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I think the problem is that most people just go into denial and don't correct the behavior that caused the problem. It takes a lot of self discipline to establish and sustain a high savings rate. I started executing my plan at age 51. I wish I'd started much earlier but that was where my life's decisions had placed me.
I think the whole "self discipline" thing is overrated. It's really more about realizing that the bigger living space, more stuff, etc. isn't going to make you happy, or at least not as much as you think. Once you understand that, then the self discipline comes much more easily.
The other thing that helps a lot is understanding that you can probably have anything you want, but not everything. Once you focus on the stuff that is truly most important to you, then it's easier to ignore the other superfluous stuff.
The other thing is, you need a deep motivation. Extrinsic goals like wanting to get rich to show off doesn't work. The goals have to be internal...like valuing independence. Like wanting to do important work in the world that doesn't pay much or maybe not anything at all. Or wanting to have the money to contribute to causes that are near and dear to one's heart.
The other thing I've noticed is that having a worldview of wanting to live efficiently. If you get a kick out of living efficiently, living in an oversized house, having a long commute in an oversized car, buying stuff you don't need....those things just seem completely superfluous and stress inducing.
Once you have a true understanding of the limited happiness "more" can bring, and you have those other strong internal motivations, then it doesn't feel like sacrifice or self denial to have a high savings rate.
People use storage units for 13 years? That is nuts. I think if you have something in storage that long you don't really want it.
Ever watch hoarders? They often have storage units because their primary home is already full of stuff and they can't get rid of it.
My dad was a little like that. In his case he could never part with stuff he felt connected to his family members who had died, primarily their furniture. My grandmother had a 6000 sq ft. mansion full of antique furniture, knick-knacks, etc... My dad only had a 1br apartment. So he stored her stuff. We tried to have an intervention with him... but he literally could not part with the stuff. To him I think to sell or give it away would have been like losing his parents all over again.
He always thought either he or his kid(s) would get rich and have a place big enough to put all that stuff. And that we would want it if we did. Nope.
on the other hand taking a look at some of the polls done on mister money mustache or the early retirement forum you have loads of people who have saved quite a bit . they are way above the norm ,so if you really want to ,there is always a way .
This says, in the same article, that a high percentage of Americans have no savings but then says that the average savings rate is 4.4%. How are both true?
They have $5400 in checking but can't come up with $400 for an emergency? Last I checked $5400 - 400 = $5000. So which is it? Do they have any money or not?
This says, in the same article, that a high percentage of Americans have no savings but then says that the average savings rate is 4.4%. How are both true?
They have $5400 in checking but can't come up with $400 for an emergency? Last I checked $5400 - 400 = $5000. So which is it? Do they have any money or not?
I think we don't have good data on this.
That's still possible. Here is a potential breakdown.
26% save 0%
24% save 3%
25% save 5%
25% save 10%
That right there gets you to 4.42% and I save a ton more than 10%. If you compare our savings rate to our gross we are at 32%. If you compare it to our taxable income we are at 55%.
People simply do not pay themselves first. Always pay yourself first 10-15% , then live off the rest. The habit was never formed for many people. If the "rent is too high", or the mortgage for that matter you are living outside your means.
I think denial and procrastination (I'll start tomorrow) play into this. I was told not taught how to save. Because of that, I spent my paychecks. It took me a long time to change my way and create a saving habit. Now I don't think about it, I think about other ways to save money. Sure I wish my house was bigger or nicer, but I can afford it without worry. A lot of people I know are drowning in debt behind the scenes because they have more than they can handle.
I think the whole "self discipline" thing is overrated. It's really more about realizing that the bigger living space, more stuff, etc. isn't going to make you happy, or at least not as much as you think. Once you understand that, then the self discipline comes much more easily.
The other thing that helps a lot is understanding that you can probably have anything you want, but not everything. Once you focus on the stuff that is truly most important to you, then it's easier to ignore the other superfluous stuff.
The other thing is, you need a deep motivation. Extrinsic goals like wanting to get rich to show off doesn't work. The goals have to be internal...like valuing independence. Like wanting to do important work in the world that doesn't pay much or maybe not anything at all. Or wanting to have the money to contribute to causes that are near and dear to one's heart.
The other thing I've noticed is that having a worldview of wanting to live efficiently. If you get a kick out of living efficiently, living in an oversized house, having a long commute in an oversized car, buying stuff you don't need....those things just seem completely superfluous and stress inducing.
Once you have a true understanding of the limited happiness "more" can bring, and you have those other strong internal motivations, then it doesn't feel like sacrifice or self denial to have a high savings rate.
The above understanding along with having the discipline to save and learning how to properly invest the savings is key to a successful retirement. I splurge on things that I really want but I'm very frugal on everything else. And some of the categories I like to splurge on are major purchases (like the oversized house you mentioned) yet we are still able to save 38% of our gross income. Its not that hard once you decide you don't need to have the best of everything.
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