The importance of saving

[Fradel Schaechter]

It was the topic of saving that got me started on a journey that eventually led me to be interested in real estate. It has been the cornerstone for me as I have followed the advice of the books I had read (like The secrets of the millionaires mind' by T. Harv Eker, and 'How to make a hell of a profit and still get to heaven' by Dr. John Demartini) and watched my savings grow at a rate I can hardly belive. I currently spend 60% of my income, the other 40% is divided between 10% charity, 20% total to three categories that include money to buy an asset, money for  a down-payment for a house/house hack, and money for retirement. The last 10% is for other categories like education, 'play' money etc.

I am amazed that though I am not earning a huge amount of money right now, I am still able to save steadily and live off only some of my money.

How much of your money do you spend? How important is saving to you?

[Alan Pederson]

We are at about the same place. We spend about 60% of our income and save the other 40%. The 40% is divided between 401K's (16% total) and saving to purchase more rental properties (24%). We should be saving more but for the past 10 years we have helped pay for college for 2 kids and 3 weddings. The last girl child is getting married in May of this year so all the kids will be out of our pockets after that. We should be able to start putting another 10% away and get our expenses down to 50% of our income.

I had a long conversation with two of the people that I supervise a couple of days ago. They both received their tax returns and spent them as fast as they received them. The first guy got back $5,000 and the money went towards breast surgery for his wife. A couple of weeks later he spent $800 building himself a new computer. He told his wife they didn't have any money but she went out and spent $800 on supplements and getting her hair and nails done along with a few other things. He ended up having to take out a payday loan just so he could buy groceries. He makes $24 an hour, is married, and has a 3 year old at home.

The other guy got back $3,000 on his tax return and spent almost the entire thing buying his wife a fancy diamond ring. This is the same guy who works every bit of overtime he can because he can't afford to save $20 a paycheck. He makes $27 an hour and lives in his grandparents old 900 sf house with his wife and 2 kids. He drives a new Mustang and always has the latest I-phone.

These 2 drive me crazy when they tell me this stuff. I guess that's just how some people are. It would terrify me to live like this and have no money in the bank.