Budgeting & Saving

My Plan to Travel the World and Save Half of my Income

I was working on recording a retirement episode of the WealthFast Podcast and stumbled across a pretty neat fact.

The more you save, the earlier you can retire.

The concept is pretty simple; you need about 25-33 times your annual spending rate to retire and if you save 20% of your income, you can replace your income in 37 years; assuming that your savings grow at 5% per year.

That means, in 37 years, you can retire and live comfortably on what you have saved. That seems like a long time to me.

The calculation involves dividing your savings rate by your spending rate.

20% divided by 80% in this case. This calculation gives you an annuity; how much you can add to your retirement fund each year.

Let’s assume that you decide to save half of your income, 50%. Your annual contribution would be 1.

Using a Present Value calculation we plug in the following variables; $0 current balance, 5% interest rate, 1 annual addition, -25 Future value. Solving for N, the number of years, gives us 16.6.

That’s 16.6 years until retirement!

It sure beats working in a cubicle for 40 years before retiring.

Can I Save if I Have Student Loan Debt?

If you’ve seen my recent video on Youtube, then you know that I have a plan to pay off 65k in student loan debt in less than three years. Part of this plan involves saving more money by cutting expenses.

Little did I know that by cutting unnecessary expenses and making more money, I would be able to save much more.

In fact, I would be able to save 50% of my income!
50 percent savings club
That means that each month I deposit an entire paycheck into what I affectionately call my Freedom Fund. Instead of a retirement goal, I have a debt pay down goal and a travel goal.

Is It Really Difficult to Save 50%?

I used to think that radical savers were crazy couponers that clipped and snipped for an extra 30 cents at the grocery store. Now I know that radical savers have made a lifestyle decision. A little over a year ago (84 weeks to be exact) I read this post over at Frugal Portland about how Kathleen planned to save half of her income.
save half income commenter

At the time, I was saving 10% of my pre-tax salary in my company sponsored 401(k) plan. I even commented on that post that I wanted to do the same but only if I could travel as well.

84 weeks later my plan is in place.

How I Plan to Save Half My Income and Travel

I started the blog to document my goal of travelling more. Because I am saving half of my income from my day job to fund my student loan debt payoff, I will fund my travels with half of my income from my side hustle.

Is it really so hard to believe that you can save 50% of your income and still do what you want to do, like travel the world, buy a house or pay for advanced education?

Apparently it is, because after Kathleen published this post on Yahoo about how she and her fiance planned to save half of their combined income, the trolls came out. Similarly an ugly comment was made on my 65k debt payoff video.

I guess it’s radical to save money and pay off debt.

Who knew?

And now the fun stuff. Kathleen and I are starting the “Save 50% Movement” for everyone who is a radical saver. You could be saving to pay down debt, saving to travel, or saving for a house. We’re here to encourage each other to save more. Even if you’re not quite ready to save 50%, join us and as you see how easily others are doing it you will be ready. (Let’s hope it doesn’t take 84 weeks.)

Are you radical? Join us.

How to Join:

  • Commit to saving half of your after-tax income. (If you can save half of your gross income, that’s awesome!)
  • Request to join our Facebook group to stay motivated and encourage others

Optional for bloggers:

  • Write a post declaring your goals and grab the button below to include in your post.
50 Percent Savings Club
<div align="center"><a href="" title="Save Half Club" target="_blank"><img src="" alt="50 Percent Savings Club" style="border:none;" /></a></div>

Originally posted 2014-01-22 14:40:55.

Budgeting & Saving

How Much Should I Save?

When starting out in your first job, it can be tough to save. Between rent, transportation costs, student loan debt (and more) you may think saving money is impossible. Luckily, it’s easier to save than you may think! You will need to create a savings plan. Boring, right? But once you’ve identified your goals, you’ll be well on your way to having a fat savings account.
[Tweet “Saving money becomes easier when you realize how it’ll improve your life.”]
Having a strong savings account is more than just a point of pride. It means security. You’ll be secure in your finances and more secure in yourself. Even more than owning things, saving money can bring you great happiness. There’s a deep sense of happiness to obtain when your savings are high. Let’s start building your account:

Identify Your Savings Goals

When deciding how much to save, it’s important to first determine what you’re saving for. Even if you’re simply saving money to give you peace of mind (ie: an emergency fund), it’s still important to set some goals. Let’s say you want $10,000 to feel secure. That’s your goal. Your goal will determine how much and how quickly you will need to save. Here’s a possible list of things you may want to save for:
  • Emergency fund (short-term goal)
  • A wedding (short to medium-term goal)
  • Down payment on a house (medium-term goal)
  • Retirement (long-term goal)
  • Saving for children’s college education (potentially medium- or long-term goal)
Once you have determined your savings goal(s), it’s time to make your budget! It’s a lot easier and less boring than you think. Think of it this way… a budget is about thinking about how you want to use money to improve your life. Creating a better life is one of the most rewarding things we can do with our time. Let’s get to it.

How Much to Save Depends On How Much You Make

Clearly, how much you can save is determined by how much you make. Someone who makes $100,000 should be able to save much more than someone who brings in $30,000. That’s not to say the $30,000 a year person can’t save, it just means they need to be more strategic and ruthless about it.
Even if you have substantial student loan debt, you can still save money. Take the first step to create a monthly budget which will help show you where and how much you can save.
If you realize you need more money to reach your savings goals, read this post we wrote about using your “other 8 hours” to generate more income. You’ll be surprised how much you can make by hustling a little on the side! All that new found money can go towards your savings goal(s)! And new house, car, whatever is less out of reach than you may think.

Can You Sacrifice A Little?

Let’s get real: do you really need that gym membership? Or can you get away with workout videos on YouTube or DVD’s from the local library? How much money can you save by cutting cable or switching to a low cost phone carrier? Hint: A lot.
You can further reduce the amount of money you spend by looking at your food expenses. In stead of going out for lunch, simply bring your lunch to work. Instead of hitting the bars after work, host a happy hour at your place – just make sure it’s a fun BYOB event.
While these life changes may seem like a sacrifice, you’ll get used to the new norm. You may realize bringing your lunch to work is easier than driving to a restaurant during lunch traffic. You may realize you’re more comfortable hosting an event than being a customer at a bar. Sometimes saving money doesn’t really equate to many sacrifices.

Save Half of Your Income – Or More

It sounds crazy, I know. How is it even possible to save half your income or more? Between taxes, health care costs, plus actual living expenses… Depending on your income, savings discipline, and side hustling abilities, you’d be surprised how many people actually do save half their income.
While Will Lipovsky, from First Quarter Finance, has extremely low transportation and living costs, he’s currently saving over 50% of his income. He’s saves 85%, actually. See, saving a large amount of your income is possible.
Kali Hawlk, who quit her job to start her own business, also saves 50% of her income along with her husband. She does this by prioritizing affordable and fun hobbies over material goods and wisely using credit card rewards to fund her travel wanderlust.
You may have heard of the incredible popular, Mr. Money Mustache. He and his wife saved over 50% of their income in order to retire at the age of 30. His story, profiled by Forbes, is incredibly inspiring and informative. I encourage everyone to read it.

Savings Account Vehicles

Depending on your goal, you may need to consider different places to stash your savings. If you need your savings to be liquid, you won’t want to put your savings into stocks. For example:
  • Emergency fund:
    • Since you need this fund to be easily accessible, keep this in a regular savings account, either at your local bank or an online bank.
  • Retirement fund:
    • Since this is likely a long-term goal, consider keeping your savings invested in the stock market. Yes, the stock market gets a bad rap but, over the long-term, you’re likely to realize a significant increase in your initial investment.
If you’re curious about online investment options, check out LaTisha’s review of Betterment. Betterment, and other online investment companies like it, is a very good option for retirement savings. Betterment offers easy investing options with low fees. While Betterment and other long-term investing options may not be the best option for short or medium-term goals, you might want to check out Betterment for your long-term goals.

It’s up to You

I now pass the microphone to you. How do should you save. How do you plan on doing it? What will you do with the money once you have it? Comment below if you have questions. We’re here to help.

And without further ado, let the savings begin!!!

Originally posted 2015-07-22 10:00:24.

Budgeting & Saving

What Would the World Be Like Without Budgets

The importance of having a budget has been debated probably since the origin of the word. Some people live by a budget and can’t get by without their spreadsheets, while others simply see it as an ineffective waste of time.

In fact, a Gallup poll indicated that two-thirds of American households do not utilize a budget.

Budgets Are Intended to Help Us Do Three Main Things:

  1. Track our income and expenses each month.
  2. Prioritize our spending by matching our money with our goals.
  3. Limit how much we can spend on certain expenses to prevent overdrafts, running out of money too soon each month, or going into debt.

Given the crucial benefits budgets offer, it’s hard to imagine a world without them. You’ve probably heard the word ‘budget’ used several times when you were a kid. You may have heard it from your parents or other adults but never really grasped the concept.

Here are some of the key financial setbacks that occur when you don’t budget:

Out of Control Spending

While it’s easy to create a budget, it’s not so easy to maintain it. Each day, Americans are faced with advertisements and temptations to spend. When you don’t have a clear budget to create a purpose for your money, it becomes all too easy to overspend. It’s why you may find yourself leaving a store after spending $100 when your initial intention was to spend only $25.

“But if you don’t have a budget that limits your spending, how can you technically ‘overspend’?”

You’ll know that you overspent when you wind up short on cash later in the month. A budget helps restore order to your spending habits and control the money you have instead of letting it control you. A budget should be freeing.

Increased Debt

Out of control spending will no doubt lead to debt. You can only live above your means for so long. Having a budget can help you pay off your debt quicker by avoiding costly interest charges. Your budget can also keep you from accumulating crippling amounts of debt.

Many families are already dealing with debt. 2015 Federal Reserve statistics show Americans hold a combined average total of $890.9 billion in debt. I wonder how much of that debt belongs to anti-budgeters. Credit card debt is the third largest source of American debt, followed by student loans and mortgage debt. It’s difficult to picture the debt numbers being even worse. But if the Americans who do budget would stop… that could lead to an astronomical amount of debt.

Financial Goals Wouldn’t Be Attainable

Whether your financial goals are to pay off debt, buy a house, retire, or take a vacation, you’ll do well with a budget. Having no idea where your money is going each month can be confusing, overwhelming and derail you from ever reaching any of your goals.

You won’t be able to save, say, $5,000 extra dollars if you don’t establish a clear and realistic goal. A budget simply puts your goals on paper. Budgeting is all about prioritizing your spending and making the most of your money. It helps you keep your goals in sight at all times.

If the entire world didn’t budget accordingly, we would all just spend our money on whatever came our way without considering the consequences. We would be unknowingly working against ourselves and preventing ourselves from ever reaching financial stability.

This is why creating some type of budget is so crucial. Without it, the world and the economy would be in even bigger trouble. Even if you’re already good at managing your money, a budget will help make sure that never changes. Think of a budget as your very own accountability partner. A budget is a great way to make sure you achieve the life you dream.

[Tweet “If you don’t have a goal, how will you know when you’ve scored?”]

Do you budget? How does it help you reach your financial goals?

Originally posted 2015-07-08 10:00:00.

Young Finances

9 Principles of Success

We all want to be successful. Most people want to to better than their parents did. We strive to be our best self and even better than that. Over the years I’ve learned 9 Principles of Success that have kept me motivated as I strive for my goals. These principles apply to entrepreneurs, young adults and anyone who desires to do more.

9 Principles of Success

Don’t live your life to please others

Even though you may admire the achievements you see other entrepreneurs accomplish and aspire to do the same or more. You also may push yourself to your personal limits because there was that one person who told you that you would never make it. But you can’t live your life just to please others. Real leaders take action.

Don’t depend on other people to get you ahead

As the leader of your success, you failure or success will be solely determined by your own efforts. If you spend all day waiting for your big break, you will have wasted a lot of time. It’s been said that luck is when opportunity and preparation meet. Take the time you have available to you each day to put yourself one step closer to your ultimate goals.

“Opportunity is missed by most because it is dressed in overalls and looks like work.” – Thomas Alva Edison, Inventor and Entrepreneur

Keep harmony and compassion in your business and your life

I know we live in a capitalist society, but the businesses and the people that are the most successful and get ahead in their industry are the ones who help others along the way. Harmony is also important to keeping a smooth running operation, whether it be a business or your personal life.

Get Rid of those Backstabbers

You should surround yourself with people that will support you and push you to be your best. People that don’t want to see you succeed are ‘haters’. There’s no definition of haters at so let me break it down for you.

There are 6 Characteristics of Haters

They are Imitators: They pretend like they’re going to get involved when really they just want to steal your ideas.

They are Spectators: They look but don’t lift a finger to help and they are waiting for you to fail.

They are Commentators: They always want to add their ‘two cents’ on your goals even though they’ve never done the same thing you are doing.

They are Dictators: They always want to tell you what to do and how to do it.

They are Agitators: They are always annoying and negative.

They are Hesitaters: They always have an excuse to why they won’t take a step toward achieving more.

“A successful person is one who can lay a firm foundation with the bricks that others throw at him.”
David Brinkley, Newscaster

Always be nice

The word ‘networking’ is constantly repeated in our interviews with young entrepreneurs. It’s important to be nice to everyone that you meet. You never know when you might meet the person who will be instrumental in your success.

Free Yourself from Addictions

It doesn’t have to be a drug addiction that prevents you from being successful, you could be addicted to T.V. or other bad habits that kill your productivity. It’s important to prioritize your day and all of your activities. If a bad habit, or an addiction is preventing you from taking action, drop it.

“You can’t build a reputation on what you’re going to do.” Henry Ford, Entrepreneur

Surround yourself with people who are as smart or smarter than you

You will become a better person by getting the mental stimulation you need from those that surround you. When you associate with people who are smarter or as smart as you then you can constantly increase your knowledge.

“Watch, listen, and learn. You can’t know it all yourself. Anyone who thinks they do is destined for mediocrity.” –Donald Trump, Business Mogul

Let Go of Money as Your First Motivation

I’ll admit it, money is a huge motivator for me. It is for most of the contingent workforce. The first time I learned the term ‘opportunity cost’ I began to measure the value in almost everything that I did. But if money is your first motivator then you will lose site of your ultimate goal.

“If you work just for money, you’ll never make it, but if you love what you’re doing and you always put the customer first, success will be yours.” –Ray Kroc, Entrepreneur

Be Persistent in Pursuing Your Dreams but Enjoy the Journey

Don’t lose sight of your dreams, goals and aspirations. Make a visual representation of your goals and place it somewhere that you can see it each day. That’s what makes a person successful. When you look at those goals each day your mind will create ways to achieve those goals. Begin with the end in mind but don’t forget to enjoy the journey along the way.

Remember that life is a journey, not a destination.

Quote resource:

Originally posted 2015-02-04 06:00:00.