Monday Musings - 3
The art of saving...oh the ever tremendous question about how much, how often, how quickly can you save enough money to truly go do whatever you want while the cash generator you have created keeps on churning. We all ask these questions and all do different mathematical equations trying to figure out things like:
"Maybe if my return is 5% instead of 7% each year..."
or
"What if I went with an average dividend yield of 6%..."
But what I am looking at today is the flip side of these things that a lot of us forget to ask ourselves:
"How am I living while I save?"
This is a very important question to ask and one that a lot of us seldom do. When you are truly trying to create passive income, generate wealth, or retire early then the sole focus is on the future not on what is happening right now. This is the wrong way to think. There is balance available and we should strive towards a balance life.
Let me ask you these couple of questions:
- When do you plan on retiring?
- How many years of life do you have until then?
- How many years of life do you have after this point in time?
- How is your health now?
- What do you envision your health to be at that time?
Now sit down and answer all of these questions honestly. For me I would like to be able to retire at around 45. That is 15 years. Beyond that my life expectancy hopefully (you never know) is another 40 years or so. I am in great health right now and believe that in 15 years it will be comparable to where I am now.
What's my point? If I know I have 15 years until I think my first available retirement age will be, what am I doing with those 15 years? How am I living them? What am I going to be able to enjoy and just how exciting will I be able to make my life while trying to save over 50% of my income each year?
The real question that has to be asked is really,
"How many years am I willing to give up to meet my retirement goals?"
The answer: none.
Let me tell you a real story from my life that happened just last week. I was off from work and went down to the local Starbucks to get a coffee and read. It was a nice day outside and so I sat out on a bench and began to sip my cold brew and read. I heard a loud crash on the street and saw a multitude of people running towards it. A woman had been hit walking across the street. The bystanders helped, gave CPR, and did all they can until the paramedics arrived but the woman passed away. There was nothing that anybody could do.
We don't know how long we have left on the earth. We don't know if we will be taken today, tomorrow, or live to be 100 but what we can do is live each day to its fullest. I think that sometimes as "frugal" or "diligent" investors we miss out on this. We take for granted the next 15 years of savings thinking that we will then have a lot longer to live "free". My question though is why aren't we doing that everyday already?
Yes we work, some of us 12 hours a day, but that doesn't mean we cannot live. Go out and hike, that's free. Go spend a few bucks at a Goodwill and get a book that you've always wanted to read and actually sit down and read it. Splurge on a $15 movie ticket and go see Thor, because your inner child loves the comic book characters and wonders what that blonde god will look like defending galaxies on the big screen.
There is no reason that we cannot save and live while we do it. I want you to take a good hard look at your budget and figure out how much money you have per month for "living" activities. If it is less than 10% than I feel bad for your current lifestyle. Yes you can put your head to the grindstone and work until you have retired but I would venture a guess that the years between now and then would be more enjoyable if you did not.
Really want to save and live? Try this:
Now as you can probably tell I am a bit of a hippie. I definitely lean more towards Dustin Hoffman in Meet the Fockers than Robert DeNiro. That being said, maybe this isn't for you and you are a bit more Jeff Bezos than Jeff Spicoli . There is nothing wrong with that.
What I want you to understand though is that you can always make another dollar but you can't make another day. When you sit down and think about that you may just look a your budget a bit differently.
As always leave any comments or suggestions you have below!