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Secrets of Extreme Savers
Old 07-19-2010, 09:44 AM   #1
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Secrets of Extreme Savers

You could put my picture in there. I'd rank with the best of them. Decades of living way below your means pays off in spades.

Yet I don't feel deprived at all.

Secrets of extreme savers - Avoid debt (1) - Money Magazine

I would characterize myself as a pretty extreme saver but just an average investor.
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Old 07-19-2010, 10:13 AM   #2
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So what's your savings rate?
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Old 07-19-2010, 10:18 AM   #3
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So what's your savings rate?
I just looked at the first six months of 2010 in Quicken and it looks like our savings rates (deposits into savings accounts, investment accounts and HSA) was 44% of our after-tax income (and about 50% if employer matches are included). We could easily crank it up to over 60% by cutting back if we really wanted to, but I don't feel like totally depriving ourselves of stuff and activities that add significant pleasure in our lives.
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Old 07-19-2010, 10:24 AM   #4
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So what's your savings rate?
0.....
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Old 07-19-2010, 10:30 AM   #5
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Over the past 12 months, our savings rate was 73% of after tax income.

I consider myself a good saver and a lucky investor.
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Old 07-19-2010, 10:33 AM   #6
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0.....
Same here, but at one time I had a pretty high savings rate. All I can do now is control the outflow.
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Old 07-19-2010, 10:40 AM   #7
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You're so right, MB. At some point I think it is a lot easier to save money than to try to earn a lot more or to invest aggressively. This is a way of tackling the retirement dilemma from both ends - - building the nestegg, and minimizing the expenses to which one is accustomed.

When one is in their 50's like this couple, and presumably "on the home stretch" so to speak, taking the chances a 20-year-old might take at investing is not smart. When retirement is drawing near, many people move to a more conservative AA.

In a sense, I was lucky. My divorce left me with virtually nothing but debt at age 50 so I HAD to be a saver. I learned to live on less because I wanted to retire and the numbers told me that was what I needed to do. Then I got used to it and like you, did not feel deprived. I just felt determined.

Now, I can spend more. Delayed gratification is the best!
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Old 07-19-2010, 10:41 AM   #8
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I just looked at the first six months of 2010 in Quicken and it looks like our savings rates (deposits into savings accounts, investment accounts and HSA) was 44% of our after-tax income (and about 50% if employer matches are included). We could easily crank it up to over 60% by cutting back if we really wanted to, but I don't feel like totally depriving ourselves of stuff and activities that add significant pleasure in our lives.
The last few years of w*rk, savings rate was ~50%. Now it's quite low. I am kinda sorta working on rebuilding the slush fund after the 2007 car purchase.
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Old 07-19-2010, 11:01 AM   #9
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You could put my picture in there. I'd rank with the best of them. Decades of living way below your means pays off in spades.

Yet I don't feel deprived at all.

I would characterize myself as a pretty extreme saver but just an average investor.
I guess we would be in the extreme savers category too (gosh I feel like I should win a prize! ).

We save 150% of our after tax income. Yes, the rate is higher than 100% because much of our savings come out pre-tax.

Our savings rate as a percent of gross income is around 65%.

Taxes (mostly payroll taxes) are conservatively estimated at 11% of gross and our spending is around 24% of gross.

We buy new stuff, go on vacations, own a decent single family house, have two cars and two kids. We think we live fairly normally but we are obviously freaks when it comes to spending up to or in excess of our means. I guess you could say we are "spending" our money on buying ER.
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Old 07-19-2010, 11:05 AM   #10
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All I can do now is control the outflow.
I use a sponge.
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Old 07-19-2010, 11:06 AM   #11
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When I worked I usually saved about 50-60% of my after tax income from my job. That is the main reason I was able to retire at age 53 since my investment returns were never that high...the highest annual investment return I ever had was about 13%. I think that qualifies me as an extreme saver back when I was working.
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Old 07-19-2010, 12:09 PM   #12
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We "save" about 45% of our net income, but some of that goes into the "big ticket items" pot. Only about 35% goes into the retirement fund. I'd like to do better, but we have two kids in college right now, so that's 30K/year pushed to one side for now.
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Old 07-19-2010, 12:11 PM   #13
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I read that article and noticed a few military officers and a few high income earners (well, what I consider high income).

I don't think I save much of my take home. I do put 18% into my 401K, but that's pretax.

I don't know how you folks manage to save so much. Maybe its a regional thing? I live in the northeast and things are expensive! Housing, transportation, utilities, daycare, gas, insurance, etc.
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Old 07-19-2010, 12:24 PM   #14
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Quicken says that my total savings divided by my total income is about 46.5%, so I guess I save about that percentage of my before-tax income. If I subtract taxes from income, the percentage turns out to be about 56.1%.

Meh.

@Bimmerbill, it helps to have a reasonably high income and live in fly-over country.

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Old 07-19-2010, 12:30 PM   #15
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I don't know how you folks manage to save so much. Maybe its a regional thing? I live in the northeast and things are expensive! Housing, transportation, utilities, daycare, gas, insurance, etc.
No debt, no mortgage, low cost of living where I am. It helps that I had a Silicon Valley salary transferred to Texas a few years ago; the difference in cost of living probably made it like a 40-50% raise.
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Old 07-19-2010, 12:31 PM   #16
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I guess we would be in the extreme savers category too (gosh I feel like I should win a prize! ).
here's your prize (you choose which one you like):



actually the real prize is freedom from financial stress and being able to live the life that you choose.
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Old 07-19-2010, 12:41 PM   #17
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actually the real prize is freedom from financial stress and being able to live the life that you choose.
That is prize enough.

We are already at the point where we are free from financial stress (as to our own finances anyway). Even at the worst point in the 2008-2009 market crash, when I told DW that we lost almost $200,000 in our investment accounts, neither one of us were too stressed out, since we knew we still had many years of expenses "in the bank" and we can easily live comfortably on unemployment if we both became unemployed simultaneously. Life is good!
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Old 07-19-2010, 12:42 PM   #18
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The ER plan for me is mostly driven by a high savings rate. 61% pre-tax (gross), or about 81.5% of post-tax. For simplicity, I count the year or two of paying off school tuition debt as savings. Investment returns will mostly only matter during ER (especially the 10 years right after ER starts, but I could work part-time fairly easily if the market is looking like the Great Depression II around then).
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Old 07-19-2010, 01:00 PM   #19
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I don't know how you folks manage to save so much. Maybe its a regional thing? I live in the northeast and things are expensive! Housing, transportation, utilities, daycare, gas, insurance, etc.
It helps to receive a California-indexed compensation while living in the deep south.
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Old 07-19-2010, 01:29 PM   #20
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Yeah, I wished I was getting paid the COL adjustment for Boston and living in the south, but I gotta live in the Boston area! On the plus side, I can retire and take my Boston based pension with me to lower cost of living areas.

Tho, I am doing fine on my salary. If I had a spouse that was making good money we could bank that.

How many of you saving 50% are single earners?
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