Thursday, July 26, 2012

Go Go Power Savers

saving and spendingPhoto by 401(K) 2012
My wife and I are still DINKs. Please go back and make sure you read that right. DINKs stands for Dual Income, No Kids. We often wonder what our financial situation would be like if we were SIOKs or SITKs or NINKs or some other crazy thing that I don't want to think about. So, after reading a couple of other posts about single income living (here and here), today that wonder turns to action.

Luckily for me, our cash inflow and cash outflow is pretty simple and all our accounts are available online. Our paychecks are direct deposited into our ING checking, and from there the money goes to one of two places, expenses or investments.

My objective was to determine the percentage of income we are saving.  My method: 1) Add up all direct deposits year-to-date. 2) Add up all investments year-to-date. 3) Divide investments by direct deposits. 4) Hope for a big number, ideally over 53%.

As I was going through my ING transactions and adding by calculator, I realized I had a much better way of doing this.  I signed in to Mint, did a quick search on income, a quick search on investments,  and BAM totals already added.  Pretty sweet, huh?

Mint Awesomeness Sidebar

Quick sidebar for those of you not familiar with Mint. It's a website that you can sign-up for that will basically organize and categorize all of your financial information and transactions (provided that your account can be accessed online by Mint). How does it work? Well, after you sign up, you add all your online accounts. Mint then retrieves all of your transactions from your linked accounts and does some pretty cool auto-categorization and budget creation.

There are a lot of other things that it can do too.  I use it to instantly check the balances on all of my accounts, including net worth and investment totals. I also like looking at the budgets, even though I leave the default, which averages your previous months' spending.  I have my target retirement amount entered as a goal, so I can see how far ahead of the game I am.  Finally, I use it to check our account transactions every week or so, to make sure nobody hijacked my identity (and keep tabs on what Mrs. K has been buying, shhh). Mint is extremely useful and best of all FREE.  Definitely worth a look.

End Mint Awesomeness Sidebar 

So where was I?  Ahh yes, hoping for a big number.  My hope was for something a little over 50%, so that we could live on a single salary. Our number, drumroll please ............ 56.4%.  This number made me a pretty happy camper, although I don't particularly like camping so it made me a pretty happy... penthouser (not in the dirty magazine sense, silly, but the top floor suite sense). Anyway, I was happy.  At this savings rate we could live on a single income without making any changes.

But Wait A Minute

I forgot to add in the money that we were automatically depositing into our Roth 401(k) and Roth IRA accounts.  After tacking those on, the savings rate increased to 74.4%. Wait, were you hoping for another drumroll?  Oops, I'm sorry. That seems like a pretty crazy savings rate to me, but I re-ran the numbers and got the same thing. 

What does this show? Well, for one, you obviously have no lives. Did you just think that? Shame on you! I'll have you know that we already took a vacation and a half this year. I think it shows that Mrs. K and I are both lucky to have the jobs and support structure that got us to this point.  Also, it shows the benefit of living below your means. Could we go out and buy a new car every year, yeah.  Could we eat out fives times a week, sure why not.  But because we choose not to do those things, we have the comfort of knowing that if one of us lost our job and the other lost half their salary, we would still be living the high-life cruising in our 2001 Pontiac Grand Am. At least until there is a little K in the picture.

What's your savings percentage goal?  How are you living below your means to get there?

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