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Why super saving isn’t always the answer

Early on in her career, Merz decided to jump into FIRE — the financial independence, retire early movement that gained popularity between 2014 to 2018.

The goal was to save as much money as possible in order to retire early and enjoy her savings later on. But with a fairly modest salary, starting at $65,000 a year, and saving as much as 75% of her income, Merz ended up severely cutting into her present quality of life.

For example, despite spending $3,800 on a sewing machine — since quilting is very important to her — she didn’t get to enjoy her hobbies or living space because of her housing situation.

Merz purchased a single-family home that had been converted into a triplex and lived in the studio unit, while renting out the other two spaces.

Her monthly spend came to just $700 for the mortgage, taxes and other expenses, but she brought in more than $1,000 a month from just her rental income.

However, the studio unit was so small, she didn’t have any space to enjoy her hobbies — and she said she didn’t quilt or get her sewing machine out for the entire 18 months she lived in the home.

“I was making money on it, but I was miserable and so unhappy and so stressed out the entire time,” she admitted. “I was like, ‘This is not worth it. This will never be worth it to me.’”

Merz didn’t have much luck in the dating pool, either, with potential partners reluctant to match her lifestyle or balking at her opinions on their spending habits.

“That was one disadvantage — being single, and not being a crazy high earner, and not being able to bring in that much money,” she said. “It wasn't realistic.”

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Merz is prioritizing her mental health and making connections now

Merz was 27 years old when she realized her lifestyle was unsustainable.

“Sure, my bank account balances were flourishing, but other areas of my life were starting to suffer… so I backed off,” she said. “What had served me at 24 was not serving me at 27 or 28 or 30.”

Merz decided she wasn’t willing to sacrifice on housing, and now looks at living in nicer places that are close to work or near a park or something else she enjoys.

One of the other big downsides to extreme budgeting was what it cost Merz in her career.

Merz explained that, when she was 25, she wasn’t planning on working that long, so she didn’t care too much about skipping out on happy hours or lunch with coworkers.

But networking comes into play when you’re up for a promotion or looking for a new job or a raise, and this is something she prioritizes now, especially as she no longer plans to retire early.

She’s decided to transition into Coast FIRE, and is confident she’ll have enough savings for when she does retire — even if that isn’t as soon as she’d originally planned.

Still, Merz said she doesn’t regret her choices, since they allowed her to save so much money in a short span of time.

“It's allowed me to take some more chances with my career, trying to find the right employer and the right niche for me,” she said. “It's okay if I have to move or if I take a little bit of [a] hit on income because I have these savings and I have a buffer, so I'm not stuck.”

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About the Author

Serah Louis

Serah Louis

Reporter

Serah Louis is a reporter with Moneywise.com. She enjoys tackling topical personal finance issues for young people and women and covering the latest in financial news.

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