Help me not turn into a hopeless Scrooge!

December 2, 2009 7:03 AM

I rule at saving money, and suck at the alternative. Please help this frugal girl learn to spend her hard-earned cash without experiencing fits of anxiety.

(I know this question might seem a bit ridiculous, but please bear with me.)

Here goes. Over the past five+ years I've managed to save up a decent chunk of cash. Around $40,000, to be more specific, with another $20,000 in retirement savings. I'm 26, so this means that in comparison to my debt-ridden friends, I'm pretty loaded. I have this money through a combination of factors - my parents helped pay for my post-secondary schooling, I worked hard at a good job for the last few years, have no car/mortgage/children/debt, and am generally pretty frugal in my day-to-day life.

This should be a good thing, but instead it's causing me no end of anxiety. I'm currently living abroad and teaching English part-time (on sabbatical from aforementioned job). I could have afforded to simply take a year off to travel, but for an anxiety-prone person this seemed like a bit too much free time on my hands. So the goal was to have the chance to travel and see more of the world, with some daily structure. And, presumably, to spend some of my savings on much-deserved rewards.

Instead I'm agonizing over price tags - whether to buy a dress I don't desperately need but like well enough, go out for dinner or eat at home, stay at a hostel when I travel or at a hotel, etc. It's a constant battle between being a total cheapo and the desire to spend in a worthwhile way, an inner debate on whether something will ultimately be worth the money, or a source of regret. The times I do buy anything remotely expensive (or even average-priced, vs. on sale), it tends to be a bit random and sometimes forced. $60,000 isn't crazy money, but it's more than a need day-to-day, and although I'm proud to have amassed this much, the result is that money has kind of lost its meaning for me. Prices feel arbitrary, and thus confusing.

None of my friends are in the same boat - most are living lives of necessary rather than voluntary frugality, given our meagre paychecks, which makes me even more cash-conscious. My savings are basically a secret, and I don't have a good reference point for what constitutes healthy spending.

I also have no specific goal in mind for this money. I'd like to do an MA some day, but not yet. I'd like to put a down-payment on a house, but later. I don't want a car or anything else with a sizable price tag. I'd be happy to invest my savings (and $20,000 is already invested), but the rates are so awful right now that it doesn't feel like I'm doing much of anything.

Any advice for how to be a healthy saver AND spender, or similar experiences? I'd really like my money to feel like a blessing, and not a burden. I know I could try making a budget, setting monthly allowances, etc, but in the past I've had a hard time sticking to rigid plans in part because my natural inclination is to spend less, which makes a budget feel like needless work. (I could also try to find wealthier friends, I suppose, but I'm a far cry from a trust fund baby, so I don't know if that would do much to engender healthy habits.)

No throwaway email, but I will send follow-up comments/responses to question to mathowie or jessamyn for posting. Thanks in advance.

posted by anonymous to work & money (34 answers total)

Good for you! Having some money saved up is one of the most reassuring feelings. It sounds like you have great habits that you should keep. But oversaving (even in this economy) is a pathology in and of itself.

When I was a kid, I used to save all my money, and, like you, I'd agonize over buying a little GI Joe figure. I didn't get it at the time, but I think one thing that really helped me get perspective on this was a T-shirt my dad gave me. It was black, with a skeleton printed on it, bony arms up in extremis, with a speech bubble asking "What was I saving my money for?"

You have goals for the future, and it is really important to have a cushion these days. But live in the moment, too. You don't need to be a rich corpse.
posted by Admiral Haddock at 7:09 AM on December 2, 2009 [1 favorite]

Do you even have particular items you want to buy? You mentioned that when you buy expensive items it is sort of random. If you planned out a major purchase, say a nice camera, or a computer, in advance, and researched it to ensure that you got the best product and price would that make you feel better? You could even save up for it (even though you already have the money) by putting aside say, $100 a month in a specific "spend" savings account.
posted by ghharr at 7:17 AM on December 2, 2009 [1 favorite]

I am like you. What has helped me is setting up specific amounts that I save each month. Once the money I have planned for savings is into my savings account, the rest is for me to use as I please (once the bills are paid, obviously).

I would set up an automatic transfer into savings each time you get paid, and tell yourself that everything left in your checking account is okay to spend. I know you've said you're averse to a budget, but that will probably help as well - I just keep a simple Excel spreadsheet with rough estimates for how much I can spend per category. It's more for tracking purposes than limiting my spending, since, like you, I tend to be thrifty.
posted by something something at 7:20 AM on December 2, 2009

Hey this is more or less my situation, though I'm a little older, and have more socked away. I'm also a tireless skinflint and have been slowly thawing out my miserly heart over the past few years as my income has gotten more stable and I have been realizing that saving money on generic brand cheese [not as good as Cabot!] really does nothing except get me less good cheese [the $1 or 2 difference over a week or two is literally no money to me at this point]. I also met some people where I live in rural Vermont who are needlessly frugal and they're less fun to hang out with [they don't entertain, they're misers at work and choose to work more rather than spend some labor-saving money] and I don't want to be them.

I still hate spending money on things that I think are overpriced and/or useless, but over time I've developed some heuristics for what is worth more money and what is still worth skimping on, in my world. So, I explain it in terms of quality of life stuff. I made a new year's resolution a few years ago to eat better, sleep better, be less stressed and be around things that smelled good. I also try to support local businesses to the extent that I can. So I give myself allowances for doing these things.

- stress - I hate being stressed out and things that keep me from being overly stressed probably prolong my life. So not getting up for a 6 am flight if there's a 2 pm flight that costs $100 more is worth it to me under this plan. I was always losing tech gear when I travelled frequently so I splurged and bought an extra phone charger and a camera battery and a bag to put them in. It's a wonder how much this $40 investment has improved my life. I try to remember that sort of thing when I'm talking myself out of spending money on something.
- eat better - no skimping on generic cheese! buying good tea and coffee instead of generic stuff. I have coffee pretty much every day, it should be decent [and I buy it locally so there's the shop locally value system kicking in as well]. I set loose outlines for eating out [once or twice a week] and stick to them and again, spend money locally when I do.
- good smelling things - things that smell nice increase my enjoyment of my environment so I buy better smelling soaps and shampoos and incense and laundry soap. The difference in price is next to nothing, really, but showers and laundry are more awesome.
- sleep - same as stress. I have a good comforter, splurged on an electric mattress pad warmer and a few other things. I feel the same way about footwear, having good shoes that you like and that are good for your feet is an investment in your health [same as my gym membership]

I still try to get value out of these things when I buy them, but I don't buy cheap just because. I check sales and ebay and the dented can store, but it isn't a religion with me.

I have a few income sources and usually what I do is basically say that one teeny job is "mad money" and have a special part of my bank account that's just for that. So I feel like I specifically work for it, but at the same time, it's free to do anything with. I also carry a decent amount of cash. I'll get a chunk out of the ATM and say that it's my money for the week or the month and give myself permission to spend it down until it's gone. I'll splurge for drinks for people on occasion, or take a friend out to lunch, or offer to do the driving. I sponsored a family for Thanksgiving. I pay my shareware fees. For me feeling like having some extra cash is helping out not just me but my peer group and the world at large is a good feeling.

And lastly, if you're working towards your goals and you're still saving, every day doesn't have to be a "sock money away" day. Figure out what makes you happy and give yourself some allowances for doing that. If need be, "check in" with yourself every few months. Did you spend money on something and then regret the hell out of it? Do less of that. Was something a relly good investment and you feel better having spent that money? Do more of that. People also point to Dilbert's Unified Theory of Everything Financial and it gives you some solid idea of what to be thinking about.
posted by jessamyn at 7:23 AM on December 2, 2009 [19 favorites]

Well for starters, congrats. Wish I was in your shoes unstead of collapsing under a pile of student debt I'll be paying off until I'm 40.

/grumble

Seriously though, good work. I'm not really sure you need to change anything though. Indeed, I'll come out and suggest that you don't. You've developed a lifestyle where you're living within your means. Don't change that. Having money in the bank and putting more money there doesn't mean it's time to change your habits, it means you're doing it right. Most people should be nervous about spending money. Lord knows most of us don't make enough money that we can afford not to, even though most of us aren't nearly as nervous as we ought to be.

The reason is that you will, sooner or later, come up against one of two things, either 1) a large expense you can't avoid, or 2) an expensive purchase you want to make.

Examples of the former include medical bills, emergency travel, home and car repairs, and the like. Examples of the former could include an awesome six month multi-continent vacation, a downpayment on a nice home, an advanced degree, and, you know, children. Your savings right now could constitute a good chunk of a kid's college fund, and if not your own children, than those of friends/family/random strangers. You can always give the money away, if it comes right down to it. Believe me, if you wait long enough, you will find more than enough things to spend the money on, all without changing your natural inclination to save rather than spend.

I say keep at it.

As far as not being nervous about spending within your means, well, that may be what a budget is for. If you know how much you can spend this month based upon how much you want to save, you might well find that spending that pre-budgeted amount is a lot less nerve-wracking. That's the other thing about budgets: they're not only a tool for spending less, they're a tool for taking control of your spending. Most people feel a lot better about things over which they have complete control, and if you know, for a fact, that you can afford to by that dress, you should feel better about doing so.

Megan McArdle has a column in the latest Atlantic about setting a budget for her and her fiance, and comes to the conclusion that though it is more work, they both feel worlds better about their spending and saving habits. This isn't largely because they've changed their spending habits dramatically--it doesn't seem that they have--but because they know with absolute certainty what they can afford to spend, so spending it does not invoke any anxiety.

Give it a try.
posted by valkyryn at 7:25 AM on December 2, 2009

I am NOT good at saving money, but I am very good at overoptimizing. When building computers or programming software, I tend to overoptimize and analyse every last detail.

What helped me the most was that I need to optimize for time also.

Memento mori. Life is finite. Much more finite than the capacity to optimize anything.

You are obviously very very good at optimizing dollars. Add a little focus on optimizing for time, and get a kick out of that. Look away from the ultimate most-bang-for-your-cent spot singularity and instead a point on the price-performance curve where you are comfortable - somewhere in the bend. Keep your eyes there, and optimize for time.
posted by krilli at 7:33 AM on December 2, 2009 [2 favorites]

Yeah I think you have an anxiety issue, overall, not a need to spend more money.

If you just want to relieve your anxiety, then do as suggested above and budget how much you want to spend each month on yourself aside from necessities.

I saw something recently and decided to implement it, and it's relieved some anxiety for me. It's to set up three accounts. One is savings. One is checking for bills. One is checking for everything else. So, you deposit a certain amount to savings (the old "spend money on yourself first"), then however much, per paycheck, that will cover bills like rent, student loans, cell phone, internet, etc., and the rest goes into the "checking for everything else" account. That's the account you use to spend on whatever you feel like. So long as there's money in that account, you can go ahead and spend it with NO SECOND THOUGHTS.

So that might alleviate your stress over spending a little bit. Especially if you set it up by looking at how much you've spent for the last, say, three months on random stuff and food and anything that's not a constant bill where you might get an overdraft fee. Set it up so that amount (or maybe a bit more if you want to spend more) goes into the checking account for spending each month. Now you're automatically saving and automatically paying your bills with the other accounts, and in the spending account you KNOW you're not going to spend more than your average amount (or whatever you've decided ahead of time you want to spend per month), so you don't have to agonize over each purchase.
posted by lorrer at 7:36 AM on December 2, 2009

Here's something that might work:

Set up a separate bank account for day to day expenses versus savings (maybe you have this already).

Give yourself a notional monthly spending amount that you're comfortable with. If you've decided how much your year out would ideally cost you, you could divide this cost into monthly chunks to get your figure. Otherwise, make one up that's a little more than you normally spend.

Make sure your day-to-day account gets this amount of money in it every month.

Now spend the money. If it starts accumulating you'll know this is "your" money there, not your savings, so you can splurge it on something nice.
posted by emilyw at 7:39 AM on December 2, 2009

Certainly you're ahead of many people who are up to their eyeballs in loan payments.

But don't overestimate your financial position just because you have $60K cash. Your net worth might the same or less than others who have asset-backed debt (assuming it's not underwater). And if you become even moderately ill/injured, those savings will get wiped out in no time at all.
posted by randomstriker at 7:47 AM on December 2, 2009

I've heard that saving money for a future catastrophe, at the expense of enjoying the "now", can be a symptom of OCD. Maybe you could go talk to someone about it? You have lots of money to do so, afterall!
posted by chrillsicka at 7:53 AM on December 2, 2009

What you need is a boyfriend to spend money on. How do you feel about the East side?

Seriously, I dealt with a problem similar to this for many years. (More recently I'm blessed with less disposable income so it's less of a problem. How lucky for me, right?)

What helped me, though, was to budget some amount (say, $200 or so, sometimes $500), take it out in cash, and promise myself that I would absolutely waste it on a shopping trip or other adventure. Sometimes I would take a friend out to a very fancy meal, which they often found confusingly random, or sometimes I would deliberately buy a "toy" like a new computer thing or videogame or kitchen gadget... but the key was that I was not allowed to go home until I had "wasted" all the money I decided to spend. Sometimes by night-time, I would be sitting with $46 left in my hand wondering what to do with it. A few homeless guys had good days.

It might seem frivolous or wasteful, but that was sort of the point: I was working far too much and was much too stressed about money issues at the time, so I used these days as a sort of mental "spree" to let off steam by using money completely illogically for a change. It helped balance the relentless risk/reward, cost/benefit decisions I was making with my "real" money, both at home and work.
posted by rokusan at 7:54 AM on December 2, 2009 [2 favorites]

You're doing great, as you know. Many people would love to have your problem.

It sounds to me like you're trying to talk yourself into spending money because you feel like you should, but your heart's not in it (a dress I don't desperately need but like well enough). What if it was a dress you didn't need but LOVED? How does that change the equation? I think that's important, because if you have no problem dropping a few bucks on a dress that you love when the rest of your financial life's in order, then you're fine. If you have an internal argument with yourself over that, then you have a problem. Are you stingy with others? How much do you begrudge giving gifts to your close family and friends? What about acquaintances? What about strangers or charity? Do you have a hard time spending at all, or just on yourself?

I'm in a similar situation--not quite as much cash in the bank, but I'm paying as I go for grad school, so it sounds similar. As others have said, I've had to remind myself that paying for certain things is worth it--yes, I can walk half an hour out of my way to save $2 on mascara at the discount cosmetic store, and when I was making $25,000 a year that was worth it, but is that still the case? No, I don't really need that dress, but do I love it and will I wear it over and over again? I've eaten in every single night for the last two weeks; who cares if i get $10 takeout?

It's YOUR money. You're working for it and you should spend or save it how you want. That means that you can continue to stash it all away and scrimp at the grocery store if you want. It also means you don't have to, but don't force yourself to spend money because you feel like a miser otherwise. Then you wind up with a house full of stuff you don't really like and don't use.

Maybe you feel like you should just be doing something more active with the money you do have saved? Pick some goals to save for (downpayment, grad school, etc), and divide the money and invest accordingly in laddered CDs or something along those lines. Even just creating individual "accounts" at ING and watching savings grow towards those goals is more satisfying than having a large number in there, for me.
posted by peanut_mcgillicuty at 8:00 AM on December 2, 2009

Use a second method to make decisions, apart from the logical method: imagine yourself in three years time looking back on your decision. Are you happy with it?
posted by devnull at 8:06 AM on December 2, 2009 [1 favorite]

I'm fond of a particular criterion as a way to curb unreasonable spending, but in some sense it applies equally well to encouraging reasonable spending:

Will I look back at this night 3 months (years, etc) from now and fondly recall doing X? If no, then don't waste $x on experience X. Examples might be fancy dinner when you've been eating out so much lately that one more dinner won't be memorable at all, or going to see a movie you're not really interested in just because some people you know are going, etc. For you the key thing would be: if you think you will look back on your travels and feel really good about that one weekend you went out to see traditional (nationality) theater at a cost of $100/ticket, then those stories are worth it.

As a frugal person, considering your options carefully is important. You don't sound like someone who wants a lot of dresses, souvenirs, etc. but I can tell you, as a past frugal traveler, that it feels really great to see a rug on the floor in my living room, that I spent a whole evening in a rug shop dirnking tea and chatting and looking at hundreds of rugs, and talking about the different local styles. That $300 item was carefully picked out, brings back great memories of my trip, and makes me feel really good. On the other hand, we stayed in cheapo hostels all the time that trip, and didn't have or wouldn't pay for hotel laundry; I lost one of my favorite shirts because I had washed it and hung it out on a railing, and then the wind picked up and it blew away. Do I regret choosing to cheap out and not spend that money on better hotels? No, posh beds and good service wasn't what the trip was about for me.

You've been careful and you've got some money that you could spend, if you feel like it. Take some time to think about what you really value in life, and what experiences in your past you really value. Think of ways to use your money to optimize those experiences, and go ahead and take advantage of those opportunities. When there are times to spend money that don't fit in with your personal criteria, you don't have to feel bad about not spending it, but be sure you actually have criteria there, not just a blanket "spending money is bad" assumption.
posted by aimedwander at 8:08 AM on December 2, 2009 [2 favorites]

I've always been a good saver, and pretty fiscally responsible, even as a young child. That, coupled with an almost 15-year period of low-income student/gradstudent/single-parenthood gave me some real anxieties about spending money, even when--over the past 5 years or so--I started having enough to live comfortably and save.

I'll always be a die-hard frugalista, but I've slowly gotten better about spending money on the things that *I think matter.* Don't automatically think there's something wrong with you because you have a hard time spending money on a dress you like, or a dinner out that you can afford, or other things that some people prioritize. Maybe those aren't the things that matter to you enough, and that is more than OK.

There does come a point where penny-pinching and miserliness step over into the realm of the pathological, but "I can afford to stay in a nice hotel but choose to stay in a hostel" is not even close to that line. Spend some time thinking about the things you have spent money on (or things that had been bought for you as a child) and that really, truly brought you great pleasure. This may help you figure out your own personal "what matters."

I'm not sure you need a traditional "budget," but it might help to just have a rough idea of what you think is a reasonable monthly outlay while you're on sabbatical (which I'm assuming is partly supported by your $40,000 non-retirement savings?), and then separate out the money you think you'll want/need over the next few months out from the rest that you can set aside for house/grad school. That's not all that much work, and focusing on how to make use of a few thousand in checking rather than tens of thousands in savings might help you regain perspective about spending.
posted by drlith at 8:08 AM on December 2, 2009 [1 favorite]

You're frugal and responsible, so celebrate that while giving yourself some breathing space. Embrace your inner accountant by categorizing your assets in a useful and anxiety-reducing way.

A generic $40,000 in "savings" is a huge load on your mind, so divide it into more reasonable bits.

1) Make part of it a sacrosanct emergency fund. What do you figure you need to live on for 6-12 months? Put that amount away in an account you can access fairly quickly but that also gives you the highest interest rate possible. Know that you will use that account if and when fan meets shit (job loss, serious health or family issues, infrastructure issues, etc.) When times get better, you will divert money into this fund to bring it up to your target again.

(You do have some kind of government or private health insurance, right? If not, try to get at least catastrophic coverage.)

2) What long term plans do you have that may tap into the rest of your money? If you expect to buy a house or travel in about 5 years, stick that money aside in another account. One other possibility is that you may look at your retirement savings and decide to plump them up a bit. Maybe instead of $20,000 retirement and $40,000 savings, it should be more like $30,000 for each. Depending on your tax situation this year, this swap may save you even more money. If you don't like dealing with risk, put the extra $10,000 in a GIC or equivalent.

3) Take some of the remaining savings, even $2000 of it, and deliberately spend it now on the kind of things that are important to you, as jessamyn described above. You should be able to enjoy it guilt free because $38,000 or so of $40,000 is still in your bank accounts, clearly marked for future use.

As you contain to earn money and manage it, try to structure your budget to allow for needs, savings and wants. See J.D.'s description of the approach here. Give yourself permission to have wants and to indulge them from now on.
posted by maudlin at 8:08 AM on December 2, 2009 [1 favorite]

Prices feel arbitrary
I totally get this - I'm terrible at spending too. What helps me is setting some standards to compare prices against:

For example, I’ve decided that my free time is worth £10 ($15 USD) per hour. This means that if I see a service that will save me an hour and it costs £10 or less, I buy it and never feel bad. In the past this has helped me feel good about paying for a cleaner, a faster train ticket, a more direct flight, a really good iron, etc

My sister has a similar rule when buying clothes: ‘£1 per wear’. When she’s looking at clothes, she divides the price by the number of times she will wear the item. So she never feels bad about buying expensive things that she will wear often, like a great pair of jeans. She knows that, compared to how often she wears them, it’s a good price.

I'm sure you could set similar 'rules' in different areas of life to help you stop overthinking spending decisiona.
posted by sleepy boy at 8:14 AM on December 2, 2009 [10 favorites]

Allocate a certain amount of money as spending money for yourself. Then spend it.

Please, please, please start putting your money into a 401K / IRA now.
posted by xammerboy at 8:14 AM on December 2, 2009

I agree with jessamyn's advice - experiment with spending a little more for quality, especially on basics that you use regularly. Sheets, for example: if you find a mediocre sheet set for a rock-bottom price, you will probably appreciate saving that money only once. However, if you spend more for high-quality sheets, you will appreciate the feel of those sheets every night when you get into bed and every morning when you wake up. The Slanket is three times the price of the Snuggie, but absolutely worth the upgrade. (I'm serious.)

These two threads have some good suggestions for everyday goods that are worth the higher price tag.
posted by Metroid Baby at 8:40 AM on December 2, 2009

I'd say keep up your frugal lifestyle when possible but recognize that life abroad will cost more.

Shopping : Just avoid buying stuff the first pass unless you find it really compelling. Feel free buying stuff on the second pass. If you don't buy it on the third pass, then stop thinking about buying it. Just buy anything you actually need without wasting your time.

Travel : You might not come back, so feel free spending money on travel expenses. If you travel alone, then hostels are way way more fun than hotels. A companion for sigh seeing is worth the hassle of communal showers. So spend a couple bucks buying some attractive guy or nice girl from the hostel a beer instead.

Food : Try all the local cuisine! Eat out when local restaurant have stuff you've never seen. Buy nice wine & cheese.
posted by jeffburdges at 8:41 AM on December 2, 2009

I think it's great to save, and you sound like you are way ahead of the curve, (at least the curves I run into). One thing just from someone who has been on the other side, watching friends who have big trust funds and/or big savings is to be generous if you can. A couple friends I have that are the best savers haggle over the bills at the restaurants when we eat out together and are always trying to make sure everyone is putting in their full share, when it's clear that they have lots of savings. I know it's totally their right to do this, and it's what's probably going to get them ahead on the financial end of life, but it gets really really old to haggle about 5 bucks, especially when it seems more of a neurosis than the need for that 5 bucks. When I have extra money, but feel guilty about spending it on myself, I do something really nice for a friend or my boyfriend, like take them out to dinner. Once a friend bought my plane ticket out West when I was broke just for a vacation, and that has always stood out in my mind. Another friend just split half my ticket to see Cirque du Soleil, something she did, well, just because. Do you have friend you could take on a little trip, or to a show, or anything, just because? Of course, you don't have to do it, but it feels really good to help someone else and also makes you feel rich, in a good way.
posted by Rocket26 at 8:44 AM on December 2, 2009

I know I could try making a budget, setting monthly allowances, etc, but in the past I've had a hard time sticking to rigid plans in part because my natural inclination is to spend less

I'd recommend setting a budget, with an allotted amount of money for discretionary spending, but taking the attitude that you don't have to spend all of it month to month. You can if you want to, or you can save it up for larger ticket splurges. Or it can just sit in your chequing account until you think of something you want to do with it.
posted by orange swan at 8:58 AM on December 2, 2009

Instead I'm agonizing over price tags - whether to buy a dress I don't desperately need but like well enough, go out for dinner or eat at home, stay at a hostel when I travel or at a hotel, etc. It's a constant battle between being a total cheapo and the desire to spend in a worthwhile way, an inner debate on whether something will ultimately be worth the money, or a source of regret.

Maybe you could write about the things on which you spend money. If it was a big-ticket purchase for which you considered many alternatives, describe your decision-making process. If it's a great meal or a dress, describe it and how you feel about it. Even if you just do this in a LJ account or something, perhaps it'll make you feel like the thing you purchase has "earned its keep."

Nthing to go ahead and spend more for quality...real quality, not a label. Lots of people are making amazing stuff the old-fashioned way. I'd kinda rather buy my kitchen table from a dude who made it with his hands, y'know?
posted by desuetude at 9:22 AM on December 2, 2009

At this rate you will quickly become independently wealthy. If you retired at 35, what would you do with yourself?

Also, listen to Rocket26. I was trying to find the ted talk where I heard this. The latest research on happiness added a subtlety to the previous result that, after a point, more money brings very little increase in happiness. It turns out that spending on people does. Nurture your relationship with people you love, and be generous.
posted by gmarceau at 9:23 AM on December 2, 2009

I also have no specific goal in mind for this money.
...
Prices feel arbitrary, and thus confusing.

Prices are arbitrary unless you have some sort of internal compass.

You have savings, but you don't know its real value. This means all purchases are a drain on your savings - either directly (money comes out of savings) or indirectly (earnings don't go in to savings).

If your money were earning interest at a predictable rate (say modest treasury bond or CD rates - what your money would earn if you were retired & investing conservatively) you'd have some perspective on how much your money itself was worth. E.g. what % of your monetary needs would be covered by the interest on your money. Just multiply the current amount of money you have by the current interest rate in a safe investment and you'll see how much money you can earn in a year on that money - is it enough to live off of?

Based on your current lifestyle (and frequently expenses go down by about 30% if you're not working), would the interest on your savings be able to sustain you indefinitely? Probably not, though if you're living overseas & things are amazingly cheap, it comes closer than a typical US lifestyle. And what about savings for emergencies?

Once you know these calculations, you can judge your saving & spending habits a bit more clearly. By putting numbers on these things, you'll have an estimated date of when you can retire - when working becomes optional rather than necessary. Then your savings gains perspective - you can spend, and you know that spending X means Y more days/years/months before you can retire. The price of things now has an impact on your life. The price is no longer arbitrary. "Am I willing to trade X days of retirement for this dress?" The dollar value has real world impact.

Saving is addictive, I enjoy watching the numbers in my various accounts increase, but I also enjoy a nice lifestyle, it's all about knowing with the tradeoffs are.

Read Your Money Or Your Life. It's a great book for learning the real value of money & putting frugality in a proper perspective. It's pretty much the only book on personal finance I think anyone needs to read, though you may require some extra reading due to your anxiety, etc.
posted by MesoFilter at 10:10 AM on December 2, 2009

follow-up from the OP

Really sound advice, everyone. Thank you, it's much appreciated. I think the situation is slightly complicated because I am slightly depressed right now, which is a separate issue but makes it harder to enjoy things I generally enjoy.

To respond to a few comments of this nature, I've tried spending more on friends in the past, but found it kind of soured for me when friends began expecting that if we went out for dinner, I would pay. (Not all friends, mind you, but enough that I started to become conscious of it.) It was sort of my own doing because I was so quick to offer to pay for a while. That said, I do try to be generous. Having a boyfriend would admittedly help my spending though, because it's easier to spend in a couple setting, I've found.

The OCD/anxiety comments are actually pretty accurate. Were I not abroad I'd probably be looking for a therapist right now, but I'm postponing that until I'm back in an English-speaking country.

But all that said, these are really good and thoughtful ideas. I am going to sort through them more later and try what I can. The quality idea is something I've been working on with some success (I do like good chocolate/coffee/etc), though I think spending a lot of time with super-frugals lately has been a bit of a setback.

aimedwander, on a related note, I found the rule you mentioned works really well for time allocation, and has helped me not feel badly about skipping out on not-so-fun social gatherings with casual friends in favour of staying home with a book.

xammerboy, never fear. I'm covered.

Also, I'm a Canadian and as such am not quite so concerned on the health front (though still taking care of myself properly). But thank you all for the input on that one, too.

posted by jessamyn at 10:26 AM on December 2, 2009

As some others in this thread have advised, being able to save is a great habit. Too many people have the opposite problem. If it's really bothering you though, or if you feel like your saving has caused you develop a nervous pathological or unhealthy disorder, there are some things you can do to help that.
As xammerboy pointed out, and you say you have covered, move some of your money into retirement savings. It may be enough to make you feel like you've spent money, but really it's money you've socked away. If you're making the maximum allowable contributions there, consider getting into stock or bond investments. It can be fun to learn about how the market works, and with some background you can make your savings earn on their own.
If that doesn't appeal to you, consider taking up a hobby involving antiques or items that retain their value well. I know a guy who runs his own recording studio and it's a popular place locally because he was fortunate enough to be able to buy a ton of vintage amplifiers, microphones, guitars and other equipment that you can't find anywhere else around here because no one else can afford to put them all together in one place like he has. If he were to run into some trouble for whatever reason, someone will always be in the market for an original gold-top Les Paul or a Neumann U67, and the value on those things won't depreciate if they're well-maintained.
Going along with that same example, if there's something you know a great deal about or are interested in, find a way to use your savings as start-up for your own business. Collecting comics or antique books might be one idea. You could restore vintage cars or motorcycles. There are all sorts of possibilities!
Lastly, as mentioned previously, consider charity. Metafilter has a group on Kiva.org, which has kind of a different take on charitable giving. You loan money to needy entrepreneurs with the idea that they'll pay you back once they've raised the profits. You can help a lot of other people this way with relatively little risk or cost to yourself.
posted by Demogorgon at 11:22 AM on December 2, 2009 [2 favorites]

I'm in a similar situation, financially, at least until my condo is completed and I have a mortgage, and I waffle between not wanting to spend money on things and spending too damned much on anything at all. I try to let myself buy the things I really want, while not buying things just because they are there and the money is there and why not.

A waiting period is often suggested as a way of cutting spending, but you can apply it in the other direction. Looking at a dress you think is pretty and wondering if you should buy it? Leave it for 2-3 days. If you still remember the dress, where you saw it, where you would wear it, etc, you probably really want it and you should go buy it. If you've completely forgotten about it by 3 days later, you didn't really want it that much in the first place. The great advantage of this is that you don't even have to keep track of the items you're "waiting on". Either you remember them in 3 days (or a week or a month for larger purchases) or you don't, in which case you didn't need them.
posted by jacquilynne at 11:34 AM on December 2, 2009

I am very similar. I don't have quite as much saved as you, but I am halfway through paying off a 20k student loan AND I am saving 10% into retirement fund and another 10% in savings, and on a fairly modest income. I went through a poverty stage before I went back to school and became a bit neurotic about money :)

What's helped me is to realize that sometimes it really does not pay to go cheap and can actually cost you more in the long run. For example, every year I bought very cheap winter boots and they were not good enough quality for the Canadian winters. So they would last one season and then be done for. In the long run, it works out cheaper to buy one really good pair that will last a few years, even if that means spending $150 in one chunk.
posted by JoannaC at 4:39 PM on December 2, 2009

I know your problem! As soon as money gets "saved" it is nearly impossible to spend.

My current "budget" is to choose an amount of my monthly income to "save" (I only have one account, so no real separate savings), and then try to spend the rest. The amount to save each month is kind of arbitrary and generally ranges from 30 to 50 percent.

I also somewhat follow jacquilynne's advice on waiting for big purchases. I really enjoy going shopping, but I buy things probably significantly less than half of the time I go. I look, and look again, and ponder whether or not I want to buy something, and then go home and ponder it some more, and then eventually come back and buy it if I really want to buy it. I just bought a bag that I like, but it has been a few months since I looked at the original bag, and had a lot of time pondering in between. I also just bought a relatively expensive camera, and I probably spent two months deciding whether or not to buy it, and I finally decided "As soon as I get my next paycheck I am going to BUY THIS CAMERA." And I did.

I also use spending as rewards. I got myself some nice things when I got my last job offer. If I finish something that I am being really procrastinate-y about, I get myself a present. I have found that it is definitely easier for me to regret not buying something than to regret buying it.
posted by that girl at 5:46 PM on December 2, 2009

Congrats on having so much saved! I am not anywhere near you but have been in a similar mentality for the past year and a half. Here is what I do to not go batshitinsane. All my savings are divvied up in percentages.

So
x% into retirement
y% into short-term emergency
z% into unexpected auto related expenses
r% into electronics (i.e. Replacing day to day electronics. I anticipate needing a new laptop in two years and there is more than enough for that and many other gadgets).

[These are all separate ING savings accounts].

In addition, I have what I call spendy accounts. Example:

e% for Travel

and most importantly, I do a small percentage of each paycheck into an account that I call silly money. No really. This account comes with it's own debit card. I can use this card for anything. A round of drinks for everyone at the bar, impulse clothing, toys etc. No justification needed. I still never spend all the money I throw in here so it actually grows and over time I have become less anxious with this account.

Perhaps something like that? Transfer a comfortable percentage for fun expenses into a go shop with that?
posted by special-k at 7:18 PM on December 2, 2009

I really like special-k's solution just above. I've been scarred for life on complicated budgeting though, so my own system is much more simple. I knew I could save money on a graduate stipend, so when I got a job that paid more, I set things up to transfer most of the "excess" directly into long term savings (401K, IRA), the rest into short-term savings, and live on the stipend amount. As long as my balance there goes up, I'm doing OK - if it starts to fall, I either cut back or figure out why and move some money from short term savings to cover it.

The second thing I did was look at my priorities - I'm in a similar boat and don't have many expenses - rent, food and utilities more or less cover things. I like good food, and have basically given myself explicit permission to splurge on food that I really like or that tastes particularly good. You might consider what you really appreciate spending the money on: food, travel, really shiny objects or whatever, and give yourself permission to splurge there. Even a basic budget helps keep out the fear that you'll go broke doing so.
posted by lorimt at 9:45 PM on December 2, 2009

Congratulations on being on top of your finances. I understand how you feel though – we spend a lot of money saving for something you are supposed to want (car, house), till you realize you don’t want it. Still – I think it’s imperative to have a financial goal, otherwise, as you noticed “prices are arbitrary and confusing”. The ideas to buy stuff upthread are mostly great… unless you don’t like stuff.

Some financial goals (assuming you don’t want to take a trip around the world) – you mention you might want to pursue a MA – can you do it full time? $40K is not much to live on for 2 years without other sources of income. Can you try for a Ph.D? Of course, the problem with getting more education is that you’ll probably earn more and, if your spending stays the same, the cycle of having too much cash repeats itself.

The ultimate solution – you earn too much. Get a job that pays less. I don’t mean it in a snarky way – you mention depression in the follow-up. Is your job contributing to it? Could your skills be used somewhere else in a way that would add more meaning to your life? Even if it’s a poor non-profit? Or a school? You have an opportunity to pursue career paths you always wanted to “if money was not an issue” – money seems no longer an issue, so go and live your dream life. Do you like what you’re doing now – leaving abroad and teaching English? You could do it semi-permanently.

Final thought – your parents paid for your undergrad. I hope you are grateful for this every day. Send them on a nice vacation somewhere they always wanted to go.
posted by Dotty at 7:21 AM on December 3, 2009

I'm another very frugal person. My parents taught me to hate debt. And you know what, it's great! Buying unnecessary stuff is rotten for the environment. In some parts of the economy, people have too much money, and spend it on new granite countertops, because the previous ones were the wrong shade of black. Save it up, invest prudently, and use some of it to pursue your goals. Grad school? You'll have it covered. Buy great experiences - concert tickets, trips to interesting places, books. Spend it on education; it'll pay you back.

One thing you can do is spend less time shopping. That way, when you do shop, you actually need a dress, or shoes, and the decision is easier. A good way to be less tight-fisted is to give to charity. Decide on something in the world you want to change, and support that work. Or take 6 months and go volunteer to further your cause.

One thing I did to learn to de-stress about spending on myself was to go shopping, and buy myself something beautiful, just because. It broke the ice, and I do occasionally buy something nice for myself, but only occasionally. Having the cushion of savings has seen me through some difficult times. I'd prefer to have to have this problem than the opposite.
posted by theora55 at 11:57 AM on December 3, 2009