The Case Against “Moderation”

August 01, 2013

In this blog post, Michael makes the argument for a moderate middle ground between a couple he knows that are living well beyond their means and another couple he read about in this article that managed to pay off their mortgage in less than 5  years. While paying off your mortgage early may seem like a great thing, Michael worries that the couple may look back on this time of their lives with regret at all the things they didn’t do with that money. I don’t and here’s why.

I know a lot of people who regret not saving more earlier but no one whose big regret is not spending more money unless maybe if we’re talking about certain experiences. But in this case, the couple pointed out that the children were too young to really enjoy anything they could spend money on and they still spent “freely” on food and “little luxuries.” So what were the big sacrifices they made? Here are the specific ones they mention in the article:

Shopping at Goodwill.

Applying any extra money like an unexpected tax refund or overtime pay at work to the mortgage. (You can use this calculator to see the effects of extra payments on your mortgage.)

Not purchasing a new car unless one of their vehicles died. (Here are some tips to help you make your car last as long as possible.)

Cutting out their separate discretionary spending accounts for impulse buying.

Lowering their cable, cell phone, and car insurance bills. (Here is how I do it.)

Eliminating their landline phone and home security service.

Looking for ways to cut utility costs.

While some of these steps may have been hard to adjust to at first, consider some of the benefits:

If one of them loses their job, it won’t be as difficult and stressful to pay the bills.

It will be easier to build up considerable savings to deal with other types of emergencies as well.

They can retire earlier or with more income.

By paying off the mortgage, they’ll have more income to spend when their children will benefit from it more.

They can save more to relieve their children from the burden of student loans.

For all these reasons, another of my colleagues suggests living on half of your income. Sound impossible? Think of it this way. Unless you’re living in poverty, there are plenty of people as happy or even happier than you who are living on considerably less income than you. If they can do it, so can you.

Like starting a new diet or exercise regimen, the hardest part is starting it and sticking to it in the beginning. But once you do, you’ll get used to it and it won’t be so difficult. It may even start feeling quite moderate.