Becoming an Extreme Saver (4 of 7 Articles)
~ Sunday, October 22, 2023 Blog Post ~
I’m interested in becoming an extreme saver. I think I have always been one, although I’m just too busy to reflect and affirm that I’m indeed an extreme saver.
I like saving money rather than spending it. Like I have mentioned throughout this blog, I have always been a miser for most of my life. I consider myself among the world’s most savvy savers.
I know that saving and spending money should be balanced. It’s pretty basic and commonsensical: Save some for the future and the “rainy” and “sunny days” and spend some today.
After all, it is not advisable to save all one’s paycheck. Of course, one has bills to pay. Moreover, tomorrow is not guaranteed. Hence, we should enjoy some of our hard-earned money as well.
Today, I gathered seven articles about extreme savers and put them here in my blog. I also learned that there is a programme aired in the United Kingdom titled “Martin Lewis’ Extreme Savers” sometime in 2020.
I’m interested to check out that show. That ITV programme has an X page: https://twitter.com/MartinsSavers I’m checking it out. I do hope I find the episodes of “Martin Lewis’ Extreme Savers” somewhere on YouTube or elsewhere online.
Anyway, here are the first four of seven articles about extreme savers:
Article #1: MMS010 — All About Extreme Savings — Is It for You? (From Money Mastermind Show) [YouTube Video]
Jul 31, 2014 Money Mastermind Show Episodes
Episode 10 — All About Extreme Savings — Is It For You?
Show Notes: http://moneymastermindshow.com/episod...
Ever hear of Extreme Saving? Well in this episode we’re diving deep into extreme saving with the help of Kraig Mathias of Create My Independence. Find out if extreme saving can help you and how to get started.
Tell us what you think in the comments, and don’t forget to join us live every week for a new discussion about money!
Special Guest: Kraig Mathias | http://createmyindependence.com
Website: http://moneymastermindshow.com/
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Source:
https://www.youtube.com/watch?v=b5x3Sa8DWF8
Article #2: How to Become an Extreme Saver in 2018 (From U.S. News)
By Geoff Williams, July 11, 2018
It takes dedication and willpower — and having money doesn’t hurt either.
If you want to cultivate healthy financial habits this year — and stash away some money for your emergency fund, your retirement, your kid’s college education and that elusive worldwide vacation — now is the time to develop smart saving practices.
But if you’re going to become an extreme saver, you need to act fast and start adopting some new financial patterns. Because as tempting purchases come up, chances are you’ll forget about your vow to save money this year. So, if you’re going to commit to a more frugal lifestyle and eliminate your past budgeting mistakes, experts suggest following these steps.
Treat your savings funds like any other bill. You wouldn’t want to fall behind on your mortgage, would you? Of course, falling behind on payments happens, but you wouldn’t do it intentionally.
You need to apply that same type of thinking with your savings. Along with your mortgage or rent, your cellphone bill and other living expenses, a check to be deposited to your savings account, and hopefully a retirement fund, should be set aside each month.
Jennifer Myers, a certified financial planner and the president of SageVest Wealth Management in McLean, Virginia, puts it this way: “The mentality of an extreme saver focuses on how much cash coming in the door can be saved rather than spent.” So, a diligent saver is going to find the money and put something away every month.
Automate your savings program. You’ve probably heard it a million times, but virtually every financial expert will insist that automation works. Set up an automatic transfer with your bank or credit union so that every month money is deposited into your savings account, your retirement fund, your kids’ college savings account, your emergency fund and so on.
If you automate the payments to your savings account, you won’t forget to make them, says Derek Hagen, a certified financial planner, a wealth coach and the founder of Hagen Financial in Minneapolis. “Automation — and ignoring the Joneses — goes a long way,” he adds.
Embrace delayed gratification. “Extreme savers do not make a lot of money. They just save a lot. They’ve learned about delayed gratification. They understand that compound interest is the eighth wonder of the world,” says Alexander Lowry, a finance professor and executive director of the master’s in financial analysis program at Gordon College.
“Anybody can do it. To compound successfully, you need perseverance in order to keep you firmly on the savings path and, of course, you need time, time to allow the power of compounding to work for you,” Lowry says.
Lowry also emphasizes that there are more extreme savers out there than you might realize. “They’re your neighbors who drive old, beat up cars. They don’t take lots of fancy vacations or own a boat. They have a simple but happy life. They derive pleasure from knowing they’re saving for retirement, college and so on,” Lowry adds.
Marry well. Sure, it helps to marry somebody well off, but that’s not the key to developing smart money habits and achieving your ultimate financial goals. If your spouse feels the same way about saving as you do, you’ll set yourself up for success. After all, it’s hard to save a lot of money and budget well if one person is carefree or reckless with money.
Don’t accumulate more debt. Too much debt, like revolving credit card debt, weighs you down and keeps you from having extra money to put into savings. In fact, what should be incentive to dig yourself out of debt — particularly credit card debt — is how much more money you’ll have to put toward your savings.
“Paying off credit card debt is one of the best investments anyone can make. Paying off credit card debt at typical interest rates effectively makes an investment that returns 15 to 20 percent per year,” says Kevin Gallegos, vice president of Phoenix operations for Freedom Financial Network, a debt, mortgage and personal loan financial service company.
Start saving small amounts. You don’t become an extreme saver overnight. For most people, it’s risky and impractical. Think of it this way: If you start shoveling too much of your paycheck into savings and retirement, you might find yourself continually broke — and then perhaps reaching for your credit cards.
Some personal finance experts recommend allocating 20 percent of your take-home pay toward financial goals, such as retirement or debt repayment. With that budgeting approach, known as the 50/30/20 budgeting rule, you would commit 50 percent to living expenses and 30 percent to flexible costs, like entertainment, vacations and birthday gifts. So, if you ascribe to the 50/30/20 rule, plan to set aside no more than 20 percent of your income for long-term savings.
Less flash means more cash. Myers points out that people who are extremely good about saving money tend to not be overly concerned with their image.
“You often don’t see extreme savers living in large houses, driving fancy cars or wearing designer clothing,” she says. “They don’t keep with up with the Joneses. In fact, they don’t even care about the Joneses. They care about themselves, their security, their future independence and their values.”
Sources and references:
https://money.usnews.com/money/personal-finance/slideshows/spend-a-windfall-wisely
https://money.usnews.com/money/personal-finance/slideshows/12-ways-to-be-a-more-mindful-spender
Article #3: Learning to Become an Extreme Saver — Part 1 (From Financial Finesse)
12 April 2012
We’ve all heard about the many benefits of saving money. With money in the bank, you can pay for things you need or want without going into debt. You have an emergency fund to help tide you over in case you lose your job and you have the foundation for a nest egg that can be invested conservatively and grow over time into a substantial amount saved for retirement. There’s no question that being a saver has several advantages. But have you ever thought about the advantages of becoming an ‘extreme saver’?
First let’s understand what we mean by ‘extreme saver.’ Being an extreme saver means you’ll save a much larger portion of your income than what most people tell you to save. There’s no exact number but if the conventional advice is that you should save 5 to 10 percent of what you earn, extreme savers will aim much higher, planning to save 40, 50, or even 75 percent of their after-tax earnings. If those numbers shock you, they should — not because they’re unattainable but because many people won’t even try.
You might think it’s obvious that people should be extreme savers if they’re able to put aside that much. After all, who wouldn’t want more money? But it’s not as obvious as you think. For example, imagine you could magically double your income starting today. You could transform yourself into an extreme saver just by putting all of that extra income into the bank even if until now you haven’t been able to save a dime. Yet many among us would not choose to do that. Instead we’d imagine the kinds of things we could buy ourselves with twice as much income and we’d wind up saving perhaps only a fraction of the windfall.
But now consider what an extreme saver gets in return for saving all that money instead of spending it. If a saver can use his savings to pay for a small purchase without going into debt, an extreme saver may call upon tens of thousands of dollars at a moment’s notice to pay for a huge purchase like a car or even a house without going into debt. If a saver has an emergency fund that will last three to six months, an extreme saver may lose his job but have an emergency fund big enough to last 5, 10, 20 years — or more. And if a saver can build a nest egg over time to retire in his mid-60s, an extreme saver is building a nest egg large enough to retire much sooner, in his mid thirties if he chooses — or sometimes earlier.
Last week I overheard some colleagues complaining about their jobs and dreaming about how great it would be to quit. Whenever I hear this type of conversation, I wonder why people will often commiserate with their co-workers about disliking their job and fantasize about alternatives but won’t think about the real reason why they’re stuck at a job they dislike instead of doing something they really want. The truth is that you can’t leave a job you dislike as long as you are completely dependent on a regular paycheck to support yourself, which limits your freedom to choose what you want to do with your life. Even if you love your job and have no plans to leave, consider whether your employer feels the same way or whether you will feel the same way next year or five years from now.
Extreme savers don’t spend as much as other people and that means they often have enough money saved up to give themselves more control over how they choose to spend their time. They’re not stuck in their current job because if at any point they want to work somewhere else, they have enough savings to last them a long, long time until they find something they’d rather be doing. In some cases, they have enough savings to have the freedom not to work at all. If you value the freedom to do what you want more than you value the things you can buy with the money you earn, then becoming an extreme saver might be right for you.
So now perhaps you’re thinking, you’re interested in becoming an extreme saver but you may be still be reeling over how it might be possible to save anywhere near that fifty percent of your own income in order to get you there, especially if you’re not even able to save anything right now. In our earlier example, we imagined doubling our income but the same savings rate can be achieved by halving our spending.
The good news is that it’s not magic, nor does it require you to sacrifice the spending needed to enjoy your life. It’s simply a matter of spending your money more efficiently in the areas where most money is wasted. My own efforts at extreme saving have allowed my wife and I to save a combined $550,000 over a period of 8 years. It didn’t happen because we were incredibly lucky or worked on Wall Street. We saved this much simply because financial freedom was important enough to us to make decisions that kept our spending low relative to what we were earning. During my last post, I promised you an explanation of how my wife and I are able to live on $12,000 a year each in New York City ($24,000 combined), and I’ll lay out the details in part 2 of this blog post. But understanding why extreme saving is a good idea is the important first step to motivating yourself to get there.
Source:
https://www.financialfinesse.com/2012/04/12/learning-to-become-an-extreme-saver-part-1/
Article #4: 4 things extreme savers refuse to spend money on (From CNBC)
By Kathleen Elkins, August 27, 2018
If you want to up your savings, you’re going to have to make some sacrifices — some big and some small.
For starters, consider cutting these four expenses, all ones that have been given up by early retirees, self-made millionaires and other super-savers.
Excess living space
Financial blogger Matt and his fiancee, who asked to withhold their last names, went from living paycheck-to-paycheck to banking more than $50,000 in 2016. The Chicago-based couple upped their savings through various strategies and, if they were to pinpoint the most effective one, it would be to live big in a small home.
“We live in a neighborhood where most of our neighbors are paying a higher percentage of their income towards rent,” he writes on his blog, “Distilled Dollar.” “Of course, we could pay the same percentage and upgrade to a nice two-bed, two-bath, but we’re more than happy with where we live today.”
They pay less than 15 percent of their income for their 700-square-foot condo in Chicago. They estimate that they save about $12,000 a year, “seeing as how we could easily afford paying an extra $1,000 a month,” says Matt.
Lunch and dinner every day
Scott Alan Turner paid off more than $70,000 in loans and became a millionaire by 35. His top savings tip is simple: Pack your lunch every day. After all, dining out can add up to hundreds or even thousands of dollars a month if you’re not careful.
“My biggest [savings tip] I learned from my parents,” he says. “My dad worked for the town his whole life. He packed a lunch every day and brought it to work. In our small town upbringing, we didn’t have restaurants and we didn’t go out to eat all the time.”
Turner carried that habit into his own life: In the 10 years he spent working a corporate job, he only bought lunch out a handful of times. Instead, he cooked large batches of food on Sunday to eat throughout the week.
Things that aren’t important to you
Keeping up with the Joneses, or trying to live up to your friends’ and neighbors’ standards, is a tempting but expensive habit. Often, it leads to spending money on cars, gadgets and clothes that don’t actually make you happy.
“Question the things you’re spending your money on,” says soon to be early retiree and personal finance blogger “The Money Wizard,” who asked to remain anonymous. Thinking through your purchases will keep your spending in check and help you refrain from shelling out more than you should to “keep up with the Joneses.”
“Just because your friends enjoy spending lavishly on clothes, doesn’t mean that’s for you,” writes the 28-year-old, who already has already managed to bank $250,000. “Don’t waste money on things that aren’t important to you.”
Excessive car payments
The average monthly loan payment for a new vehicle hit an all-time high of $523 in 2018.
The good news is, “vehicle spending is far and away the easiest category to control,” says “The Money Wizard.” He drove a 13-year-old pickup truck before upgrading to a Mazda 3, which he bought for $13,000 in cash — which means he doesn’t make any car payments. “Taking a reasonable approach towards the new car upgrade is key.”
You can also save on gas by carpooling with co-workers or neighbors. And if you live in an area where public transportation is an option, consider using it at least a few days a week. While you may not save time, chances are you’ll save money.
Finally, if you live within a few miles of your office, consider investing in a commuter bike, which could easily pay for itself in less than one month. Trent Hamm, author of “The Simple Dollar,” estimates that you could save nearly $6,000 a year by leaving your car in the garage and riding to work. Plus, your commute would double as a workout.
This is an update of a previously published story.
Source:
https://www.cnbc.com/2018/08/27/4-ways-extreme-savers-refuse-to-waste-money.html
