03-27-2012 07:16 AM
I read a blurb yesterday from a guy that saves a lot of money, but he says he does not really save much at all. I disagree with this reality, BUT, I did agree with his principle.
This guy literally counts his chickens before they hatch!
He and his wife sit down, do a budget for the month/year, and calculate how much they can save.
They tally up the total for the month.
Then they tally up for the year.
So they look at big picture, a year in advance.
Then they multiply that by 4. <--- just their standard of measurement.
I thought wow. Here I am, working within a budget, thinking I am barely saving anything at all! I feel like I save $120 (now) a paycheck, times two and then $100 a month for Ally CD. In my mind, that felt like saving just about $200 a paycheck.
When I change my perspective and count ahead, and include TSP, my perspective is a lot more exciting!
When I turned it around that way - I was SHOCKED at how much I was saving! I can definitely get on board with this reverse thinking. I haven't told DH yet, cuz he has not idea of how much I really save and I don't want him to start thinking we can spend more. Love him much, but he just might say we can splurge and go to Hawaii or something. I have him believing we live to paycheck to paycheck (which we really do), paying cash (which we really do), and yes he does see how much comes in and how much goes out. He just never made the mental connection between the gap of gross and net pay. He understands there IS a gap (taxes, insurance, TSP, etc), but he's never looked closely at it. He just looks at the bottom line - how much do we have to work with. One piece of that gap is a direct deposit into savings.
03-27-2012 08:57 AM
This is an awesome tip! I like the idea of saving forward and being proud of how much you have accomplished (well, will accomplish) rather than feeling bad you aren't able to save as much as you would like.
03-27-2012 12:33 PM
I'm with you. My spreadsheet dips a year into the future mainly to see where the low points are, but it works much like your saving forward, just that we put a part of the expected balance into IRAs. We have actually already done it for the entire year by way of one of those checks that credit card companies send out; the fee is next to nothing, and there's no APR if paid by new year. Of course they hope we don't.
03-27-2012 01:59 PM - edited 03-27-2012 02:02 PM
I sat down and actually ran the numbers. Surprise!
If I count TSP and employer contributions, plus the direct deposit secret savings, plus the CD's I do, and my annuity contribution --- and NOT counting the interest I earn -- I was pleasantly SHOCKED to see 5 figures!! That's five figures BEFORE the decimal point!
Then I redid the number counting only what I can access (so minus TSP, employer contribution, and annuity contribution) and the number was nice too. It's about 37% of the gross income (about 26% of take home pay).
At least that is what it will be with the next paycheck if there are no expensive surprises.
I went from thinking I was saving about $100 a paycheck to realizing it's a bit more than that when you count in the secret direct deposit, etc. I tell you, the out of sight, out of mind really works! And I can tell you that thinking I am saving 5 figures a year will definitely be a motivator to not eat out, etc!
Oh, I am soooo excited!!!
03-27-2012 02:19 PM
I am excited for you!!! Having enough saved away for a rainy day and retirement is definitely something to be proud of, and you're saving for your kid's college education also, right? This is how it feels post-rebuild and I just hope everyone who is in the process of rebuilding will be able to experience the same elation you are feeling now.
03-27-2012 05:09 PM
Idiotsavant - Thank you!
I have one graduating from college in about 35 days. No student loans on that one! Not that he will appreciate it...
The next one (he graduates from high school in a few months) - not sure when he will graduate from college, but he starts in the fall. Have 30k saved up for it. And at the time he starts, I will be able to take part of the paycheck to pay his expenses ($500 a paycheck) ...so in theory, I will be paying cash as I go, not touching the 30k, and still able to save some!