Easier Said Than Done
As of today, my savings account has a balance of approximately $36,600.
By saving $200 bi-weekly through payroll allotment, I will automatically save an additional $3,800 by the end of this year.
Including compound interest, which hovers around $45 per month depending on the interest rate, I could potentially earn an additional $360 by the end of this year.
So without lifting a finger, and barring any emergency withdrawals, my savings account balance will be approximately $40,700 by the end of this year.
When I saw that number, I immediately thought myself “hmm…if I can save $40k with practically zero effort, what would I have to do to save $45k – or maybe even $50k – by December?”
And a new goal personal challenge was born.
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Can I ask why you only save $200 per pay period when you earn over six figures per year? Sorry I dont mean to come across as rude. Do you have high expenses?
Your question wasn’t rude at all, but it is representative of how a reader can make assumptions by reading one post and/or only skimming a select few.
My living expenses are less than 35% of my income. The remaining disposable income is allocated amongst several of accounts. However, this post is about only ONE of them – i.e. a “savings account,” the most liquid, cash only, also loosely referred to as an emergency fund. To answer your question and put things in context, I also max out my retirement accounts (401k and IRA), invest in non-retirement accounts, my daughter’s college fund, AND enjoy life which all require cash flow because I avoid consumer debt. [-SM]
Good for you!
So what is your new personal challange? Inquiring minds would love to know ;) (okay, okay so nosey ones would love to know lol).
Can I borrow $20? LOL!!!
Since I’ve pretty much depleted my cash buying my house I’m going back into intense savings mode. Haven’t quite set a goal yet – I’m just socking it away for now. My broker offered to sell some of my non-retirement stock for my downpayment to keep me a little more liquid but I didn’t want to realize my losses.
If I could, I’d rather trade places with you – dump a house I no longer want in another state and buy a new fabulous townhome in the city I love. [-SM]
If this is all automatic saving, then why would you say it’s easier said than done? Can’t you just automate the additional amount as well? Or are you just playing the additional amount by ear?
Only if it were that easy. I would “just automate” if the “additional amount” was sitting around piling up and waiting for me to save it. [-SM]
This makes me wonder, how much is TOO much to have in the emergency fund? I know this is a tough time to invest, but cash in savings account these days earns virtually nothing for interest. What is your magic number to say “Ok, I have enough in my emergency fund, any excess is now going into the XYZ investment fund”. Or would you never cap your savings account?
First, my savings account isn’t only for emergencies. I save for many reasons and avoid consumer debt at all costs. Further, I’d rather protect my principal and earn “virtually nothing” than lose it at a faster rate by investing everything I earn. I only invest what I can live without for 10 years or more. Second, I have non-retirement investments and contribute a predetermined amount. That amount doesn’t change just because my liquid savings has reached a certain balance. And no, I will never cap my savings account. My income and lifestyle affords a comfortable balance of saving, investing, giving, and spending. [-SM]
“Sorry I dont mean to come across as rude” ahhh too late, just kidding
Single ma, you are doing super great, you are so perfect I am indeed jealous of you. Watch out though, the other side of this can be boredom.
nice and to the point post – i love it! and that savings account building up like that just goes to show how easy it can be to set up :) great work!
Sigh. To be your age, and have your savings?
Color me green with envy.
I was wondering when the new goal would show up! Good for you…no moss.
That’s amazing!
That’s awesome SingleMa. Care to join my $50k savings challenge?
Sure! Tell me more about it. [-SM]
I think it’s possible SingleMa. Although doubling or tripling your savings seems daunting to most people, it’s very possible if you’re smart about your spending. The key lies not in the raw amount of how much you save, but in your personal savings rate (the amount you save relative to your income). If, like most Americans, you save 4% of your income, then using coupons or discounts to get an overall 4% reduction in your expenses will double the amount you can save. I’ve written about this… http://wrinklydollar.com/?p=44
SM, Here is the info on my savings challenge.
http://www.singleguymoney.com/2008/12/singleguymoney-savings-challenge.html