Savings rate

[LivingAlmostLarge]

Do you just count your savings rate as what you save? Or do you count mortgage paydown? Just running some numbers into a budget and we are at 50% needs/wants (includes mortgage), 20% taxes, and 30% savings. The number skews a little if we move the mortgage paydown into savings since it's large.

I feel so guilty that we aren't saving more. We should be. As our income has grown we're starting to go up in spending instead of saving as much. The biggest change has been going up in our mortgage. I know monthly what we spend but not broken down if it matters.

[Jluke]

If it makes you feel better count the extra mortgage payment as savings. It will inflate your savings rate but you also know that are you putting your savings to work for you immediately.

At the end of the day your net worth hasn't changed; just that the form your savings was in went from cash to illiquid home equity.

[TexasHusker]

I got two chocolate donuts this am for a dollar. Had I purchased them separately it would been $.60 each.

Therefore, today I saved $.20, and I will be adding that to my net worth.

[kork13]

Saving 30% of your income isn't bad at all... In fact, it's pretty darn good. For what it's worth, I do consider debt reduction (in excess of minimum payments) to be a part of meeting my savings goals. However, if your current habits aren't going to meet your goals, take it slowly & pare back your expenses over time. Start with any needless subscriptions, and reduce the amount you eat out. Find ways to reduce your costs across the board, and implement them one at a time. Eventually it'll boost your savings rate, and I'd bet that if you do it smartly, you'll barely even notice the change in your lifestyle.

[feh]

Or do you count mortgage paydown?

No, I wouldn't. You're repaying money that you've borrowed.

Any extra payment you make would show up in your net worth, if that makes you feel better.

[scfr]

If I had a mortgage, I'd count extra payments to principal but not the principal portion of the regular monthly payment, although all payments to principal do positively impact net worth. You could make the case for counting the principal portion of the monthly payment as savings, but personally I wouldn't do it just for the sake of simplicity.

BTW, The closer you get to retirement you may start paying more attention to net worth and less to percentage saved. That has been true in my case

But to change the subject slightly, I don't think you bought a house yet, did you? If you really are concerned about spending creep, it is not to late to buy a less expensive house and get a smaller mortgage!

[LivingAlmostLarge]

I've already thought about it. And definitely am eyeing smaller houses. But with what we want it's more location than size based. I'm not quite sure we're willing to compromise on location yet. Size we've already done.

[DaveInPgh]

I've already thought about it. And definitely am eyeing smaller houses. But with what we want it's more location than size based. I'm not quite sure we're willing to compromise on location yet. Size we've already done.

Sometimes when you desire a specific area, your choice on size is limited unless you are building. There are some neighborhoods in my area I would never be able to downsize into. The existing properties all exceed what I am currently living in.

[clatoden99]

Repaying mortgage is saving! So this jacks up your savingsrate. Taking out new loans is in conjunction with this, having a negative savings rate. Paying everything off is maybe not the best move, as having a balance in your account will help you make smarter deals, and exposure to the stock & rental-market will usually help you grow your capital. Have a mix, this will lower your risk.

[LivingAlmostLarge]

Nothing is set in stone and i've noticed that homes are starting to sit longer. It may make me reconsider what we spend.

[bennkar]

I always included the principle paydown portion of my mortgage payments as savings. I always looked at increasing your liquid or near liquid net worth as savings, and this certainly applied. I understand why some don't but its really just whatever floats your boat.