Many, many moons ago I joined J.Money's millionaire goal blogger's group. Friday I updated my plan, and let him know. When I did that I checked out a bunch of new and newish bloggers to the group. Through that I found a new group. It is a group that has a goal I want to reach. A goal I doubt I can reach this year but I know I can reach it at some point, so why not join up now. So you are sitting there going, So what is the group?!
The group's goal is to save half of their income, after taxes are taken out. This does not mean that you don't count pre-taxed savings, just that we are looking at the lower number.
Go check the two leaders out at YoungFinances and FrugalPortland.
With our daughter's expenses of over $12,000 for daycare alone which accounts for about half of my income, we can't afford to save half our total income. My husband and I make about the same, plus we have our joint rental income.
Now this group is not strict, paying off debt counts as savings.
Right now I only have two debts we are paying off:
My mortgage which is 4.75%, minumum payment of $252.48, total balance of $45,040.31
Private loan through NYSERDA to replace my water heaters and furnace which is 3.49%, minimum payment of $36.79 but this has been on autopay for so long, I don't know the total balance. It started as $5150 and was a 15 year loan. I am trying to get the information.
Keep in mind that paying interest does not benefit you, so this group only allows for principle payments. That means I can only count $73 of the $252 payment as "savings". Still better than nothing. I believe I paying about $24 per month on principal towards the private loan though.
So, just with debt repayments I am "saving" $97 per month.
So averaging my rental income and our salaries, that would give us a savings rate of 2.33%. Obviously that is way too low. But wait! We have not accounted for real savings:
We have a retirement savings of 16.4%, which right now is $625/month plus my pay in to my pension. That brings up to 18.60%. Not bad, not bad at all, but still short.
Well, here is where the rental comes in. The income is variable so I don't account for it in the budget and it ALL goes to savings or debt repayment.
This is because we have debts we are not paying on as most graduate student do:
$17,000 in graduate student loans 0% for now, 6.8% six months after my husband graduates (Nov 2014 is the expected start of repayment)
$5,500 in undergraduate student loans 0% for now, 6% six months after my husband graduates (again Nov 2014 is the expected start of repayment)
$5402 in undergraduate student loans 0% for now, 6% when I graduate in three years (May 2017 is the expected date of repayment)
We already have set aside $17000 to pay off the graduate loans, so we just need to pay off the undergraduate loans and start an EF. Prior to this, the money set aside for debt repayment and our EF were one and the same.
So assume we can either save or pay down debt by $4000 per year? How much, as a percent, will we be "saving"?
So, that is up to 26% of our net income. Not bad, but we still have a ways to go. So my goal within this group is to increase income and decrease expenses until I can truly say "I am saving half my salary".
So who is with me?