Saving large amounts of money.

[james.hendrickson]

Hey Forum Crew,

For those of you have saved large amounts of money, how did you do it?

Share your story for the benefit of the hundreds of lurkers here on the forums.

I'll start, back in 2004 I saved $21,000 to put down a house downpayment. It took about 14 months. Here were the sources of income, in rough percentages:

1. Bank interest (.5%)
2. Selling unneeded household stuff on craigslist (5%)
3. Salary (37%)
4. Reimbursements for work expenses (1%)
5. Participating in research studies (.5%)
6. Refinanced an investment property (50%)
7. Selling found items (1%)
8. Work bonuses (5%)
9. Cashback rewards from local business (.5%)

For me the bottom line is that saving large amounts of cash needs to come from multiple sources, some small, some large. What is also good about the approach of cobbling together lots of different sources is that pretty much anyone can do it. As long as you have a job, and some things to sell, you are pretty much good to go.

[97guns]

The savings method that really jump started my bank roll was through the employee stock purchase plan at Home Depot, it was savings + very high return on investment

I've also found that having no life outside of work was a great way to save, quickly and large amounts. Work, go home watch tv, sleep and go to work the next day

[Singuy]

This was our formula.

Step 1. Went to college and studied something in the healthcare field(Pharmacy for me, Optometry for my wife).

Step 2. Even though our income went from student loans(negative) to positive 230k+, we still lived like a college student to pay off student loans. No new cars, no lavish vacations, no crazy dinners. Fast food, low rent, couponing, and drove our high school beater.

Step 3. Continue with step 2 after loan payoff. Pay off mortgage or any other debt that has interest while maxing out 401k.

Step 4. Continue with step 2, diversifying into taxable index funds and crowdfunding investments.

Step 5. Continue with step 2. We now make 380k/year...bought used cars with cash, no lavish vacations, no crazy dinners, no gym memberships, no star bucks coffee, no alcohol outside of our house. In fact we don't even have Netflix memberships, just Amazon prime. Yearly expense is ~40k or so and 25% of that is property tax. We eat out once or twice monthly. Our bill never surpassed 50 dollars except once at Disney. I change my cell phone out every two years. I spend 200 dollars on a Chinese android phone while selling my old one for 50% of what I spend on the new one. We go on one to two vacations/year. Mostly 7 night cruises that cost 1300 for two(inside cabin). We still use coupons, and shop for the lowest possible price on anything. We have no problem going to low income grocery stores and the Dollar Tree.

Result: NW 1.4million @ 34 years old.

[97guns]

Result: NW 1.4million @ 34 years old.

Well done

[FLA]

Considering I never made more than 52k and was a single mom, I think I did pretty good at saving. I have 517,000 in retirement savings, a 55,000 cash value pension, 14k in an emergency fund. Have no mortgage or debt. I did that by age 44 just by working up to saving 15% in my 403b.

Was on a good path to retire at 62, then I got sick. I'm not allowed to save in retirement accts anymore. I'm just sticking every extra dollar in the EF

[~bs]

Considering I never made more than 52k and was a single mom, I think I did pretty good at saving. I have 517,000 in retirement savings, a 55,000 cash value pension, 14k in an emergency fund. Have no mortgage or debt. I did that by age 44 just by working up to saving 15% in my 403b.

Was on a good path to retire at 62, then I got sick. I'm not allowed to save in retirement accts anymore. I'm just sticking every extra dollar in the EF

You bring up a good point. it's always smart to start saving early, as you really never know what life will have in store for you. Saving while you're in your 20s before you get married and have kids is smartest. I know couples whos savings rate dropped drastically once they had kids due to a variety of factors.

[Singuy]

Considering I never made more than 52k and was a single mom, I think I did pretty good at saving. I have 517,000 in retirement savings, a 55,000 cash value pension, 14k in an emergency fund. Have no mortgage or debt. I did that by age 44 just by working up to saving 15% in my 403b.

Was on a good path to retire at 62, then I got sick. I'm not allowed to save in retirement accts anymore. I'm just sticking every extra dollar in the EF

That is impressive saving that much as a single mom!

[FLA]

thank you, Singuy

[FLA]

You bring up a good point. it's always smart to start saving early, as you really never know what life will have in store for you. Saving while you're in your 20s before you get married and have kids is smartest. I know couples whos savings rate dropped drastically once they had kids due to a variety of factors.

I was very lucky, I was 22 in my first nursing job when someone talked me into going to an inservice on the 403b which I knew nothing about really. I signed up and then started reading and learned my company only offered an annuity to save in. I went to HR and said I wasn't happy with the annuity and wanted to pick from a fund family with more options. He said, "pick a company", I replied Fidelity (I didn't know about Vanguard) and he let me invest through them. I was the only employee who ever complained and they acted in good faith.

Then I met my husband, who is 15 yrs older than me, he had invested in the 403b all in cash because he didn't believe in stocks. I eventually got him to trust me with our portfolios. But he would stop contributing during down turns (once he forged my name and changed my acct to all cash, we were headed for divorce by then) so he never made as much money as me. If I hadn't started at 22, I would be screwed today.

[rennigade]

Start maxing 401k and roth ira as soon as you possibly can. Earlier the better. If you cant max put as much as you can in. It will snowball year after year...soon your gains (or loses) will be more than what you can contribute per year.

[james.hendrickson]

Are you guys using any savings tools like digit.co or acorns?

I kind of assumed that you need to socking away as much of your additional/extra income to make the savings happen, and wasn't sure if tools like digit.co or acorns help savers who already have discipline.

[Singuy]

Here are some of my tips.

Tip 1. Go to a third world country and visit a family. See how they live..stay with them..live their lives..humble yourself.

Tip 2. Don't be afraid of what others think about you. Build your self-esteem up. Don't be embarrassed about driving a beater, clipping coupons, living in a small place, or shopping in low income plazas. In fact, you should OWN IT. Have your head held high..knowing you have a fat bank account (or will have) so who cares if Joe Smith thinks his car is better than yours? News flash for you, his shiny new car is leased..and he is probably poor(more than 72% of Americans live paycheck to paycheck). Why waste your time trying to impress people who pretends to be rich?

Tip 3. Do a cost of living/income analyses. It doesn't always make sense to live in a HCOLA if your job doesn't pay you enough to. If you love the HCOLA, that is fine! Go somewhere with LCOL, save your beans and move back if you can. This can prevent you from throwing a lot of hard earned cash away on rent or interest.

Tip 4. Try to be debt free before having kids (any sort of debt, including mortgage unless you are a savy investor). If you have the means to, then DO IT! Kids can change your income dynamics (like a spouse quitting). If you were behind before, you'll just be more behind after a child.

Tip 5. Patience patience patience! You were used to the college student life, so why jump into the high life so fast now? Be patient with your debt and your savings. I know it looks like a mountain apart trying to get to these goals, but with patience and smart planning..it is totally possible at a young age! As Dave Ramsey said.."you must live like no one else now, so you can live like no one else in the future". Patience is KEY!

[StormRichards]

Not sure if our $700k in retirement qualifies us for large amounts of money in the eyes of others, but here is how we accomplished it.

Started off contributing in our 401ks up to the company match.
Lived a frugal lifestyle so we could aggressively eliminate student loan debt.
Increased our 401k by half of every salary increase.
Sold on eBay for extra money.
As soon as our budget allowed for it, opened Roths for each of us.
Paid off vehicle.
Opened a brokerage account to invest outside of our IRAs.

[sv2007]

Having a large amount of savings (a bit different than saving large amounts of money) requires growing your savings. That means investing it wisely.

I'm pretty sure we'll never get to where we are now, even with 2 workers at pretty high paying jobs working fulltime until we reach 55 or 65 (or whatever the generally accepted retirement age is) with only saving and an average investment return.

To have exceptional savings, one must do mroe than the average. If you dig up my old posts, I've been outlining how we got to where we are and how others can do the same.

[TexasHusker]

The most I ever saved at one time was $15,000.

I accomplished that by talking down the price on a BMW 7-series from $91K to $76 and change.