Poll

What percentage of your PRE-tax (gross income) do you save? - for retirement or long term (> 5 years) purposes

10-14% pretax
15-19% pretax
20-24% pretax
25-29% pretax
30-34% pretax
35-39% pretax
40-44% pretax
45-49% pretax
50-54% pretax
55-59% pretax
60% + of your pretax income is saved
Something else?  Give us some details

Author Topic: % of PRE-tax income saved (Gross Income Saved)  (Read 4731 times)

reneeh63

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% of PRE-tax income saved (Gross Income Saved)
« on: December 26, 2017, 08:27:30 AM »
So PRE-tax to make it easy to calculate - for example, if all your gross income was $100,000 and you save $25,000 in long term savings, that is obviously 25%.  The key is that it is GROSS (so everyone is counting from the same base), and it doesn't count if you're just saving for next year's vacation or to put a new roof on your house in a couple years.  It has to be for retirement specifically, your kids' educations, or in general for more than 5 years down the road to count.

2Birds1Stone

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #1 on: December 26, 2017, 09:59:06 AM »
~50% of gross or 60-70% of net.

RetirementInvestingToday

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #2 on: December 26, 2017, 10:16:31 AM »
Over the last 5 years I've managed an average:
- 51% gross
- 83% net

sol

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #3 on: December 26, 2017, 10:37:44 AM »
I wish it were so simple.

How do you account employer matching contributions to your 401k?  Because to me they look like savings, but most people don't think to include them as part of their income.  They are literally both.

And if those count, then what about subsidized health insurance?  My employer spends something like $14k/year to insure my family.  I never see it, but I do benefit from my employer spending that money on my behalf.  I wouldn't normally count it as income, but if I had a different job I would need to include it in my spending, and it would thus come out of my income.

What about dividends?  I've been saving long enough that I earn tens of thousands of dollars per year in dividends, but they're most (not entirely) inside of retirement accounts so even though I am making money, they do not count as taxable income yet.  But some of them will be taxed as income in future years, after being earned this year.  Some won't.  Some are taxed as income this year, in my taxable account, even if they are automatically re-invested to buy more shares.  Are those income, or spending, or neither?

I own two rental houses.  Do my gross rents count as income?  Because most of that goes to paying my mortgages (some of which I retain as equity), and the rest is offset by depreciation.  My schedule E only shows a few hundred dollars of "income" per year on something like $48k of gross rents I collect. 

And then the houses appreciate tens of thousands of dollars per year, in paper income I can't utilize without a refi.  My net worth apparently goes up, but I don't consider capital appreciation as "income" or "savings" even though it is kind of both.  And what about when the market tanks?

I love the idea of carefully counting up your life, but comparisons don't mean much when people have such disparate income situations.  Some of us work straight W-2 jobs but some work under the table.  Some of us get bonuses, or profit sharing, beyond our regular income.  Some of us are landlords, or business owners, and our "spending" is really "investment in the business."  Some of us are retired and living off of investments.  Most of us are some combination.

Sorry to be a downer.

matchewed

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #4 on: December 26, 2017, 10:41:58 AM »
I wish it were so simple.

How do you account employer matching contributions to your 401k?  Because to me they look like savings, but most people don't think to include them as part of their income.  They are literally both.

And if those count, then what about subsidized health insurance?  My employer spends something like $14k/year to insure my family.  I never see it, but I do benefit from my employer spending that money on my behalf.  I wouldn't normally count it as income, but if I had a different job I would need to include it in my spending, and it would thus come out of my income.

What about dividends?  I've been saving long enough that I earn tens of thousands of dollars per year in dividends, but they're most (not entirely) inside of retirement accounts so even though I am making money, they do not count as taxable income yet.  But some of them will be taxed as income in future years, after being earned this year.  Some won't.  Some are taxed as income this year, in my taxable account, even if they are automatically re-invested to buy more shares.  Are those income, or spending, or neither?

I own two rental houses.  Do my gross rents count as income?  Because most of that goes to paying my mortgages (some of which I retain as equity), and the rest is offset by depreciation.  My schedule E only shows a few hundred dollars of "income" per year on something like $48k of gross rents I collect. 

And then the houses appreciate tens of thousands of dollars per year, in paper income I can't utilize without a refi.  My net worth apparently goes up, but I don't consider capital appreciation as "income" or "savings" even though it is kind of both.  And what about when the market tanks?

I love the idea of carefully counting up your life, but comparisons don't mean much when people have such disparate income situations.  Some of us work straight W-2 jobs but some work under the table.  Some of us get bonuses, or profit sharing, beyond our regular income.  Some of us are landlords, or business owners, and our "spending" is really "investment in the business."  Some of us are retired and living off of investments.  Most of us are some combination.

Sorry to be a downer.

I think you meant to click the "Something else?  Give us some details" button. ;)

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #5 on: December 26, 2017, 11:03:04 AM »
How do I know whether or not the money will be used for a new roof or vacation in a couple of years?  I don't have separate places for money that will never be spent. All savings is eventually for spending. I don't plan on dying with it.

(But 50% of our gross salary was unspent, ignoring 401k contributions from the company in both savings and spending.)

inline five

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #6 on: December 26, 2017, 12:15:30 PM »
All I'm concerned about is net worth change. It doesn't matter if it's from savings or gains. If it goes up = good, goes down = bad.

Don't get too wrapped up around savings rates. Just save the most you can and do everything in your power to increase it.

reneeh63

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #7 on: December 26, 2017, 12:29:52 PM »
How do I know whether or not the money will be used for a new roof or vacation in a couple of years?  I don't have separate places for money that will never be spent. All savings is eventually for spending. I don't plan on dying with it.

(But 50% of our gross salary was unspent, ignoring 401k contributions from the company in both savings and spending.)

Eh...lots of people have "planned expenses" - that they won't be doing that month but they anticipate and have set some money back for them.  I want to weed out the amount of money that might be saved for a couple months for a trip the next summer...heck - I could "save" another 20% and spend it the next month, easy!

inline five

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #8 on: December 26, 2017, 12:35:42 PM »
How do I know whether or not the money will be used for a new roof or vacation in a couple of years?  I don't have separate places for money that will never be spent. All savings is eventually for spending. I don't plan on dying with it.

(But 50% of our gross salary was unspent, ignoring 401k contributions from the company in both savings and spending.)

Eh...lots of people have "planned expenses" - that they won't be doing that month but they anticipate and have set some money back for them.  I want to weed out the amount of money that might be saved for a couple months for a trip the next summer...heck - I could "save" another 20% and spend it the next month, easy!

During your accumulation phase why are you taking trips? The idea is to save and stuff everything you can into investments.

Trips are for the time your returns outpace your savings, you're done, and FI.

IMO.

If you are trying to see where others fall, why does it matter? Where do you fall and how can you improve it (if desired) is what matters.

matchewed

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #9 on: December 26, 2017, 01:55:53 PM »
How do I know whether or not the money will be used for a new roof or vacation in a couple of years?  I don't have separate places for money that will never be spent. All savings is eventually for spending. I don't plan on dying with it.

(But 50% of our gross salary was unspent, ignoring 401k contributions from the company in both savings and spending.)

Eh...lots of people have "planned expenses" - that they won't be doing that month but they anticipate and have set some money back for them.  I want to weed out the amount of money that might be saved for a couple months for a trip the next summer...heck - I could "save" another 20% and spend it the next month, easy!

During your accumulation phase why are you taking trips? The idea is to save and stuff everything you can into investments.

Trips are for the time your returns outpace your savings, you're done, and FI.

IMO.

If you are trying to see where others fall, why does it matter? Where do you fall and how can you improve it (if desired) is what matters.

That's a great way to burn out on an aggressive goal. Working towards FIRE != sacrificing QoL. You can live a great life and still FIRE. You can travel and still FIRE.

inline five

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #10 on: December 26, 2017, 02:00:21 PM »

That's a great way to burn out on an aggressive goal. Working towards FIRE != sacrificing QoL. You can live a great life and still FIRE. You can travel and still FIRE.

What? This entire website is dedicated to sacrificing ones QOL in order to be in a position where you have financial independence. That statement literally goes against everything posted on here.

matchewed

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #11 on: December 26, 2017, 02:14:36 PM »

That's a great way to burn out on an aggressive goal. Working towards FIRE != sacrificing QoL. You can live a great life and still FIRE. You can travel and still FIRE.

What? This entire website is dedicated to sacrificing ones QOL in order to be in a position where you have financial independence. That statement literally goes against everything posted on here.

There is a serious difference between learning how to live your life in an efficient manner that doesn't consume too many resources but still provides an equivalent utility or happiness and sacrifice.

Saving for FIRE is not and should not be sacrifice.

This website is in fact not dedicated to sacrifice.

Various conversations you should read to learn more about what this website is about.

https://forum.mrmoneymustache.com/mustachianism-around-the-web/for-all-the-new-people-update-from-jacob-of-ere/
https://forum.mrmoneymustache.com/welcome-to-the-forum/time-value-of-happiness/
http://www.mrmoneymustache.com/2014/11/23/not-extreme-frugality/

Letting go of that which does not provide value is not sacrifice. FIRE is centered around letting that useless crap go. Then efficiently pursue the rest. That is also not sacrifice.
« Last Edit: December 26, 2017, 02:20:02 PM by matchewed »

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #12 on: December 26, 2017, 02:18:58 PM »

That's a great way to burn out on an aggressive goal. Working towards FIRE != sacrificing QoL. You can live a great life and still FIRE. You can travel and still FIRE.

What? This entire website is dedicated to sacrificing ones QOL in order to be in a position where you have financial independence. That statement literally goes against everything posted on here.

There is a serious difference between learning how to live your life in an efficient manner that doesn't consume too many resources but still provides an equivalent utility or happiness and sacrifice.

Saving for FIRE is not and should not be sacrifice.

So in your view cutting out unneeded things such as a larger or more modern house, cooking your own food vs the convenience of having it prepared for you is not sacrifice but cutting out unneeded and unnessary activities like traveling is?

Ok.

matchewed

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #13 on: December 26, 2017, 02:21:00 PM »

That's a great way to burn out on an aggressive goal. Working towards FIRE != sacrificing QoL. You can live a great life and still FIRE. You can travel and still FIRE.

What? This entire website is dedicated to sacrificing ones QOL in order to be in a position where you have financial independence. That statement literally goes against everything posted on here.

There is a serious difference between learning how to live your life in an efficient manner that doesn't consume too many resources but still provides an equivalent utility or happiness and sacrifice.

Saving for FIRE is not and should not be sacrifice.

So in your view cutting out unneeded things such as a larger or more modern house, cooking your own food vs the convenience of having it prepared for you is not sacrifice but cutting out unneeded and unnessary activities like traveling is?

Ok.

Travel is not necessarily unneeded or unnecessary.

inline five

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #14 on: December 26, 2017, 03:08:20 PM »

That's a great way to burn out on an aggressive goal. Working towards FIRE != sacrificing QoL. You can live a great life and still FIRE. You can travel and still FIRE.

What? This entire website is dedicated to sacrificing ones QOL in order to be in a position where you have financial independence. That statement literally goes against everything posted on here.

There is a serious difference between learning how to live your life in an efficient manner that doesn't consume too many resources but still provides an equivalent utility or happiness and sacrifice.

Saving for FIRE is not and should not be sacrifice.

So in your view cutting out unneeded things such as a larger or more modern house, cooking your own food vs the convenience of having it prepared for you is not sacrifice but cutting out unneeded and unnessary activities like traveling is?

Ok.

Travel is not necessarily unneeded or unnecessary.

Well, according to you.

sol

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #15 on: December 26, 2017, 03:27:40 PM »
This entire website is dedicated to sacrificing ones QOL

You either haven't read the blog, or you've grossly misinterpreted what you've read.

Allow me to clarify: your quality of life is not related to your spending!  Once you've covered your basic needs, happiness is not derived from consumerism.

matchewed

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #16 on: December 26, 2017, 03:33:18 PM »

That's a great way to burn out on an aggressive goal. Working towards FIRE != sacrificing QoL. You can live a great life and still FIRE. You can travel and still FIRE.

What? This entire website is dedicated to sacrificing ones QOL in order to be in a position where you have financial independence. That statement literally goes against everything posted on here.

There is a serious difference between learning how to live your life in an efficient manner that doesn't consume too many resources but still provides an equivalent utility or happiness and sacrifice.

Saving for FIRE is not and should not be sacrifice.

So in your view cutting out unneeded things such as a larger or more modern house, cooking your own food vs the convenience of having it prepared for you is not sacrifice but cutting out unneeded and unnessary activities like traveling is?

Ok.

Travel is not necessarily unneeded or unnecessary.

Well, according to you.

Yes... I fail to see your point. My point is broader than just travel. My point was more based on your comments about how FIRE must be about sacrifice and you still haven't provided any insight or comments that would convince me that such sacrifice is necessary in pursuit of FIRE. I believe you are proposing a framework which is detrimental to increasing ones happiness and satisfaction. It provides negative utility in fact. So why should anyone pursue such a framework for their lives?

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #17 on: December 26, 2017, 03:39:50 PM »
This entire website is dedicated to sacrificing ones QOL

You either haven't read the blog, or you've grossly misinterpreted what you've read.

Allow me to clarify: your quality of life is not related to your spending!  Once you've covered your basic needs, happiness is not derived from consumerism.

Well at one point I stayed in a two bedroom apartment with 17 beds. Technically I had shelter. My QOL was pretty crappy.

So I would definitely not agree that spending less on shelter (a basic need) doesn't impact ones QOL.
« Last Edit: December 26, 2017, 03:42:31 PM by inline five »

sol

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #18 on: December 26, 2017, 03:52:28 PM »
So I would definitely not agree that spending less on shelter (a basic need) doesn't impact ones QOL.

I assure you that someone, somewhere, is twice as happy as you are while spending half as much.  That's is true at any income level, all the way down to people who literally spend nothing.

You are free to spend to your own priorities.  I would probably recommend not having 16 roommates, to most people, but I've also know nuns who find spiritual fulfillment in living in spartan close quarters with more people than that, and they sure seem happy.  Somehow, they find joy without a new iphone every 18 months.

Just don't confuse your desires with your needs, and be cognizant of the fact that your desires are the root of your suffering, not the other way around.  The fact that you don't seem to see the difference is telling.
« Last Edit: December 26, 2017, 04:34:59 PM by sol »

reneeh63

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #19 on: December 26, 2017, 04:19:27 PM »
How do I know whether or not the money will be used for a new roof or vacation in a couple of years?  I don't have separate places for money that will never be spent. All savings is eventually for spending. I don't plan on dying with it.

(But 50% of our gross salary was unspent, ignoring 401k contributions from the company in both savings and spending.)

Eh...lots of people have "planned expenses" - that they won't be doing that month but they anticipate and have set some money back for them.  I want to weed out the amount of money that might be saved for a couple months for a trip the next summer...heck - I could "save" another 20% and spend it the next month, easy!

During your accumulation phase why are you taking trips? The idea is to save and stuff everything you can into investments.

Trips are for the time your returns outpace your savings, you're done, and FI.

IMO.

If you are trying to see where others fall, why does it matter? Where do you fall and how can you improve it (if desired) is what matters.

I'm actually asking for someone else on another board who says she's an MMM but is dogging us about what % of the U.S. population saves 60% or more of their income.

As for trips, I'd ask you why you even EVER plan to take a trip - haven't you worked that out of your system?  Do you REALLY NEED to take a trip?  Don't you get all of your life satisfaction from within yourself and your family?  That's all FREE!  :-)

I'm a red panda

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #20 on: December 26, 2017, 04:38:45 PM »

That's a great way to burn out on an aggressive goal. Working towards FIRE != sacrificing QoL. You can live a great life and still FIRE. You can travel and still FIRE.

What? This entire website is dedicated to sacrificing ones QOL in order to be in a position where you have financial independence. That statement literally goes against everything posted on here.

Can you point to where MMM has said anything about sacrificing quality of life in a blog post?

Optimizing is not sacrificing. Consumerism is not necessarily better. Enough is as good as a feast.

wenchsenior

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #21 on: December 26, 2017, 04:41:14 PM »
How do I know whether or not the money will be used for a new roof or vacation in a couple of years?  I don't have separate places for money that will never be spent. All savings is eventually for spending. I don't plan on dying with it.

(But 50% of our gross salary was unspent, ignoring 401k contributions from the company in both savings and spending.)

Eh...lots of people have "planned expenses" - that they won't be doing that month but they anticipate and have set some money back for them.  I want to weed out the amount of money that might be saved for a couple months for a trip the next summer...heck - I could "save" another 20% and spend it the next month, easy!

During your accumulation phase why are you taking trips? The idea is to save and stuff everything you can into investments.

Trips are for the time your returns outpace your savings, you're done, and FI.

IMO.

If you are trying to see where others fall, why does it matter? Where do you fall and how can you improve it (if desired) is what matters.

I'm actually asking for someone else on another board who says she's an MMM but is dogging us about what % of the U.S. population saves 60% or more of their income.

As for trips, I'd ask you why you even EVER plan to take a trip - haven't you worked that out of your system?  Do you REALLY NEED to take a trip?  Don't you get all of your life satisfaction from within yourself and your family?  That's all FREE!  :-)

Well, if you are looking for a representative sample to report to your friend of how people in the U.S. handle money, polling MMMers is not the way to get it.

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #22 on: December 26, 2017, 07:11:10 PM »
What? This entire website is dedicated to sacrificing ones QOL in order to be in a position where you have financial independence. That statement literally goes against everything posted on here.

I don't know what site you are reading, but that's not my take away from the MMM blog or forums.

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #23 on: December 26, 2017, 08:09:25 PM »
How do I know whether or not the money will be used for a new roof or vacation in a couple of years?  I don't have separate places for money that will never be spent. All savings is eventually for spending. I don't plan on dying with it.

(But 50% of our gross salary was unspent, ignoring 401k contributions from the company in both savings and spending.)

Eh...lots of people have "planned expenses" - that they won't be doing that month but they anticipate and have set some money back for them.  I want to weed out the amount of money that might be saved for a couple months for a trip the next summer...heck - I could "save" another 20% and spend it the next month, easy!

During your accumulation phase why are you taking trips? The idea is to save and stuff everything you can into investments.

Trips are for the time your returns outpace your savings, you're done, and FI.

IMO.

If you are trying to see where others fall, why does it matter? Where do you fall and how can you improve it (if desired) is what matters.

I'm actually asking for someone else on another board who says she's an MMM but is dogging us about what % of the U.S. population saves 60% or more of their income.

As for trips, I'd ask you why you even EVER plan to take a trip - haven't you worked that out of your system?  Do you REALLY NEED to take a trip?  Don't you get all of your life satisfaction from within yourself and your family?  That's all FREE!  :-)

If you're referring to FlyingSaucerMom she has mental issues (no, really). Best to just ignore. IMO.

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #24 on: December 26, 2017, 08:11:22 PM »
Disclaimer: I think this is a very fun discussion, and I'm glad you made this post!  Savings rates are very valuable for comparing your own personal growth, but it becomes kind of useless as a way to compare yourself to others, because of many factors Sol pointed out. 

The one area where I have a really tough time figuring out how to quantify savings rate for me is roth vs traditional contributions. 

For example, when I put a dollar into my Roth IRA, that's really damn powerful.  It's like a superhero.  None of that will be taxed, nor will any of the earnings.  Plus any of the the principal can be taken out any time I want penalty free. 

However, a dollar put into my 403 account is far less powerful.  Not only will that money be taxed eventually, but so will the earnings on that dollar.  And I can't access is unless I wait till I'm 59.5 or unless I convert it to a roth for a half decade. 

So, it costs you a bit of savings rate bragging rights to get a dollar Roth'ed into superhero status (gotta pay taxes on it first), but it can be worth it. 

Another area where I have a tough time quantifying my savings rate is my pension, because:
   a) My contributions stay mine and earn interest, but I most likely will never get THAT money back, it will rather take the form of a monthly income.  So, for example I currently could get a check from the state of Michigan for 80k right now, but my plan is to forego that option to get a monthly income later that I will value more. 
   b)  My employer makes contributions on my behalf, but it only goes towards the pension once I retire, so I'd never get that as a lump sum. 
   How I reconcile that:  Currently I just use the  cash payout I could get if I were to quit and take the check when calculating my net worth.  However, when I retire I'm going to drop that.  At that point I'll say that my net worth is "x"  in the stache + "y" in home value + "z" in annual pension income. 

So, savings rate is not a black and white thing, but I still think it's really valuable because you can measure it however you like, and use that as a way to challenge yourself. 


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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #25 on: December 26, 2017, 08:43:35 PM »
I included debt paydown as well as investments in the % of saving.  Some investments were in the market, others in real estate.   Debt was just real estate, which is all the debt we have.

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #26 on: December 26, 2017, 11:56:09 PM »
Pre-Tax Retirement Contributions
46% of gross income 1
20% of gross income 2
33% of gross household combined income

(39% if after-tax Roth IRA accounts were included)

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #27 on: December 27, 2017, 12:19:32 AM »
I included debt paydown as well as investments in the % of saving.  Some investments were in the market, others in real estate.   Debt was just real estate, which is all the debt we have.

Isn't debt paydown spending, not saving? This seems to say I am "saving" more if I live in a huge house with a giant payment.

Would you have counted differently if it was a credit card payment instead of a mortgage?

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #28 on: December 27, 2017, 01:28:27 AM »
The principal portion of the payment doesn't count as spending because it increases your net worth. The interest counts as spending however. I believe this is in the "shockingly simple math" article.

reneeh63

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #29 on: January 01, 2018, 10:23:28 AM »
How do I know whether or not the money will be used for a new roof or vacation in a couple of years?  I don't have separate places for money that will never be spent. All savings is eventually for spending. I don't plan on dying with it.

(But 50% of our gross salary was unspent, ignoring 401k contributions from the company in both savings and spending.)

Eh...lots of people have "planned expenses" - that they won't be doing that month but they anticipate and have set some money back for them.  I want to weed out the amount of money that might be saved for a couple months for a trip the next summer...heck - I could "save" another 20% and spend it the next month, easy!

During your accumulation phase why are you taking trips? The idea is to save and stuff everything you can into investments.

Trips are for the time your returns outpace your savings, you're done, and FI.

IMO.

If you are trying to see where others fall, why does it matter? Where do you fall and how can you improve it (if desired) is what matters.

I'm actually asking for someone else on another board who says she's an MMM but is dogging us about what % of the U.S. population saves 60% or more of their income.

As for trips, I'd ask you why you even EVER plan to take a trip - haven't you worked that out of your system?  Do you REALLY NEED to take a trip?  Don't you get all of your life satisfaction from within yourself and your family?  That's all FREE!  :-)

If you're referring to FlyingSaucerMom she has mental issues (no, really). Best to just ignore. IMO.

Haha - how'd you guess?  I guess she uses some other screen name on here - not sure why she didn't ask ya'll directly except she probably wouldn't rate so highly among the folks on here!

SwordGuy

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Re: % of PRE-tax income saved (Gross Income Saved)
« Reply #30 on: January 04, 2018, 10:17:11 AM »
I included debt paydown as well as investments in the % of saving.  Some investments were in the market, others in real estate.   Debt was just real estate, which is all the debt we have.

Isn't debt paydown spending, not saving? This seems to say I am "saving" more if I live in a huge house with a giant payment.

Would you have counted differently if it was a credit card payment instead of a mortgage?

Fair question.

I didn't count paying down our mortgage at the regular rate.  Tha'ts just paying living expenses as they arrive.

I did count paying down the HELOC that was used to buy a rental property a couple of years ago.   I would have counted buying that rental property with cash from my income, just as I counted buying Vanguard stock purchased from my income.   

I wouldn't have counted it if I paid cash for a rental property out of cash savings.  That's must moving savings from one pile to another.

Don't count paying off credit cards for living expenses as they arrive.   

If I had been a horrible consumer sucka with $20,000 in old credit card debt and joined the MMM cult, I would count all credit card payments on the pre-enlightened-me CC debt - above and beyond the minimum payment - as savings.   I don't think it really is savings, but when you're that deep in the outhouse hole, you gladly grab any ray of sunshine you can.  :)
And, in a certain way, it's the best category to put it in.  It's not daily living expenses on your current budget, it's not fun, and it does increase your net worth.   Plus, as the debt goes away that money can easily stay out of the daily living expenses and fun categories since it's already in the savings category, so there's less chance of reverting in the future.

Can't say I've given you an ironclad, guaranteed to be right answer, but it's what I do.