We saved 48% of our income last year.
What that means, specifically, is that 48% of our net base salary went into our retirement accounts. Net = after taxes and any other non-retirement withholdings. Base salary = the amount in the employment contract.
This does not include money that went toward paying down debt. For example, I finally managed to pay off my student loan.
How is this possible?
I’m going to write a somewhat abstract post because I don’t want to just baldly state our actual income. Some people do that, but *shrug* I’m not going to. The point is to focus on STRATEGY for those who will find it helpful.
Posting actual numbers, Money Diary style, tends to draw doubters and naysayers. That’s not my audience. Big hair, don’t care.
How is it possible to save half your income?
Two ways: offense and defense.
My husband taught me this. I’m an extremely hardcore full austerity frugalite. I play D. I can casually do a Buy Nothing Month and barely notice, because I’ll just spend the time reading library books and journaling. I’ll cheerfully serve up lentil soup, darn my socks for a third time, and dilute my laundry detergent to 80%. The trouble with this scrimping method is that you can only get your expenses down to zero dollars and zero cents. There’s a finite limit to how much you can save by playing defense.
I married a strategic thinker. He plays O. There is an infinite amount of money that someone can earn. There is no top level to how much you can escalate your income. In his mind, it’s a lot easier to find a way to EARN ten thousand dollars than it is to SAVE ten thousand dollars. That’s why he quit his job as a logger to go back to school and become an aerospace engineer.
We’ve learned to respect each other’s mutual styles and use them to work together. He appreciates my sincere desire to cooperate toward financial independence and stay on plan. I appreciate his ludicrous ability to read textbooks for fun, design things that go to space, and accrue patents. We take turns suggesting lifestyle pivots and talking each other through the pitch.
That’s how we’ve wound up in this bizarre, outlier situation of banking half our income.
Step One: Cooperate and tell the truth about your life. We have a breakfast meeting every single week where we talk about our finances, among other things. We’re able to do this without blame and recrimination because we share the goals of early retirement and excellent vacations. We’re allies. Wealthy celebrities go bankrupt and get expensively divorced all the time because they don’t know how to work as a team, and this is why cooperation comes first.
Step Two: Focus on career direction and earning potential. We’ve relocated for jobs four times in our ten-year marriage. We don’t have a mortgage but we both work at our dream job. The goals here should be, how do we do the most fascinating possible thing all day while mentoring younger people and also making it rain money?
Step Three: Lifestyle design. The tricky part.
The most valuable parts of anyone’s lifestyle are usually outside the cash dimension. Love and friendship. Self-expression. Connection to the natural world. Developing a personal philosophy. Sleep quality, cooking skills, having a home filled with laughter and conversation. Put a price on any of that.
We build our feeling of home and being entertained around the intangibles, and that’s what makes it relatively easy for us to chop expenses.
Okay, seriously though, how do we save half our income?
We live in a studio apartment close enough for my husband to take the bus to work. I work at home.
We got rid of our car two years ago because all they do is eat money 90% of the time.
We cook at home, only going out to eat maybe once a week because we’re really too busy. We’ve only had pizza delivery ONCE in our entire thirteen-year relationship, and it wasn’t very good either.
We don’t drink alcohol or indulge in any other recreational substances such as pay cable.
We don’t “shop” as an activity, and that’s no sacrifice, because we both hate wandering around in stores. Also, we live in a 612-square-foot studio, so where would we put anything?
Our default weekday is to work all day, go to kickboxing class together, bike home, shower, eat dinner, hang out with our pets for a while, and go to bed.
Base salary. See above. We’ve prioritized earnings over our own lifestyle throughout our marriage. That has meant moving away from family and friends over and over again. It has also meant getting rid of at least 80% of our possessions and living in a quarter of the space we had as newlyweds, because we’re nomads now.
Overtime earnings. Many jobs don’t have this as an option, and not everyone is in a position to take advantage of it. My family’s perspective is that working overtime helps take the pressure off of all the colleagues with young families or other caretaking responsibilities. Take one for the team, ka-CHING.
Bonuses. My husband has this terrible habit of winning awards at work. Unfortunately he might also wind up making money off his patents at some point, too. It’s dreadful.
Non-cash perquisites. One feature of frequent business travel is that it racks up a lot of points and miles. Another is that a lot of passthrough expenses go through our credit cards, building up yet more points and miles. We typically don’t have to “pay” for plane tickets, hotel rooms, or rental cars anymore.
Side hustle money. Everything we make on the side goes toward things like electronics upgrades, vacation, or vet bills. It used to go toward debt payments. There’s something highly motivating about thinking, “I’m going to earn myself a brand new Mac” or “this will buy our dog another year” as opposed to abstract numerals with a dollar sign in front.
The treats: Part of why our lifestyle works for us is that we’re both motivated by the same major goals, one of which is financial independence and the other of which is travel. We splurge on vacation, as well as a few other things: Our phones, robotics textbooks, spoiling our pets, hanging out at Starbucks, and going to our boutique gym. Since we save half our income, we feel entitled to indulge ourselves in the ways that matter to us, as opposed to things that don’t, such as owning two vehicles, eating snacks and drive-thru food, watching cable TV, or living in an average-size house.
We moved into a studio apartment so we could get a year ahead on our retirement savings, instead of a year behind. (Scrambling to pay 2015’s IRA contribution in spring of 2016, whereas now we’re already saving for 2020 in 2019). It worked! Saving crazy amounts of money has been fun for us and it’s helped us to build a stronger marriage. The stress of debt is so, so much harder than the stress of sharing a tiny living space and basically living like college students.
I've been working with chronic disorganization, squalor, and hoarding for over 20 years. I'm also a marathon runner who was diagnosed with fibromyalgia and thyroid disease 17 years ago.
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