Posted by Tim Stobbs on February 8, 2010
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.