Try Living on 50% of Your Income

After reading about so many people super-saving their way to wealth by living off of 50% or less of their total income, my wife and I have been toying with the idea of giving it a try ourselves.

For a month.

Not this month, mind you. Definitely not happening this month.

I spent a few minutes running the numbers this morning and it seems that people run them differently. Some use their gross pay as a starting point. Some use their net pay. Some just use what seems like an arbitrary estimate of sorts.

For me, I’m going to use my bi-weekly take home paycheck amount plus my 401k contributions all multiplied by 26 (the number of paychecks per year) and then divided by 12 to give me a nice monthly starting point for my income.

This is my way of pretending that taxes don’t exist while pseudo-padding the numbers in my favor by making my income less than it actually is.

For instance, technically, I contribute 15% of my income towards my 401k. But using this calculation (which omits federal taxes, state taxes, and health benefits), I contribute 19.86% towards my 401k.

Make sense?

Basically, all I’m doing is using my actual take home pay for my calculations. Plus my 401k contributions. This is sounding a lot more complicated than it needs to…

Anyhow, after some “quality time” with my 99-cent calculator, the numbers look like this:

Savings (50% total)
19.86% – 401k
30.14% – Unaccounted For

Expenses (50% total)
24.95% – Mortgage (Minimum Payment)
11.36% – Auto/Insurance/Gas (Minimum Payments + Gas)
 9.34% – Utilities
 4.35% – Unaccounted For

I found these numbers shocking.

Each month, I feel like my checking account balance is pretty stagnant. And I’m supposed to have like 35% of my paycheck available? Really? No way.

But upon closer inspection, it actually does seem to jive. For the past few years, I’ve been sending all of that “unaccounted for” money towards debt — credit card, auto loan, and mortgage. It adds up pretty close.

So, essentially, I already have been living at the 50% level. All along…this whole time.

I’m just not seeing the wealth yet because I’m still carrying debt, so one thing at a time… Scratch the 50% idea for August and wipe out the $4000 left on the auto loan first.

I’ll revisit this idea again in a few months when, hopefully, I’m debt free…