Mad Money

I’ve been tracking my expenses, which is  a great way to get a grip on how much I’m spending, what I’m spending it on, and what my savings rate is. Part of me is thinking that I might have gone overboard, as I’m saving 83% of my pre-tax income, which is higher than the 75% upper end recommended

I haven’t tallied my spending from New York yet (which should drive my averages up), but before I left I had gotten my variable spending down to almost $1200 (shaving another $100 off of what many people seem to think is an already low cost-of-living).

What I’m thinking is that I might start taking anything above 75% that I save and earmark it as “mad money”. If I want to travel with this, blow it at the mall, buy some big tech toy or whatever, that’s what its for, to be spent foolishly. I’ll try to avoid anything with a monthly commitment, but if I end up with something that does have a monthly commitment, I’ll just take it out of the mad money fund (and cancel it when/if it runs dry).

I’m torn about whether this makes sense or not, because with my current spending, I could be retired in 3 years or less. Capping my saving at 75% would definitely push this back (and lead to a potential retirement in 5 years or so, unless I could up my income a bit). My lifestyle would definitely improve though…

Definitely food for thought…