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Have you ever taken a pay cut? Do you regret it?
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Same boat but I have a paid off car.
I make $85k in DMV area and have been able to save $45k (not including 401k that has $20k) over the course of around 20 months
I see the biggest mistake people make is renting a nicer place just because they can afford it. I can afford to live on my own but choose to live with roommates because I’m able to save $2k+ a month by doing so.
My spending summary:
$4.4k take home pay
-$1k Rent/utilities
-$400 bills (cell, car insurance, fitness related)
- $500-1000 for other spending (electronics, eating out)
Save $2k-$2.5k a month
I still take small vacations (on average spend $150/day by splitting with GF), do things like ski, have nice electronics, go out drinking, bottomless brunch etc. I feel like I’m living life!
-Evaluate your rent, aim for 30% or less of your take home pay and you will save like crazy
-Limit your eating out such as twice a week spending on average $30 or less per meal
-never order delivery. Always pick it up yourself
I cut my rent in half by moving from Virginia Square to Falls Church. I have one more roommate (so four of us in a 4 bedroom house) but its not nearly as bad as I thought it would be. I'll be 100% debt free by August, which was my goal. Anything is survivable for a time -- you just have to want something bad enough to make sacrifices for it.
Have you spent any time really imagining what you could be doing if you saved more? Who you could help, the experiences you could enjoy, the ventures you could start, the peace of mind you could have? Once you know what matters most to you, it becomes clearer what is a waste of money.
@OP Did a little analysis for you here.
TC: 225k
401k : 19,500 (savings)
Balance: 205,500
HSA : 3500 (savings)
Balance: 202,000
After taxes (-33%): 135,340
(-)current Rent : 36000
Balance: 99,340
Reduce your rent by 500 and save $6000
(-)Food: 24000
Balance: 75,340
Seems a lot, don’t you get to expense food at work? You could easily save 12,000 by changing your lifestyle and cooking yourself or getting meal kits.
(-) clothes: 30000
Balance: 45,340
You already know this bit too much.
(-) vacations: 15,000
Balance: 30,340
(-) monthlies, entertainment and misc: 10,000
Balance: 20,340
Just a guesstimate but you prolly save:
Balance + 401k + HSA : $43,340 right now. Not bad, but you could easily double it.
Just for context: my wife and I make 400K and our annual savings are about 200k may be more this year due to covid-19
Our monthly burn rate is about $6k in NYC
Your monthly burn rate is about $9k, control this and you’ll save more. Which means prioritizing what you spend your money on.
Then again you can keep your burn rate same but try to earn more.
This is SDA1, title change in fish bowl blocked me from posting anything.
@consultant3 here is my personal breakdown.
@Deloitte 7, you can follow a similar template.
TC: 400k (me + spouse)
401k : 39,000 (max it)
HSA: 7,000 (max it, healthcare is expensive you’ll end up using it later in life)
Balance: 354,000
Balance after - 33% tax: 237,180
Target savings: 200,000k (includes 401k,HSA)
Max Annual Expenses Budget: 83,000 (rounded)
Rent + parking + utilities + insurance : 41,000
Groceries: 6000 (500 per month)
Entertainment : 6000 (500 per month)
Shopping: 6000
Vacation: 12,000 ~ 15000
Misc: 6,000 ~ 8,000
Pretend like you make 150k and save everything else - and make one of your hobbies your investment strategy. If you incorporate your own investment management - learning, strategizing, executing - into your lifestyle it will flow naturally.
Man, what? I make similar money in chicago, have a car (and the 200+/mo parking spot that goes with it...) and am paying for part time b-school out of cash flow and I am still able to save after maxing 401k and backdoor Roth IRA.
$225k and single is more than decent money, I would argue. I'd recommend listening to Naval Ravikant's podcast on wealth creation. He gives great perspectives on self management and how to think about your income with a long term view.
Invest your money with small businesses to make extra money
Here are some tricks i’ve used to save more:
Max our all workplace savings vehicles (401k, after tax 401k contribution, company stock, HSA)
Setup an account with a brokerage have part of your paycheck deposited there. Setup automatic investments into mutual funds. Make a goal to not touch this $.
Start depositing in all of the above in small amounts and increase it over time. Wife and I have saved over $2M with the above strategy.