Getting past the need for things to gratify....

[Joan.of.the.Arch]

AF income? Is that an annuity? Dividends?

I'm not following what kind of personal finances system you use. You do not budget. You have a year's worth of income put by, yet it is not an emergency fund. You used up some pool of money buying a house, furnishing it and --I think-- rennovating. If you have a system that is something many people might not be familiar with, I'd like to hear about it. I'm curious.

Anyway, if you want to resist tempatation to spend, another idea is to find an interest (hobby?) that costs very little, but which replaces impulses to go out and spend, because it is just better than going out and spending.

[papa_squat]

My husband has an AF income each month so we really don't NEED an emergency fund since that money will never go away.

You'll definitely need to clarify what a "AF income" because I've never heard this term used in this community. Also, would that income be there if you're husband passed, or if he did something illegal?

I think the people who need an emergency fund the most are those who believe they need an EF the least. It's not just about saving for emergencies that seem likely to happen, it's about having liquidity in case the unthinkable happens. Even if you know you are getting a guarenteed monthly amount, what happens if either you or you husband is ill, needs life-saving surgery and insurance won't cover it? Or consider a scenario like a lawsuit where legal expenses drag on and make it hard to pay the bills each month? Or an accident renders you or your husband unable to work? Stranger things have happened...

...plus I'm having a hard time believing you are a serious member of this community if you're browsing Porsche dealerships without an EF or even a budget. Now I'm really curious to find out what a AF income means...

[josetann]

I'm not following what kind of personal finances system you use. You do not budget. You have a year's worth of income put by, yet it is not an emergency fund. You used up some pool of money buying a house, furnishing it and --I think-- rennovating. If you have a system that is something many people might not be familiar with, I'd like to hear about it. I'm curious.

To be completely honest, we're a bit similar. But it's not the norm, so I don't talk about it much. We have a decent bit of money set aside in various places. There is no one fund that is our emergency fund. Rather, we have a bit of a cushion in our checking account. Then there's more of a cushion in a savings account (a cushion earning a decent bit of interest at the moment...diff country though, no good interest rates in the US). Then there's enough sitting in a US checking account to get us back "home" in case the crap hits the fan here (plane tickets for four, plus a bit extra to get us on our feet temporarily...and there's a bit more there for recurring expenses such as electric and yard mowing in summer).

In a real, dire emergency, we could consider our Roth IRA as an emergency fund (withdraw principle amount penalty-free). But I have different definitions than most. What most people think of as an "emergency" fund I think of as a "life happens" fund. What I think of as an "emergency" fund, others would think of it as a "zombie apocalypse" fund (ok, bit dramatic...how about a "Great Depression II" fund?). Honestly, I can't think of many realistic worst-case scenarios that would cause us to deplete our retirement accounts. So, I'm able to sleep well at night (except for the kids waking up sick at odd hours...but that's a different story).

We also don't "pay ourselves first"...but we are able to save up a decent bit. Again...this is not the norm, and I don't think I could advocate that anyone else use a similar system.

As for resisting temptations...I just avoid them the best I can. Don't want to buy a new car, so I don't step foot on a new car lot. Don't want to buy a boat, so I don't go looking at them. I think of what I REALLY want when there's no external force trying to persuade me. I.e., I like scooters (had an Aprilia Scarabeo 500 last year...company is actually owned by Vespa now). I do some research, see what scooters are available, and when I see a good deal, I buy it. No salesman trying to tell me what I should get (and how much money I should spend to get it). So, if you REALLY want a toy car to play in...don't go to the Porsche dealership. Figure out exactly what you're wanting in the car. See what cars fit that definition (I'm betting you'll find quite a few reasonably priced models alongside the Porsches). Look into how much it'd cost to buy one, how much for maintenance (some expensive models are doubly expensive to maintain...but not always), insurance, etc. So maybe the Porsche fits your needs 95%, but some other model fits your needs 90% and costs $50,000 less (and costs less to maintain and insure to boot!). Pick whichever one you want (and can afford), but just make it an informed decision, that's all I'm saying. Me, I'd pick the less expensive one, get almost as much enjoyment out of it, and get a LOT more enjoyment putting the $50,000 toward something else (retirement, vacations for the next ten years, whatever). Actually, I'd just buy some rain gear for the scooter...but that's just me

[Barclay]

Wow. I didn't realize I was saying controversial things. I guess this is not the norm at all.

I am trying to be a "serious" member but maybe I need more rigor in my finances to be accepted. An AF income is just simply my husband's Air Force income. I am a computer engineer for the Air Force and he now works as a civilian as a program manager. He is a retired officer since last summer. The income would go away if he passed (makes me upset just typing that, we are both still very young). But, he is well insured so I would be fine if something unthinkable happened.

I originally posted just to get advice on basically avoiding the temptation for new, shiny things. I don't want to purchase a new car. I've been considering a Porsche for a few years now and I'm just too cheap to actually spend the money on one.

Thanks for everyone's input. I'll start working a more structured financial objective.

[skydivingchic]

I don't think everyone necessarily needs a highly structured strict budget. There are plenty of financially successful people here who don't know how much they spent on groceries last month or fuel for their car. Generally speaking they make sure they save enough to meet their goals first, then the rest can get spent however. I think, as has been suggested, you really need some goals, whether that is a Porsche or a vacation or early retirement or something else or a combination thereof. The thing is, when you are first starting out trying to save for your goals, it is easier to do if you understand where your money goes. So I do believe it would be worth it for you to spend several months tracking every penny you spend and deciding what some of your goals are. Then you can sit down and see if your spending is in line with meeting those goals. If not, then you at least have the information you need to figure out where you can start trimming expenses to meet your goals. After a while, things are likely to become more routine and you won't necessarily need the written budget. But written budgets are great tools to get you on the right path.

I'll give you an example from my own journey. Several years ago I got serious about paying off my CCs once and for all. I got some budgeting software and sat down to work things out. At the time I was taking private ice skating lessons, which I really enjoyed. Unfortunately, it quickly became obvious when I ran the numbers that I wouldn't be able to continue with those lessons as well as meet my savings goals (pay off CC, fully fund Roth, save a certain amount each month for vacation, etc). So it came down to a question of priorities. I decided the savings goals were more important and cut out the lessons.

So that leads me to avoiding temptation. First, figure out how much in total you will save each month. Then figure out how you are going to split that up between your various goals. Prioritize! Is it more important to you to eat out once a week or take a vacation sooner? Is saving for an early retirement or getting the latest "toy" more important to you?

One thing you can do once you've decided on a few of your top savings priorities is print out a picture or two representing those goals. Put them in places you would see them before spending - your wallet, for example. That way every time you spend money, you see the picture to remind you where you are headed. Is what you are buying necessary? Will it set you back too far from meeting your goal?

Also, as has been mentioned, avoid advertising and places likely to induce you to spend money. We don't have cable so I rarely see commercials. I don't often read magazines or newspapers. I have AdBlock Plus and NoScript installed on my web browser, which together block a huge number of advertisements while I am online. Don't go to the mall or stores to "browse". Stay out of stores that are specific problems for you - I can always find something I "need" at REI, so I stay the heck out of there unless I truly have something specific to purchase.

[JoeP]

Yes, avoiding situations or stimuli that could encourage you to spend is helpful: internet ads, TV ads, magazine ads, radio ads, malls, car lots... Also, when in a store, take the most direct route to the item you came in to purchase, so that you avoid passing too many "CLEARANCE!" displays that try to sell you things you don't need (unless you came into buy those things, in which case you're in luck!).

[papa_squat]

Wow. I didn't realize I was saying controversial things. I guess this is not the norm at all.

I am trying to be a "serious" member but maybe I need more rigor in my finances to be accepted. An AF income is just simply my husband's Air Force income. I am a computer engineer for the Air Force and he now works as a civilian as a program manager. He is a retired officer since last summer. The income would go away if he passed (makes me upset just typing that, we are both still very young). But, he is well insured so I would be fine if something unthinkable happened.

I didn't mean to come across as judgmental, but I actually was concerned that you were talking about an air force income.

I also assumed by the infomation and your language that you were younger (late 20s, early 30s), hence why I still think that browsing a Porsche dealership is asking for trouble. Unless you have a truly fat trust fund, the only purpose for a Porsche is as a retirement trophy. It's not a pratical family vehicle, especially for someone who already admitted to having hardly any liquid assets after buying a house.

Not everyone needs a budget. Some people have money coming out of their ears and have no need to trouble themselves with it. But if you're asking for serious advice about resisting temptation, you didn't really come off that way. Asking people how to resist tempation for a Porsche is like asking people how avoid burning yourself on a hot stove. Don't touch the stove! Therefore, don't go to the Porsche dealership, or anything else to try fooling yourself into thinking that you somehow deserve shiny things you can't afford.

Now if you can afford the Porsche, great. Good for you. Seriously, go for it. But if you're not sure, then consider creating a budget and seeing how much the monthly payment and insurance would inflate it. I think if you enjoy that pile of money, the tempation will quickly disappear.

Enjoy the Vespa in any case because it's sure to be a lot of fun for the summer. If that's not enough, starting saving for the Porsche. If it helps to give you a savings goal, the one my father-in-law leases (don't get me started on that ) has a $130k sticker price.

[snafu]

For a different take...Perhaps like DS [Dr. Steve] since you've looked after both emergency funding and retirement you needn't worry about traditional [category] budgeting. Why not choose to put 12%-15% of monthly income into a Dollar Cost Averaging [DCA] portfolio

Spending relates to personal values. Summer is terrific here, every community hosts their own special event/festival and welcome visitors with modest pricing, open arms and oh so delicious home made style ethnic foods. It's like touring the world but sleeping in your own bed. No big crowds, no stressed drivers, no l-o-n-g, unpleasant lines in airports, not shoved into seats sardine-like with a cabin crew who can't cope with unhappy fliers who are paying more for reduced service.

Most of our friends and relatives are staying out of malls and big stores as much as possible in summer. Shop with a list & reward yourself for sticking to it! We're not spending either money or time indoors if possible. Following my mom's example, we 'change out each room, packing up winter stuff, exchanging jewel colors for pastels creating an easy care Zen-like decor. Not needed, not used or tochkies - gets packed in a bin until snow threatens again. Meals focus on salad with BBQ support for meat, fish & veggies. It's a holiday for me too!

[Barclay]

DCA is interesting but it's basically what my 401k does. I'm not sure I want to invest more of my money into anything market related right now. So much is being invested in the market from my 401k investing. Maybe I'm being entirely too conservative, but right now, I prefer to just sit on my cash in basic mma accounts.

I don't have any great vacations planned this year. I think my objective is to just enjoy our new home this summer.