Categories
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 TravelTish.com 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="https://www.facebook.com/groups/256492897848742/" title="Save Half Club" target="_blank"><img src="https://youngfinances.com/wp-content/uploads/2014/01/50-percent-savings-club.png" alt="50 Percent Savings Club" style="border:none;" /></a></div>

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

Categories
Budgeting & Saving

3 Tax Tips for Procrastination Prone Millennials

This post is part of the TaxACT #BeatTheDeadline blog tour which shares tips on how to make tax time a smooth and easy process before the April 15deadline. TaxACT provides the tools and guidance to help you confidently file taxes easy and fast. Do your own taxes today at TaxACT. You got this.

Are you a millennial do it yourself-er that has a hard time with deadlines? And by that I mean, were you planning to do your taxes early on and for some reason the date has crept up on you? I realize that life gets in the way sometimes. And tax season is no different. If you still have to file your taxes, here are 3 simple tips for you; the procrastination prone millennial.

Pull Together All Tax-Related Documents

Take a few hours to organize. Get your W-2, 1099, student loan interest forms, dividend and interest paperwork, and any other tax related document that came in over the last few months. With all of these documents in front of you, it will be easier to cover all of your bases.

Any employers should have placed your W-2 in the mail by January 31st. Student loan interest forms typically arrive shortly afterwards, around early to mid February. Dividend and interest forms may come at a later date; however you can estimate the expected dollar amount using your monthly bank statements. Some investment companies have agreements in place to allow you to import your information directly into your tax filing software. For example, if you have an automated investment account with Betterment, you can import all of your gain and loss data directly into the TaxAct software.

Get Your Education Perks

As a millennial, you are likely either in college or have started paying back any loans from college. If neither of these situations describes you, keep reading, because you may have some education perks coming to you anyway.

Some college students are eligible for Education Tax Credits, while others will be eligible for a tax deduction based on education spending.

American Opportunity Credit: This was set to expire at the end of 2010 but was extended for an additional seven years through December 2017 by the American Tax Payer Relief Act of 2012. The full credit is available to individuals whose modified adjusted gross income is $80,000 or less, or $160,000 or less for married couples filing a joint return. The credit is phased out for taxpayers with incomes above these levels.

If you do not qualify for the American Opportunity Credit, you may qualify for the Lifetime Learning Credit. You cannot take the American Opportunity Credit and the Lifetime Learning Credit for the same student in the same year.
Lifetime Learning Credits: This credit can help pay for undergraduate, graduate and professional degree courses – including courses to improve job skills – regardless of the number of years in the program. Eligible taxpayers may qualify for up to $2,000 per tax return.

Use the Electronic Filing Option

Mailing tax forms is not the right strategy for a procrastinator. What if you make it to the post office too late or you forget a stamp? Instead, choose to electronically file your taxes, known as E-file. This will allow you to quickly and easily submit your taxes.

Not sure if you need to file taxes? Check out The Ultimate Tax Guide for Millennials for the answer.

Beating the tax deadline doesn’t have to be stressful. With TaxACT, everything you need to confidently prepare and e-file your taxes is right at your fingertips. You got this. File your simple or complex federal return FREE today with TaxACT Free Edition.

Originally posted 2015-04-09 02:00:13.