should it feel this constrained?

[daveymck]

There's not really a concise way to describe my question. I'll make my best attempt.

Before I get into details, which I'd kinda like to do, here's the basic gist of the problem: My wife and I together have a pretty decent income. We have for a few years, in fact. I guess we've gotten a bit used to it, too. Maybe that's the real problem.

Luckily, we've managed to stay relatively free of debt, and have saved up some money. After listening to Dave Ramsey for the last few months, I got kinda fired up and decided to use some of that savings to pay off the remaining credit cards and student loan debt. So, yay, debt free and all that. Furthermore, we set up a new budget with a few savings goals in mind. Now, when we look at it, we feel very constrained by it. When we look at the grand scheme of things, like our overall income and what kind of house we live in, and then at the money we plan for personal spending (fun money), it feels strange that we're watching every dime.

So, I guess the big question is, what's normal? We know friends who we're pretty sure have a somewhat lower income than we do, yet they have twice the house we do. Not that we're trying to keep up with the Jones's, but we are just curious what the norm is here...

If I can get any takers here, I'll throw some details out.

[Diavel_guy]

Don't compare yourself to others....ever. You have no idea what their situation is. Maybe the have lesser jobs, but inherited money. More likely then that they are willing to take on a lot of debt. Or willing to live paycheck to paycheck or with little savings. This is how most Americans live, no matter where they land on the income spectrum.

I have a very high six figure salary and nobody would ever know it. I have an 8 year old vehicle that's paid off. I live in a modest dwelling. I don't take tons of fancy vacations or dress lavishly. My self worth is not derived by material things nor do I crave them thankfully. Don't get me wrong, I like nice things by the way. I do take pleasure in knowing I have no debt and a ton of emergency money to save me should things go south. Because you never know what monkey wrench life will throw you, no matter how much you make, that will put you in the poor house overnight!

[kork13]

It just depends on what you're used to. If you're still used to the more free-spending days, then of course a budget that controls your spending will feel constraining. But if you have your spending well under control, there's no reason to hold the reigns so tight that you're gasping for air. If you're willing to post some details about what you're talking about, we can give you more specific opinions.

In general terms, however, we had a discussion on "fun money" a little while ago. You might get some idea there of what makes sense for you. Personally, I budget about 5-7% of my income as 100% discretionary spending. But in the end, it's a personal decision based on what you're comfortable with. If what you're doing right now doesn't work, sit down with your wife and take a new look at your budget. Either reduce your savings goals (you might be saving too aggressively), or reduce your recurring spending in other areas (such as cable, cell phones, etc.). The difference can be diverted toward increasing your discretionary spending.

[disneysteve]

So, I guess the big question is, what's normal?

Normal is BROKE. Normal is living beyond your means, in debt up to your eyeballs, 10K or more of CC debt, eternal car payments, student loans that never end, etc. Why exactly do you want to be normal?

If you have gotten yourself debt-free except the mortgage, congrats! That already makes you far from normal, and that's a good thing.

As for feeling constrained, post some numbers. Let's see where your money is going. Perhaps you are not giving yourselves enough slack. A budget should make you feel empowered and in control, not constrained and deprived.

[MakeAStash]

IMO go for what you want. If you want to have fun spending to the max, do so but note you will likely need to work pretty much until you die. If you want to become financially independent and not have to work, then save up now and let compounding work its magic for you.

[Wino]

You had debt. Therefore you had spent money you didn't have. Therefore, you were spending more than your income.

You now have no debt, and you're saving more. Therefore, you are living within your income. That's why it feels like less money.

Remember, though, at retirement, your borrowing comes to an end.

[Slug]

I think I'm with Wino here. Those are substantial changes. It should feel a little more constrained. You're also paying attention to it all a lot more now. So not only have you changed how you allocate your spending, you've also changed how you allocate your thinking. Once you begin to trust your new system and see the wealth build, my guess is you will feel freer.

[YLTL_Dan]

I totally agree with everyone else on not comparing yourself to others.

Another thing to think about is the Dave Ramsey plan isn't (and shouldn't be) a long term plan for most people. Some people love to live that way, but the intensity should decrease after you get your debt paid off and hit some of your early financial goals.

After we paid off our debt, saved our emergency fund, fulfill retirement accounts, etc we loosened up our budget and quit using the "envelope" system. If you're feeling constrained, you can increase your budget... but hopefully that "constrained" feeling isn't just caused by envy of friends/neighbors.

[bjl584]

I agree with what others are saying. Don't compare yourself to others. Especially without knowing what their total financial picture looks like. Also, you should feel constrained right now. You went from overspending to saving and debt repayment.

That being said, maybe you need to budget in some fun money each month. A couple of nice dinners or a night out. Something to reward all of your hard work and efforts to get your finances in order.

[MonkeyMama]

So, I guess the big question is, what's normal? We know friends who we're pretty sure have a somewhat lower income than we do, yet they have twice the house we do. Not that we're trying to keep up with the Jones's, but we are just curious what the norm is here...

The problem is that nothing is "normal." You have to define what works best for you.

I think if concerned about savings and future, things will always feel "constrained." You realize you can't have it all. There may be some element of shock compared to how you used to live, and maybe an element of still suffering from prior bad decisions. Feeling constraint is not necessarily a bad thing, it's just learning to live within limits.

I think a lot of people think once they get out of debt, then that is IT! Money will fall from the sky!! But the truth is then you realize you have to save for this or that, and plan ahead, and frankly I don't know if that ever ends. There is ease, and significantly less stress, without the debt, but all of life's responsibilities don't disappear. & then of course you become determined to stay out of debt, which will always take work. {I personally don't mind the work and constraints, because we have faced several big life/financial challenges VERY easily. The work pays off big time, and very quickly. I think once you easily weather something that is generally very difficult, you look at it all very differently}.

Finally, you can't compare yourself to others. You will never know the full story. Maybe people with nicer homes were more careful with their money and put a huge down payment; always had a low interest rate. Maybe they've already paid off their home, so income does not matter. Maybe the home was gifted or inherited. Maybe they are in debt up to their eyeballs and can't really afford it. You'll probably never know the details. All you can worry about is yourself.