“There are just too many things that require money these days…I am in my mid-30’s and the amount of money going towards 2 cars, furniture and house stuff, LCD TVs, computers, an annual vacation, property taxes, utilities, even lawn care for goodness sake, burns through a big chunk of our income. Throw in the recent engagement ring and the eventual wedding rings and wedding itself…there is no end of places to spend money.

My suggestions that form the basis of my financial philosophy.:

1) Re-read your problem, then re-read the above quote. Keep doing it over and over again until it clicks. It should take too long, you already know the answer. You just have to accept it on an emotional level.

2) Once you accept the truth of why what you state above is silly, then act on it. In a word, “Don’t”. Don’t get two cars, don’t get multiple TV’s, don’t get cable. Don’t get a lawn, don’t pay utilities, don’t buy computers. Just don’t. Set a savings goal as ambitious as you like. 80% is possible, but I would say 50% is usually more appropriate. Then, earn as much as you can, and design your life to fit what is left over. Pay yourself first. There are no sacred cows in how you live. Remember that you are not entitled to anything. You have to kill your emotional attachments and sense of entitlement. Your above statement is full of a sense of entitlement. We were raised to think “I’m supposed to have two cars, live in a house, have a dog, have an expensive ring, watch, TV, and a fancy wedding”. This is the trap. The emotional ties that make us think this is normal. Let the math do your decision making for you and never be ruled by your emotions ever again. Buy a house OR rent. Based on which is cheaper. Factor in the costs of financing, the purchase price, rent, utilities and maintenance of owning. Then factor in the costs of renting forever. Contrary to conventional wisdom, it is often better financially to rent. The only time it is better to own, is if the savings you make during the years from having a paid off house that you own outright add up to more than you pay in rent. When you buy a car, buy a tool not a status symbol. Get the cheapest car you can that meets your transportation needs and leave your ego at home when shopping.

I save 42% after tax. We live frugally and get all the nice trappings of consumer life if and when there is leftover after our savings goals. until then the house renos and furniture in our fixer upper can wait. We live with what we have, and get the nice stuff (and even basic stuff) only when cash is in hand. I’ve spent the last 5 years living in a home that is largely empty because we are still using my Ikea college days furniture. We will keep doing it until after our savings goals are met, we will slowly pick up furniture, one room at a time and fix up the house one room at a time. We tend to do this by saving enough so that our tax refunds fund one room or project each year. Baring disaster, we will retire comfortably and early. Even if one of us spends 5 years unemployed, we will still retire in basic comfort.

Financial means has nothing to do with earning, or with saving and has everything to do with spending. Don’t spend, and everything else falls into place.

Once the mortgage is paid, I figure our savings rate will likely be around 40% (we earn about $165k pre-tax combined; no kids). There are just too many things that require money these days. I am amazed at those of you that can save more than 50% of your income. Your incomes must be very high, or else you’re doing something different than I am. I am in my mid-30′s and the amount of money going towards 2 cars, furniture and house stuff, LCD TVs, computers, an annual vacation, property taxes, utilities, even lawn care for goodness sake, burns through a big chunk of our income. Throw in the recent engagement ring and the eventual wedding rings and wedding itself…there is no end of places to spend money.

I think it’s funny reading the posts to this question, and other questions. Those of us who frequent this blog (and I’m including myself) are definitely not “typical” people. The average family, making the average family income, living near a major work centre, has no hope of saving anywhere near the percentages I see above. With today’s house prices, most younger families are lucky to have anything left to save at all. About half the population has a net worth (including their homes) of something like $50k or less…and my guess is most of us on this blog saved that within two years. I just hope we don’t forget that we are fortunate to be in the positions we are in financially.

No kids but a money sucking travel habit.

Dave: I count interest as an expense even if I borrow to invest. I don’t think too much about how to classify an expense, as long as I am consistent.

It is think for me I would word it as “how much am I NOT spending” rather than “how much am I saving.”