Author Topic: My Savings Rate for 2018  (Read 4293 times)

KTG

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My Savings Rate for 2018
« on: March 30, 2018, 09:48:19 AM »
So one thing Money Mustache has done for me is to take a hard look at how I spend money. Especially on bills. It took a long time, but I set up an awesome excel workbook to track my little Mustachian empire, such as how my 401k has grown, what my index funds are doing, but most importantly to track my monthly expenses like gas, water, cable and all that, and compare them to what they were the year before. Its been an eye opening experience. My goal is for my monthly expenses to be less than the year before. And even though some naturally go up, like auto insurance, some I have managed to bring down, like electricity and cable for example. So far I have done really well.

The one thing I haven't been focusing on very well is saving cash. I did put some of my emergency money into the dip we just had, so I wanted to replenish my emergency cash fund, rather than cash out what I just put in. So for 2018 I have been aggressively cutting back on spending and moving everything I can into savings and then in turn buy more VTI as I go. Keep in mind, the tax cut, a raise, a bonus, all have helped, but I havn't blown any of that money on anything. My only debt is my home, and while I do use my credit card, I rarely carry a balance from month to month. So this is really money being saved, not saved and then spent. My 2017 savings rate ran about 19% a month including 401k contributions and after tax take home pay. But I am not sure if and how often I might have skimmed off that to be honest. I didn't track it like I am now.

So for 2018, my month savings rates:

Jan: 65%
Feb: 58%
Mar: 43%
April Expectation: 39%

and I expect the rest of the year to be in line with what I expect April to be. I am not expecting additional funds coming in other than my salary job. And this also assumes nothing major breaks in my house or in my car (knocks on wood).

At any rate, I am stunned, really. And I have you guys to thank for motivating me.

KTG

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Re: My Savings Rate for 2018
« Reply #1 on: March 30, 2018, 09:50:34 AM »
Crap, sorry for the multiple posts... it didn't seem like the Post button was working.

PNW Lady

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Re: My Savings Rate for 2018
« Reply #2 on: March 30, 2018, 10:10:51 AM »
Congrats! The forum and MMM articles are such great inspiration. It is pretty amazing the impact a little awareness and focus can have on getting your savings rate up.

Another fun one to track is annual mileage, and to see how low you can go!

Penn42

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Re: My Savings Rate for 2018
« Reply #3 on: March 30, 2018, 04:54:54 PM »
That's awesome, keep it up.  It sounds like we found MMM at about that same time.  I had a spreadsheet for last year, but it was pretty basic and didn't tell me much.   This year I really stepped up my expense tracking game.  Currently at 57 percent for the year.  I expect it to stay about right there if nothing major happens. 

It's been fun keeping a much closer watch on it all.  I haven't yet actually stayed below my allotted budget every month because I made it a little tighter than I've been able to handle.  But I'm not going over it by very much and my next goal is to settle in at my number. 

I love having things to work towards. 



Sharing In The Groove

DreamFIRE

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Re: My Savings Rate for 2018
« Reply #4 on: March 30, 2018, 05:26:45 PM »
Congrats to all the savers!

Don't forget to count your employer's contributions to your retirement plan if you are vested.  This might be my last full year of full time employment, and I expect to be back up over 80% saving rate this year.

Edit: I just recalculated this from scratch.  With my typical budget, I could hit 84% this year, but I have some additional home maintenance that I need to do this year, which could drop me below 80%.  I have a meeting with the company retirement plan manager to start an additional fund in addition to my 457, which if it works out as planned, should put me back up over 80% but very unlikely to beat my record from 2016 of 83% savings rate.  Still, not bad for my last year.  OMY isn't out of the realm of possibility, though.
« Last Edit: March 30, 2018, 06:50:10 PM by DreamFIRE »

londonbanker

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Re: My Savings Rate for 2018
« Reply #5 on: April 05, 2018, 05:38:02 PM »
Is the saving rate you’re quoting a % of preTax income or postTax income?

DreamFIRE

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Re: My Savings Rate for 2018
« Reply #6 on: April 05, 2018, 08:50:58 PM »
Is the saving rate you’re quoting a % of preTax income or postTax income?

I use the take home pay formula which is after taxes as Mr. Money Mustache explains here;

http://www.mrmoneymustache.com/2015/01/26/calculating-net-worth/

Example:

The MMM Take Home Pay calculation would thus be:

Gross Pay + Employer 401(k) match – taxes and fees
= $8620 gross pay + $300 employer 401(k) match – $1724 federal tax – $689 state tax -$200 professional fees
= $6407 biweekly or $13,839 per month

KTG

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Re: My Savings Rate for 2018
« Reply #7 on: April 09, 2018, 07:50:22 AM »
Is the saving rate you’re quoting a % of preTax income or postTax income?

Well, both. I am contributing to my 401k, so that's pre-tax, but I am actually setting aside a lot of cash (post-tax) that I am used to spending. As a matter of fact, currently the cash I am setting aside is more than what I am contributing to my 401k. I've just been really focused on lowering my bills and cutting my spending down and pretty unprepared for how much I would be able to save.

I know I should do more with the cash and I eventually plan to, but I am building up my emergency fund after throwing a big chunk of what I had into the market dip.

If I am able to stick with this, I will increase my 401k contribution.

KTG

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Re: My Savings Rate for 2018
« Reply #8 on: April 09, 2018, 07:52:39 AM »
Congrats to all the savers!
Don't forget to count your employer's contributions to your retirement plan if you are vested.

Oh geez, I didn't even include this. I do get a pension too. So that means my numbers would be even higher. Actually, my company matching is only done once a year, so not sure that I should add that monthly.

I was just looking at this from a point of view on what my salary was bringing in. Didn't even think of other sources. And then there is a dividends too.

Ugghhh too much to track!
« Last Edit: April 09, 2018, 07:54:40 AM by KTG »

KTG

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Re: My Savings Rate for 2018
« Reply #9 on: April 09, 2018, 08:04:32 AM »
Ok what the hell, I added a couple of more lines to my spreadsheet. So including pension contributions (which are always a couple of months behind), and the 401k matching that occurs in Feb, my revised savings rates are:

Jan 2018: 74%
Feb 2018: 122%

Wow crazy I guess. Not sure I should be doing it this way, but I guess it is money coming in...

Edit: Wait, what the hell. This is really confusing. My Pension and is based on my Salary, and my 401k is based on my contribution. I am just dividing my total of what is going into savings + my 401k+  my matching + my pension + and then my dividends (which get reinvested) by my take home pay (post-tax salary). Not even sure if this is the right way to do it.
« Last Edit: April 09, 2018, 08:31:36 AM by KTG »

DreamFIRE

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Re: My Savings Rate for 2018
« Reply #10 on: April 09, 2018, 03:21:17 PM »

Over 100%??  Make sure you are adding your employer's contribution to the take home pay side of the equation as well, as in Mr. Money Mustache's example.

Although dividends are taxed now, I don't include them as income in my savings rate figure because they are essentially part of the existing stash and part of the growth which is already factored into the 4% rule.

KTG

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Re: My Savings Rate for 2018
« Reply #11 on: April 10, 2018, 05:19:15 AM »
Ha! Yeah I wasn’t adding all those new numbers to the take home total. Oops.

Corrected Jan 2018: 63%
Corrected Feb 2018: 71%

I am going to go ahead and add the dividends. I am reinvesting them, but it would be the same as cashing them and eventually buying more stock which is what I would do anyway, and that’s sort of saving to me.

11ducks

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Re: My Savings Rate for 2018
« Reply #12 on: April 11, 2018, 04:27:49 PM »

I'm currently at 47% net savings, not including my 5% retirement contribution or my employer contribution. It would be 65% if I included mortgage payments.
Cheaper beans...CHEAPER BEANS! - dagiffy1

KTG

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Re: My Savings Rate for 2018
« Reply #13 on: April 12, 2018, 07:38:14 AM »
Mortgage payments? Isn't that an expense?

londonbanker

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Re: My Savings Rate for 2018
« Reply #14 on: April 12, 2018, 02:27:54 PM »
Mortgage payments? Isn't that an expense?

The interest part of it yes - the capital repayment part is savings as accretive to your NW number

DreamFIRE

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Re: My Savings Rate for 2018
« Reply #15 on: April 12, 2018, 09:25:02 PM »
Mortgage payments? Isn't that an expense?

I posted this in another thread, but it's applicable to your question as well, so this is mostly just a copy / paste from my other post:

MMM doesn't include the part of the mortgage payment that is made toward the principal of the loan as spending, but he includes the rest of it.  A mortgage payment may include principal, interest, property tax, homeowners insurance, PMI, and HOA fees.  Only the amount of the payment made toward the principal should be counted as saving vs. spending using MMM rules.  I think people are conflating MMM's comments to exclude their entire mortgage payment from spending, but that's not how it works.

http://www.mrmoneymustache.com/2015/01/26/calculating-net-worth/

Quote from MMM in the "spending" section:

Everything that flows out of your wallet, bank account, credit cards,  or automatic payroll deductions for things like insurance.

Finer Points:
I include property taxes and sales tax, but do not count income tax or other payroll taxes.
I include all loan interest and fees, but do not count the principal portion of loan payments.


Later in MMM's example for spending:

Joe’s Spending

Interest portion of his $2500 mortgage payment: ($2000)
Interest on credit card and student loans: $480
Condo fees: $450
Property Taxes: $500
Utilities: $200
Car Payment: $539

Dicey

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Re: My Savings Rate for 2018
« Reply #16 on: April 12, 2018, 09:42:23 PM »
Congratulations to you KTG. Also, I saw your other post today DreamFIRE, good info.

Without taking anything away from your achievements, I want to add that I was never able to hit such high numbers. I was single, earned an average wage in a HCOLA and had a huge mortgage payment, because, HCOLA. The most important thing is consistency.  Keep tracking, keep saving, keep investing, and your FIRE dreams will come true. Mine took a lot longer, but my success is still as sweet, five+ years later.
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11ducks

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Re: My Savings Rate for 2018
« Reply #17 on: April 13, 2018, 03:52:43 AM »
Mortgage payments? Isn't that an expense?

Yep, I don't really count it, but once the mortgage is paid off it'll be a nice addition to my % savings rate!
Cheaper beans...CHEAPER BEANS! - dagiffy1

KTG

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Re: My Savings Rate for 2018
« Reply #18 on: April 16, 2018, 09:48:40 AM »
I see. Well, rather than track each part of the principle I was paying, I was just tracking what my house was worth - minus what I still owed, and then adding that to my net worth. I wasn't really considering the monthly payment. I guess I feel real estate is kinda dicey sometimes and goes up and down in value, and that monthly amount might be lost in that value I guess.

Still not sure if I should bother. It just feels like a cost of living expense. Even though each payment helps me.

I am doing terrible this month by the way. . . :( Wont be a big % like the previous 3.

Making Cents

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Re: My Savings Rate for 2018
« Reply #19 on: April 16, 2018, 10:21:49 AM »
Our annual savings rates hover around 60-65%, not including mortgage as savings. Once medical expenses are past us, I think we should be able to start hitting 75%. Looking at savings rates by month is a new spin on this... it's very helpful I like it! None of these include mortgage on the savings side.

Jan 63%
Feb 66%
March 51%

I knew DH made less last month and that we spent slightly more, but this way of crunching the numbers as a percentage is extra motivating since DH's pay is variable. By shooting just for a numbers of dollars not to exceed in spending and a minimum dollar amount to bank monthly, I was missing this.
« Last Edit: April 16, 2018, 10:23:49 AM by Making Cents »

KTG

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Re: My Savings Rate for 2018
« Reply #20 on: April 26, 2018, 12:49:40 PM »
So due to the drag of my pension hitting my account, it takes almost a month or so to finalize what my rate for a previous month was. So:

Corrected Mar 2018: 47%
April Expectation: 26%  >: (

Really have done a crappy job this month. And worse, I have a balance on my CC that will take some time to pay off. I could just use my savings, but I am so irritated I let it get as high as it is ($1500) than I am forcing myself to take it from my pay. So this is going to affect my rate the next few months. So May could be even worse than April.

I am so lame.

Also, I would like to note that I have a bank account set up for home repairs. Every week a scheduled transfer takes from my checking and puts it there. Its just my way of setting aside a little bit here and there to soften the blows of AC repair or something. I had a chunk of change in there, but have sucked it dry. But I am not including these amounts in my Savings Rate because, well, stuff is always breaking in a house. Last thing to go was a $400 microwave.
« Last Edit: April 26, 2018, 12:58:31 PM by KTG »

Dicey

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Re: My Savings Rate for 2018
« Reply #21 on: April 26, 2018, 09:20:35 PM »
So due to the drag of my pension hitting my account, it takes almost a month or so to finalize what my rate for a previous month was. So:

Corrected Mar 2018: 47%
April Expectation: 26%  >: (

Really have done a crappy job this month. And worse, I have a balance on my CC that will take some time to pay off. I could just use my savings, but I am so irritated I let it get as high as it is ($1500) than I am forcing myself to take it from my pay. So this is going to affect my rate the next few months. So May could be even worse than April.

I am so lame.

Also, I would like to note that I have a bank account set up for home repairs. Every week a scheduled transfer takes from my checking and puts it there. Its just my way of setting aside a little bit here and there to soften the blows of AC repair or something. I had a chunk of change in there, but have sucked it dry. But I am not including these amounts in my Savings Rate because, well, stuff is always breaking in a house. Last thing to go was a $400 microwave.
The important thing is just to keep at it. Don't beat yourself up (unless you ran up your card for hookers and blow). It's a marathon, not a sprint. You will get there!
I did it! I have a journal!
A Lot Like This
And hell yes, I am still moving confidently in the direction of my dreams...

Making Cents

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Re: My Savings Rate for 2018
« Reply #22 on: May 02, 2018, 09:20:10 PM »
Jan 63%
Feb 66%
March 51%
April 41% (hmph time to buckle down again)

Cactus

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Re: My Savings Rate for 2018
« Reply #23 on: June 13, 2018, 10:48:12 PM »
Thats very impressive to me. We are at 10 % something.😅

DreamFIRE

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Re: My Savings Rate for 2018
« Reply #24 on: June 15, 2018, 07:18:09 PM »

I did end up investing more into my work 457B and 401(a) as mentioned earlier, over $40,000 to be contributed pre-tax this year, so that's helped to keep my saving rate over 80% this year, which could be my last full accumulation year as a full time employee.

OurTown

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Re: My Savings Rate for 2018
« Reply #25 on: June 18, 2018, 08:02:41 AM »
40% as a couple, that counts my 401(k) plus match, my 403(b), her 457(b), her 403(b) plus match, both Roth IRAs, and principal included in the regular mortgage payments.

QuillScroll

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Re: My Savings Rate for 2018
« Reply #26 on: June 19, 2018, 09:06:16 AM »
My savings rate this year has been consistently about 50% every month so far.
I calculate this percentage off my net pay not gross. Any additional payment towards mortgage principal is also considered as savings but the regular payment I make is considered spent.