by Tricia
Yesterday, I posted a brief recap of an article in the New York Times about people saving up money for down payments on homes. On that post, I received a comment from someone wondering why I called them “Super Savers” and I thought I would devote a post to it, because it brings up good points about how I now look at things.
I’ll single out the first couple, Janey Lee and Pablo Agüero. They were saving $18,000/year with their $100,000 income. That comes out to 18% of their income being saved. Does 18% seem that impressive right off hand? It might not to some. But do I think it is? YES!
Here’s the big reason why:
I have no idea of all of the particulars of their life. The story in the New York Times only gave a glimpse into their financial lives and aside from sitting down with them and hearing their life story, there’s no way I can judge their spending against mine. Sure, there are the things like eating out and entertainment that can (for the most part) be reduced and/or eliminated for most of us. And from the article, it appears that they were targeting those areas. But I don’t know if perhaps one of them is paying child support, or helping to pay for an elderly relative’s nursing home, or if they give a percentage of their income to worthy causes…the list goes on and on. Until I know all of those details, I cannot say whether the percentage of income they were able to save was enough or not enough.
Now, since I don’t know about the particulars of their life, I look at their goal and what they accomplished. Janey and Pablo set a goal of saving a down payment for a home and they made changes in their lifestyle to make it happen. It took them 5 years to save that money, but they kept with it and made their dream happen. I have nothing but a great deal of respect for that. My guess is that they’ve learned a lot in the process and I hope they will have a brighter financial future because of it.
With my finances detailed on here for all of the world to see, probably the most difficult part is having people tell me that I am not doing enough. Sometimes they are spot on (like with our grocery spending), sometimes it’s a matter of them not knowing the whole story. There’s no way I can give everyone all of the details of how we live. Unless you can live in someone else’s shoes…you can’t know everything.
The same can apply to stories about debt reduction that you read. I’ve read a few debt reduction stories where people paid off over $30,000 of their debt (or some high number like that) in a year and they make $150,000/year. Before starting my debt reduction journey, the first thing out of my mouth was, “Of course they could do it, look at how much they make!” I don’t say that anymore, because I am missing the point. The point is that they had to change the lifestyle they were used to and stick to their goal. Again, nothing but respect for those who have done it. I understand now that I cannot compare my life to others.
To sum it all up, to compare lifestyle to lifestyle and merely looking at the numbers is dangerous and can have negative results on your morale. However, looking at what others have accomplished can provide a great source of inspiration.
That’s why I called those people “Super Savers.”
Great post! It is important to note that all “super saving” requires diligence and sacrifice, no matter how much money someone makes. My husband and I save ~18% of our income for retirement/emergency savings/large planned expenses (mostly retirement) and also donate 10%. Our only debt payments are our mortgage (5.5% interest) and my student loan (3% interest). It can be done.
I agree that those people were super-savers. And I was even more impressed because they were living in NYC while they saved all that money. Their incomes may seem large, but NYC is so expensive that saving all that money really wouldn’t be easy.
I would not say that 20% is out of line. The Super Saver line might come at 25-30%. Then again that is pretty subjective.
Anyone who can save up a decent downpayment in my opinion is a super saver. Most (real all) people I know have either gone the no down payment route or borrowed money from family to get into the market.
I was thinking about this a lot while I was at lunch. One of the most important things to remember, I think, is that everyone has different priorities. I know my three great weaknesses are pretty dresses, books, and travel. I have got the pretty dresses under control (though I came close to buying one at lunch today!) and I try to buy cheap used books off of ebay (I like to reference my books again and again, so I don’t like to borrow from the library) but one thing I will not budge on is travel. To me, travel is what makes life worth living, and it’s what I save up my money for. When I took money out of my savings account for Europe last year, I had a momentary pang of guilt, but then I remembered that this is what savings are for! I saved my money all year so I could properly enjoy my trip to Europe, and now I had to spend my hard earned savings!
I agree that Super Saver is subjective. I have a very low income (I’m a graduate student) but I often feel people judging the spending “choices” I make. (I use the quotes because I really feel like some are not true choices.) For example, on my meager salary in the past YEAR alone I have been a bridesmaid in THREE weddings (requiring designer dresses that cost sometimes $200 AND requiring expensive plane tickets for each one). I have had people say, “well you should just tell that person not to pick an expensive dress or that you can’t be in the wedding.” To me that is not a choice I really felt I had. I have one brother and for me to say, sorry no, I can’t be in your wedding would have been more than insulting. I also don’t think it’s right to tell a bride what dress she can pick for her bridesmaids at her own wedding. It’s her day. So I get a little mad when people judge what I should and shouldn’t spend money on. Like Tricia says – there are parts of the story people don’t know! Part of MY is the fact that I have saved nearly $19,900 in the past 6 years towards a house downpayment. That’s almost $20,000!! On average, over the past 6 years I made $14,500 a YEAR. That’s, on average, about 22% of my salary per year that I saved. I’m just proud I saved ANYTHING! During these six years I lived in Washington, DC and San Francisco. Not cheap places either. So everyone think before you judge someone else for deciding to adopt a cat or buy a book or go to a wedding. Sometimes you just CAN’T cut everything.
“There’s no way I can give everyone all of the details of how we live.” I run into this problem again and again. I mention something in a post and people comment on that part of it not realize there are reasons A,B, and C for that. So I have to choose to either let the comment stay or explain A, B, and C again. Ahhh, life of a blogger is a tough one ;-).
Completely agree with you, Tricia! Having spent in the past 110-125% of my income, I think anyone spending 100% of their income is doing better than many others, so to save 10% is stupendous! (10% is an example, any amount is great).
I think you just identified the single-most important point in becoming a “super saver”: commitment. It doesn’t matter what your income is, if you’re committed to saving, you’ll make it happen – whether it’s actually changing your lifestyle or simply living the status quo and tucking all additional income into savings, if you’re committed, your savings will grow. And Nine Circles makes a good point, $100K in NYC doesn’t have the buying power it would in a less expensive city.
I’ve heard you say a few times that your grocery bill is too high. This is one area in which I encourage you NOT to economize. Part of America’s problem with healthy eating is that it is expensive and our government only exacerbates the issue by subsidizing the farmers to keep the prices artificially low. I encourage you to read Michael Pollan’s book, “The Omnivore’s Dillema,” but I really ecnourage you to not beat yourself up about the grocery bill. Buy good, healthy food for you and your family. It’s better for your health and the health of the farming industry and the environment.
Yeah, I agree 100%. In my experience the ones that say you’re not doing enough or criticize every expenditure above absolute subsistence level fall into one of two categories: those who have never been through a prolonged debt-reduction project who make their pronouncements from their elevated equestrian position and those who just started the journey and and are still running flat out (and don’t see how long and bumpy this journey really is).
Neither one makes the best trail guide.
Savers are as savers do. Unless the advice giver has made more progress than you, don’t take it too seriously. The good advice/advisers give much more generic suggestions: track expenses, economize, evaluate, plan ahead. Nitpicking individual items in *someone else’s* budget is not useful (although nitpicking your own is a key part of the process).
A good guide just points out the path, knowing only the traveler can take the steps. It’s best not to follow those who say “I’ve never been there but I can show you the way.”
if you save, that is very good. saving 18% just for downpayment is very good. hopefully, the couple also put away savings for emergency fund, retirement and other goals as well. in that case, 18% is super saving in my book.
we are currently saving about 85% of our combined income, because we are behind the power curve. that doesn’t mean we are eating ramen every night. we do travel and buy want things.
i like what Tricia said, it is about changing lifestyle. of course, i had to go deep in debt before i realized i need to change lifestyles. who would have thought you could live much better lifestyle when you aren’t in debt. go figure.