Our Savings Journey: Living Off Half Our Income

posted by Andrea | 02/24/2014

our savings journey



In a blog post I wrote over THREE years ago, I casually mentioned that Dave and I lived off less than 50% of our income… and boy did I get some reactions!

Although that wasn’t even close to the main point of that post, it must have resonated with some of you, because I’m still getting comments on that post three years later. I’m also still getting emails from people asking WHY we live off less than 50% of our income, HOW we live off less than 50% of our income, WHAT we do with that savings, and IF we still do live off less than 50% of our income.

So while I never expected to do any sort of follow-up post on that casual statement I made over 3 years ago, I figure it’s finally time — because the emails and questions just keep rolling in :)

DISCLAIMERS: First of all, I’m not a financial advisor so please make sure you consult with one before making any rash financial decisions.

Also, since many of you have asked, Dave and I do not follow Dave Ramsey — not because we don’t think he has good advice, we just don’t. We freely use credit cards for all our purchases and then pay off the credit card at the end of the month. However, we do have a similar philosophy on debt… it’s bad!

Finally, I fully realize the ideas and concepts in this post won’t work for everyone. The intention of this post is NOT to tell you how to manage your money, but simply to explain what Dave and I have done and how it has worked for us.

So let’s start off with the WHY.

WHY do we live off less than 50% of our income?

When Dave and I were first married, I remembered some advice from my parents who suggested that no matter how little we both made at our jobs, we should try to live off 50% or less of our income in order to build up a savings account and so that we wouldn’t be stressed out if one of us lost our job (Michigan had a very bad economy at the time).

So although Dave and I both had very low-paying non-profit jobs, we decided this was what we were going to do (or at least try to do).

So I guess the short answer to the “WHY” question is simply that we wanted to live off 50% of our income so we could use the other 50% for an emergency fund, saving, investing, larger purchases, and to pay off any debt we had down the road. 

Yes, we had to do without many things (and we continue to do without certain things) but Dave and I would rather do without some things NOW and be financially set later than splurge and live extravagantly now only to pay for it later.

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HOW do we live off less than 50% of our income?

Back to the beginning… when Dave and I were first married, we both worked for low-paying non-profit organizations, we had just put a down-payment on our house, and we had over $40,000 of student loans that we wanted to pay off ASAP.

We were committed to living off less than 50% of our income, but when we looked at the numbers, they didn’t look great.

Since we both made the same amount, Dave and I made the bold decision from DAY ONE that HIS paycheck would go directly into our joint checking account and MY paycheck would go directly into our joint savings account. We also decided that we wouldn’t touch our savings account unless we had an emergency.

NOTE: we’ve always had joint bank accounts and we’ve always used direct-deposit for any income we possibly can as this makes the savings process SO much easier.

So for the first full year of our marriage, we never once touched the money in our savings account and instead paid all our mortgage payments, utility bills, grocery, gas, student loan payments, etc. from Dave’s income in our checking account. We did not make any EXTRA payments on our loans or our mortgage at this point, but just focused on paying all our bills while building up our savings account.

I won’t lie, there were several months when I thought we might have to dip into our savings — but we somehow always managed to squeeze by. We lived VERY simply and we basically didn’t spend money on anything unless it was an absolute necessity (and even then, we waited for a deal with coupons or tried to buy used.)

So after that first year of living off 50% of our income we essentially had my entire first year’s salary in our savings account! Although I didn’t make a lot, I can’t even tell you how rich we felt as two freshly married college graduates! We basically felt like we had won the lottery, and knew it was worth that year of hard work and sacrifice.

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WHAT do we do with the 50% of our income we save?

After that first year of saving 50% of our income, we knew exactly what we wanted to do with it. We used some of the money to make a lump-sum payment for my student loans (I had a lot less than Dave and they were at a higher interest rate) and to buy a new-to-us car (something else we really needed).

We kept the rest in our savings account in case of an emergency and continued living off 50% of our income.

Over the next several years, we continued to live off 50% or less of our income and then every summer, we used SOME of that savings to pay off Dave’s student loans, pay down large chunks of our mortgage, pay for home renovations, invest, etc. etc.

So no, we haven’t just been stock-piling 50% of our income for the past 8 years — we’ve been using it, enjoying it, investing it, etc… but we always keep a set amount in our savings account in case of emergencies.

We basically came up with a “base amount” that we could easily live off from for at least 6-9 months and have that amount in our saving’s account at all times — liquid cash “just in case”.

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Do we STILL live off 50% of our income?

The short answer is “yes”.

Over the past 8 years, our income has increased quite a bit — like more than doubled from when we were first married. Dave has gotten yearly pay raises, he finished his Master’s degree which bumped him to a new pay scale, and my business has brought in much more income than I was making at my non-profit job years ago (although, as I’ve mentioned before, the income didn’t happen over night and there were plenty of lean years!)

However, as our income continues to increase each year, our basic expenses have NOT increased all that much. Yes, we have a few more home-related expenses due to owning a larger, older home; and we have a few more daily expenses due to our growing family and adding more children — but for the most part, our NECESSARY expenses have not gone up that much. (Notice, I said “NECESSARY” expenses. There are lots of things we could spend our money on, but we don’t.)

Since we we’ve become so used to living simply and doing without lots of things other people might consider necessary, it’s been relatively easy to continue living off 50% or less of our income.

We continue to use the extra income to pay down our mortgage, fund our larger home renovations, and invest — and we continue to keep that base amount of 6-9 of months living expenses in our savings account at all times.

Eventually, we’d like to do more with investing and trying to have our money make money — but right now, we’re pretty conservative with our investments as our main financial goal is to get our mortgage fully paid off in the next 2.5 years.

 

A few things that have made this journey possible for us:

I totally realize that living off 50% of your income will not work for LOTS and LOTS of people — however,  if I had to list off a few things that have made it possible for US… these would be it.

1. We both grew up with financially responsible parents. 

Neither one of our families are millionaires, but Dave and I both grew up with middle class parents who taught about finances from an early age and DEMONSTRATED how to live happily without all the latest and greatest gadgets.

While we were never deprived, we were also taught to make sacrifices, that we couldn’t just have everything we wanted (even if we could afford it), and that happiness wasn’t from things.

If you were never taught or shown HOW to live frugally or be financially responsible, you’re already fighting an up-hill battle. It WILL be harder for you, but you can do it!

2. We started from the very beginning.

I think another HUGE reason we have been successfully living off 50% or less our income is because we started from day one. Coming into our marriage, we were used to living like college students with basically no income and super low standards.

We kept living like this even when the income started coming in — and it was simply amazing how much of our very small income we were able to put away that first year.

Since we set our standards so low from the beginning, it was much easier to keep those low standards. If we had set higher standards of expensive yearly vacations, expensive weekly dates (or even any weekly dates), fancy clothing, new cars, etc. it would be A LOT harder to go back and simplify now. I’m not saying it can’t be done, I’m just saying it would have made our savings journey a lot more challenging.

3. We’ve always been focused on being debt-free.

Neither Dave nor I have ever had any sort of credit card debt, car payments, or any other form of debt besides our student loans and our mortgage. It wasn’t necessarily easy, but going back to #1 above, it’s how we were brought up. You didn’t buy something you couldn’t afford. Period!

So even before we got married, our plan was to pay off our student loans before we had kids and then focus on paying off our mortgage ASAP. We also knew that if at all possible, we did not want to incur any additional debt.

This was huge for us because there we many opportunities when it would have been SO much easier to take out a loan or “steal” money from our savings account; but instead, we waited until we had the money in our checking account and THEN we made the purchase.

Oh, and to alleviate any confusion — we did still make most of these purchases with credit cards, we just waited until we knew we had the money to pay off the credit card bill IN FULL at the end of that month.

4. We live in a relatively low cost of living area.

I don’t want to totally disregard all our efforts, because we have made many many sacrifices over the years. But I also don’t want those of you living in extremely high cost of living areas to feel like failures because you can’t live off 50% of your income (even if you do make sacrifices).

West Michigan has a pretty low cost of living compared to many other states and cities across the US. So not only are groceries, gas, and basic necessities a bit cheaper here, we were also able to capitalize on a REALLY BAD housing market 3 years ago and purchase our house for an extremely reasonable price with a LOW LOW 2.49% interest rate!

5. We automate almost all of our savings and investing.

It’s not always easy to save money when you have it in your hands just waiting for you to spend it. However, it’s A LOT easier when you never actually touch your money!

From day one, Dave and I have had almost all our income automatically deposited into either our checking account or our savings account. Even with my business, I’ve been able to have almost all my income sources automatically deposited into my business account — which then transfers to our savings account.

We have all our payments and investments automatically withdrawn from our checking account so we don’t ever have the chance to hesitate on making an extra payment.

For example, Dave and I each fully-fund a Roth IRA every year — we do so by dividing the maximum investment ($5,500 for 2013) into 12 equal payments and have that amount automatically withdrawn from our checking account each month.

We also have our mortgage payment (plus an extra principal payment) automatically withdrawn from our checking account every month — and by doing this, we’ll be able to pay off our mortgage much faster than if we just made the minimum payments every month.

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OK, so I think this EXTREMELY LONG post answers most of the questions I’ve gotten over the past 3 years! 

I honestly tried to shorten this post several times, but I feel like all the information here is necessary to fully explain our side of the story without divulging too much personal information and, hopefully, without coming across like we’re bragging or trying to tell you how to manage your money.

This is OUR story. Period. 

I realize this won’t work for everyone and that’s fine. However, if it inspires anyone to put a few more dollars away into savings or pay off a little extra debt this year, I’ll be thrilled!

It really is amazing how quickly a savings account can grow when you automatically deposit money into it every month and then refuse to touch that money for a while.

It’s also amazing how quickly a debt can be paid off if you diligently pay a little extra principal each month — believe me, I know this from experience!

Obviously large financial changes won’t happen overnight, but if nothing else, I hope our savings journey inspires you to evaluate how you’re currently utilizing your income.

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55 comments

  1. Candace

    02/24/2014

    Great, solid advice! I’m forwarding this post to my daughter who just graduated from college. Thanks again, Andrea! You (and Dave) Rock!

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  2. Suzanne

    02/24/2014

    Very impressive! You should check out the blog Mr Money Mustache, he takes this kind of savings and used it to retire in his 30′s!

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  3. Erin

    02/24/2014

    We were given the same advice during premarital counseling, and thanks to following it, we’ve been able to pay for my husband’s master’s degree and some additional postgraduate work without having to take out student loans. It was such a great feeling to receive his diploma and know we didn’t have thousands of dollars of student loans left to pay!

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  4. Nicole M.

    02/24/2014

    Enjoyed the post today Andrea. So many people do not understand the concept of “do without” because they think things like movies, eating out, etc are necessities instead of things they can and maybe should do without. I would love to see a post of “things we don’t spend money on” as it might be eye opening to some to see those things. Just a suggestion :)

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    Mrs. W Reply:

    I would love to see a post on things you don’t spend money on too.

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    Andrea Reply:

    Thanks Nicole — I’ve actually already done 3 different posts about what we don’t spend money on. Here’s a link to the most recent post — you can use the search bar to search for the others!

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  5. Lindsey T

    02/24/2014

    Andrea – as always, phenomenal post! My husband and I were just discussing living off 50% of incomes last night, so this post was at the perfect time. Thank you!

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  6. Jeni

    02/24/2014

    Great example of living of less than you make! One thing I have noticed, as well, from reading your other blog posts, is that you have very generous relatives and friends who help you out quite a bit. Gift cards, maternity clothes, baby clothes, children’s toys, house renovations, furniture, etc. Things that others would have to spend out of their own income, you seem to often get in gifts. We, for example, have never received a gift card for a restaurant or a store EVER in our 17 years of marriage. So every dinner out is totally on our dime (or penny, sometimes – lol!) I think your saving habits are laudable and don’t mean to take away from that discipline at all. But it sure would help anybody’s expenses to have moms who buy storage containers full of baby clothes for them and dads who pitch in to help renovate kitchens. :)

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    Andrea Reply:

    Thanks Jeni, we do have a great group of family and friends around us — and you’re right, I’m sure this has helped in our savings journey! However, I do want to point out that we also share lots of stuff with family and friends. I’ve lent out the maternity clothing I own and a bunch of Nora’s baby clothing and baby things when we weren’t using them. We’ve also given away A TON of stuff we no longer want or need to various friends and family members.

    Also, we ONLY get gift cards for birthday and christmas gifts (and it’s because that’s what we ask for) so our family doesn’t just randomly give us money and gift cards just for the heck of it — they’re nice, but not that nice! If we didn’t get the gift cards, we would simply forgo going out to eat as we feel it’s usually not worth spending our own money on food we can make at home for much less.

    Finally, we definitely DO pay my dad for helping us on our renovation projects. It’s most likely less than we would pay an outside contractor (and we’re grateful for that) but he doesn’t work for free :)

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    Christina Reply:

    It boils done to great habits and examples! Everything in life takes effort and little changes make big differences! While, I realize your comment isn’t meant to offend,I feel it’s still the habits one develops! Andrea’s mother taught her to buy used and I am thinking that bin of clothes is indeed ‘seconds.’ If you get use to buying used anything, instead of new, that saves TONS right there!
    I brought my 4 girls to Salvation Army on Saturday for their ‘half off’ sale. I spend pennies for entire new wardrobes for each of them! Yes, we had to really look, wash the clothes and wait in lines…. but our time was worth the savings!
    Not everyone should wear the latest greatest trends in the stores, as not every body looks good in them. My girls buy clothes that look great on their amazing figures and spend nothing. My oldest three have jobs and all three brought ‘new work’ clothes as well. They know how to get the best bang for their hard earned dollars and that isn’t ever at any mall. Again, with the habits we develop. We had lean years and I figured out amazing ways to save money with a large family.

    Andrea is just Queen Bee with the whole lot! Kudos Andrea on being a fantastic example and sharing your stories!

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    Andrea Reply:

    Thanks Christina — I was not offended by Jeni’s comment, but thanks for your thoughts as well.

    And yes, the baby clothing my mom purchased was all 2nd hand (and she waited until the 1/2 off sale, so I think the whole bin was about $20) amazing! She loves to shop and I hate to shop so it was probably the best baby gift she could have given me — especially since we really don’t NEED much of anything the 2nd time around :)

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  7. Stephanie

    02/24/2014

    We totally follow the don’t buy unless you can pay for it in cash philosophy. We also pay for a lot with our credit card, but have payed interest maybe once during a mishap in our financial dealings. Getting a free gun with all the points built up from a local hunting and sports store is definitely worth having the card. :). New hunting gear is usually low on the list of priorities over here so free makes it easy.
    All though living on half our income is not possible we do make a point of saving for emergencies and other large expenses. Whether medical (which is usually the case with a larger family. :)) home renovations, or vehicle repairs.
    I would love to fund retirement accounts and have our mortgage paid off before tuition hits….. but 6 months to pay off our mortgage isn’t enough time. Oh well, we will make it through. It is totally worth the effort and sacrifice to send our kids to the private christian school.

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  8. Stephanie

    02/24/2014

    Loved this. My husband is a Dave Ramsey FPU facilitator, and we’ve compiled a list of “things we don’t spend money on”. People are truly amazed. It is interesting to see what some people think are necessities (such as smart phones, pets, minivans w/ less than 3 children, etc.) and what we know we can live without. Although we get laughed at for our frugal ways, we know WE will be the ones retiring at age 50, paying for our children’s college funds, and taking the yearly vacations we want. Oh, and at the end of our list, we’ve referred his class to follow your blog for more ideas of how to live simply! :)

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    Andrea Reply:

    awesome Stephanie! and thanks so much for referring your class to my website… I’m honored!

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  9. Janelle Fife

    02/24/2014

    This was one of the best posts about how to save as a newly married couple and buying a house…..My husband and I just got married in November and are also about to close on our house, I have about the same amount of student loan debt as ya’ll did and I’m hoping to knock it out within 2 years, with your plan, that seems totally feasible! We are also looking at different ways to save and make our money work for us (we now have chickens and I am getting into gardening for veggies and fruits) but for right now, we are just moving one step at a time to knock out debt and save….thanks again for your great post! :)

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  10. Julie H

    02/24/2014

    I love this post! Thank you! Some great ideas and advice as always!

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  11. Debbie S.

    02/24/2014

    I love it when you have post like this! Thank-you so much for sharing what works for you.
    I admire your style of living and have learned greatly from reading your blog.
    I am going to share this with my family tonight over dinner.

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  12. Heart and Haven

    02/24/2014

    I’m glad to see someone else who follows frugal & sound financial planning, but still uses credit cards! lol.
    That is one part of Dave Ramsey’s advice that my family doesn’t follow either. We too, also pay off our credit card each month. But found this is a good way for hubby and I to track what we spend money on, and can discuss any changes to the budget that we may need to make. We see credit cards as a purchasing/budgeting tool, rather than a way to buy something we can’t afford and will pay back later.

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    Andrea Reply:

    Yup — we’re big fans of credit cards as they have definitely helped us to simplify and streamline our finances. I know they aren’t for everyone, and I’d highly recommend NOT using credit cards if they are a temptation; but we’ve never had that problem (we both hate to shop) so credit cards are not an evil “no-no” for us!

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  13. Laura

    02/24/2014

    Wonderful post! I also live on 1/2 my income and while I it may be harder/easier to do so in different parts of the country (I live in Washington DC, which I think is pricey, but not compared to friends’ expenses in NYC!) you just have to figure out what works for you. From your post it sounds like your Roth IRA payments come from your Checking 1/2, (the “living on” half) and not your Savings 1/2. Is that accurate?

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    Andrea Reply:

    Thanks Laura — and yes, we do fun our Roth IRA payments via our checking account. We feel like the IRA’s are a “necessary expense” for us and right now, we can afford to make the payments from our checking account so we’d rather not dip into our savings. However, if we do larger investments (which we don’t do a lot of right now) we will often take that from our savings account if necessary.

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  14. Chris

    02/24/2014

    We have some similarities. However, we did not start out marriage living on 50% of our income. My husband made $5 an hour when we were first married and I did not work until a few months later. (I had moved when we got married). However, a little over 10 years ago, I got a really good paying job. After my tithe, I used all my income (and some of my husband’s) to pay off our house. We saved approximately $140,000 in interest and 20+ years of payments. Then after that, I saved up money for our son to go to 11th and 12th grade at Christian school, braces, etc. THEN I quit my job – my goal.! :)

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    Andrea Reply:

    haha — I love that you worked to meet your goals and then quit! Sounds like you plowed through a lot of debt and other expenses REALLY quickly!

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  15. Kristine

    02/24/2014

    This is my favorite kind of post! I am always motivated by those who are ‘doing’ it!!! We have made LOTS of mistakes, credit cards, debt, loans, cars…and have turned it all around! It is so hard to make those costly mistakes. You can keep making excuses, or you can just do it. We have 4 kids, were military and moved all over the world. I am blessed to stay at home with my kids (though I have worked in the past) and it is so rewarding to see the savings happen. Baby steps…and you will be on the right track. Thanks Andrea.

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    Andrea Reply:

    Thanks for sharing a bit of your story too Kristine — sounds like you guys have done A LOT of hard work to get your finances on track! Good for yoU!

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  16. Jacquie Kush

    02/24/2014

    Your parents must be so proud of you guys! You were both really mature at a young age. I hope that I can teach my sons to be so responsible. Your point about not having everything (even if you can afford it) really resonated with me. It is hard not to give your kids “everything” when it isn’t a financial hardship to do so. Thanks for the post!

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  17. Rose

    02/24/2014

    Bravo!!!! Loved it!!!!!!!! I’m going to pass this along to my sons….

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  18. Lisa

    02/24/2014

    Loved this post! I have been reading your blog for years. My husband and I live frugally and within our means, but I am just curious since we have a one income household….what percentage of income would you live on if only Dave was earning an income?

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    Andrea Reply:

    Thanks Lisa — I was actually going to make a point of saying that obviously one reason we’re able to make this work is because we have TWO incomes — but I thought that would just be stating the obvious and make the post EVEN LONGER!

    That said, if we were only living off one of our incomes, we would definitely have to completely rework our budget. We honestly probably wouldn’t have purchased this house if we were only living off one income — because we bought it knowing we wanted to do A LOT of home renovations.

    So while I don’t think we’d be able to live off 50% of only ONE of our incomes, I do think that if we knew we were only going to live off one income, we could rework our budget and change our lifestyle to make it work. I’m guessing we could make it work to live off 60%-75% of Dave’s income — but then we wouldn’t be paying off our mortgage as quickly or doing as many home renovations.

    Does that help?

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    Lisa Reply:

    Thank you for your response! Yes this helps! We live under our means and save the rest for various things….retirement, investment account, vacations, house, etc, I just like to hear wisdom from others with the same thinking as us when it comes to finances. Thanks again!!

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  19. Kim

    02/24/2014

    You guys ROCK!

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  20. Cherie

    02/24/2014

    Good information Andrea, thanks for sharing!

    Can you share more about paying a chunk on your mortgage?

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  21. Maria

    02/24/2014

    Great post as usual, Andrea. I pray that some day I will have a daughter-in-law like you – one with both brains and beauty (but not high maintenance), yet humble.

    I can’t believe how financially savy you are at such a young age when most people are living way beyond their means and are mortgaging their future away due to the cheap credit that’s available. You are such a great example of how planning, perseverance and hard work pays off. Having peace of mind is much better than having a houseful of the latest “stuff”.

    Thanks for sharing your story.

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  22. Kelly K

    02/24/2014

    Love this kind of post and am always so impressed at how far ahead of the game you and Dave are at such young ages… Two really good heads on two sets of strong shoulders! Thank you for sharing all the details.

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  23. Debbie

    02/24/2014

    I like this post too like many have already commented. For me it feels good when I see little or no balance on our credit cards. We only use 2 so I’m also thankful for that and we pay it off every month. I can’t believe you’ll pay off your mortgage in 2 years! Didn’t you just buy your house less than 10 years ago? On top of that you’re putting $450 each every month on your Roth? Those two (mortgage & Roth) are a big chunk off your monthly spendable income already. I really commend you on how you’re doing all this. It motivated me to increase the amount that automatically goes into our savings account and the amount I put in my 401K at work :-). The one thing that I want to add is that I can testify that giving 10% or more of our gross income as tithe and offering has blessed us more than if we didn’t. I’m also not writing this to brag but to just attest to the result of giving. We’ve never been short of money because we tithed first.

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    Andrea Reply:

    Thanks Debbie! And yes, we purchased our house 3.5 years ago and plan to have the mortgage paid off in 2.5 years (so 6 years total).

    Also, since I’m self-employed, it’s very important for us to be fully funding our IRA’s NOW so we have plenty in there later on.

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  24. Jenni

    02/24/2014

    This is a great post. I appreciate in particular how you started off with $40,000 in student loans, but took a balanced approach of saving, and then paying part of your savings toward lump sum payments toward your loans. I read a lot of advice that focuses on paying all the loans off first, but it feels imbalanced to me, even though that would obviously save interest. I like the idea of saving for three things – loans/paying off debt, some things you would like to improve, and building your emergency fund. That way, if your income is cut from a job loss, you have something to lean on instead of having put it all into paying off your loans.

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    Andrea Reply:

    Yes Jenni, Our student loans were both VERY low interest rates so it was much more important for us to build up a good size savings account before paying off large chunks of debt.
    After all, we would be in an even worse situation if we paid off our low-interest student loans, then had some crazy medical expense or car repair that we didn’t have savings to cover and had to take out a high-interest loan or put it on our credit cards!

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  25. Tshanina | Thrifty T's Treasures

    02/24/2014

    I love this, “Dave and I would rather do without some things NOW and be financially set later than splurge and live extravagantly now only to pay for it later.” I totally agree!

    Sadly, our society has an, “I want it now” attitude and we’re teaching the next generation that if they want something they should just go out and get it no matter the cost. If only people would realize the freedom that comes when we live debt free and within our means!

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  26. Jennifer M

    02/24/2014

    Hello, I am from Ontario, Canada, and things are different but the same than in the U.S.A.. I think life in generally is more expensive here. Nonetheless, it was important when my spouse and I decided to have children, one of us would be at home with them, and not paying someone else while we worked. Because of this, we worked hard at having no debt – except our mortgage. Thus far, two children later I’ve been fortunate to be at home with them. We don’t ‘keep up with the Jones’ and don’t go on fancy vacations. We are content and do live comfortably. People seemed to be amazed; however sometimes people just don’t want to ‘give things up’ or go on a budget.

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    Michelle Reply:

    Hi Jennifer … I’m also from Ontario. And you’re comment about things being “different but the same” is so true!

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  27. Tracy

    02/24/2014

    This post totally inspired me to rework our budget today and look for things I assume are neccessities that really aren’t. Whew! We started out our marriage with the advice “If you can afford the payments you can afford it!” So we opened three credit cards right away. Ugh! So dumb! It only took three years before we realized debt didn’t have to be our normal! I worked outside the home for a few years and every penny I made went to pay down debt and build up savings. I kept a countdown to be debt free (from credit cards and major medical expenses) and the day I paid off that last debt was my last day of work.

    We don’t make a lot of money but we use YNAB so we have a one month cushion in our account at all times. We have a very small amount left on our student loans and the end of our debt is near! Thanks for the inspiration!

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    Andrea Reply:

    Sounds like you’re making good progress Tracy — and yay for paying off debt!

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  28. Megan

    02/24/2014

    Great post. I’ve never lived off 50% of my income (I’m single and I live in a high cost of living area) but when I was 22 and fresh out of grad school someone told me to start putting the max possible contribution into my 401k from day 1. The theory was that if I was used to living on $0 income as a grad student, I could get used to salary – X% (which was guaranteed to be more than $0!) and never know the difference. They were right, and after 15 years of work I am far, far ahead of others in their late 30s in terms of retirement savings.

    I also have to second the importance of parents who teach financial responsibility. I had a bank account from the day I was born. They’d take me to deposit any money I might get for my birthday, etc. (I spent part of it and saved part). When I turned 18 they marched me down to the bank to apply for a credit card with these instructions:

    “You will charge ONE thing per month on this card. When the bill comes, you will pay it in full. If there’s an emergency, use this, but only for a real emergency. Other than that this stays in your wallet.”

    As a result I’ve never had debt and have really good credit. It’s one of the greatest gifts they could have given me.

    [Reply]

    Andrea Reply:

    Yes Megan — I actually had a credit card before I was 18 and it was in my name and my parents name so they could monitor everything. It helped boost my credit score at a very early age and taught me financial responsibility :)

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    Amanda Reply:

    That’s the one thing I wish I had done sooner – a credit card. I was proud to make it through college without one, but it made life more difficult afterwards, because I was unable to secure a credit card. I actually got engaged my senior year of college, and my now husband added me to his credit card account, and that is what helped me start to build credit (that and starting to pay back on my school loans).

    My parents gave me the same advice on the 401k. They now regret not being more purposeful in their retirement savings from an early age, and have been playing catch up. I feel like my husband and I are far ahead of many of our peers in that dept.

    While we don’t live off of 50% of our income, I do have our back account set up with automated rules – it automatically moves money into our savings acct twice a month. My husband still has a savings account from before we were married. We have a small amount that goes in there from each of his paychecks. That money is our “emergency reserve” because it’s out of sight, out of mind. Our primary savings acct has a minimum we’re comfortable with, but we do use that money for bigger projects too (home reno, new appliance, vacations (planned), etc.).

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  29. Tricia B

    02/25/2014

    I wish this was possible for us. Our incomes just don’t match the cost of housing since we moved cross country a couple years ago. So we are just kind of stuck. I wish I could find a local budget coach to help support us! Medical bills are just driving me insane!

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  30. Sallie

    02/25/2014

    (I haven’t read all the comments so I apologize if this was mentioned.)

    I’d like to add a number six to your list. You’ve had no significant health issues or medical bills. From what I’ve read on your blog, I’m assuming you have quality health insurance through your husband’s work and it appears none of you have had ongoing medical issues.

    Count yourself very fortunate. You would be amazed how quickly all of your years of hard work can go south when you cannot work due to health issues and/or your insurance comes with a very high deductible and you deal with medical expenses year after year.

    I’m not trying to take away from the great choices you’ve made. I just see almost no financial success blogs written by people who are older and have faced medical issues. It’s a complete game changer.

    [Reply]

    Cate Reply:

    Sallie: Just got onto this blog but totally agree with you. Blogs nowadays are not aimed so much for we “older” folks. My husband worked as a mailman for years. He never put money into a 401 due to ignorance on his part (and we were not married then or I would have insisted he do so) and he and his dad invested in get-rich-quick schemes (something else he would NOT have done had he and I met earlier in his career). As a result, years later he and I met, married and he became disabled (due to a botched knee job by the VA in Omaha that left him disabled for life). We are now 62 and 59. When he became disabled it took seven months to receive disability. In that short time, we went through his little retirement savings. I worked as a medical transcriptionist out of my home for years with no retirement income. My income went mostly to bills and paying IRS self-employment taxes – hence, no savings whatsoever. I now am in my third year of treatment for cancer with another 18 months to go. We are considered to be living below the National Poverty Level and honestly live paycheck-to-paycheck. My husband has taken on a part-time job that pays only minimum wage. BUT, in all this, God is always good and faithful to provide. I guess the lesson here is, EVEN if you save for years and years, your income can be rapidly depleted when a major illness enters into the picture. SO, keep yourselves healthy and wealthy in your youth and you may be in a “better” place to enjoy your older years. P.S. I never smoked a day in my life and was not a drinker. I have lymphoma (cancer of the lymph nodes – something they cannot prevent or know what causes it). Goes to show you, you never know!

    [Reply]

    Sallie Borrink Reply:

    It is interesting to revisit this post eight months later. We’re currently watching friends who are 60ish go through financial devastation due to health issues and job loss. They did everything right, but have been caught in a perfect storm. I remember thinking ten years ago how they had it made. Hard workers, great jobs, things paid for, lived within their means, great retirement lined up, gave generously, walked in faith and gave honor to the Lord for their blessings, etc. How quickly it can change.

    [Reply]

    Andrea Reply:

    Oh that’s horrible. I know that medical and health issues can REALLY do a number on people’s finances — even people who are very financially “set”. Sorry to hear about your friend’s difficult situation.

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    Andrea Reply:

    Oh I’m SO sorry to hear about this Cate — sounds like you got hit with “the perfect storm” and it just kept hitting you even while you were down.

    I don’t have any great tips or advice for you as I haven’t been in a comparable situation. Although I’m sure it’s hard for you to stay positive during this very difficult time, you are right when you said “God is always good and faithful to provide”.

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  31. Shelly

    02/26/2014

    This is one of my all-time favorite posts (and I read every day)! What great advice for a newly married couple! I wish someone had told me that when I was first starting out. In fact, I’m going to see if I can use some of this for our budget. Don’t listen to all the nay-sayers. You and Dave have done a terrific job and this is great, great advice!

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    Andrea Reply:

    Thanks Shelly! I’m always a fan of re-evaluating budgets so I’m glad this post is causing you to “rethink” your own budget!!

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  32. Elena

    02/27/2014

    Andrea, you and Dave should be very proud of yourselves! This is such a great accomplishment, and one that Nora (& baby #2) will benefit from. You are doing the right thing… the responsible thing.

    Your posts are always so inspiring. I always end up with a smile on my face after reading them. Keep up the awesome job that you are both doing for your family!

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