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I'm still lost with respect to how someone could save 60% of their gross income, unless maybe it's a kid who is living with parents who are providing free room/board and other things. Maybe one of those Bay Area weirdos living in their car?
Make enough and live way below your means and it's certainly possible. My wife and I save roughly 40% of our gross (~50% of take home) but if we lived in a cheaper house, condo, or apt and went down to one car (or ate out or traveled a lot less) we could certainly be at the 60% level.
I had been 50% of gross for a long time but as my income grows it's dropped to 40% of gross partially because of increased taxes and the other was a conscientious decision to spend more
This. I think most can't do it, because taxes and insurance take up too much of their gross. So gold star if you can FSM.
Make enough and live way below your means and it's certainly possible. My wife and I save roughly 40% of our gross (~50% of take home) but if we lived in a cheaper house, condo, or apt and went down to one car (or ate out or traveled a lot less) we could certainly be at the 60% level.
There is a BIG difference between 40% and 60%. In the past I've had people tell me they had some extremely high savings rate, but when I'd question them on how that was possible it turns out they were including things like rents received, bonuses, employee matches, etc... as savings, but not as income. Don't get me wrong, I think it's great that these folks are saving for their future, but if they expect to have a discussion about it they need to include this sort of detail.
There are plenty of folks out there living off 1/2 to 1/3 off their income. They just do not brag about or cut corners off a round table.
Sure, we live on a little over 1/3 of our gross. In recent years it's been, roughly speaking, equal parts... (1) savings, (2) spending, (3) taxes. We'd have to live on almost nothing in order to save 60% of our gross income.
If one is talking 60% of after-tax income... fine, that's way different.
I'm still lost with respect to how someone could save 60% of their gross income, unless maybe it's a kid who is living with parents who are providing free room/board and other things. Maybe one of those Bay Area weirdos living in their car?
Usually extreme savers do it by:
--Earning above average (but not fabulous) incomes. Typically in the top 20%, but not necessarily the top 5%.
--Living in less housing than most people. I.E. They still have roommates even when earning professional level incomes. Or they live in a small apartment/condo when everyone else in their peer group has the single family detached house.
--They have fewer or no kids...or don't have them until they are nearly financially independent.
--They try to live within biking distance of work and other necessities so they can minimize or even eliminate the need for a car. If they must have a car, they drive used economy cars and typically shun long daily commutes to work.
--They don't spend a lot of time or money on cable TV or entertainment. They are more likely to be content creators instead of content consumers.
--They don't spend much eating out, etc. Focus is on cooking healthy meals at home.
--They tend to avoid the highest cost metro areas unless they're in really high paying fields like finance.
--They often have practical skills (sewing, cooking, fixing things around the house), so that they don't have to pay other people to do things for them.
I'm still lost with respect to how someone could save 60% of their gross income, unless maybe it's a kid who is living with parents who are providing free room/board and other things. Maybe one of those Bay Area weirdos living in their car?
I saved 30% of my gross for quite a few years with an average income (below average for my area) in a high cost area. I know I could save 60% if I had an above average income. I do many things outlined in my post above. I:
--Live within walking distance to work (but still have a car. Bought a decent used economy car--no gas guzzlers for me).
--Don't have cable TV or other entertainment packages (Netflix). I use the library instead.
--Don't have an expensive cell phone or cell phone package ($35 a month).
--I shop sales at the grocery store (although I do eat out at modestly priced cafes/restaurants about 2X a week.)
--I live in a small apartment (studio, not a 1BR).
The bulk of it is really about keeping housing and transportation costs as low as possible. If you do that and don't go too crazy with the other stuff, you make it much easier to save.
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