Wednesday, June 21, 2017

My Savings Rate as of 6/21/2017

My savings rate is actually a new concept for me.  For the past couple years getting out of debt, I had no, nothing, nada, ZERO, savings rate.  I had a small emergency fund of $1000 that I often used and replenished as needed, mainly for emergency car repairs or other such unbudgeted items.  That small emergency fund saved me numerous times.  For anyone trying to get out of debt, it is a necessary first step before paying any extra on your debt.  Don’t miss this important step.

Today, my savings rate is 10.6% consisting of the following:

    • T. Rowe Price – Simple IRA – 3% of my before tax pay is invested in my employers Simple IRA Plan to get the 3% match offered. While still in debt, I did not put any money into this as I used all extra cash to help pay the debt down. I enrolled in the IRA plan in October of 2016 and finally glad to use this employer sponsored benefit. I plan on increasing the percentage of my contribution by the end of 2017.
    • Savings Account – With my Investment Plan, I am saving 3.8% of each paycheck to build my emergency fund to a comfortable level that will give me 3-6 months of living expenses.
    • TD Ameritrade Account – Also with my Investment Plan, I am using 3.8% of each paycheck to purchase Dividend Paying Stocks.

    I’d like to track my savings rate quarterly, so I’ll start documenting it as below:

    Quarterly Savings Rate

    2016 – Q3 – 0%
    2016 – Q4 – 3%
    2017 – Q1 – 3%
    2017 – Q2 – 10.6%


    1. That's awesome Brian. When starting out, your savings rate is an important part of building your net worth. It helps to get that compounding off the ground.

      I actually should calculate my savings rate. Although I still waste a lot of money eating out, I think my savings rate might be closer to about 50%. I'm not sure. I know that before I get paid, 34% of my income goes towards my retirement account in a Roth 401k plan. Then, with after tax dollars, I'm contributing to my Roth IRA and my dividend portfolio. So, it might be somewhere between 40-50%. Whatever it is, it's going to be higher next year after I get rid of my last remaining student loan, as that $2000 a month that I'm using to pay for that loan will be geared towards savings/investing.

      You are on the right path Brian. In my opinion, the higher the savings rate, the better.

    2. Wow, 50% savings rate is AWESOME!!! Yeah, I'm right there with you on spending way too much money on eating out.


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