Budgeting & Saving

Save Half Challenge: A Dummy Proof Method to Saving 50% Take Home Income

Are you a little intimidated by the Save Half challenge?  I was too!  Saving half of my meager take home income seemed like a far fetched dream.  As a relatively new saver, the idea of putting away such a large amount by the end of the year seemed so impossible, daunting, and utterly fantastical.

Refusing to give up, I chopped that intimidating number down into bite sizes to make a dummy proof savings plan in 2014 and I’m dying to share!

Go Minimalist 

My first step was cutting out non-necessities.  Taking a look at monthly expenses and seeing what can be cut out.  A quick way to do this is to list your monthly expenses in order by priority.  Then go down the list and see how far you get before you hit half your monthly income.  Seriously consider whether the remaining expenses on the list can be eliminated or reduced.

Make Financial Goals 

My second step was deciding what money goals to achieve with that 50% and rank them in order from most to least important.  I have three major financial goals this year: pay off student loan, max out Roth IRA [$5,500], and have 3 months salary in savings.

My 50% savings could cover my student loan, max out my Roth, but didn’t quite cover the entire 3 months savings goal.  No worries though, I’ll finish stacking that up in 2015.

Create A Checklist  

I made myself a no brainer checklist of payments to fulfill my monthly goal.  The more structured the process the more likely you’ll satisfy each goal.  Mine is broken down into two pay periods since I get paid bi-weekly.  My tax return and odd months that I get paid 3 times will also be split 50/50.  Need an example?  Here’s a spreadsheet.

Half Monthly Take Home: $1500

Pay Period 1 Pay Period 2 Monthly Goal
Student Loan $250 $300 $550
Roth IRA $0 $459 $459
3 Months Savings $100 $391 $491
Totals $350 $1,150 $1,500


(Like me, this example couldn’t cover the whole 3 months salary savings goal.  Don’t get discouraged there is always next year!)

Aren’t those numbers more tangible?!  I’ve plugged in my own and use it as a checklist in my day planner.  Every time I get paid I whip out my handy dandy 50% schedule and put money towards my monthly goals.  Seeing this chart everyday helps me second guess each purchase.  [Do I really need take out tonight?  Probably not!]

Do The Hustle

I imagine you’re thinking, this is all well and good, but how do you expect to live with only one half of your income for expenses.  LaTisha here at Young  Finances said it best, you’ll likely need to earn more to save half.  And that’s not a bad thing.

EVERYONE is capable of side hustling.  Think about it.  What are you good at?  Do you have expertise that you could start charging for?  To meet my goals I’m working on increasing marketing for my freelance services, applying to be a virtual Assistant, and trying affiliate advertising on my own blog.

Now over to you, are you participating in the Save Half challenge?  What’s your plan to save half?  Do you have a side hustle idea to share? 

Click here to join the Save Half group on Facebook and make it your priority to save 50% of your income!

Originally posted 2015-05-12 10:00:49.

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.