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Saturday, November 1, 2014

The Balance Point

Posted by Tim Stobbs on January 29, 2014

I started to reply to a comment from Paul N and quickly realized I needed an entire post to answer it.  Here is part of Paul’s comment and question.

I read a few lines on another blog, ” Depriving yourself of everything you enjoy is not a formula for long-term success”. It leads to “Frugal fatigue”. How does one find that balance between?

This reminds me of my early experiences on spending less and saving more.  Way back when I started this mad journey to retire early I was entirely focused on cutting back on our expenses.  Then after my first son was born 10 weeks early and our house needed its main structural beam replaced (in the same month) we ended up with pile of debt.  So in response I cut to the bone for spending and we poured everything into paying off those debts.

I can assure you that hacking expenses to the bone is an effective short term measure but I agree entirely with the quote from the other blog that it is a recipe for disaster in the long run.  Why?  In summary, you learn to dislike your own life and begin to resent your plan regardless of how attractive the outcome is.  I experienced it first hand and so after some of the initial debt repayment I eased off the other savings and looked at our spending carefully then expanded the spending again, but only in certain key areas.

We personally focused on expanding spending on what matter most to us and what we enjoyed about life. For example, my wife likes eating out so we earmarked some cash each month to allow that to happen. Then for a while I can honestly say we found our balance point…well at least for a while.  Then over the years I haven’t paid as much attention to the spending and it crept up a bit higher.  Not huge amounts, but it moved up, some of that was just having a growing family (we now have two kids and a dog).  Yet now I can honestly say I think perhaps we went a bit too far the other way.  I don’t agree that all our spending was a good idea from a balance point of view (I won’t say we are hugely over spending, just a bit).  So I struggle with asking myself where is the balance point again, because to be honest is shifts all the time.

The shift in some regards is normal, you change over the years and so does what matters most to you.  So your spending should evolve with you to keep that balance, but often it doesn’t.  We tend to form habits and keep them even when their outcomes no longer really serve us.

So my plan to try to head back to balance again is to go over our spending data with a detailed eye and get some input from my family on what they like the most.  Then examine the things we don’t use that much or like and see if we can’t reduce our spending on them.  This may free up some cash for savings or it may just end up boosting up  others areas of spending, it all depends on the net results of the exercise.

In the end, balance is a temporary state, you have it and then it leaves, so you have to cycle back around to it.  Frustrating, I agree, but it is the truth.  How do you find your balance point between saving and spending?

Comments

4 Responses to “The Balance Point”
  1. Goldeneer says:

    There needs to be a balancing point and my balance occurs with trial and error.

    In the past, we were very frugal for 3 years and changed our micro culture with our friends as a result. Instead of going out to eat, we had a lot of backyard BBQs. For fun we had frugal excursions like riding horses and dogsledding. We missed out on restaurants and caribbean vacations but didn’t feel deprived. Instead we gained financial independence 3 years after that.

    Our current fun money is $250/month each and can be spent on anything fun and outside of our budget. However we do allow for more spending if our quality of life will be superseded in comparison to paying the mortgage early. This year we spent it on organizing our home and an overseas vacation.

  2. Jay says:

    Hi Tim, I’ve been having the same conversation recently about going too far, I’m just starting out on tightening the budget. My worry has been going too extreme and then giving up (or having my other half give up), I came to the conclusion that honest talks were needed in the household if we ever felt deprived. After the first month we’ve noticed we’re happier spending less, mostly because we talk more.

    P.S. I think it would be cool to meet you for coffee one day. I travel to Regina for work semi-regularly.

  3. Tim Stobbs says:

    @Goldeneer – That is great you changed the culture in your group of friends…it is always a bit of guessing game on how people react to change. I like the idea of fun money…we treat our monthly spending cash somewhat similar.

    @Jay – Oh yes, talks with the spouse are key to keep everyone on the same page. I’m lucky that mine reads this blog…just to know what crazy idea I’ll be bring up next week. ;) I sent you an email about coffee, just let me know when.

    Tim

  4. Erin says:

    ‘Going too far’ is useful because it lets you know what really makes a quality difference in your life and what you don’t miss. Then you can reinsert the things that really give your life quality and eliminate the things you discover are not worth the money.

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