Saving large amounts of money.

[AJ444]

My wife and I are closing in on a million at 36, when we got together when I was 29 we had a net worth of zero counting two underwater homes.

Keys to success:

1. A spouse that is financially in lockstep with myself We both previously were married to spenders. My wife did a 6 month civilian tour in Afghanistan to get the cash to sell her house.

2. Income has grown 75% in 7 years with promotions and job hopping.

3. Lived incredibly frugal for 3 years until all debts were paid. This included driving older cars, shopping at Aldi and limiting nights out.

4. After debt was paid off we limited lifestyle creep. We keep our budget equal to one of our salaries after 401k max and the rest we save. If one of us loses our jobs nothing in the budget needs adjusted. This also enables us to have a lot of fun and take nice vacations. We struggled with this at first as we got used to extreme saver mode but now have struck a nice medium with the spend an income rule.

[Captain Save]

This was our formula.

Step 1. Went to college and studied something in the healthcare field(Pharmacy for me, Optometry for my wife).

Step 2. Even though our income went from student loans(negative) to positive 230k+, we still lived like a college student to pay off student loans. No new cars, no lavish vacations, no crazy dinners. Fast food, low rent, couponing, and drove our high school beater.

Step 3. Continue with step 2 after loan payoff. Pay off mortgage or any other debt that has interest while maxing out 401k.

Step 4. Continue with step 2, diversifying into taxable index funds and crowdfunding investments.

Step 5. Continue with step 2. We now make 380k/year...bought used cars with cash, no lavish vacations, no crazy dinners, no gym memberships, no star bucks coffee, no alcohol outside of our house. In fact we don't even have Netflix memberships, just Amazon prime. Yearly expense is ~40k or so and 25% of that is property tax. We eat out once or twice monthly. Our bill never surpassed 50 dollars except once at Disney. I change my cell phone out every two years. I spend 200 dollars on a Chinese android phone while selling my old one for 50% of what I spend on the new one. We go on one to two vacations/year. Mostly 7 night cruises that cost 1300 for two(inside cabin). We still use coupons, and shop for the lowest possible price on anything. We have no problem going to low income grocery stores and the Dollar Tree.

Result: NW 1.4million @ 34 years old.

As long as you guys do enjoy living this way . .go for it.. I would not cheap out on the food though, it's probably a good idea to invest in a healthy lifestyle .. cause that might cost you later... this is coming from someone paying for bad eating habits at 33.

[clatoden99]

More than a habit, it was my strategy:

I pay myself first. I programmed my bank account to automatically transfer $X to my investment account after each salary clears on my account.
I buy assets on credit and I try to aggressively pay it back. This forces me to save as much as possible on daily routines. See my plan for the next 10 years here: Planning the next 6/10 years.
As for habits, I’ve developed some. I’d actually call them methods:

I withdraw all cash I will need for the month, and $0 go on my cards.
I track my expenses. In particular, I used to write ALL my expenses down. After some point I was disciplined that I don’t do that nomore. I can go nuts over 5 bucks sometimes.
I shop on a budget. I entitle myself to spend $x at the supermarket. In order to accomplish my goal, I usually write down what I need before I go out for shopping.
I purchase on sale. I track specific sales so that I can buy the products I want to at large discounts.
I take advantage of the intrinsic value of my money, by buying in bulk.

[feh]

There are many roads to Dublin. We took the safe route:

1. obtain a college degree
2. be fortunate that what you love to do also pays well
3. buy less house than you can afford
4. buy less car than you can afford
5. live frugally; don't let increases in income change your lifestyle
6. invest all that money you're not spending

[rennigade]

Tip 1. Go to a third world country and visit a family. See how they live..stay with them..live their lives..humble yourself.

I was listening to a podcast this morning about a former cia guy talking about how things are playing out today. He made an interesting point that everyone should have to volunteer for 2 years when they're 18. Kind of like the draft but it doesnt necessarily have to be in a conflict zone. Going to any third world country and working there for 2 years. How different everyones attitude would be about our country after that.

[Singuy]

As long as you guys do enjoy living this way . .go for it.. I would not cheap out on the food though, it's probably a good idea to invest in a healthy lifestyle .. cause that might cost you later... this is coming from someone paying for bad eating habits at 33.

We eat lots of veggies and my wife can't stand grease which gives her stomach problems. We buy mainly fruits and veggies and cook at home (well my parents are doing a lot of the cooking nowadays). I learned all the Asian dishes I like from restaurants so I replicate those at home. We just don't buy them from Whole Food or buy organic unless if it's on sale. You'll be amazed at the amount of fruits and veggie you can buy from low income grocery stores. Sometimes I'm shock myself to see 1990 prices in 2017.

[StormRichards]

You'll be amazed at the amount of fruits and veggie you can buy from low income grocery stores. Sometimes I'm shock myself to see 1990 prices in 2017.

I am not asking this to start any conflict, but what exactly is a low income grocery store?

[Singuy]

I am not asking this to start any conflict, but what exactly is a low income grocery store?

In FL we have two tiers

High End:
Whole Food
Fresh Market
Farmer's Market on weekends
Publix
Target
Trader Joes

Low End:
Save-A-Lot
Bravo
Aldi
Hispanic local stores usually with metal bars on their windows.

Low End stores are usually located in poorer demographic locations.

[StormRichards]

In FL we have two tiers

High End:
Whole Food
Fresh Market
Farmer's Market on weekends
Publix
Target
Trader Joes

Low End:
Save-A-Lot
Bravo
Aldi
Hispanic local stores usually with metal bars on their windows.

Low End stores are usually located in poorer demographic locations.

I personally never viewed grocery stores in this manner. I would classify places like Whole Foods and Fresh Market more of a health conscious grocery store. No doubt these stores are more prevalent in higher income neighborhoods. However, I wouldn't classify the other stores as low income grocery stores. I see Aldi stores all over the place, including several within minutes of my house. By no means are we in the best neighborhood in our area, but we are far from a low income neighborhood.

[Singuy]

I personally never viewed grocery stores in this manner. I would classify places like Whole Foods and Fresh Market more of a health conscious grocery store. No doubt these stores are more prevalent in higher income neighborhoods. However, I wouldn't classify the other stores as low income grocery stores. I see Aldi stores all over the place, including several within minutes of my house. By no means are we in the best neighborhood in our area, but we are far from a low income neighborhood.

I don't see any Aldi next to high income areas. I do see them a lot in median income areas, not always in the ghetto or anything.

Aldi is probably the best of the bunch with the best pricing. But I know most affluent people don't want to deal with quarter shopping carts, no grocery bags, and no one bringing their groceries out to their cars. Those are the type of service you get with higher end places which also comes with a much higher end price. I don't believe Whole Food's lettuce is somehow magically better than Aldi's (many studies have shown that organic doesn't give you any magical health). Although some can make a case that Aldi's fresh produce goes bad quicker (hit or miss for me). To some, shopping at Whole Food is more for the "I made it" status than anything. Sometimes that brand new BMW you just bought doesn't look as nice parked next to someone's 20 year old beater. Looks much nicer next to the new Range Rover at Whole Food.

[StormRichards]

I don't see any Aldi next to high income areas. I do see them a lot in median income areas, not always in the ghetto or anything.

Aldi is probably the best of the bunch with the best pricing. But I know most affluent people don't want to deal with quarter shopping carts, no grocery bags, and no one bringing their groceries out to their cars. Those are the type of service you get with higher end places which also comes with a much higher end price. I don't believe Whole Food's lettuce is somehow magically better than Aldi's (many studies have shown that organic doesn't give you any magical health). Although some can make a case that Aldi's fresh produce goes bad quicker (hit or miss for me). To some, shopping at Whole Food is more for the "I made it" status than anything. Sometimes that brand new BMW you just bought doesn't look as nice parked next to someone's 20 year old beater. Looks much nicer next to the new Range Rover at Whole Food.

I suspect there are plenty of uppity people that would never be seen at an Aldi. However, my daughter plays soccer with some girls that live in some of the nicest neighborhoods in our area. I talk with most of the parents on the team, and I know for certain that some of those very wealthy moms shop at Aldi. There is one that I suspect is too much of a snob to shop there, but I don't know that because I avoid talking to her at all cost.

I think there are a lot of factors that come in to play as to where wealthy people shop.

[Singuy]

I suspect there are plenty of uppity people that would never be seen at an Aldi. However, my daughter plays soccer with some girls that live in some of the nicest neighborhoods in our area. I talk with most of the parents on the team, and I know for certain that some of those very wealthy moms shop at Aldi. There is one that I suspect is too much of a snob to shop there, but I don't know that because I avoid talking to her at all cost.

I think there are a lot of factors that come in to play as to where wealthy people shop.

Wouldn't be surprised since wealthy people are wealthy for a reason. I suspect those who became wealthy through hard work will shop at Aldi all day everyday.

It's probably the trophy wives with money fallen onto their laps that ends up being the snobs since they have no idea what is the value of a dollar.


Too bad there are too many fakes out there. You can spend every dime you have trying to pretend to look rich. You can rent your clothes, rent your car, and hang out with wealthy people all day every day. Too bad this special club you think you are in just cost you your retirement and you are one layoff away from bankruptcy.

[butler]

Never spend on something just because others in your social circle are doing it. I think people ask themselves "can I afford it" before spending instead of asking "do I need it". That is a big behavior change, it took us years to get into that habit. Just because we can afford something doesn't mean we should buy it.


Almost everyone in my friend circle has at least one luxury car, we are extremely happy with our two Chevys and if someone judges us by what we drive then so be it.

Similarly, I see almost 70% of the crowd in my office even some of the analysts under me eating out almost every day. On the other hand my wife and I almost always bring food from home. I cannot believe people spend $75-$100 a week on weekday lunch.

My third pet peeve is people bragging about latest and greatest technology. We always buy gadgets which are at least one generation old. Why do we need to have a new cell phone every year (or even every two years)? Why do we need to have absolutely the latest model? I see people going all crazy on 4k displays and 3d printers and latest macbooks. May be this is Silicon Valley/Bay Area thing but to me its consumerism at its worse.

And last, I am still surprised that people don't put enough (or anything at all) in their 401ks. Most of the start-ups and smaller/mid-sized companies in Valley don't match at all. But I still absolutely can't justify not putting money in 401ks.

[FLA]

one of my proudest mom moments was when my son got a job in HS at a senior complex. I had tried to instill good financial habits in both my kids but felt like their eyes glazed over when I said as soon as you get your first job, put money in your 401k. I meant their first job after college. DS came home from his first week at the senior center job and said he had signed up for the 403b. I can't believe he had actually heard me!

I agree, I saw so many people at work who put nothing in, not even enough to get the company match. And they were younger employees so they had never gotten any of the defined benefit pension plan. The 403b was it. Crazy

[disneysteve]

one of my proudest mom moments was when my son got a job in HS at a senior complex. I had tried to instill good financial habits in both my kids but felt like their eyes glazed over when I said as soon as you get your first job, put money in your 401k. I meant their first job after college. DS came home from his first week at the senior center job and said he had signed up for the 403b. I can't believe he had actually heard me!

I agree, I saw so many people at work who put nothing in, not even enough to get the company match. And they were younger employees so they had never gotten any of the defined benefit pension plan. The 403b was it. Crazy

Our daughter opened her Roth when she was 17. She funded it with her babysitting money and summer job. She hasn't contributed since starting college but just the money she put in during high school will grow nicely over the next 40 years.