ETF’s or perhaps learning you don’t have to spend that last $20 in your pocket just because you have it.  On the other hand when you are so used to saving a lot then hard to get in the habit of spending more when you can honestly afford it or given yourself permission to just enjoy spending some of your money.

I face this little push and pull on my savings all the time.  It sort of creates an interesting internal debate on what I want in the future (ie: retire at 45) versus what I want now (today that is a toss up between a Blu-ray player or an extra half an hour sleep in).  For the longest time I sort of avoided this debate by focusing mainly on what I needed rather than what I wanted, which worked fine for a while but recently has fallen apart.

Why? Well that’s easy.  I’ve began to realize that any extra savings I do at this point is fairly minor in the overall picture.  For example, I’m currently putting an extra $2900/month to my mortgage beyond my regular payment.  At this rate the mortgage should be paid off in a bit over than 2.5 years.  So yes I could save my next raise at work and shave off perhaps a month more, but really what’s the point?  If a month going to help my long term goals out that much? No not really, so why not spend some of that next raise.

This is the point where I get into trouble.  I’m not even sure what I would spend the extra money on yet.  You see I’m nervous about getting in the habit of spending more on a monthly basis and falling into the lifestyle inflation trap where you just keep spending more for each raise that you earn.  So I’m somewhat stuck in a saving groove and a bit nervous about getting out of it.

Perhaps the answer really shouldn’t be mind this time.  Perhaps I should just turn it over to my wife and say “So what do you want most in life, beyond what you already have?”  Then spend the money on that.  After all I have to say several excellent compromises have come from my wife over the years like increasing spending money but focusing it on certain areas like eating out.   She’s got a better intuitive balance on spending for today that I do.

So if you’ve been in the savings groove how did you get out of it?  Or what do you want most beyond what you already have?  I’m just curious what people spend their extra money on.

9 thoughts on “Stuck in a Savings Groove”

  1. Oh, I know that groove (aka rut at times!) well. I’m trying to budget IN fun activities (has to be activities, not books or similar) in the amount of $300/month. I couldn’t make the goal in January as work got in the way, but will persevere. 🙂 A ski trip in February will more than make up for the shortfall.

  2. Have you ever thought of using a specific bit of extra as “donation money”? Find something that matters to you and donate to it’s charity. No, you don’t make more money out of it but you do get a constant warm fuzzy feeling AND most donated money counts as a tax deduction!

    One thought I had when reading your post – if you are doing well enough to sock away almost $3000 per month toward paying off your mortgage, why not take some of your new extra income and donate toward someone who is clearly trying but getting foreclosed on or something – or to some fund (if there is any) which helps people having trouble paying their housing payments – or for that matter, to a shelter for the homeless! Just a few thoughts.

  3. Just pointing out a typo of EFT (should’ve been ETF I assume)

    additional $3000/month towards mortgage is amazing, kudos to you, that takes dedication indeed (if it’s from your combined salary income)

  4. I’m in a bit of a saving rut out of necessity now. Both my wife and I are in school, but she finishes in May. There are a few areas where it feels like we’re starving ourselves, but understand that we need to.

    Obviously when the time comes that she’s working we’ll loosen the belt a little bit in these areas. We’ll still be doubling the mortgage payment, maxing out the RRSPs and putting 10% towards debt repayment. After that it’s just a matter of dividing up the wants.

    As income grows, the RRSP contributions grow, the 10% repayment grows and the spending grows. I think it’s a balanced solution. I think as long as you live within that budget you won’t get carried away with needing “more stuff”.

  5. For now I am totally in saving mode and frugal living as much as I can (and trying to find ways to improve it almost everyday!).

    But if you live comfortably with your actual income, why not making sort of a wish list with your wife, like traveling to a particular country, your Blue Ray DVD player, etc… and when you get your salary increase indulge according to your list?

    Maybe this way you will feel less guilty when you spend? Because when I read your post, I feel that you have this guilty feeling like «this money could have been more wisely spent»

    Wise spending is a very «elastic» concept 😉

    Good luck with these decisions!

  6. @Susan,

    Actually I have been considering that, but I haven’t decided on how much and where yet.


    Thanks for the typo catch.

    @Mama Zen,

    Actually not a bad idea. Make a list and then go down it as money allows.

    I’m not sure if it’s really guilt when spending, but rather a fear of not wanting to fall into a meaningless spending trap.

    Thanks everyone,

  7. You calculate your net worth every 2 months and write about finance every day.
    With that sort of awareness,I fail to understand how lifestyle inflation could get to be a problem…you would see coming a mile away and nip it in the bud.
    I see it happening with people who do not keep track of their finances…but you?

  8. Hazy,

    Actually good point, I would have a better awareness that most people. I don’t track my spending THAT closely to see it right away, but I would notice a slow down in net worth over a longer period.

    Thanks for the external point of view. I’m likely worrying about something a bit too minor here.


  9. I also find it reeealy hard to loosen up the purse strings after living in frugal mode for many years. Most of the time it’s not an issue because the things others would splurge on just aren’t interesting to us (new vehicles, eating out, current electronics, trendy wardrobes). The one indulgance we allow on our journey to retiring at 55 is that we travel now while we are healthy and our kids are still at home to join us. Yes we could retire a few years earlier if we waited until we retired to do the travelling, but we’ve consciously decided to start now rather than assuming we’ll be up to it then. If we are healthy well into our retirement, great, if not then we didn’t put off seeing the world while we had the chance.

    Before spending on anything not absolutely necessary I invariably convert it to a travel equivalent and decide which I’d value more. Nice dinner out vs gondola ride in Venice; new DVD vs admission to the Louvre in Paris… It’s never any contest. Travel always wins.

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