Debbie writes in:

Love your blog, but you are too focused on the future. What’s the point of working toward financial success if you’re just going to eventually die? Why have a life if you’re not going to live it?

I get some variation on this question about once a month, but something about Debbie’s wording left me thinking.

In a typical year, Sarah and I spend somewhere around 60% of our income, a level we’re pretty happy with since we don’t make tons more than the average American income and we have three children still living under our roof. We save the rest.

Now, we most certainly could spend that other 40% on things that would raise our day to day standard of living, and I have no shortage of ideas on how I might do that. It would be fun to do some international travel. We could redo our entire kitchen.

Instead, we save it, and it’s a model we recommend to readers of The Simple Dollar.

The response I often hear when I tell people this is, “Why don’t you guys live a little?” The thing is, we are “living a little” — a whole lot, actually. We used to spend every dime we had. Eventually, we discovered this is just a much better path for us. Saving a significant chunk of our income gives us the best life for us that we’ve yet found.

Let’s break down why.

The Average American’s Finances (and Ours, Too)

Let’s start off by looking where we were at to begin with, which was a financial state not that different from the average American’s financial state.

78% of full-time workers in the United States live paycheck to paycheck. More than three out of every four people in the United States working at a full-time job would encounter some major financial turbulence if they missed just one paycheck.

We were in that boat. We were in a situation where we would often wait to pay bills until the next paycheck hit our checking account. If a paycheck was late, we would often find ourselves worrying about what came next.

The average American my age is carrying $133,000 in debt. Given that the average American household income is around $70,000, that means the average American my age is carrying somewhere around two years of their income in debt, and that debt is accruing more interest with every passing day.

We were in a giant hole of debt. Student loans, credit cards, car loans, personal loans. Later, we had a mortgage. It was a huge weight on our shoulders.

That was the reality we were in for years. In truth, we were spending around 35% of our income just on minimum debt payments at the worst of it. We might have been “living life,” but much of our income was going straight into debt payments.

The Real Impact of This Life on Us

At the same time, there were a bunch of other things floating around in our life.

We felt strongly chained to our jobs and at the mercy of our bosses. Every professional bump in the road filled us with worry. If something didn’t go well at work, we were scared because we knew we couldn’t afford a career detour. Losing our job was a scary proposition.

This gave our bosses a great deal of power over us, and they would use it, intentionally or otherwise. They had that financial leverage over us, which meant that we had to put up with treatment that we could have refused.

We felt a constant low level of stress. We didn’t sit around and obsess about money, but the stress of our financial situation seeped into everything. We didn’t want to check the mail. We didn’t want to look at bills or talk about them at all. Conversations about the future were intentionally vague. We couldn’t sit down together and look at our financial future with optimism.

Even worse, every little thing that went wrong became a big magnified worry. If our car didn’t start before work, it was a huge stress. How were we going to pay for the repair? How were we going to pay for a temporary ride to work? How was our boss going to take it if we were late? If something broke at home, there were similar worries. A fender bender was a major source of stress – would this make our insurance go up?

Often, we just put on blinders and tried to ignore those things in the moment, but the background worry was always there. We couldn’t think of our daily lives without it. We couldn’t think of our jobs without it.

That constant low level stress had lots of negative impacts on our lives. We would get sick quite often. I personally didn’t feel all that great most of the time. We argued a lot, usually about little things unrelated to money, but it was just steam being let off from the money stress.

Furthermore, there was the reality that we weren’t making any progress at all on our life’s dreams and goals and ambitions.

We wanted to live in a nice big house where our children could play with the other children in the neighborhood, but we lived in a tiny apartment with no kids nearby.

We wanted to be great parents who weren’t constantly stressed out all the time, but we were constantly stressed out all the time and secretly doubted whether we’d be good parents at all.

We wanted to be able to stop working when we were relatively young and have a few decades of good health to go on a lot of adventures together, but we couldn’t see how we could possibly afford to ever stop working.

Our life dreams were fading away.

What were we getting out of this, though? Surely we had to be getting something out of this, right? Honestly, we spent a lot of money on things that I don’t even remember at all. I assume they must have been fun in the moment… but almost all of them are completely forgotten.

We ate out a lot, but few of the meals were really memorable. My best memories of meals from this period in my life were either eaten at home or at a really cheap ethnic restaurant Sarah and I used to enjoy.

I used to run with a pretty expensive crowd that went out for drinks constantly. I barely remember any of those people or any of the time I spent with them, even if I’m trying to remember them.

I know I used to stop by a convenience store near our apartment virtually every day to buy a bottle of Gatorade and a slice of pizza after work. I’d walk there from our apartment, chat to the person working there, and drop more than $5 on a simple snack. It’s all completely forgettable.

I collected books and trading cards. I remember reading some of the books, but I actually only own a few of the ones I had in that era. The rest have been sold or given away or stuck into Little Free Libraries. I didn’t even read some of them. Most of my attempts at playing the trading card market didn’t go particularly well, with a few nice exceptions, but it was a significant net loss, too, and it’s an experience I can barely recall today.

Money just fell out of our pockets for lots of unimportant things. Forgettable meals. Forgettable entertainment. Forgettable snacks. Forgettable social events. None of it made any sort of lasting impact on our lives. They just made the time go by.

It was an unhappy life. It should have been happy, with a pretty new marriage and an infant child, but it wasn’t happy. You might think that I’m just looking back on it and seeing it as unhappy from my current vantage point, but the truth was I was unhappy back then, too; I was just in a state of denial about the whole thing.

The truth was all of the things we were spending money on were effective at giving fleeting little bursts of happiness, but that happiness faded fast. If we didn’t quickly do something again to bring on that fleeting happiness, we were left with a pretty dreary existence going forward.

Something had to change. And something did.

A Different Path

Sarah and I mutually decided that the best route going forward from this point was to simply cut out as much of that unimportant, fleeting spending as we could. Just rip it out, toss it to the side, and see what was left of our life after that.

Basically, unless something addressed an actual need in our life, we better have a very good reason for spending that extra money. The case for that expense being genuinely important had to be a good one or we just weren’t going to spend the money.

Our idea was that if we cut out everything, the things that were actually worthwhile would become clear and we could bring them back. Everything else didn’t deserve our money until it showed us that it deserved our money.

Whenever we were tempted to buy something, we simply asked ourselves a few questions about it. Did we really need it? Is it something we could just borrow? Could we have the same thing – or something very similar – at a lower price? Could we wait 30 days to buy it (most desires fade after 30 days, leaving only the important ones)?

We cut out a lot of spending. Over time, we did gradually reintroduce some things, but for a lot of our old expenses, we just found better substitutes.

I became an avid user of the library, which largely replaced my book buying habits.

Rather than stopping at the coffee shop daily, Sarah and I migrated to making coffee at home at about a quarter of the price.

We started making most of our meals at home, too.

Rather than just reflexively going out all the time, we started to look for things to do in the community and things that didn’t involve having to pay someone to do it. We started going on lots of walks around town and hikes in nearby parks. We started getting much more involved in community events.

Rather than buying expensive snacks at the convenience store, I would buy the same thing in bulk and keep them in the closet. I also toned down my snacking, but I didn’t eliminate it – I tried to consider whether I really wanted a particular snack or if I was just doing it out of routine.

We started intentionally accentuating friendships that didn’t nudge us to constantly spend money. The friends that were willing to go play soccer at the park or have a potluck dinner party started becoming more central in our social life, while friends that just wanted to go engage in “retail therapy” or go “out on the town” every single time started becoming less central in our social life.

We mostly moved to buying store brand versions of everything at the store.

The key thing to note is that we didn’t sit around feeling miserable and counting our pennies. We kept doing things that made us happy that lasted – we just cut out the things that didn’t really last for us. We had stuff going on pretty much every evening, and when we didn’t, we’d usually go on a long walk around town, pushing our infant son in a stroller.

The thing is, as we started doing this, lots of good things started happening in our life.

The Fruits of the New Path

The first thing that really changed is that I stopped being scared to check the mail. I knew that we had money in our checking account to handle any and all bills as they came in.

In pretty short order – over the course of several months – we paid off several credit card bills, leaving us with just student loans and car loans. At that point, I built up a little emergency fund, so suddenly the prospect of not having the car starting in the morning seemed a little less worrisome. In fact, one winter day, the car didn’t start – something that would have really put me on “tilt” just a few months beforehand. I knew we had the money in savings to handle it, so I didn’t get stressed out. I just made a few phone calls and everything was fine.

It was during that winter when I started writing The Simple Dollar, and looking back, the big thing that I couldn’t help notice was that the low level of financial stress in our lives had retreated. That background stress that was very subtly painting everything grey was going away. It made everything feel better.

Our marriage felt better. We stopped arguing nearly as much, something that has remained to this day. Sarah and I disagree so infrequently that our kids are amazed that we don’t just resolve things immediately and peaceably.

My job felt better. I didn’t feel like my boss had nearly as much power over me. I felt more in control of my career’s future and I didn’t really feel under my boss’s thumb any more. In fact, it was that sense of career freedom that really nudged me to amp up my efforts on my side gigs, one of which was The Simple Dollar.

I felt more in control as a parent. I didn’t feel stressed out by a crying infant like I once did. I remember distinctly when my son was crying just short of his first birthday and it wasn’t bothering me much at all. I knew it would pass, and I remember thinking in that moment that I wouldn’t have been able to deal with that several months beforehand.

I felt healthier. I used to get several colds per winter. Over the last decade or so, I might get one. The last significant cold or illness I’ve had of any kind was almost a year ago. I could barely go a month without feeling sick back in those days.

I felt more optimistic about the future, too. I genuinely felt as though I could see the big goals Sarah and I had for our future becoming real.

And they have.

Today’s Reality

As I write this, Sarah and I (as noted earlier) spend perhaps 60% of our income. Some years we’ve been below 50%; other years, like this past one, had some unexpected bumps and the number was higher. We haven’t come close to spending as much as we earn in any year for more than a decade.

Within 18 months of our decision to turn things around, we paid off all of our debts – credit cards, student loans, car loans, everything.

A couple of years after our turnaround, we bought a nice family four-bedroom house. Four years after that, the mortgage was paid off in full.

Right now, we have zero consumer debt. No credit cards. No mortgage payments. No car loans. No student loans. Nothing.

We both fund retirement savings at a very healthy clip. We fund 529 college savings plans for our children at a healthy clip, too – we want to help them significantly with college, but we want them to bear some of the reality of the cost, too.

I’m really happy with my day to day life. There’s nothing that I truly want to do that I’m kept from doing for financial reasons. If I want to spend money on something, I can do so without worry. The only thing is, I really only spend money on stuff if I’m very, very convinced that it’s a meaningful and worthwhile expense. If it’s not, I either just skip it or I find a cheap or free way of doing it.

Right now, Sarah and I are hoping to “retire” not too long after our youngest child leaves the nest and we find ourselves without children at home for the first time in more than two decades. We’ll probably be in our early fifties at that point and should have enough savings in place to walk away from any work that we do that isn’t completely fulfilling for non-financial reasons.

At that point, we want to explore some different things. We don’t want to just sit around and idle. We want to be able to take on challenges that just really don’t work if working full time for an income is a requirement. I’d like to spend a big block of time writing and editing a fantasy series that’s been running around in my head for years. Sarah and I would both like to do a bunch of local charitable work. We both want to take a long summer and visit a bunch of national parks with just a tent and a bit of gear in the trunk of our car. We want to be able to be a regular presence in our kids lives and in the lives of our grandchildren.

The thing is, those goals are completely realistic. We’re on a path to making them happen.

There’s just one final point I really want to make here.

Back when Sarah and I were really struggling financially, we were spending about 35% of our combined income just to keep the debts paid. We really only lived on about 65% of our combined take-home income.

Today, Sarah and I are in great financial shape. We bank about 40% of our income and live off of about 60% of our combined income. We do have three kids now, of course, which devours quite a lot of expense – we’re feeding five people and the kids seem to have endless expenses.

Still, at the worst of our spending, we were really only spending 65% of our income, and today, we’re spending around 60%. It’s not that different, honestly, in terms of dollars and cents.

What differs is that today, every dollar that goes through our hands goes toward either something necessary or something meaningful or it goes to solidify the future. Every dollar has a purpose. That simply wasn’t true back in those days.

So, What’s the Point of Financial Success?

The point of all of this is simple: If you adopt an approach with your money where you only use it for things that are either truly necessary, deeply meaningful, or to secure a better future, you’re going to have a pretty good life. You’re going to be able to do everything you truly want to do in life without worry, though it may take time to get there.

The trick is really figuring out what’s really meaningful for you, and that’s actually surprisingly hard to do. It is very hard to separate the things that are meaningful from the things that give short-term bursts of pleasure, and it’s even harder to do that from the outside when you can only see how a person spends money and not how those choices really affect their life.

It’s much easier, in the moment, to just choose the option that gives the flash of happiness, but if you consistently choose that route, you’ll never build to anything deeper and more fulfilling. Step back and look at what actually lasts in your life and fill it with more of that and less of the momentary bursts of happiness.

You’ll be glad you did.

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