Saving money

[DebbieL]

Wow Anonymous Saver - that's awsome! Can I ask where you live? That sounds like an incredible amount that you are able to live on (35% of $38,000). Just to rent my apartment is about $900/month (and buying the same place here is ridiculously priced right now - it would cost me at least 2000 a month). I'm always so envious of people who live in the lower COL areas. I would relocate in a heartbeat if it weren't for the fact I can't bring myself to take my daughter away from her extended family (her grandparents, aunts, uncles and cousins have been a huge part of her life - and her father completely abandoned her so I feel she needs all the love she can get).

[anonymous_saver]

I have no debt, as I paid off my graduate school loans with my savings before they charged me any interest. I use flexible spending dollars for medical needs. I actually probably spend less than $11,400/year. I live in ______, so cost of living isn't necessarily really dirt cheap. I use holiday/gift money to buy myself clothes, weather gear (I do live in ______...) and other things like DVD's (although I still put 25% of that towards retirement as well!).

MONTHLY EXPENSES:
$340 (Share rent of $680 with partner.)
$25 (Half of land line phone and electricity bills.)
$150-$185 (Groceries.)
$100-$150 (Necessities, pet food, spending money.)
Total= $615 - $700
Total=This would mean I spend $7,380 - $8,400/year.

ADDITIONAL EXPENSES:
$200-$300/year (pet bills)
$250-350/year (gifts/holidays)
$100-$150/year (apartment necessities)
Total=$550-$800/year.

TOTAL OF EXPENSES= $7,930-$9,200/year.


To be honest, looking at these numbers... even if I am missing a few things, I couldn't see me spending more than $10,000/year. My expenses will obviously rise when I buy a house, but I'm happy the way I live now. I could spend less on food, but I am a strict vegetarian and eat lots of organic foods.

My partner makes about the same amount as me and saves similarly as well.

If I lived alone, that would only add about $400/month ($4,800/year) more to my expenses, which would increase my yearly expenses up to $12,730 - $14,000.

You can be happy without spending as much money! Trust me.

[F16]

I am currently saving about $900 monthly.
The most important rule about saving is "Pay yourself first".
Set up a savings account, and start to deposit small amounts of money,
$50 or $100. Do it regularly, say every 10 days, when you get unexpected money, get that money also to your savings.
That means that you must do some sacrificies, not dining out, no movies,
no nothing. That means that you have no life.
But that is the price I am paying for saving for my first home.
Decide what you want. You cannot get everything you want.
You have to prioritize. Divide your goals between needs and wants.
Start with needs, then focus on wants.

PS
The situation with 10% CD.
I am currently living in a country, where you can get 8-12% yield on CDs denominated in local currency, about 3-7% on dollar denominated CDs (yield depends on the amount invested) and about 4-6.40 % on euro-denominated CDs. That's it. All CDs are compounded monthly. Dividends are reinvested. All CDs have rollover instructions. I hope I answered all the question. For any additional information, please send a message to my email. Because the main topic here is how to save more.

[krayziebone33]

This may be a bit of an ignorant question (pardon me), but is there any reason why you don't calculate your net savings rate? That's actually what I was doing since I don't yet have a 401k with my employer. I'm still learning, for the most part.

[krayziebone33]

Originally Posted by disneysteve

Certainly, any money that you don't spend each month does count as savings, even if it ultimately gets spent. The money we are saving for college will ultimately get spent. The money we are saving for retirement will ultimately get spent.

I just look at the short-term money differently than the long-term money. Vacations get paid for out of current income, not out of savings. If I do pull some money out of our MMF for a trip, I just gradually replace it from current income over a few months, like restocking your EF if you spend some of it.

The advantage of living below your means is that you have money leftover each month that can build up for things like your EF, travel, entertainment, auto expenses, home repairs, etc.

To anyone who is new to the idea of saving, this is a very easy, straight-forward explanation. Thanks again, Disneysteve.

[krayziebone33]

Originally Posted by Aleta

Wow Lynda, what can anyone add to what you said. That was alot of information for those that are as you say piddling around. I think that we all come into the financial lightbulb moment when we are ready to see it. I personally never knew that debt was really a bad thing. It seemed like everyone I knew had debt of some kind. One night I was flipping through the channels and a financial program came on about getting out of debt. All I can say is that I couldn't pull away from the TV. My eyes were finally opened about debt and the power it had on your life and how it could hold you back. If I had been told that by someone earlier on or had seen it in a magazine, I wouldn't have paid any attention to it. I was not ready for it. So, thank you for your comments.

You're right. I'm glad the bulb went off for me now in my 20s. Finding this forum was one of the best things that has happened in my life too. I thank you all for the wealth of information that you all provide.

[KellyB]

My partner and I save about 25% of our gross income. We max out our 401ks and Roth IRAs each year, and put $400 per month into education funds. In addition, we save about $1000/month into a short term account to pay for car repairs/vacations/medical/house big ticket items, etc. I didn't count that in our savings percentage, but it is a very important part of the overall budget, and a huge psychological comfort to have all that plus the 3 months emergency fund saved. Things feel "tight" when I guess they don't have to be, but I'd rather have that and the savings than just blowing it all on frivolous "stuff". We're late 40s now, goal is to retire at 60 with $2M to get us through the next 30 years or so. Have to pay off the house and HELOC before retirement to make it all come together. Slow and steady with a plan will get us there!

[lovcom]

Originally Posted by F16

You know, that doesn't matter much.
What would you advise on saving?
How to free up more cash for investing?
What are your ideas?

Thanks in advance.

So who is offering the 10% annual rate for CD's? You claim this then you say "it don't matter much"....hmmm.....bumpy recovery, yea?

[Ima saver]

She explained that the was in another country!

[Snave]

My wife and I save about 33% of our income. Actually, about 3% is a match to my 401K. That is maxed out and then we save as much as possible after that. I am in sales, so I do get some bonuses and those mostly go to savings. We are in our early 30's and have been saving for a long time. I maxed my 401K out when I started out of college and also began investing outside the 401K as much as possible. I am thankful that we were able to do this because it is affording us the opportunity to now not feel the crunch that a lot of our friends are feeling that are our age.

[F16]

Strategies for Saving Money to Invest

The first strategy is to set up a regular savings program if you do not already have one.

Saving means putting money aside from present earnings to provide for a known or unexpected need in the future.

It is an integral part of family and personal financial planning.

Having a specific goal provides motivation to save. You probably will not get very far saving for the sake of saving.

[F16]

Needs versus Wants


Individuals and families save to satisfy their needs and wants.

Needs are items that are necessary for survival such as food, shelter, clothing, and medical care.

Wants are all the other things we think we need, but could do without. If we spend our money to

satisfy wants before we meet our needs, we will probably experience financial difficulties.

The pressure to acquire present wants is often greater than the willingness to provide for future needs or

even future wants.



Generally speaking, four major financial needs require planning for in the near and distant future:

1. Emergencies from the normal course of living such as car repairs or replacing a major appliance.

2. Loss of income as a result of death, divorce, disability, or unemployment.

3. Other family goals such as education for your children or special vacation.

4. Retirement

[F16]

A regular savings program is critical to a family's immediate well-being as well as their long-term security.

To adequately fund a savings program and begin an investment program, you must identify a specific amounts to save from each paycheck and honor that commitment.

Regular savings in small amounts is generally more effective than setting
aside larger sums at sporadic intervals.

As your salary increases, increase the amount you commit to savings.

[F16]

Pay Yourself First

Another important concept for your savings program is to "pay yourself first".

Make your "savings bill" a part of your spending plan, just like rent or mortgage payments, utility bills, clothing, car payments and upkeep, child care, or any other bill that you normally incur.

When you pay your other bills, pay your savings bill by depositing the money into a savings account or other financial instrument.

One painless way to accomplish this is payroll deduction if it is available.

Your employer deposits your savings directly from your paycheck into a credit union, bank account, or a money market fund for a higher interest rate.

If you never see the money, you won't miss it or be tempted to use it for something else before it reaches your savings account.

Small amounts of money can grow quickly over time.

[F16]

Save Bonus Money

Saving "bonus" money is also an easy strategy.
Bonus money is money earned or received that was not expected, such as tax refunds, gift money, overtime pay, rebates, and refunds.

Saving this money over time will boost your saving dollars and provide a larger balance on which to earn interest for the future.

[F16]

Save Coupon Money

Another strategy to boost your savings is to save coupon money.

Many people use coupons to reduce their grocery and personal care bills, but few think of actually saving the money they saved!

To make this strategy a reality, put aside the amount you "saved" by using coupons at the grocery store or drugstore. The amount saved is probably printed on each receipt.

Put the "savings" (the money you did not spend) in a special "coupon saving jar".

Every month or so add this cash to your savings account.

Saving just $2 a week for 52 weeks gives you a savings total of $104 which could be your "seed" money to open an investment account.

[F16]

Continue Installment Loan Repayments

Most of us have one or more installment loans that we are repaying.

Once you pay off an installment loan (assuming other loans are not overdue), continue to make "payments" to your savings account.

For example, when you pay off your car loan, continue writing a check for the same amount, but make the check payable to your savings account.

You were able to get along without this money for the duration of the car loan, so continue to live at the same level and save the "car payment".

This is a good way to save for the down payment on your next car when the old car needs to be replaced.

It also adds a substantial amount of money to your savings account on a regular basis.
This same strategy can be used when other household expenses end (e.g., childcare).

[F16]

Collect Loose Change

Another painless strategy is to collect loose change.

At the end of each day, empty out your pockets and wallet and put the change in a special container.
Every other week or once a month, deposit the change in your savings account. Don't cheat on yourself by "stealing" change that has been collected.
Take it all to the bank. Some people even go so far as to keep all their change. They only pay for cash purchases with bills and save all their coins.
Develop a plan that works for you and stick to it.

[F16]

Save Lunch Money

Saving lunch money is another way you and your family can save money.

Get up 10 minutes earlier and make your own lunch.

Save the money you would have spent on lunch.

If all family members do this, the family can realize a nice sum that they can add to their savings. Working together to reach family goal, such as a new TV or a summer vacation, can be an excellent family activity.

[RedHotLama]

Self
Income 70+k
401k 20%+3.2% match, 14+k per year just from me
Roth fully funded 5k (7% ish)
Employee Stock Purchase Program 8%, roughly 5600 a year

Wife
About the same, salary eligible for 401k is a little less and she doesn't get ESPP.

We are trying to save 3k a month as well.

so
29k for 401k
10k for Roth
5.6k for ESPP
36k for Down payment
= 80.6k savings a year

Housing costs are per month
1k rent
200 util
400 food
100 eating out
500 other
250 insurances
=2450 or 30k per year

Taxes and SS eat up about 25k + 8k =33k