balancing living for today and saving for tomorrow

August 23rd, 2007

Balancing Living for Today and Saving for Tomorrow

This is something I think about a lot in a theoretical sense right now. Our current focus is debt reduction and elimination, basically getting to a place where we are not paying for our past. But at some point, all this money that we are using to reduce our debt will have other purposes. We got serious about getting out of debt so we would have more money available to do things now, but as we continue to pay down debt, subtle changes are happening in how I think about money. I’m becoming better at thinking about long term and short term scenarios instead of simply immediate gratification.

So how to know how much to save for tomorrow vs how much “lifestyle inflation” to allow to better enjoy today? And when I say lifestyle inflation, I’m not talking about upgrading a car or house, I’m talking about small things. Right now our budget is very tight, so tight in fact that for example we have no entertainment category. No going out to eat, no going to events, no budget for entertainment at all. And we have a very very very small budget for home decor/furnishings etc. So small it will take 3 months to save the money to get my son a bookcase for his room (his books right now live in a cardboard box on the floor), and we rescued the couch we have from our neighbors who were discarding it (we asked, I promise!).

Some people will think this is madness, making our budget so tight, but we really really want to be out of debt. We’re comfortable with making some sacrifices now to accomplish that. But not forever. The whole motivation for beginning serious debt elimination was for a better life now and in the future.

So once our debt is eliminated, theoretically that will free up about $1000/month. Which we, if we wanted to max out our IRA contributions (which people keep saying is the smart choice), would use basically all of for retirement. Well, that can’t happen. We need more play money to have a little more fun. But then, will we be left unprepared in the future? How can one choose between having a comfortable life now and having a comfortable life later when it seems like the “both” option is just not available?

It seems so complicated to find that balance. But we’ll keep looking. There is no room for giving up in this dojo.

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7 Responses to “Balancing Living for Today and Saving for Tomorrow”

  1. How long until you are debt free?

    I would likely leave a little room in the budget for fun. It helps you to stay motivated and allows you to enjoy life a bit more.

  2. December 2010 is the plan.

    But once the credit card debt is gone (I think August 2008ish I hope) I think there may be some small relaxations involved in the budget. Maybe. lol

    There is budgeted money for the kids to have fun. My son is doing gymnastics in the fall and my daughter a mommy and me swim class. Our fun is observing/participating ;) .

  3. This is something my wife and struggled with for a long time. We lived frugally for years, never getting anything new unless something broke. We finally got sick of not having any fun and feeling guilty when we spent money rather than saving or investing it. Then I stumbled across Richard Jenkins’ “60% Solution.” Check out my interpretation of it and then read his info in detail. It has helped us a ton.

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