Good goal-making exercise to encourage saving

[Rbuckyfuller]

As I work toward FI, I find that something that helps me stick to my goals is to imagine myself retiring at the end of the year, and then figuring out what I would have to do to make that happen.  So I think to myself:

"If I could learn to live on ____, then I could retire at the end of the year."

This is nice because it requires a (somewhat unrealistic) goal for both spending and for your savings.   Right now I am at -- "If I could learn to live on $20,000, I could retire at the end of the year."

--- I haven't learned to live on $20,000, but I am working my way there!

[Richard3]

That's a nice way to flip it and to put the focus on WHY you're reducing spending (to reduce the magic number by 33x as much)

[meadow lark]

Love it!  If I could live on $18,100 I'd be there!

[Silvie]

For me, visualization helps. I imagine myself doing what I love to do most, without having to worry about money. Apparently, the mind can't understand the difference between reality and imagination, so if you visualize what you want to achieve, your mind thinks it's real and starts working on realizing it. That doesn't mean you don't have to take action, but it's a first step. If you think it's real, you can do it! :)

[Cromacster]

Just a question that has probably been answered before.....

Do people include mortgage payments when calculating the amount they need to live on?  What about the taxes and insurance?  Or should I just include the interest?

[desk_jockey]

With a search of the forums, you’ll get several peoples take on this question.   As a minimum you should consider the interest, tax and insurance as a cost, as this is money that is spent and cannot be retrieved.   Many people here in the remove the principle repayment portion from their expenses list, as it is form of savings.
 
For simplicity I chose to count my whole mortgage related payment as spending.   That way I have another factor of safety in 13 or so years when the mortgage payment disappears. 

[steveo]

I include my whole mortgage payment within my saving rate however I do not include my home equity as an asset.

My thinking is that I need someplace to live and once the mortgage is paid off my on-going expenses for life are reduced. I don't include it as an asset as it doesn't produce any income.

To me any taxes, insurance and up-keep are expenses that must be catered for in an on-going capacity.