Author Topic: MSN Money: Supersavers = saving 15% for 10 years  (Read 13400 times)

jrhampt

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MSN Money: Supersavers = saving 15% for 10 years
« on: August 09, 2012, 06:33:35 AM »
MSN Money's series on how to become a millionaire includes this segment on being a "burst saver" or "super saver".

http://money.cnn.com/2012/07/20/pf/savings-budget-millionaire.moneymag/index.htm

I also like some of the naysayers in the comments saying how impossible it is to save 15%.

tooqk4u22

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #1 on: August 09, 2012, 07:54:48 AM »
I saw that - I never heard of burst saving and when I read it I was surpised. How pathetic.  Saving something is better than nothing though. 

smalllife

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #2 on: August 09, 2012, 07:56:53 AM »
Such naysayers in the comics . . .

Hell, I'm saving a little more than 15% on a third of that guys salary (only including retirement accounts). 
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RoseRelish

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #3 on: August 09, 2012, 08:10:03 AM »
15% isn't so bad, it's that it's a stretch goal that's sad. I could do 15% in my sleep.

tooqk4u22

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #4 on: August 09, 2012, 08:33:55 AM »
Its not a stretch goal, it is a KEY MOVE.....c'mon say it with me...."BURST".....sounds so dynamic.   The basis makes sense but how about you save 15% of your pay and when you get a pay raise or bonus save that too. 

I just went back and read through some of the comments...so funny.

mugwump

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #5 on: August 09, 2012, 09:34:16 AM »
Yeah, I did burst savings.  My husband had the stable income so when I was working I saved or invested 100% of my take-home pay.  The burst lasted 10 years. It worked.

arebelspy

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #6 on: August 09, 2012, 09:35:16 AM »
Sure, 15% is laughable, but overall I liked the article.

The idea of saving more when expenses decrease (say, kid goes off to college) or when income increases (raise, bonus, or tax refund) is elementary to us, but may be novel and helpful to readers of that site.

And their example guy actually was frugal for once!

Quote
Moore says the secret to his success has been keeping his housing and transportation bills low.
He bought a four-bedroom fixer-upper in an estate sale for $63,000 in 1995 and did most of the repair work himself. He's since paid off the mortgage and estimates the 2,700-square-foot house in St. Louis is now worth about $250,000. He owns a 15-year-old Buick Riviera with 154,000 miles on it and saves on gas and maintenance by mostly taking a train or bus to work and driving only when absolutely necessary.

THAT is Mustachian!
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jrhampt

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #7 on: August 09, 2012, 10:19:28 AM »
True, it does have an overall mustachian tone to it except for the 15% bit.  And, of course, the commenters.

smalllife

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #8 on: August 09, 2012, 10:23:38 AM »
True, it does have an overall mustachian tone to it except for the 15% bit.

Depending on your salary, 15% can be a big deal.  Many of you guys work in high earning fields and can sock away over 50% without so much as blinking.  For those of us in the low 30Ks or below (aka the retirement income many of you shoot for), 15% isn't something to laugh at.   It's a good starting point and completely possible to do more, but it's not chump change for those of us lower on the totem pole.
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arebelspy

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #9 on: August 09, 2012, 10:39:28 AM »
smalllife, you're right that 15% could be more difficult for some than others, but for an article telling you how to get wealthy by saving, 15% doesn't cut it.

And my guess is that many of the commentors who complained about not being able to save 15% waste plenty of money on eating out, xbox live, iphones, car loans, and INTEREST.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
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You can also read my forum "Journal."

strider3700

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #10 on: August 11, 2012, 12:12:37 PM »
We've been doing burst savings or debt payments here as well.   My wife has a well paid permanent position.  I was watching the kids and doing contract work.   We could get by on just her income so mine was bonus.  As I'd get a cheque it was immediately moved to savings, put against the mortgage or spent on something very long lasting needed for the house.  Things like a new roof, side fences,...

It worked well enough that my wife is cutting back her hours at work and taking her career in a different direction with a new part time venture.  I can increase my hours to compensate a little for the reduction in her income  and we still have a buffer.   

joer1212

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #11 on: November 14, 2012, 12:53:05 AM »
Ha HAAAAAA!
This article was pathetic!
I live on 15% of my salary and invest the rest.

kolorado

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #12 on: November 14, 2012, 10:29:18 AM »
I agree with you Smalllife since I'm in that boat, but I don't think that's what the article was implying. Really, if the median wage earner in the US somehow walks away from the article with the idea that saving 15% for 10 years will amass them a million $, they will be sorely disappointed. Plugging the numbers into a simple savings calculator and at a perhaps generous 8% return over 10 years, their savings will amount to a whopping $110K.
Even doing the math on the example in the article, an income of about $90K, saving only 15% over 10 years will get you just over $200K.
The 15% is way off base and misleading. You'd have to have an income of nearly $450K to make it happen with an expected interest return of 8%. Be more optimistic with the returns if you want but the average Joe doesn't usually get 10%+ a year returns over the long term.
In my 12 years of marriage, DH's 401K has averaged about 6.5%. I think that's pretty awesome considering the mess and losses we've gone through over the last 6 years especially.
And for what it's worth, this will be the first year my DH has made more than $40K, and just over it. We have three kids, a new home and two cars. Yet we've saved 15-35% of his income every year of our marriage and no, it isn't easy. We make a lot of sacrifices and forgo a lot of experiences to provide for our future. This year we will have saved 18.5%.
We began our marriage and savings plans thinking we would retire with $1 million, which of course wouldn't be worth so much in future dollars but was still generous enough to live well on in the future. Now we're just hoping to make it to $500K and much of that will be in the value of this house when we sell it. I have talked him into retiring to a tiny cottage so that's a big step toward reducing our needed income.

Jamesqf

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #13 on: November 14, 2012, 10:47:13 AM »
We make a lot of sacrifices and forgo a lot of experiences to provide for our future.

That's entirely the wrong way of thinking about it.  Consider this: even if you had no need to earn a living - say you are a trust fund baby - you still do not have the time in your life for all possible experiences.  You must select the ones you want to have.  So if you for instance select tent camping with the kids in a fairly nearby place over driving across the country in a 40-foot RV, have you sacrificed or foregone anything?  No, you've just chosen one of two (possibly, according to your tastes) enjoyable experiences to have.

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #14 on: November 14, 2012, 11:18:18 AM »
We make a lot of sacrifices and forgo a lot of experiences to provide for our future.

That's entirely the wrong way of thinking about it.  Consider this: even if you had no need to earn a living - say you are a trust fund baby - you still do not have the time in your life for all possible experiences.  You must select the ones you want to have.  So if you for instance select tent camping with the kids in a fairly nearby place over driving across the country in a 40-foot RV, have you sacrificed or foregone anything?  No, you've just chosen one of two (possibly, according to your tastes) enjoyable experiences to have.

Very good point!

kolorado

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #15 on: November 14, 2012, 11:22:04 AM »
We make a lot of sacrifices and forgo a lot of experiences to provide for our future.

That's entirely the wrong way of thinking about it.  Consider this: even if you had no need to earn a living - say you are a trust fund baby - you still do not have the time in your life for all possible experiences.  You must select the ones you want to have.  So if you for instance select tent camping with the kids in a fairly nearby place over driving across the country in a 40-foot RV, have you sacrificed or foregone anything?  No, you've just chosen one of two (possibly, according to your tastes) enjoyable experiences to have.

That all depends, what if you can't afford to do either without sacrificing savings for the future?
I didn't use the term "sacrifice" lightly. I don't go around like a martyr every day or anything, but are you really trying to deny that those on the lower income level, raising kids, aren't making sacrifices in the now for the future?
Just imagine it from this perspective, trust fund baby has 100,000 things he/she can choose to do. Time is their only limitation, not money. As you go further down the income spectrum, people are limited by time but also by disposable income. But just like the trust fund kid, we see all 100,000 choices, even the ones we would never be able to afford. Down at my income level, I'm well aware of the 100,000 choices but can realistically only afford 5% or less of them. It's only human nature to be disappointed or even feel like you've made a sacrifice when everyone above you is choosing to eat chocolate cake and cheesecake and pie and cookies and ice cream and your only option is lemon tart.
Your example wasn't really the best either, since especially with camping, if you go with merely the intention of "camping" you could do that in your back yard and not spend a penny. Most campers I know like to be exposed to and expose their kids to new places and parks and trails and historical sites. The nearby campground will be a sacrifice, not a solution.
There are only so many easy sacrifices you can make(lattes, no cable, secondhand clothes, etc)before you start having to dig into the hard ones. For example, in our case, our older two children are special needs. Trust me when I say that I have thoroughly examined the public education offerings and am not impressed. I would do almost anything to get them into a private school that specialized in meeting their needs. The tuition, however would be more than half our income. So the next option is to homeschool them so that I can adapt my approach and curriculum to their needs. This is not the solution I feel is best for them. The solution that is best for them is out of our financial reach. Do you see what I mean?

ketchup

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #16 on: November 15, 2012, 02:28:25 PM »
True, it does have an overall mustachian tone to it except for the 15% bit.

Depending on your salary, 15% can be a big deal.  Many of you guys work in high earning fields and can sock away over 50% without so much as blinking.  For those of us in the low 30Ks or below (aka the retirement income many of you shoot for), 15% isn't something to laugh at.   It's a good starting point and completely possible to do more, but it's not chump change for those of us lower on the totem pole.
It really varies depending on your living situation. I will make about 28K before taxes this year, and I'm able to sustain a savings rate of over 60%.  But that's not possible for everyone.

grantmeaname

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #17 on: November 15, 2012, 05:38:28 PM »
I saved nearly two thirds of what I made when I was making $17k annually in Americorps, and I know Bakari and the ERE folks do much better than I do. It's certainly a squeeze, but it just goes to show that you could always be doing better and saving more.

Dee

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #18 on: November 15, 2012, 06:21:15 PM »
Quote
We make a lot of sacrifices and forgo a lot of experiences to provide for our future.

Hi Kolorado,

I just want to validate your point and commend you for making those tough choices in favour of a more secure future. I, for one, would not currently be equipped to save nearly as much as your family is saving, with that income and with children to raise. Yes, a few people in similar positions may be saving more, but that vast majority are not. Your savings are extraordinary!

kolorado

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #19 on: November 15, 2012, 08:12:00 PM »
Quote
Hi Kolorado,

I just want to validate your point and commend you for making those tough choices in favour of a more secure future. I, for one, would not currently be equipped to save nearly as much as your family is saving, with that income and with children to raise. Yes, a few people in similar positions may be saving more, but that vast majority are not. Your savings are extraordinary!

Thank you, Dee. I appreciate that. :)

Captain and Mrs Slow

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #20 on: November 16, 2012, 07:48:26 AM »
I live on 15% of my salary and invest the rest.

I know has been discussed elsewhere but does the 15% include mortgage/rent?

For us rent and ultitlies alone runabout 40% of our take home pay, bit more during the winter bit less during the summer, once you add in all the other costs it jumps to about 85%

Note I am working on lower some of it but there are enough fixed costs which are hard to lower.

Edit: one factor is we have one high rather than two medium incomes so taxes are higher.
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Captain and Mrs Slow

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #21 on: November 16, 2012, 08:04:08 AM »
The very first comment I read was a guy bragging about how frugal he is driving a 100 miles a day on his old beat up car, don,t need to guess what my reply was;)
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offroad

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Re: MSN Money: Supersavers = saving 15% for 10 years
« Reply #22 on: November 16, 2012, 09:57:02 AM »
Should there be a triad plan?

1). Save abs much as you can
2). Cut all expenses till you scream
3). Learn to live on minimal dollars.

Simple or complex as you want.