Poll

What is your household savings rate?  See instructions below on what to include/exclude.

0-5%
1 (0.3%)
6-10%
1 (0.3%)
11-15%
8 (2.4%)
16-20%
8 (2.4%)
21-25%
10 (3%)
26-30%
14 (4.2%)
31-35%
25 (7.6%)
36-40%
21 (6.4%)
41-45%
25 (7.6%)
46-50%
36 (10.9%)
51-55%
29 (8.8%)
56-60%
28 (8.5%)
61-65%
40 (12.1%)
66-70%
31 (9.4%)
71-75%
27 (8.2%)
76-80%
15 (4.5%)
81-85%
4 (1.2%)
86-90%
4 (1.2%)
91-95%
1 (0.3%)
96-100%
2 (0.6%)

Total Members Voted: 315

Author Topic: What is your savings rate?  (Read 18336 times)

CommonCents

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What is your savings rate?
« on: April 30, 2015, 08:28:36 AM »
Please vote in the above poll: What is your savings rate?  (Or alternatively:  How MMM are you?) 

Instructions: Exclude taxes [ETA: More specifically exclude fed income tax, state income tax, medicare, social security and property tax, but not sales tax.  For those in other countries, please calculate as best comparable].  Include employer matches only if including in the denominator as well.  Include principal portion of debt payments.
« Last Edit: April 30, 2015, 07:35:02 PM by CommonCents »

2Birds1Stone

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Re: What is your savings rate?
« Reply #1 on: April 30, 2015, 08:46:37 AM »
65% since Jan 1st, which is a HUGE accomplishment for me. I was at 30-40% for 3-4 years before discovering this site. 50% last year.

begood

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Re: What is your savings rate?
« Reply #2 on: April 30, 2015, 09:01:01 AM »
Right around 33%, so I guess I'm one-third Mustachian?

kwh03001

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Re: What is your savings rate?
« Reply #3 on: April 30, 2015, 09:12:00 AM »
Right around 60%, Single income, three kids, 72K gross per year

We live quite comfortably.  I don't know why you would want any more.

EDIT: update to clarify that we grossed 72K per year, not spent.  That would be ridiculous.

mathlete

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Re: What is your savings rate?
« Reply #4 on: April 30, 2015, 09:12:51 AM »
As a percentage of gross or net?

I'm a red panda

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Re: What is your savings rate?
« Reply #5 on: April 30, 2015, 09:15:35 AM »
I can't respond because I have no idea how to calculate this excluding taxes.

I know how much of my annual salary ends up in savings each year, but my largest expenditure is taxes- so to exclude taxes (all taxes? Just income taxes? Federal and state? Property taxes? Sales tax?) messes my calculation up so much I don't know what to calculate.

Retired To Win

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Re: What is your savings rate?
« Reply #6 on: April 30, 2015, 09:28:02 AM »
Although I am already FIRE'd, my "surplus income rate" calculated as the difference between my gross passive income and my basic living expenses is 70%.  Most of that keeps accruing in my Discretionary Fund, so I estimate a net 50% "savings rate" when I strip out what I spend for fun.

dude

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Re: What is your savings rate?
« Reply #7 on: April 30, 2015, 09:42:55 AM »
% of gross income = 40.2%
% of net income = 48%
% of gross if I include employer contribution to my pension = 57.7%
% of net if I include employer contribution to my pension = 69%

thd7t

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Re: What is your savings rate?
« Reply #8 on: April 30, 2015, 09:45:45 AM »
Looks like 46% of net income (with employer match added to income)
I put 41-45%, because I think that's where we usually are.  I'm hoping to boost a few % in the next month or two, though.

slschierer

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Re: What is your savings rate?
« Reply #9 on: April 30, 2015, 09:47:23 AM »
45% last year, but it should be much higher this year!  I found MMM around November of 2014, and we have implemented some huge changes since! We have sold the Yukon and purchased an economical 4-cylinder averaging 33 MPG (Honda Accord), my husband switched jobs which has resulted in increased pay and decreased his commute from 62 miles per day to 2 miles per day (!), opened IRA accounts, increased our payments toward our mortgage, and increased our 401k savings rate.  We have two children, and, unfortunately, still have to pay a ridiculous amount in childcare expenses (more than $16k/year). 

Emerald

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Re: What is your savings rate?
« Reply #10 on: April 30, 2015, 10:00:36 AM »
33% of gross.

pachnik

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Re: What is your savings rate?
« Reply #11 on: April 30, 2015, 10:16:18 AM »
I am saving about 1/3 of my net income.
Cheers!
Pachnik

mathlete

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Re: What is your savings rate?
« Reply #12 on: April 30, 2015, 10:19:50 AM »
We're at about 46% of our household take home pay.

Kids may be on the horizon though so I imagine that this number could get blown up pretty quickly.

Emilyngh

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Re: What is your savings rate?
« Reply #13 on: April 30, 2015, 10:28:06 AM »
Please vote in the above poll: What is your savings rate?  (Or alternatively:  How MMM are you?) 

Instructions: Exclude taxes.  Include employer matches only if including in the denominator as well.  Include principal portion of debt payments.

Hmmm, I answered 21-25% because that's what it has been with DH as a FT SAHD and me working my relatively low paying but super flexible and autonomous job for the past few years.   Our savings rate was 60%+ before we made these life changes (so we have a stache compounding in the background).

 But, we have some side income coming in that I plan on putting in our investment accounts over the next 8 months, which bumps it up  for these months.  Also child support ends this month, and even with paying for my stepdaughter's college, we'll still be able to start investing some of what that was each month.  Factoring these in, we'll be at 34% each month for the rest of the year!   Also, this amount should continuously rise as I keep getting raises, DD goes to school fulltime, so DH starts working again at least PT, and then in four years when DSD graduates from college.   We have a regular budget that's on the tightish side, but we're comfortable with it, so all income beyond this will go straight to the savings percentage.
« Last Edit: April 30, 2015, 10:30:03 AM by Emilyngh »

spud1987

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Re: What is your savings rate?
« Reply #14 on: April 30, 2015, 10:41:07 AM »
About 60-65%.

But we're not very mustachian. We spend about 60-70k per year (but more like 45k if you take out our ridiculous Bay Area rent). We are just lucky to have high incomes (about 180k after taxes and including employer match). Cutting our spending down to mustachian levels (I consider this 40k if you have a mortgage/rent) would not be terribly difficult, but it wouldn't help much with regard to our savings rate. Our target FIRE number is 1.2M plus a paid off house.

Travis

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Re: What is your savings rate?
« Reply #15 on: April 30, 2015, 10:58:52 AM »
If I did the math right, I save 48% of gross, and 54% after taxes.  I'm moving in a couple months and if the numbers work out I'll be gaining an additional 5% due to a combination of slight income increase, rent decrease, and massive childcare cost decrease tempered by some additional car ownership costs.

Candace

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Re: What is your savings rate?
« Reply #16 on: April 30, 2015, 11:00:28 AM »
I'm at 49% excluding Federal, State and payroll taxes. Not excluding property taxes. Not including employer match as income, which someone noted above. (Certainly not including their contribution toward health care etc. as income either.)

This was illuminating. When MMM talks about savings rate, is he referring to gross or net (gross - taxes)? I had always calculated it as gross and was frustrated at my 37% savings rate. A 49% rate sounds much better.

unmetamorphosed

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Re: What is your savings rate?
« Reply #17 on: April 30, 2015, 11:02:38 AM »
Saving at least 17% percent annually only including maxing out my Roth IRA, which is currently my only personal investment account (not including my work related 401k).
I have 'extra' money left over each month, which I'm slowly saving up to eventually create some kind of taxable investment account by the end of this year.

20% of my take home each month goes to paying dues for the weightlifting team I'm on. I get sad when I think about how much it is and how much I'm missing out on saving but I justify it because I am maxing out my Roth and still saving a bit additionally and:
1) I am extremely frugal in every other aspect of my budget to make it happen. I never go 'out' to eat or party or whatever, and I have no debt. I'm going to start biking more and driving less beginning this summer.
2) I love weightlifting and if I want to continue improving and compete on a higher level I need the training. And the team also functions as my social group.

I'm also getting a raise this year and will switch to a higher paying career in a few years so this low saving rate will change decently soon.
Also, I have a passion and I've got to pursue it, right?
Please tell me I'm right

NotJen

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Re: What is your savings rate?
« Reply #18 on: April 30, 2015, 11:10:18 AM »
I was at 56% for 2014 after [income] taxes. I only calculate annually.

42% before taxes.

thd7t

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Re: What is your savings rate?
« Reply #19 on: April 30, 2015, 11:11:06 AM »
I'm at 49% excluding Federal, State and payroll taxes. Not excluding property taxes. Not including employer match as income, which someone noted above. (Certainly not including their contribution toward health care etc. as income either.)

This was illuminating. When MMM talks about savings rate, is he referring to gross or net (gross - taxes)? I had always calculated it as gross and was frustrated at my 37% savings rate. A 49% rate sounds much better.
If I remember, MMM calculates based on net, because taxes are lower in his style of ER.  In addition, employer retirement contribution is added into both the income and saving side, I think.

WYOGO

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Re: What is your savings rate?
« Reply #20 on: April 30, 2015, 11:18:02 AM »
With federal taxes excluded, I am running consistently between 75% and 80% sometimes a bit more. It does take time to structure your life to support these levels. It is possible to do this and have no lack. Onward and Upward.

YTD 78%
« Last Edit: April 30, 2015, 11:20:10 AM by WYOGO »

SomedayStache

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Re: What is your savings rate?
« Reply #21 on: April 30, 2015, 11:47:17 AM »
Right around 60%, Single income, three kids, 72K gross per year

We live quite comfortably.  I don't know why you would want any more.

EDIT: update to clarify that we grossed 72K per year, not spent.  That would be ridiculous.

I would love to see you post a case study or your numbers!    We have 3 kids, gross income is somewhere in the 80s, and nowhere near saving as much as you.

CommonCents

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Re: What is your savings rate?
« Reply #22 on: April 30, 2015, 12:06:51 PM »
I can't respond because I have no idea how to calculate this excluding taxes.

I know how much of my annual salary ends up in savings each year, but my largest expenditure is taxes- so to exclude taxes (all taxes? Just income taxes? Federal and state? Property taxes? Sales tax?) messes my calculation up so much I don't know what to calculate.

That's exactly why I wanted to exclude them, to gain a more realistic view of savings.  Taxes vary a lot for people in different countries, income brackets etc.

I meant all income taxes (fed, state, medicare, social security) and property tax, but not sales tax. 

RWD

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Re: What is your savings rate?
« Reply #23 on: April 30, 2015, 04:12:31 PM »
We've been around 55-65%, but there are changes happening this year that should increase our income and decrease our expenses. I'm hoping for 70+% next year.

Zikoris

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Re: What is your savings rate?
« Reply #24 on: April 30, 2015, 04:21:45 PM »
We've sat at around 65% for the last three years.

onecoolcat

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Re: What is your savings rate?
« Reply #25 on: April 30, 2015, 04:49:35 PM »
48.7%, it would be 71% if I didn't have student loans and a car payment!  Both were acquired before I became serious about I got serious about FIRE.  I pay for most living expenses for my wife and I as she helped me out during law school.  This allows her to have 79% savings rate!

RWD

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Re: What is your savings rate?
« Reply #26 on: April 30, 2015, 05:13:43 PM »
48.7%, it would be 71% if I didn't have student loans and a car payment!

The principal portion of your payments should count toward your savings rate, as decreasing debt is increasing your net worth. Then you would need to track your car's depreciation separately as an expense for a more accurate picture.

sol

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Re: What is your savings rate?
« Reply #27 on: April 30, 2015, 06:42:10 PM »
There are too many variables here for me to know for sure.  How exactly do you "exclude"something like property tax?  Pretend I didn't earn or spend that money? Pretend I earned it but didn't spend it, or vice versa?

What about rental properties? Those generate significant income for my family, most of which goes to paying for the properties' mortgages, including their property taxes but also some equity paydown for me.  How can I exclude the rental properties if they're not cashflow neutral for me?

As close as I can tell, we hover around 60%.  I can make that number go up or down 10% pretty easily, though.

Maxman

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Re: What is your savings rate?
« Reply #28 on: April 30, 2015, 07:02:04 PM »
We're retired and don't save much now about 5%. This will increase when we start collecting SS in a year.

teen persuasion

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Re: What is your savings rate?
« Reply #29 on: May 01, 2015, 07:02:52 AM »
I view taxes as another expense, just like housing.  Yes, they vary for everyone, but something like housing can vary, too, depending on COL for an area.  I'd rather include everything.  Yes, it will be different after ER, but other things can be different in time, too - child expenses (childcare goes away, college expenses come and hopefully go, etc.)

I've actually included our tax refunds as income, since they are substantial, so also deducting FICA I get 52% savings rate.   I left state taxes in there - those are likely to increase, not decrease for us post FIRE.

CommonCents

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Re: What is your savings rate?
« Reply #30 on: May 01, 2015, 08:08:03 AM »
I view taxes as another expense, just like housing.  Yes, they vary for everyone, but something like housing can vary, too, depending on COL for an area.  I'd rather include everything.  Yes, it will be different after ER, but other things can be different in time, too - child expenses (childcare goes away, college expenses come and hopefully go, etc.)

I've actually included our tax refunds as income, since they are substantial, so also deducting FICA I get 52% savings rate.   I left state taxes in there - those are likely to increase, not decrease for us post FIRE.

You may set up your own poll with your own rules then. :)  But this particular poll is set up in my sandbox.

ETA: I know this is a great divide on MMM, but to me, it's a better way to compare apples to apples, or at the first least, apples to pears rather than bananas.  For the person paying virtually no taxes (whether due to low income+kids,
they have the ability to shovel almost all of it into savings.  For the person paying high taxes (different countries, higher state taxes, higher income), that person can't shovel the same percentage in without particularly unpleasant conversations with government officials.  Practically speaking they are limited to income-taxes=x as a starting place.  So, this polls puts everyone on even footing as best as I can make it, understanding it's an imperfect system and MMMers are bound and determined to complain about the rules of any poll here.

Plus, it's my understanding it's how MMM calculates it.  WWMMMD do indeed?
« Last Edit: May 01, 2015, 09:11:58 AM by CommonCents »

NICE!

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Re: What is your savings rate?
« Reply #31 on: May 01, 2015, 08:19:49 AM »
High 30s, might be 40% or more this year. I hope to do better, like many inspiring people in these forums.

Someone voted 0-5%...I'm more curious about that than the people with 80+% savings rates.

midweststache

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Re: What is your savings rate?
« Reply #32 on: May 01, 2015, 08:32:55 AM »
I put 26-30%, since YNAB tells me it's 42% but that includes interest on student loans and savings that pay my bills in the summer (when I don't receive a stipend), but that didn't account for 403bs or HSA, so I probably wonked up the poll numbers.

True story, I have no idea how to math. Math is only fun for me when I do finance stuff, and even then there's some places (gross vs. net in calculating net worth, for example) where it seems like too much work for very little payoff, since we're a while from retirement (i.e. I can cognitively move my savings rate from 30% to 36%, but that still doesn't effectively change the actual dollars we're saving)>

thd7t

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Re: What is your savings rate?
« Reply #33 on: May 01, 2015, 08:42:21 AM »
High 30s, might be 40% or more this year. I hope to do better, like many inspiring people in these forums.

Someone voted 0-5%...I'm more curious about that than the people with 80+% savings rates.
I think someone mentioned that they are already retired and that their savings rate is accordingly low.

nottoolatetostart

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Re: What is your savings rate?
« Reply #34 on: May 01, 2015, 08:58:20 AM »
I said 55%, but excluded daycare ($19k) per year from our net income since it's not quite the same expense as say using the $19k towards a vacation. It's just an amount that reduces my income as a working mom.

Next year, once we get some other pesky expenses behind us from 2014/2015, our savings rate will get to 78% and be that for the next few years until I quit working. Excited for 2016!

mrmoneycleanshaven

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Re: What is your savings rate?
« Reply #35 on: May 01, 2015, 09:39:47 AM »
Right now its 34% of net, but soon I'll get a bigger shovel and move into the 80% category. I don't think I'll stay 80% for long, I have wants, and for my life plan 34% is way more than I can ever imagine needing.

When I get that bump I will be buying a 2-3 year old fun to drive car, and go on more vacations. I live well on my current budget and will not have lifestyle creep in the day to day, but I do value leisure time and so I'll likely drop from saving 80% to saving 70%, still even that leaves me with a savings at the end of my contract that will be enough to be FIRE at 40.

Of course I am not sure about FIRE at 40, I like my career field, and its one that is needed, plus if I do another 10 past the end of my contract I can collect a pension that's 40% greater than my current spending rate, while building a stash I'll never have to even touch.

RWD

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Re: What is your savings rate?
« Reply #36 on: May 01, 2015, 10:07:37 AM »
I view taxes as another expense, just like housing.

Income taxes are the cost of making money. It's not correlated to what your taxes will be after you stop working.

Imagine your only income is coming from a business you own that cost $900k a year to operate and grossed $1 million in revenue. You pocket $100k. Your personal annual expenses are $30k. If you include the cost of making the money as an expense here then your savings rate is only 7%. But I would argue your actual savings rate is 70%, because if you sold the business to retire you don't need to keep spending the additional $900k per year.

This is also how I would approach sol's question with rental properties. For an income producing asset like a rental house you should add just the net income to your total net income.

roadtofreedom

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Re: What is your savings rate?
« Reply #37 on: May 01, 2015, 10:15:47 AM »
Last two years, SR reached to 82%. High incomes and moderate MMM way of living. DW working


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sleepyguy

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Re: What is your savings rate?
« Reply #38 on: May 01, 2015, 10:31:44 AM »
Hover between 60-65%.  Next year should be a higher as my older kid will be out of daycare into kindergarten, and the younger will be in daycare (no more nanny).  So quite a substantial savings.

On top of that my GF may be embarking on a different career path (and more lucrative)...

2016 should be quite a good savings/fire-building year for us.

mtn

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Re: What is your savings rate?
« Reply #39 on: May 01, 2015, 10:33:17 AM »
I answered 26-30%, but that is a guestimate for a few reasons:
*I got a new job with a big pay bump in a higher COL area in January. Prior to this, my saving rate was about 30%, all Roth 401k.
*With the new job and payouts from the old, I fully funded a 2014 Roth IRA in 2015. Then I fully funded a 2015 tIRA. But since then my savings rate dropped to 6% due to my front loading the IRA's.
*I'm pushing about 50% of my take home into a savings account that will be used for a wedding, a down payment, my fiance's IRA (after the wedding), and an emergency fund (which is already built, but needs to be bigger). This isn't really divided into separate things.

So if I just look at dollars that I've put to retirement during the year 2015 (ignoring if it was a 2014 or 2015 contribution), Roth or traditional, and divide it by my gross income, I get 26% savings rate.

But this is also including my current 401k contributions through the end of the year, which will lead to innacurate results. I suspect that my 6% contribution to the 401k will go down to zero for a brief time in July, and then go up to around 30% in October. (No, there is no match for me yet). And after the wedding I'll inherit about $25,000 worth of student loan debt that we will be aggresively paying off.

By various ways that I have calculated it, my savings rate for 2015 on December 31 will be anywhere from 17.8% to 42%.




devan 11

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Re: What is your savings rate?
« Reply #40 on: May 02, 2015, 02:56:23 PM »
I polled to 60-65, but after reading directions, should have been at a much higher rate.  I have 60% of my gross earnings put into a Roth 401k.  Since Roth is post taxes and taxes run 33-35%, I take home something around 10 ish % and 90% goes to Roth.  I'm in a final push before quitting work.  Obviously, everything is paid for.

onecoolcat

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Re: What is your savings rate?
« Reply #41 on: May 02, 2015, 03:26:14 PM »
48.7%, it would be 71% if I didn't have student loans and a car payment!

The principal portion of your payments should count toward your savings rate, as decreasing debt is increasing your net worth. Then you would need to track your car's depreciation separately as an expense for a more accurate picture.

In that case, my savings rate is 70%.  I have a no interest car loan through my brother and my student loans are at 3.8%.  I make the monthly $480 payment and make an extra $1500 a month payment as well.  All in all I only pay a total of $120 in interest a month.

Sibley

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Re: What is your savings rate?
« Reply #42 on: May 02, 2015, 04:03:23 PM »
My 10-15% will increase dramatically once I extinguish my debt emergency and that $$ is reallocated. Second half of 2016 is my projection, excluding any "windfall" money. Debt payoff is currently around 50% of take home pay.

Melody

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Re: What is your savings rate?
« Reply #43 on: May 05, 2015, 03:49:12 AM »
62% but this isn't very good for a high income person who pays very little rent.

minority_finance_mo

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Re: What is your savings rate?
« Reply #44 on: May 05, 2015, 09:27:04 PM »
Honestly, since I have a job with a 401K + match + ESPP, and two side jobs and scholarships, it's hard to calculate, but I'm most definitely in the 60-70% range of my gross income from all sources.
« Last Edit: May 05, 2015, 09:28:46 PM by moe_rants »

Caoineag

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Re: What is your savings rate?
« Reply #45 on: May 06, 2015, 06:09:37 AM »
Was shocked to see ours was 66% using your calculation parameters. I generally do my percent from gross because the more I save pre-tax, the lower my taxes go. AKA its an expense I can lower to a certain extent. I also normally ignore the principal on my mortgage since I am more focused on investing than paying off the mortgage at the moment. Each year our savings rate has gone up as we have paid more things off and earned more money.

sol

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Re: What is your savings rate?
« Reply #46 on: May 06, 2015, 02:19:19 PM »
I spent some time recalculating our savings rate to account for some of my previous concerns in the best way I could think of.

For example, I added to our gross income 401k and HSA and pension matching funds, all of the rents we receive, and a few other little odds and ends that I don't normally think of as "income", but didn't include investment returns.  This makes our total income look ridiculously high.   I added to savings the principal and postive cashflow portion of all mortgages, all 401k and HSA and pension contributions, and our roths and taxable accounts.  Taxes I greatly simplifed to just my portion (not employer's match of) OASDI, medicare, and federal income tax.  We don't pay state tax.

Property taxes were one sticking point.  Despite the OP asking to exclude them, I just cannot fathom how to account for property taxes as anything other than an expense.  I pay them every year.  I could pay less if I moved.  They aren't proportional to my income.  They are not savings.  They are voluntary spending, just like groceries and utilities, so I left them lumped in with expenses.

All of this accounting dramatically changes the picture of our finances, but surprisingly makes very little difference in our overall savings rate, which still hovers around 65%.  That seems less impressive when you add up the number of dollars in the remaining 35%, which seems about double what I consider my family to actually spend in a year, but then I have to remember that this 35% also includes taxes and mortgage interest on multiple properties, large child care bills that will drop out in retirement, and other weirdness like medical insurance that I normally don't see.

One interesting thing to note is that for people who are heavily invested in real estate, this kind of accounting makes their savings rate primarily determined by where they are in the amortization schedule of their mortgages.   A bunch of young mortgages would show high interest and low principal payments, and thus a low savings rate.  A bunch of late mortgages would show mostly principal and very little interest payments, showing a much higher savings rate.   And that's true for identical payments over the life of the mortgage, which seems kind of bogus to me.

CommonCents

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Re: What is your savings rate?
« Reply #47 on: May 06, 2015, 03:58:02 PM »
Property taxes were one sticking point.  Despite the OP asking to exclude them, I just cannot fathom how to account for property taxes as anything other than an expense.  I pay them every year.  I could pay less if I moved.  They aren't proportional to my income.  They are not savings.  They are voluntary spending, just like groceries and utilities, so I left them lumped in with expenses.

Actually, if you look back at the OP, you'll see I edited it a while back to include them after all (by striking through the exclusion) as the arguments people made made sense.  :) 

CommonCents

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Re: What is your savings rate?
« Reply #48 on: May 06, 2015, 04:00:58 PM »
Interesting results.  Looks like almost half (42% to be precise) of respondents are between 45-65%.

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Re: What is your savings rate?
« Reply #49 on: May 06, 2015, 04:08:29 PM »
Interesting results.  Looks like almost half (42% to be precise) of respondents are between 45-65%.

Yep, makes me realize that DW and I need to step our games up. Playing the rewards CC game to control our travel spending will probably do the trick.