You can save more (and not have it hurt)

I’m a big fan of Ramit Sethi. (He’s the “I will teach you to be rich” guy.)

I bought his Advanced Personal Finance course, and I don’t buy personal finance courses often. (I still do plan on reviewing that product here.)

Like most people with a brand, he has certain catch phrases that come up repeatedly. One of the ones that I see coming up often is this one:

“There’s a limit to how much you can cut. But no limit to how much you can earn.”

– Ramit Sethi

It feels like this quote was designed single handedly for wallpapers by Quotefancy, doesn’t it?

Now, let me be the first to say that, by the standards of objective truth, this statement is fact.

But that doesn’t mean it’s always helpful.

I’m going to tackle the first part of the phrase in this post. (I may tackle the second part in another one.)

And it begins with a Greyhound bus trip.

There’s a limit

Years ago, I was on a cross-country Greyhound bus trip with my girlfriend at the time. We were on our way to San Francisco, where we had no plans and no place to stay. And little money.

We linked up with a guy on the bus who called himself “Kentucky Dave, The World’s Greatest Songwriter” (and yes, it was always the whole thing). And he told us that he knew about a place where we could stay in San Francisco almost for free. “I’ve been there lots of times, it’s a fine place.“

San Francisco is a ridiculous place to stay in today, but back then for me it was nearly impossible. We couldn’t afford anything. And since we were traveling in summer, the hostels were sold out. (Darn you, Green Tortoise.)

So we looked into the address that Kentucky Dave, The World’s Greatest Songwriter had given us, and figured we had nothing to lose.

It was an austere place. The person who checked us in told us that there were no beds available, but there were cots and floor mats we could use. And lockers.

What kind of place was this?

We soon learned: it was a homeless shelter.

We couldn’t stay there. We were just young travelers seeing the city. We couldn’t take a cot away from someone who had no other choice.

But did we have another choice? The hotels we found were all way out of our range. We would have spent all of our money on a single hotel night, and then what would we have done?

We looked around for some other alternatives, but finding none, and with evening upon us, we went to the bus station, found a corner, laid out some of our stuff, and slept there.

My point here, is that this was the point where we realized we had reached “peak cut”. We had been trying to scrimp and save so much while we traveled, from sleeping in the car, to free camping, and each time getting better and better at it.

But here, we had gone too far. Our desire for savings had finally gotten to the point that we were no longer enjoying our journey. We had gone too far.

By this measure, I agree with Ramit’s phrase, “there is a limit to how much you can cut.” Because eventually it hurts.

But it’s not always that bad

But have you really gotten to that point?

Because limit or no, let’s face it, you could probably save more.

We’re all a little histrionic, and it’s easy to say that “I couldn’t save another dollar“. But that’s based on a feeling, and not a fact. It feels like you can’t, and that’s why you don’t.

But I want to challenge you. Could you really not find $20, $50, or even $100 in your monthly budget to put away toward either your debt, or savings? What if you were to try it for a month and see?

$100 bucks a month over a sustained period of time can make a huge difference in your financial position. I’m not talking about selling your house and living on the street. I’m just talking about reducing the unnecessary spending that you wouldn’t even notice if it wasn’t there.

What you notice and what you don’t

I want you to spend money on what makes you happy. But some spending is unintentional, and it doesn’t even bring you happiness, because you don’t notice it.

When you spend money that you wouldn’t otherwise notice, you lose the benefits of spending. You lose the satisfaction, the pleasure. Now that’s a waste.

How do you spend money and not notice it? When you haven’t made a plan for it. Money when not attended to tends to just go. And then, at the end of the month, you can wonder where it all went.

That’s why I recommend that everyone make a monthly budget with categories. So you give yourself permission to spend up to that point. And don’t feel bad!

You can focus on making more money instead of having to save more if you want, but if you believe that more money is the solution, I have unfortunate news that it rarely is.

I’m doing this too

I’m in the same boat too. I’m planning on taking the same challenge, and starting to throw some extra money at my mortgage starting in the next month or two, so I can defeat my final debt boss even sooner. My bet is that I won’t notice the extra money. But we shall see.

Save more, don’t notice. Now that’s pretty cool.

Sure, there is a limit to what you can cut. But I don’t think you’re there. Why don’t you try and see?