The Personal Saving Rate In America And The Best Way To Save A Ton Of Money

Before the pandemic, the personal saving rate in America hovered between 5% – 6%. Post pandemic, the personal saving rate in America shot up above 25% as people freaked out about their future.

US personal saving rate historical and up to 2017

We already know the main reasons why people go into debt are due to greed, stupidity, entitlement, desperation, and insecurity. The debt article offers five solutions on how to eventually become debt free.

Based on a recent social experiment on Financial Samurai I've managed to figure out how to make you severely curb your spending to the point of absolute monk-like frugality. Before I show you how, let's get a snapshot of the overall US personal saving rate in America to put things into perspective.

The Personal Savings Rate In America Could Be Better

As you can see by the chart above the US personal saving rate is roughly 6%. At a personal saving rate of 6%, it will take someone 20 years to save up enough money to replicate one year's worth of income. That's pretty pathetic. At least the 6% is an improvement from the 2.5% figure seen between 2005-2007!

It took a colossal financial meltdown to scare Americans into tripling their savings rate for several years. Now it's back to spending all we have thanks to the bull market.

It's my hope that every single reader saves at least 20% of their after tax income every month by maxing out their 401(k)s and IRAs where available.

If there's still disposable income left over after general living expenses, save even more in laddered CDs or open an investment account with Personal Capital where they automatically build a low cost, risk-appropriate portfolio for you.

Build Your Savings Muscle

My mission is to get people to build their savings muscle as large as possible. You don't want to look back 20 years from now and kick yourself in the face for being so undisciplined. Let's all encourage each other to increase the personal savings rate in America. The more people take control of their finances, the better for everyone.

You may have all the enthusiasm in the world for your job after graduation. But trust me when I say your enthusiasm will fade after 10 consecutive years of work. Now it's time to demonstrate how you can join me in saving a ton of money with this one strategy.

How Financial Samurai Saved Me Over $100,000 In A Day

In a post entitled, “The Cure For Financial Hoarding” I listed out several items that I've been thinking of buying but can't get myself to pull the trigger because I suffer from saving for retirement while in retirement disease.

The Want List:

  • Range Rover Sport = $83,000 after tax.
  • Panerai Submersible watch = $13,500 after tax.
  • Pair of Prada shades = $270 after tax.
  • New Macbook Pro 13″ with retina display = $1,560 after tax.
  • More vacation spending = $10,000 extra a year.

Total: $100,000+

I thought by being open about some of the things I'd like to buy, the community would give me permission to go ahead and splurge. My current car is 13 years old with lots of electrical and mechanical problems. My laptop is from 2007 and I'm on it for 2-4 hours a day as a blogger. I'm very much into diving now and haven't bought a luxury watch in five years. Meanwhile, I just need a new pair of shades in sunny California since my $15 cheap ones are falling apart.

But instead of receiving the green light I was hoping for, I got one big stop sign!

Take a look at some of the comments:

“I understand what you are saying about enjoying your life but Frugality isn’t a disease. Yes, I save money for financial security. But a frugal life also comes from a place of morality. Using fewer of the planets resources, finding happiness in yourself and other people instead of in material things, maintaining humility and empathy in face of desperate poverty throughout the world, etc. No matter how “hard” I work, I’ll never feel like I deserved my wealth more than anyone else struggling through our laps around the sun. Profligate spending like $10,000 for a watch will always seem extremely wasteful to me.”

“Spend your money on a off-grid Hawaii house with a killer media room if that’s your thing. Start an emu ranch or a non-profit of your choosing. Live a life that your time and money afford, not a life of buying silly status symbols. Cruises are a great example of how to spend tons of time and money without looking outside the middle-class world as almost everyone blows money on cruises.”

“My suggestion is be honest about what you’re buying with a $12,000 watch that “will last forever”. Sure, it’ll last a long time, but you’ll want to replace it before then… These are status symbols. I have no judgement there, it’s just the truth. We people like to justify these purchases with technical excellence (7,500′ water resistant!), but that’s what the marketing folks have taught us to do. A great book on the subject is called “Spent” and changed my view of items for life.”

I tried not to sound judgmental, but it’s tough not to come across that way with a topic like this involving watches that cost more than a year of minimum wage income!”

More Feedback

“When I have the feeling that I’m not splurging on myself enough, I usually ask myself what I want, then compare that to alternatives. The alternatives are usually a) save this money for my future family or b) donate this money to a good cause. When you look out how many people out there are living with less, the idea of buying $300 sunglasses seems a little silly.”

“A $12,000 watch? I’m rethinking this. Why would anyone want a $12,000.00 watch? Why not something cooler and more meaningful? You will gain more pleasure from experiences over stuff! When you are on your deathbed, would you really care about a watch?”

“But Frugality isn’t a disease. Yes, I save money for financial security. But a frugal life also comes from a place of morality. Using fewer of the planets resources, finding happiness in yourself and other people instead of in material things, maintaining humility and empathy in face of desperate poverty throughout the world, etc. No matter how “hard” I work, I’ll never feel like I deserved my wealth more than anyone else struggling through our laps around the sun. Profligate spending like $10,000 for a watch will always seem extremely wasteful to me.”

“Your examples are foreign because I see no added value to expensive shades or new BMW over used Ford? Interesting that your examples put you in top 1- 5% AFTER retirement. Rare circumstances I'd guess.”

I wonder how many of the critics actually save more than the personal savings rate in America. What do you think?

Analysis Of Comments

I love these comments! Every comment makes a judgement as to why buying anything on the list is a waste of money. Making price comparisons of the items to yearly salaries, poverty, status symbols, morality, and charity is thrown in to make me feel guilty for ever spending money on something I want. Shame me good baby!

Not one comment used objective mathematics to calculate affordability. For example, nobody broke down the actual annual cost of ownership of a Range Rover if resold in five years compared to an income to get a better picture of cost. I decided to write a whole 1,500 word post on how you can deduct a SUV as a business expense to highlight a potential 30% savings off sticker, but the feedback was still mostly of disapproval.

Despite still saving 50% of my after tax income in retirement, a rate that is 10X the national average, I'm still being judged for being wasteful and amoral. I presume my critiques must at least also save at least 50% of their income, otherwise wouldn't that make them hypocrites? There is an infinite amount of comparisons I can point to where your spending is considered amoral and wasteful compared to another as well, but I don't.

So it got me to thinking several questions:

  • Can we not help but judge people for their financial choices even if we don't know the full extend of their finances?
  • Will we always think that our way is better than others?
  • Why are people so judgmental?
  • Shouldn't we all buy generic?
  • Why are people so quick to come to conclusions about others?
  • Is there some kind of frugality competition where whoever can live like a pauper the best, wins?
  • Should we all be ascetic monks? If so, why aren't there more monks?
  • If you are so righteous about your spending and savings habits, why don't you donate more to charity or make charity your full time work?
  • How can any of us ever spend money beyond basic food, clothing, and shelter when there is so much poverty in the world?
  • Why don't more people decide to start a blog and share their words of wisdom if they want to find a cost efficient way to give back to society?
  • Perhaps the US personal savings rate is much higher than 5% since it looks like nobody spends a lot of money and I'm being criticized for spending money even though I save 50% of my after tax income. 
  • Does America have a conscience since we save so little and eat so much?

Conclusion

It's impossible NOT to force our way of thinking onto others, especially if we think they are doing things wrong. Religion is probably the most gruesome example of “my way or death.” Even if someone is making $800,000 a year, we will feel they are elitist for sending their kids to private school since we make only $50,000 a year.

Even if someone lives in an area of the world that is almost always warm and sunny, we think it's a waste to spend $270 on a pair of shades because we wouldn't even dream of spending such an amount living in our cold, dark, and dreary place.

Thanks to these comments from my “Financial Hoarding” post, I've decided not to spend any money at all on the things I've been thinking of buying. Instead, I've earmarked $100,000 to lower risk investments. Buying $100,000 worth of stuff that will depreciate to $65,000 or less over five years doesn't seem like a good financial proposition.

Why not invest $100,000 in something that has over a 90% chance of appreciating by 5% a year for the next five years to $128,000? A $60,000 gain is huge! Then I'll have even more money to invest to make even more money to save the world. I promise during this time period I will also stay in ideal shape so as not to ignore the plight of millions who are starving.

The lesson learned if you want to save more money is this: Tell as many people as possible your desires and let them thoroughly judge you. The more they make you feel bad about your spending desires, the more inclined you will be to save and invest for your future. When you can roll hundred dollar bills as toilet paper, you know you've got it made!

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102 thoughts on “The Personal Saving Rate In America And The Best Way To Save A Ton Of Money”

  1. Haha! Love reading your posts and this one made me laugh:) So very true tho! People love judging and that’s perhaps why people tend to socialize with others in their socioeconomic class so they can buy their Range Rover without feeling like an awful human being! I have to find your post on cleaning ladies though I always had one when my husband and I were working crazy hours from 5am to 8-11pm in NY and often on weekends. Came down to economics. Our opportunity cost was higher…even at above market rates we paid our cleaning lady we could make significantly more spending another hour at work (or honestly resting so we could be awake at work) and we were providing work/pay to another so seemed ok on that front too. Now that we no longer live in the New York (whew) we have more time and less stress and decided to clean ourselves!

  2. Definitely hit the nail on the head with “why are people so quick to judge others.” It’s all relative, or as the great Carlin once said – anyone who drives slower than you is an idiot, and the ones who drive faster are maniacs.

    I try to follow Ruiz’ “4 Agreements” in my life, one of which is “Don’t Assume”. Most judgment of others is because you are projecting your beliefs, experiences, and needs onto them. The faster you can let go of that judgment the faster you’ll be able to be happy with yourself.

  3. Spending $13k on a watch is not greed. It’s a donation to a deserving watchmaker in Switzerland who should have a good life for his amazing skills :)

  4. Sam,
    I think there will always be those who are frugal and simply can’t see that there is a forest of trees. Some people are more extreme than others, although I think Jacob Lund at Extreme Early Retirement has to be one of the farthest towards frugal extremism – and I cannot fault him for that since that is his own personal choice.

    Tell you what, give me $13,500 and I’ll buy you a $20 watch that is submersible in water but it won’t look as nice if that’s ok with you. :-)

    I think that one should change their mindset as they approach a level of equilibrium in their finances. Don’t go on a huge spending spree after saving 50% of your income for years, but if all your ongoing bills are paid for in perpetuity I see no reason to not spend any of the extra in a “frivalous” way.

    1. I’m just wondering why folks still quote Jacob from ERR. He was essentially an unemployed blogger for two or three years during the financial crisis. He justified his frugality through his post graduate non working phase which is great and went back to work two years ago as a quant analyst in finance!

  5. Thank you for going over the feedback from your original posts. I typically go through the same thought process when considering a major purchase (what could this money do if I saved it). It can be debilitating at times and makes it a difficult decision. Your statement about turning that $100k into $128k in 5 years sounds great in investing terms, but at what point does everyone give the “Approval” to make those large purchases (whether it be watches or vacations)? Interest and returns are rewarding, but at some point your accumulation exceeds your required lifetime necessities. Thoughts?

    1. I think the answer is NEVER, so long as you reveal your desires to enough people. There will always be enough people who will make you feel bad for your desires or spending habits.

      Hence, if you want to buy something, never let anybody know.

  6. Cindy @ GrowingHerWorth

    Honestly, I read these types of articles with a combination of jealousy, regret, motivation, and probably a little bit of judgement. I’m not to the point of saving 50% of my income, and still have debt. I’m not even close to a 6 figure income. And I recently purchased a car that is 20x my current net worth (which is very, very low). I think it’s all relative. I couldn’t tell a $12,000 watch from a $300 watch. But then, I could care less about watches in general. I’m not into fancy cars, but I’m also a little snobby about cheap cars too. And I like a little luxury when I travel, although I rarely travel. Nothing extravagant, but you won’t see me at cheap motels or hostels either.

    In my opinion, if you’ve earned it, you should feel free to use it in whatever way makes you happy (echoing a prior comment about not clubbing baby seals and all). If you invest, that’s growing businesses, and growing your wealth. If you spend, well, that’s providing people with jobs. And if you give, it’s helping people in need. I see no problem with any of those. Sure, some choices may be better than others. But there are no absolutes. You could give freely, only to create dependence. There are no perfect solutions.

    1. I hope you can focus on the motivation feeling. I purposefully go jogging around the mansions of pacific heights to get motivated. I don’t get jealous because those folks took risks, worked hard, and deserve what they have.

      1. Cindy @ GrowingHerWorth

        I can’t deny being jealous of what others have. But it’s not in a “they don’t deserve it” sort of way at all. I think that anyone who took risks and/or worked hard definitely deserves what they have. It’s more of a “Damn, why didn’t I figure it out sooner?” kinda jealousy. Maybe call it a motivational regret? It’s spurring me to get my ass in gear, so I consider it a good thing!

  7. Great idea! I hope they really do donate their computers and laptops to underprivileged people around the world. I’m happy to help get the word out if one of the critics wants to put in the effort to make this a reality! One love.

    1. The ‘Cognitive Egocentrism’ and ‘Identity Trap’ apply to this concept of OLPC (One Laptop Per Child). It is a cool idea to give kids laptops. But with no clean water, no electricity (25% of the world pop. has no power at home), no internet access, poor medical, literacy and education deficiencies, etc. in a few months the kids wind up using the laptop as a breadboard. Different priorities. Still, it is a great write-off for all those first-world producers to dump their outdated hardware, software, semi-conductors, etc. for a nice tax advantage at year-end close, and solve a first-world e-Waste problem, too!

  8. Gina D. Beard

    Make it a point to put money in your savings account every time you receive a check. Only you can determine how much of your paycheck you can afford to save, but the key is consistency. Even if you can only place 10 percent in savings, do it every time. Those small savings will add up.

  9. Minor correction here…there is a difference between the terms savings and avoidance in financial use. You actually avoided 100K, not saved 100k.

    But yes, you have every right to go ahead and spend as you see fit. No judgement here. Aloha!

    1. Is a penny not spent a penny earned and a penny saved?

      To counteract your argument, the $60,000 spread is another savings differential:

      “Thanks to these comments from my “Financial Hoarding” post, I’ve decided not to spend any money at all on the things I’ve been thinking of buying. Instead, I’ve earmarked $100,000 to lower risk investments. Buying $100,000 worth of stuff that will depreciate to $65,000 or less over five years doesn’t seem like a good financial proposition.

      Why not invest $100,000 in something that has over a 90% chance of appreciating by 5% a year for the next five years to $128,000? A $60,000 gain is huge! Then I’ll have even more money to invest to make even more money to save the world. I promise during this time period I will also stay in ideal shape so as not to ignore the plight of millions who are starving.”

  10. People can have very different interests and tastes and thus totally different preceptions on how to spend money. I know someone who splurges on LV handbags. I think that’s crazy because I have no interest in owning one but I don’t criticize her for it. I spent several hundred dollars on scuba equipment which I’m sure other people think is dumb or weird. To each his own if one has the means to afford it.

    With all of the holiday shopping mania I admit I’ve had many temptations to but stuff for myself. I got a few things but I am going on a hiatus for personal shopping while I deep clean and declutter my house. I’m not buying anything for myself until I’m done and have done a full inventory of what I already have. I’m also going to try and just make a wish list for Christmas and hope I get some of those things instead of buying them for myself. I don’t want anything expensive luckily. Some new slippers, a knit hat, a Greenpan medium size pot, and some new clothes would be nice. I like practical stuff. :)

    Happy Thanksgiving!

    1. To each their own indeed. The $150 knock off LV bags are actually pretty sweet! Easy to fake since the materials don’t cost much and there aren’t many moving parts.

      Greenspan medium size pot.. oki doki. Thanks for the idea!

  11. If we might all live a little more like Gandhi’s words: “Live simply so others may simply live.”

  12. I am confused. What’s the purpose of having money if you don’t spend them on things you really like/want?? Money is not the end-goal, if you save enough for the future the rest should be spent.

  13. No one will ever be able to tell me how to spend my money. There are too many idiots out there to project their opinion on you to realize that their opinion is only an opinion. Nobody knows your situation or your full financial breakdown.

    Reasonable people will always be able to balance spending and saving, but saving for the sake of listening to other’s opinions is not very reasonable in my opinion!

    1. I really love to read and hear other people’s opinions. Perhaps this is why I like to blog so much and banter around various topics with different spins.

      I truly don’t mind the feedback from the community which I’ve highlighted in this post. If the community can inspire me to write a post, and come up with a solution to save, all the better!

  14. Holiday Greetings,
    I thought I might add my perspective. Although I could buy nice things, I rather like being the guy with the $30 Timex watch. When I look down at my wrist, I know the time, and smile quietly knowing that the savings I have buys me much more time doing what I want. No fancy watch adds more time to life, but frugality adds the power of financial independance, that too me adds much more time to do what I want, and not chase dollars to buy things to validate myself to others. I much rather a cheap watch and security, then an expensive watch and the look of a sick oyster at low tide when I realize I have to go to work to pay for said watch.

      1. In response: I think you hit escape velocity to FI at a relatively young age .
        Your risk of unexpected change is higher due to your long time horizon
        In semi retirement. So I would spring for good wheels but keep my powder dry
        On the new watch. Personally, having had a Rover, I like all wheel drive BMW
        For a busy city and yet just fine for mountain and poor weather.

  15. Sam, you have my full permission to buy the Range Rover, just to shove it up your neighbor’s living-rent-free, wife-and-kids-having, restaurant-cooking, luxury-vehicle-driving grown son’s @$$!

    The Harry Browne ‘Identity Trap’ is similar to Freud’s ‘Cognitive Egocentrism’. This results in doomed approaches such as negotiating with terrorists, trying to convince drug addicts they should stop getting high all day and instead get a minimum wage job, Congress will voluntarily reduce their spending and pass a budget, etc. This posts reminds me of two quotes, first in relation to your “saving $100K.”…
    “I stopped a rape yesterday. I changed my mind.” – The Unknown Comic (Murray Langston)

    …and expecting supportive feedback without a commenter’s personal agenda…
    “When someone asks you to tell them the truth, do not believe them. They really want a reinforcement of their own self-image.” – Albert Camus

    1. Just elaborating on my last point, those commenters with agenda are attempting to make themselves feel better, not you. I would bet, without exception, they are unable to purchase a $12K watch or $75K Land Rover cash. Their comments make it appear that they have ‘made a choice’, but FS is the one who is actually faced with the choice. Nice to have choices.

      For myself, some of the biggest mistakes in my life have been making my desires and goals known to others I thought were ‘on my side’ but instead they were threatened that somehow I might accomplish something they wouldn’t/couldn’t. They were much more comfortable telling me all the reasons I would fail or waste my time. In those cases, it changed the relationship forever, for the worse. Well, like telling people how much money you make, sharing personal desires publicly is a bad idea.

      1. I think you make a good point. There’s a post I wrote a while ago called, “Only The Super Rich Or Poor Say Money Doesn’t Buy Happiness” which eludes to this. If you don’t have money, it’s better to say that money doesn’t really matter to help feel better. If you have a lot of money, then of course you take money for granted more than the person who has to work all day for it. It’s like being all for raising taxes when you got mega millions already in the bank!

  16. Good idea to put on one’s oxygen mask first.

    It is an interesting concept if EVERYBODY was financially independent, would there be any need for charity?

    I hope that by regularly writing about personal finance, more people will be aware of the importance of personal finance and improve their financial situations over time. Fight on and never surrender!

  17. I posted this on someone else’s blog, and it seems appropriate here:
    Without a dream, there is nothing;
    without a plan, it can only happen by chance;
    Plan to realize your dream, and live a happy life.

    It sounds to me like you enacted a plan to realize your dream, but your dream somehow changed along the way. Rewards come in many ways, and material things are not the only kind. We as humans need to feel we’ve accomplished something, stamp that we have met the milestone of sorts. What good is just accumulating? What is the reason for your accumulation obsession. Seems to me you need to redefine or refocus to YOUR dream, the reason you do what you do, otherwise the happy life will be elusive as you fight the internal conflict of how you satisfy your internal need. Reward your efforts, whether that is splurging on a high end something you’ll feel proud to own, or whether you donate 4x the annual income of a local charity in one shot and bask in the smiles on the recipient end of your generous donation. Satisfy the human in you and celebrate your achievement. – Cheers.

  18. I am going to stick with my original comment to “The Cure for Financial Hoarding” which was simply “children”. Of course, I said it jokingly but after reading this I realize that it does add another dimension to what may be an otherwise abstract internal conflict re: consumption v. frugality.

    When you have children/family all priorities change. All unnecessary expenses seem frivolous in the face of providing something greater for your children.

    That said, live it while you can/feel good about it Sam!

    I think you’ve inspired me to start writing about my own financial life. My thinking is that by recording and reporting on my savings rate, expenditures etc. I will be more likely to not only stay on top of things but to also be more proactive. Keep me honest kind of thing.

    1. Would be wonderful to publish one of your posts here if you begin the writing journey. It’s fun and very rewarding, but you will have to grow a thick skin and super strong finger muscles.

  19. This post had me howling with laughter. But I think what made it funny is that it is tinged with truth

  20. Dee @ Color Me Frugal

    I’m amused that with the first post you got tons of comments telling you not to buy the stuff you wanted. And now with this post you got tons of comments telling you to buy. You are wicked awesome at reverse psychology, man! I must learn this master blogger technique…

    1. Takes about 10,000 hours of practice. But you’ll get there!

      One guiding light is to always believe in a POSITIVE outcome. Although I was shamed from the comments, the positive outcome is discovering that such a strategy of revealing your desires helps CURB your desires!

  21. Money has the same objective value, regardless of how much YOU make. That is the whole point of money. It is a mistake judge the cost of an item against your personal earning or savings rate. A $12,000 watch is ostentatious and wasteful, regardless of whether or not you can afford it. $12,000 holds a power and value that does not depend on you. That money can pay a kid’s college tuition, or feed a family for a year. That does not mean we should feel guilty for spending money, or live like paupers while we give all our hard earned dollars to charity. There is a middle ground somewhere. That middle ground is nowhere near $12,000 watches or $80,000 range rovers.

    Humans are notoriously bad at understanding value. We like to think of percentages and ratios. We compare items to other similar items. This is a mistake. Paying twice as much for a $80,000 car is not the same as paying twice as much for a $1,400 laptop. $40,000 is a significant amount of money in our society. $700 is not. Maybe neither are significant in your yearly budget, but that is not the point.

      1. There absolutely is! Money is one of the few things on the planet that holds a completely objective value. There is nothing wishy-washy about it. One dollar has an absolute value. There are minimum wages. There are defined poverty levels. There are tax brackets. We have spending data. We have cost of living data. We track inflation.

        When we think about budgeting and personal finance, money becomes a percentage of our own income. It is important to remember that that same money also has an intrinsic value that exists outside of our own budget.

        1. Cool. So what is the Value Handbook say about what we can spend on certain items such as a car, house, etc.

          Right now you are just talking in fluff. I need some specifics on how much to spend.

          Also, what are you doing specifically to help society?

          Thanks.

        2. Isn’t this the holier than now attitude Sam is referring to in this post where you project your morals onto someone else, yet you don’t say how or what you do to give back? All you are doing is saying that people with money who spend are not as good as people who don’t have money.

          NEWSFLASH: People with money pay way more absolute taxes than people with little money. These taxes use to help the community and social programs.

          Don’t be bitter.

    1. I understand what your are saying Animal, but really it is about percentages. I think it is absolutely ridiculous for parents to put their 8 year old kids on travel soccer teams that cost them with all the expenses $7k a year when they only make $100k…but they obviously get enjoyment from spending their money that way … Especially crazy IMO when they are not maxing out their 401k. So hey as a percentage society does this a hell of a lot more often and it’s accepted as normal, but I buy an expensive six figure car(s) for cash and it is offensive to people when it is less of a percentage hit on my income than them paying for little jimmy with two left feet to go get his participation ribbon. Don’t judge other people regardless!

      1. $7,000 and $100,000 are not the same thing. Regardless of what your income is, the two figures are vastly different. When people see your expensive car, they are not judging you, thinking you can or can not afford it. They are angry to see that money go toward inflating your own ego instead of helping your community.

        The more wealthy you become, the more this becomes an issue. As your spending increases, it starts to have a larger impact of other people. Large sums of money represent large amounts of economic power.

        When trying to accumulate money, we like to think about amassing “our” money. We try to grab as much of it as possible. We work hard to obtain money, and we think we own it. It is hard to get out of this mindset when spending money. When you spend money, it is no longer yours. You are now influencing the world. You have collected power, and now you are exerting that power on the world around you.

        Will you use your power to buy a fancy car or watch that showcases your wealth? Or will you use your wealth to help make the world a better place? “I have money, therefore I am better than you?” Or, “I have money, therefore I can help you.” Which one makes you an asshole?

  22. Reminds me of Dennis Kozlowski, the infamous Tyco CEO that ended up in jail. It seemed that it was his lavish lifestyle spending (including a $13,000 shower curtain and million dollar birthday party, with an ice sculpture peeing vodka) that did him in. Societies have a funny ‘conscience’ when it comes to displaying wealth – that it’s OK up to a point, then suddenly it’s an issue. However, I’d be surprised, in real life, if spending 100k/yr would get you into much hot water in SF. I’ve been on a bit of a spending spree and people raise their eyebrows, figure that you’re in debt just like them, then move on, although I’m actually growing my NW while spending. Makes me wonder what CEOs and entertainers think when they make a million a month (or much, much more). Kozlowski is probably still wondering what he did wrong…

    1. Dennis’ conviction probably has something to do with his $100 million worth of unauthorized bonuses, artwork for personal use by company, and kick back fees to former employee for banking deal.

      He is the anti Stealth Wealth movement.

    2. The one thing I recall about that birthday party for Kozlowski’s wife, was that he paid a $1 million appearance fee (plus travel expenses) for Hulk Hogan. If you have ever seen Hogan party, it was actually a great deal.

  23. Ben @ The Wealth Gospel

    Great topic, Sam! I love the negative comments, personally. I mean, there are the douchebags who will never be agreeable (just delete those) and then there are people who disagree and have a valid argument that can actually help you make a better decision. None of us are perfect and sometimes getting someone else’s perspective can give us a better path for ourselves. It’s important that we learn from others, even when they’re criticizing us.

    1. Best to buy your wife a Grace Kelly Birkin bag first Charles! She’ll love you 4EVA if so. Mahalo

      BTW: The reason why Grace Kelly always had the Sac à dépêches bag by Hermes aka ‘Kelly Bag’ was to hide her baby bump. Women will appreciate this type of knowledge from a man.

  24. I’m pissed…& strongly considering not following the blog anymore. (ok maybe I’m exaggerating) But buy the damn Range Rover already! I’m going to sound like kind of a jerk here, but people who judge others on how they spend their money 99.9% of the time are those who cannot go out and create wealth on their own. The past couple of weeks have hit home more than ever personally in my business…there are those that can produce, and there are role players. Sam, you produce, enjoy the fruits life…don’t get suckered into the thinking of these other yahoos who think that money is finite resource…it is an infinite resource. If everybody bought the “most frugal” stuff the world would be a pretty boring place.

    Happy Thanksgiving!

    1. Perfectly said. Enjoy ur success. Those that give you a hard time are envious that they can’t have the finer things…you are clearly grounded enough to know that there is a balance. Money will always be there to be made…

      Also, for me there are ancillary benefits to having things that you want; I feel more confident wearing my Rolex or panerai, and the same for the cars…that feeling has directly resulted in earning more money…to get them, you will enjoy it.

      As far as the car purchases, look for a certified used RR. get one a couple years old, you will save a boatload for the same ride and still have a full warranty…

    2. Just. Can’t. Get. Over. The Hump. To. Spend. Money.

      The strategy of telling the world your desires is super effective due to the shaming. I strongly believe this strategy will truly help those who have spending problems.

      Happy Thanksgiving!

  25. I retired at 55 a few years ago as I had lost passion for my day job and was blessed to have socked away enough money to not have any worries. Note that the blessing included being born with some brains, having values, getting (and continuing) as good an education as I could afford, working my butt off for 30+ years, and saving carefully. My financial advisor tells me that – unless I significantly change my life style – I will not be able to spend what I have saved before I pass (hopefully after a nice long retirement). I share this not to brag but to present my credentials to share a couple of thoughts about your reluctance to spend YOUR money:

    #1 Spend your money as YOU see fit – you earned it, you paid taxes on it, you did without to save it, you made it grow. Be like the “little red hen” – she did all the work so she enjoyed the end result.

    #2 There will always be those who are certain they can spend your money better than you. These people have 2 things in common: they strongly believe they are advocating for the greater good of someone/everyone -and- that anyone who resists providing money to their cause is: greedy, thoughtless, heartless, immoral, etc. There is no way to reach accommodation with these people so do not even try. Especially do not ask them for their opinion on how to spend your money.

    1. Stewart – I’m always impressed if someone is able to RETAIN passion for 25+ years for their day job. Mine started fading after year 10, and I left by year 13.

      I’ll keep The Little Red Hen analogy in mind! Cheers

  26. Going to disagree with a lot of those comments. Your money, your choices. I dislike the mentality of depriving yourself because others are suffering. Of course we should help others in need, but I don’t think it means we shouldn’t buy something we personally desire. My parents are in a phase of life where they have accumulated wealth and can start loosening the purse strings a little bit. I’ve noticed it is hard for them to do and they feel guilt when they splurge (ie buy an expensive bottle of wine). I’ve told my Dad that he and my Mom shouldn’t feel required to leave XX amount of money to us (their two children). They have earned their wealth and should spend it as they see fit. If they decided to donate all of it to the various charities they support it wouldn’t bother me in the slightest. I feel zero entitlement to wealth others accumulate.

    1. I’m with Broke Millennial here and Mr PoP’s parents are in the same place where we keep telling them to not worry about money spent on us and that it should be spent on them since they earned it.
      It’s not my place to judge you as moral or immoral based on your spending patterns. I guess if you were spending money to club baby seals I might judge that… but that’s not what this is about. As long as your purchases aren’t hurting anyone, go for it. I hope you get a great bang for buck in terms of happiness from your spending. (I highly recommend the book “Happy Money” if you’re looking to figure out how to buy happiness.)
      And lastly, I mourn the loss of your Maui Jims. I was able to get a pair for free a couple of years ago (an amazing swag bag gift!) and absolutely LOVE them. When they finally bite the dust I don’t know if I could go back to cheap-o sunglasses without feeling like I have the weight of a brick on my face when I wear them, which is generally for at least a couple hours every day.

      1. Ah yes, one who appreciates a pair of nice shades! Hard to go back once you’re used to nice lenses.

        The weight is probably the difference between glass and polycarbonate lenses fyi.

        1. The thing is, I don’t think it helps in my case to reveal my desires to people I know, because the people I know are all enablers lol.

          And now, Sam, I am about to enable you:

          * A Range Rover Sport = $83,000 after tax. I say go ahead and get it. Just lease it under your business. Make sure it is an FMV lease so that you can expense the rental payments and return it when the lease is done so that you aren’t stuck with a depreciated asset that you would have had to sell at a huge loss. If you lease it under your business, it wont even appear on your personal credit, and I cannot stress more how all the payments are a tax write off this way!!!! And if you actually DO use it to generate revenue for your business, then it’s a win-win situation, nothing but upside.

          * A Panerai Submersible watch = $13,500 after tax. Just buy it used from a distressed private party at a HUGE discount. Look for someone who is unloading all of their flossy stuff to pay for whatever disaster just happened in their life. There is always someone who is selling their watch for that purpose (paying $13.5K full retail and taxes on a watch is part of what got them in that mess in the first place, LOL). Search ebay, craigslist, or join a watch collectors forum and buy one from one of them when they advertise that they are in a pinch and need to sell quick. Be patient and wait for the right deal. Get it authenticated of course to make sure its the real deal with box and papers and check with Panerai to make sure the serials and papers check out. Once you’re sick of it (and trust me eventually you will get over it or your eye will wander towards an upgrade), get back on the watch collectors forum and sell it to another collector for exactly the amount you bought it from. I say join a watch collectors forum and sell it to one of them because you are guaranteed a quick sale with them (they are always on the hunt for a good deal and will pounce when presented) and they’ll pay your a fair price. You might even turn a profit if you negotiated a dirt cheap price from the distressed private party you initially bought it from. Actual cost of use: $0, with a potential upside!

          * A pair of Prada shades = $270 after tax. Repeat the process above but for sunglasses. Sunglasses are even easier to find super cheap used! A little harder to sell, but maybe there is a sunglasses collectors forum. Or, just buy them from Nordstrom and return it when you are sick of them (just kidding!). Total cost of use: $0.

          * A new Macbook Pro 13″ with retina display = $1,560 after tax. Lease it under your business. Seriously. Same deal as with the Range Rover. I actually think Apple offers in-house small business leasing and are very competitive. Total cost of use after tax write off’s: $0

          * More vacation spending = $10,000 extra a year. You’re entitled to a vacation!!! Just do it! Look how much money I saved you above AND you got your fun toys for as long as you needed them :)

        2. The thing is, I don’t think it helps in my case to reveal my desires to people I know, because the people I know are all enablers lol.

          And now, Sam, I am about to enable you:

          * A Range Rover Sport = $83,000 after tax. I say go ahead and get it. Just lease it under your business. Make sure it is an FMV lease so that you can expense the rental payments and return it when the lease is done so that you aren’t stuck with a depreciated asset that you would have had to sell at a huge loss. If you lease it under your business, it wont even appear on your personal credit, and I cannot stress more how all the payments are a tax write off this way!!!! And if you actually DO use it to generate revenue for your business, then it’s a win-win situation, nothing but upside.

          * A Panerai Submersible watch = $13,500 after tax. Just buy it used from a distressed private party at a HUGE discount. Look for someone who is unloading all of their flossy stuff to pay for whatever disaster just happened in their life. There is always someone who is selling their watch for that purpose (paying $13.5K full retail and taxes on a watch is part of what got them in that mess in the first place, LOL). Search ebay, craigslist, or join a watch collectors forum and buy one from one of them when they advertise that they are in a pinch and need to sell quick. Be patient and wait for the right deal. Get it authenticated of course to make sure its the real deal with box and papers and check with Panerai to make sure the serials and papers check out. Once you’re sick of it (and trust me eventually you will get over it or your eye will wander towards an upgrade), get back on the watch collectors forum and sell it to another collector for exactly the amount you bought it from. I say join a watch collectors forum and sell it to one of them because you are guaranteed a quick sale with them (they are always on the hunt for a good deal and will pounce when presented) and they’ll pay your a fair price. You might even turn a profit if you negotiated a dirt cheap price from the distressed private party you initially bought it from. Actual cost of use: $0, with a potential upside!

          * A pair of Prada shades = $270 after tax. Repeat the process above but for sunglasses. Sunglasses are even easier to find super cheap used! A little harder to sell, but maybe there is a sunglasses collectors forum. Or, just buy them from Nordstrom and return it when you are sick of them (just kidding!). Total cost of use: $0.

          * A new Macbook Pro 13″ with retina display = $1,560 after tax. Lease it under your business. Seriously. Same deal as with the Range Rover. I actually think Apple offers in-house small business leasing and are very competitive. Total cost of use after tax write off’s: $0

          * More vacation spending = $10,000 extra a year. You’re entitled to a vacation!!! Just do it! Look how much money I saved you above AND you got your fun toys for as long as you needed them, without having lost any money (or just a nominal amount anyway depending upon how you execute your exit strategy on each).

          What else do you want to buy? I really think I can help you :)

          On another note, some of the wealthiest people I have ever known find these luxury items “boring”. Acquiring things no longer had any appeal to them, simply knowing that they COULD buy them many times over was enough and they didn’t have to actually go through the process of doing it only to eventually get rid of it or have it take up space. They had other interests. But everyone has their vices…

    2. That’s a great attitude Erin! Financial habits are hard to change I’ve found from my own parents ways. We want to wish them max happiness as much as possible as they get older.

  27. In regards to savings…… Americans have traditionally relied on real estate equity as part of their overall savings and net worth. Obviously this whole concept of house prices going up double digits every year forever, has been severely tarnished!

    The FRED chart looks like it bottomed around 2005/2006 and seems to moving slowly in upward trend. I believe as employment opportunities continue to improve, this trend will continue.

    And anecdotally, I’m observing much healthier, more realistic attitudes in regards to housing values.

    1. Good point on using RE as a savings vehicle. I totally haven’t thought of using my RE as a savings vehicle though, since I view RE as a cash flow vehicle that will support my retirement since I don’t have a pension.

      RE views are definitely much more realistic now, although prices look like they are getting out of hand in some places like San Francisco.

      1. Sam,

        You are big fan of real estate…… So, I think this kind of aligns with some your thinking.

        Everyone needs a place to live. We also mostly agree that financial discipline is a problem for many Americans (and non-Americans too). Purchasing a home to live in, with a traditional 30 year mortgage is essentially a forced savings plan. This gentleman did a very good post:

        fool.com/investing/general/2013/09/22/rent-vs-buy-why-buying-a-house-wins.aspx

        As you say: Rent is always a negative 100 percent return. If you count real estate equity as part of savings (and it is accessible, although not always liquid), then Americans as a group are not doing quite so bad (yes…. They should do better).

  28. Sam,

    No offense was mean’t. You were asking for opinions and you received many opinions.

    Some of them seemed judgmental…… But….. I actually thought about that particular post for a while. I don’t think many of the comments were mean’t to be judgmental as perhaps, more a reflection of personal values. After all…. I don’t really care if you purchase a $12,000 watch or an $83,000 automobile. It’s not my money and I don’t know you.

    Watches and automobiles have very little value to me outside of their utility…. These are not really things which make me happy……. Which is why I’m not likely to understand anyone going out of their way to spend $12,000 on a watch. But, that doesn’t make it wrong. It means you have different values.

    1. No worries. I actually really like the comments and being judged. How else would I come to this unique conclusion to help people save more money?

      You’re right, we have different personal values. Buying a plane isn’t in my personal values, but I’m fine with how you spend your money.

      1. This post confuses me. I can’t tell if you are being serious. You like being judged? It sounds like you saying you welcome the negative comments and will let them effect your life even though you think they are wrong. Are you messing with us?

        1. Hi Virginia,

          I don’t mind being judged, especially since the comments provided for the inspiration and much of the meat in this post.

          I’m really trying to help people to increase their savings. And I’ve found through this transparent example that openly telling people your wants subjects you to shaming, especially the more expensive the wants. Once you are shamed, you definitely DON’T want to spend as much or anything anymore. How could we when there is so much suffering in the world?

          I LOVE to save money in truth. Any strategies I can deploy to save more makes me happy.

          Cheers,

          Sam

      2. In regards to the airplane: I really have enjoyed the airplane over the last decade in so many intangible ways. There is no way I can justify ownership of airplanes from a personal finance point of view. But… From a life experience…… It is what makes me….me. So, I regard it as a quality of life thing. I have almost no interest in any physical thing, but I enjoy flying and tinkering on my airplane. And I enjoy the freedom of traveling by small plane. It’s a fun world with many interesting people (pilots come from all walks of life).

        Check out the Oshkosh Air Show (if you have any interest).

        1. What I like about small private planes is that they open up your daily travel aperture. Where in an automobile I can travel a few hundred miles in day, in a small private plane I can travel many hundred miles. For example I can fly up to Ottawa Canada for a weekend then come back home relaxed. It must be the same time/travel perspective shift from the house to auto.

  29. I’ll have a go at imposing my values upon a stranger on the internet :)

    Perhaps a car is worth 80k or more to you, or the experience of buying a car for that price is worth it for you. Some people the only things that are “worth it” are charity or the environment or more savings, but there are probably more fun ways to spend your dollars as well than some hunk of metal, that really you should hope to spend <1 hour in per day.

    For me, after 2 years even a super nice car is just "My car" and becomes normal, and I'm lusting after the latest model again.

    I do hope you decide to pick up the sunglasses, Macbook, and some plane tickets. I'm in Acapulco for the moment and I can't really imagine being anywhere else for US thanksgiving this year. Vacation is awesome.

    1. Enjoy Acapulco!

      I did pick up some snazzy shades before coming to Hawaii for my company offsite this month. I’m undecided on the MacBook, even though TOMORROW is Black Friday with $100 off, 4.5% sales tax vs. 8.5% in CA, and I’ve got my gift cards of $150 ready! I think I’ll pass b/c I reminded myself that I bought a new 150GB Hard Drive earlier in the year when it broke.

      The $1,299 version of the MBP Retina only has a 126 GB HD, and 4 GB RAM, so the specs are actually inferior to the same. One more year of my 2007 Macbook baby!

      1. With your Macbook make sure you maximize your utility. If you can sell the old one for $500, get $150 off(gift cards) and another $100 off (Sales) plus $50 off (tax savings), you might fare better with something new.

        Although perhaps you’re reserving discretionary funds for that car? :)

        1. It’s not just the deal, it’s also the utility. Sell the old one on ebay if you want to buy the new. Then you are buying for “full price” but still benefitting from the utility left in the old laptop for someone else. Everyone wins! :) :)

          Although I can understand attachment to the older MBAirs, I have a 2009 and I’m probably just going to keep running it for mail, reddit, finance blogs, writing, Unity 2D etc until I can’t anymore!

  30. In terms of psychology, this is very interesting! If I wanted something, I would just do it. I already max out my retirement savings and have quite a large nest egg too. Last year, I bought a new car which is very non personal finance like. I buy new and keep it forever which makes sense to me. Buying used and keeping it a shorter amount of time and risking bigger repairs just seems less prudent.

    Frankly, I never let other people influence my decisions. They do not know all the information and I probably would not share all of it anyway. Besides, ultimately it is my decision and I will suffer the consequences or rewards anyway.

    1. I love the psychology behind personal finance. Absolutely fascinating how people respond to various things with asymmetric info and assumptions. As one commenter said above, it’s the Identity Trap.

  31. I support your purchases because you can afford it. Frugality/Saving is not a way of life for me but more a means to a certain way of life in the future. It’s absolutely hypocritical to try to impose own’s morality onto others and I put the negative comments you got under the same bucket as a vegetarian hating on a meat eating person.

    1. After much consideration, my personal response to such things has been indifference and observation. A driving influence of this has been Von Mises — his writing in Human Action has an interesting philosophical basis in only talking about preferences, not value (cardinal, not ordinal valuation); action as the basis of life with the ends aimed at to reduce discomfort; and explicit avoidance of any notion of objectivity relative to “good” and “bad” or gradations thereof.

      Tied to this is the concept Harry Browne called the “Identity Trap”: assuming others will react as one’s self and share the same values (or even should). Realizing this was quite eye-opening as I was completely guilty of propagating this rather silly assumption.

      1. Observation is what led to creating this post. Observation that A-HA! So this is how to drastically curb spending, but putting your secret wants out in the open to get shat on by the public. It’s actually quite effective and more people should try!

  32. The First Million is the Hardest

    I’m surprised the feedback was so negative. If someone has the means to buy a $12k watch or $83k car without putting themselves into a bad spot financially then more power to ’em!

    I think we take frugality a little to far at times. The point of being frugal, saving 50% of our income, and investing our money is to ultimately increase the quality of our lives. And anyone who says driving a BMW M3 over a used Ford or Honda doesn’t do that has obviously never driven an M3 :)

    1. The overall feedback wasn’t that negative, but I did gather up all the negative feedback in this post so it may seem pretty bad. Nobody being directly mean, but it was the use of morality and comparing the spending to the suffering others that got me curious.

      These are actually really POSITIVE comments b/c it means that these people are saving lots of money, being frugal, and donating lots of their time and money to charity. I do not believe this world has people who tell others what to do without doing what they recommend themselves.

    2. This Life On Purpose

      Being frugal is not only about ultimately increasing the quality of our lives. For some people it is simply to become less wasteful, to preserve our natural resources, to live a more simple life. Just because you can afford to buy something does not automatically mean you should, there are other factors as well.

      1. And yet, there are those with their own agenda, who don’t care about the world’s finite resources or future generations, right?

        Who’s right? Ultimately, it doesn’t matter what we do in the grand scheme of things because keeping the world running isn’t going to matter once we’re dead.

        1. The This Life On Purpose girl is obviously an early 20-something year old Millennial who doesn’t have much money, who probably has a roommate or lives at home, and who lives in this idealistic fantasy world. She is frugal because she’s poor. That’s not very admirable.

          I’ve seen these types so many times before. They they they are better than others, have contempt for people better off, yet they don’t have any life experiences or do anything to make things better. All they do is criticize others for how they spend money and do things. I bet she doesn’t even speak a second language or has visited a 3rd world country.

          1. Wow, you can figure out the gender, age, living arrangements, financial status, linguistic skills, and travel history of “This Life On Purpose” just from the short post s/he made? Maybe I’ll consult you before I next play the lottery.

            Perhaps “This Life on Purpose” has already “made it” and is quite content living below his/her means. One’s consumption doesn’t have to be commensurate with one’s net worth. That’s how one can save money, which is the purpose of this commentary.

      2. I’ve noticed that those who don’t have means tend to look down on others who have more means, just like hoe only the poor or super wealthy say “money can’t buy happiness.” I’m glad you admitted to being judgey on BRS’s post. That’s the first step to overcoming frustration. Once you let people go their way, I guarantee you’ll be happier in the process!

        1. An interesting post. For me, it is about balance. My opinion is that $13,500 for any watch is excessive. However, you want it for a passion of yours. I will bet you can find it used for a couple of grand and it will probably work just as well as if it came in a shiny new box.

          The $80K for a car is excessive. I totally, 100% agree that you should not buy pricey things that depreciate. That is why I lease. Still, if this is a vehicle you really want (and you have worked hard in your life to earn it), then how about getting a model that is 2 to 3 years old from a reputable used car dealer? Chances are that the vehicle will be at least 30 to 40% less expensive. Again, since you have worked hard for your treasure, I see no reason why you should completely deny yourself. That doesn’t mean you throw commonsense out of the door.

          1. Does it not depend on income though? Commonsense that is.

            With my net worth rule for car buying, I highlight spending no more than 5% of your net worth on a car.

            What if you have a $2 million net worth at age 35. Is $80,000 still excessive for a car? My goal is to make people think about what their are saying in a more methodical way instead of making vague statements about what should one do or what is excessive.

        2. I agree. Everyone’s situation is different. I am fairly frugal at heart. According to your scale, I could buy a car for $70,000. No way that I will do that but I don’t judge others who do. I just like seeing my pot of money grow. So, I will probably just continue leasing. I can usually find a deal with no money down. If I was to outright purchase, my limit would be $25K.

          I like nice cars. It is a weakness of mine. I drive a BMW – 3 Series. However, I make great use of coupons, reward clubs and cards and have enough over many years to indulge without any guilt.

        3. I finding these articles late! I missed out on the fun. I still say if you want the range rover, get it! Just lease it under your business. Want me to quote you on a lease payment? lol.

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