I RECENTLY READ about a trendy way to lose weight: intermittent fasting. Supposedly there are also health benefits. That got me thinking. I’ve been roundly criticized for bashing the financial independence/retire early movement, otherwise known as FIRE, and for arguing that average Americans spend unnecessarily on all kinds of stuff, thus hampering their long-term financial security. My point of view hasn’t changed.
But I’ve found room for compromise: Think of it as periodic financial fasting. I maintain that this strategy can work at virtually all income levels. Alas, it’ll still be an uphill battle to make converts. Surveys show most people would rather cut back spending in retirement than spend less today. No doubt that sounds easy—until you’re retired. At the same time, however, 87% of Americans appear willing to make tradeoffs to catch up on retirement savings.
What’s my strategy? Start by tracking every penny you spend over a 30- to 60-day period. Once you have your list, check off each item that isn’t essential spending—and be honest. This exercise will also help you figure out if living paycheck to paycheck is more about your spending than how much you earn. Here’s an idea of what counts as essential spending: food, housing, clothing, transportation, utilities and health care, including those insurance premiums. Everything else is discretionary.
That said, there’s also a great deal of wiggle-room within the essential category. A case of soda at the grocery store or leasing a luxury car are questionable for the essential category. Streaming services and premium cable channels are not utilities.
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Source: Going Without – HumbleDollar