The money balance book tells the story of a woman who got divorced and was stuck with a mortgage she couldn’t afford, and had a daughter in a good school district she didn’t want to leave (I seem to recall a year or so ahead of graduation)– so instead of selling her house she teamed up with another single mom in a similar situation; the other lady moved in with her own daughter, which helped cover the mortgage and household expenses, and they also became good friends. Bottom line though was that through creative means she reduced her needs budget without actually losing her house and without a traumatic relocation for her daughter.

Don’t know your precise circumstances and don’t mean to make assumptions, but if your basics eat too high a portion of your budget then Dr. Warren would probably recommend some kind of surgery

And I try to walk to the library, it’s about 4 blocks from my apartment and sometimes, even though I’m walking, I end up with four or five hard backs.

I’m training for a new job and there’s no parking on site, the parking is about 1/2 mile away and there’s a shuttle. I’m trying to walk to and from the job. When the training is over I’m going to a different location (with off site parking) and I’m not sure how far it is from parking to the building, but I was told the walk TO the building is all up hill (and i’m really out of shape). So I’m going to at least try to walk down to my car a few times a week.

As your situation changes your perspective changes!

This website has helped me a lot especially by getting out of debt but I actually think the articles here are getting a bit repetitive.

As a subject PF has an expiration date. Whether its PF blogs or finance magazines like Money and Fortune. Everything seems to get repetitive over time. I’ve lost interest in the PF topic.

Thanks for being there when I needed help. However its time to move on. I wish you the best GRS.

Per Elizabeth Warren’s formula, that 20% includes debt repayment– her method is: a) get a small emergency fund, b) pay off debts, c) build actual savings, like a year’s worth expenses, investments, etc. It’s like the Dave Ramsey sequence except that his percentage of the budget is not limited to 20%– it gobbles up as much as you can make it while temporarily “going crazy”. I think depending on the size of the debt some of us might be able to handle the Warren system and some of us might need to adopt some measure of Ramsey’s “crazy”. (She discusses bankruptcy as a possibility, he says you just shouldn’t do it).

But my impression was that you were into extreme frugality, ERE-style, and now I see you’re not. My wife and I don’t have kids and live in a 1br apartment (with the office in the living room), so even with a small income that’s a lot less financial pressure for us and we can (for now) afford the 30% “play money”. Still, who knows about the future.

And I really don’t worry much about future poverty– I’m used to it, haa haaa haaa. But yeah, at some point I’d like to make up for years of debts and lost savings. In the past we lived on a feast-famine cycle with an overall negative cash flow, but right now we’re just enjoying having our head above water — “oh look, we have leftover money and it’s the 29th!”– which is still a shock.

Thanks for the answers, they let me put your article into perspective and understand your thinking, and I can see how to apply these ideas to my situation.

I rarely see support of local merchants here. This needs to be part of the consideration when choosing a store. I find that using the local small businesses, I spend less, get what I need and manage to take care of it quicker.

I spend less, because I get help to find what I want and do not spend the time searching for what I need and buying what I did not come in for.

Re: the no shopping temptation….this works for me when I am on my long exploring backpacking trips. Knowing that anything I buy I have to carry on my back stops me from buying the wonderful souvenirs that are so tempting everywhere. If I buy something it is something very light like earings and I wait to the last day of the trip to buy any gifts I am taking home for family.

Now, your situation. This probably deserves a whole post. The big rationale I can offer to save more than 20% is that you never know whether or not your current income situation is going to last. Whether that’s because of a cynical view of the corporate climate or worries about health problems or the simple randomness thrown at us by the universe — a family member in need of help or a car accident or oil discovered in our back yard — I think it’s wise to consider this possibility and, if your savings are not already very healthy, up the percentage.

This is not to say that I belief in frugality for frugality’s sake. I believe that spending can be fun and good and healthy, up to a point; I myself spend more than most people find reasonable on high-quality, locally-produced food and, lest we forget, fair-trade chocolate and coffee, also books and subscriptions to obscure literary journals. I think it’s a situation of finding that balance between sensible protection of your security, an acceptable mitigation of future risk, vs. living life in a way that makes you happy.

If you’re spending too much of your effort worrying about future poverty (I don’t think you are, but IF), then you’re going to be miserable, and you should by all means seek to ameliorate this by allowing yourself the permission to spend money! However, if you believe your savings are very small and you can increase them while maintaining an acceptable level of happiness, I would err toward saving more.

Did I answer your question? I’m not sure. I think that I could come up with some sort of formula based on your specific numbers, but the truth is this is all based on assumptions about the future and your own happiness, which are worth about as much as you’ll pay for them

Do you have savings goals as a percentage of your income, or do you just try to maximize savings to wherever they’ll reach?

I ask because I’ve recently embraced Elizabeth Warren’s Balanced Money Formula, and this means that as long as I’m covering my needs and saving 20% of my income I get to do as I please with the rest, and I’m loving it.

This is the first year I’m able to afford this system of course, cuz before I barely had enough to cover my needs, I had crazy debts and my wants went unchecked in spite of this.

So I’m really asking you about it to analyze different paradigms as I plan future adjustments.

While I’m enjoying the 50/30/20, I’m thinking I’d like to increase the savings percentage in the future, and if you could offer a rationale to do that (since you seem to be doing it) I’d appreciate it.

Thanks!