Personal Finance

For those who spend 90% of their pay

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  • Nov 30th, 2015 5:55 pm
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Banned
Apr 23, 2015
994 posts
163 upvotes
Toronto, ON

For those who spend 90% of their pay

I have some questions for those of you that spend 80%+ of your take home pay.

1. How do you sleep at night? I panick whenever I go a month without saving 40%-60% of my take home.

2. Don't you want to be in a better position in case you lose your job or something unexpected comes up?

3. Don't you want to have enough leverage to be able to take on any business opportunity that comes your way?

4. Don't you feel like you are wasting your working years and just working to live? Instead of working to build?

5. Wouldn't you want the flexibility to leave work for decades on end any time you want?
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Member
User avatar
Oct 9, 2014
397 posts
49 upvotes
Winterpeg
HumansOfToronto wrote: I have some questions for those of you that spend 80%+ of your take home pay.

1. How do you sleep at night? I panick whenever I go a month without saving 40%-60% of my take home.

2. Don't you want to be in a better position in case you lose your job or something unexpected comes up?

3. Don't you want to have enough leverage to be able to take on any business opportunity that comes your way?

4. Don't you feel like you are wasting your working years and just working to live? Instead of working to build?

5. Wouldn't you want the flexibility to leave work for decades on end any time you want?
While I don't spend over 80% of take home, that point is the one that stood out to me. I actually am enjoying "living." I enjoy going out, having a life, travelling, and not saving up to try enjoying my life in my 50's when my knees and back are achy
Banned
Apr 23, 2015
994 posts
163 upvotes
Toronto, ON
DudeManGuyBro wrote: While I don't spend over 80% of take home, that point is the one that stood out to me. I actually am enjoying "living." I enjoy going out, having a life, travelling, and not saving up to try enjoying my life in my 50's when my knees and back are achy
Who says anything about 50? I can choose to retire if I want at 39-40.

You must be in terrible shape if your knees ache at 50. My dad is running triathlons and he is 75.

And seeing as you're spending less than 80%, it looks like you are more frugal than you think.
Deal Fanatic
User avatar
Nov 2, 2013
5697 posts
1522 upvotes
Edmonton, AB
"Live for the moment" / "you only live once" is what you'll hear.

A lot of people on here and from the common skin colour here are from families that have money though. It's very difficult to save anything if you're on your own completely given the poor job prospects and high living costs in GTA and GVA.
Accountant (Public Practice)
Banned
Apr 23, 2015
994 posts
163 upvotes
Toronto, ON
FirstGear wrote: "Live for the moment" / "you only live once" is what you'll hear.

A lot of people on here and from the common skin colour here are from families that have money though. It's very difficult to save anything if you're on your own completely given the poor job prospects and high living costs in GTA and GVA.
Anyone making over $50k in Toronto should be able to save. I used to save a ton even when I made that much. The thing is that my income has exploded but I have the same expenses as I did when I made $45k out of school.

Increase your income and keep your expenses flat. that's the key to financial freedom.
Deal Addict
Jun 12, 2015
2551 posts
1071 upvotes
Ontario
HumansOfToronto wrote: Anyone making over $50k in Toronto should be able to save. I used to save a ton even when I made that much. The thing is that my income has exploded but I have the same expenses as I did when I made $45k out of school.

Increase your income and keep your expenses flat. that's the key to financial freedom.
What do you do now and for estimate sake, what is your income now/expenses? Really interested in your path to FF by 40
Banned
User avatar
Jun 8, 2008
3977 posts
1423 upvotes
Toronto
I definitely spent 90% of my pay starting out, I earned next to nothing, lived in a shared house and spend most of my earnings on housing, cheap food and transit - but that small percentage that I did save started that routine of saving. I now save a lot more of my salary, but at the time, I did worry sometimes about not having a nest egg but I was saving tiny amounts of money every month when I could and was slowly building it up. You have to start somewhere and I worry that people just starting to save will feel like a failure if they're not saving 30% of their salary (or in RFD world - 50%) ... even if you're only able to save a tiny amount, and do so routinely, the habit will form. When you start earning more money, you save more money. Slowly you build that nest egg.
Deal Expert
Aug 22, 2011
41788 posts
30051 upvotes
Center of Universe
Dynasty12345 wrote: What do you do now and for estimate sake, what is your income now/expenses? Really interested in your path to FF by 40
Doesn't own a home, a car and no investments.
All of his money is put into a low interest savings account.
HumansOfToronto wrote: My secrets to saving 60% of my net pay over the past 5 years.

1. No car. I walk or take public transit to work.
2. I live in a place that is significantly below my means. This means that I spend very little on housing compared to people in my income bracket.
3. No cable. I rely on netflix.
4. Only 1 vacation a year.
5. I track my expenses on a weekly basis. If my expenses are too high then I will adjust for the remaining weeks of the month to meet my budget. I use mint to track EVERYTHING I spend - including cash purchases.
6. No impulse purchases with the exception of food. I ask myself two simple questions: (1) Do I want or need this?; and, (2) Is this worth me working longer to become financially independent. If I still want it, then I will sleep on it for a couple of days and see if I still feel the same. This prevents me from spending money recklessly.

I will be able to retire fairly soon at the age of 39-40. I can then spend the remaining years of my life not being a slave to the corporate world.
Deal Addict
Jun 12, 2015
2551 posts
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Ontario
Would DB contributions count as saving? That covers 7%+ already :)
Member
User avatar
Oct 9, 2014
397 posts
49 upvotes
Winterpeg
vkizzle wrote: Doesn't own a home, a car and no investments.
All of his money is put into a low interest savings account.
HumansOfToronto wrote: My secrets to saving 60% of my net pay over the past 5 years.

1. No car. I walk or take public transit to work.
2. I live in a place that is significantly below my means. This means that I spend very little on housing compared to people in my income bracket.
3. No cable. I rely on netflix.
4. Only 1 vacation a year.
5. I track my expenses on a weekly basis. If my expenses are too high then I will adjust for the remaining weeks of the month to meet my budget. I use mint to track EVERYTHING I spend - including cash purchases.
6. No impulse purchases with the exception of food. I ask myself two simple questions: (1) Do I want or need this?; and, (2) Is this worth me working longer to become financially independent. If I still want it, then I will sleep on it for a couple of days and see if I still feel the same. This prevents me from spending money recklessly.

I will be able to retire fairly soon at the age of 39-40. I can then spend the remaining years of my life not being a slave to the corporate world.
See, I don't think I would enjoy living below my means to that extent. I want to enjoy my life to some degree while still saving. Not gonna throw away my youth for my golden years
Deal Expert
Oct 7, 2010
15536 posts
5790 upvotes
OP must have issues with insecurity. Spending 40% to 60% is not a big deal. Most people use 40% on housing already....
Deal Addict
Aug 31, 2014
1505 posts
564 upvotes
YVR, BC
HumansOfToronto wrote: I have some questions for those of you that spend 80%+ of your take home pay.

1. How do you sleep at night? I panick whenever I go a month without saving 40%-60% of my take home.

2. Don't you want to be in a better position in case you lose your job or something unexpected comes up?

3. Don't you want to have enough leverage to be able to take on any business opportunity that comes your way?

4. Don't you feel like you are wasting your working years and just working to live? Instead of working to build?

5. Wouldn't you want the flexibility to leave work for decades on end any time you want?
you should see a doctor for item #1 - not normal.
Banned
Apr 23, 2015
994 posts
163 upvotes
Toronto, ON
spike1128 wrote: OP must have issues with insecurity. Spending 40% to 60% is not a big deal. Most people use 40% on housing already....
Most people aren't very financially prudent.
Member
Aug 13, 2005
229 posts
26 upvotes
HumansOfToronto wrote: Who says anything about 50? I can choose to retire if I want at 39-40.

You must be in terrible shape if your knees ache at 50. My dad is running triathlons and he is 75.

And seeing as you're spending less than 80%, it looks like you are more frugal than you think.
You're going to retire at 40 living frugally for your entire life, while others who work until 50 or 55 or 60 are living their lives to the fullest. The funny thing is that they'll still have enough for retirement.

To me, it seems like it's you who has the short end of that stick.
Sr. Member
Aug 23, 2011
620 posts
252 upvotes
OP sounds like someone from MLM companies.
Banned
Apr 23, 2015
994 posts
163 upvotes
Toronto, ON
krazykanuck87 wrote: You're going to retire at 40 living frugally for your entire life, while others who work until 50 or 55 or 60 are living their lives to the fullest.

To me, it seems like it's you who has the short end of that stick.
I disagree. I will be able to travel the world on a budget. I prefer that over working myself to the ground until I am 65.

I don't need a big house, a car, etc. I just need enough money to be able to travel and enjoy the simpler things. If I wanted those things, I would continue to work until my 50s - in which case I would likely make $200k or so by that age. This is assuming that my current career trajectory slows down a little.

Life is to be lived. Enjoy the rat race.
Member
Aug 13, 2005
229 posts
26 upvotes
HumansOfToronto wrote: I disagree. I will be able to travel the world on a budget. I prefer that over working myself to the ground until I am 65.

Life is to be lived. Enjoy the rat race.
Have fun doing all of that by yourself. At the age that you plan to retire, you'll have noone to go with, because everyone else is already married with kids. Also, do you really think you'll be able to change your frugal habits? Let's be real, you're always going to be insecure about money.
Member
Aug 13, 2005
229 posts
26 upvotes
OP, my bet is that if you do retire at 40, you're going to continue living frugally in your 40's and into your 50's for fear that you have no money to live into your 80's. Then when you're in your 60's with a huge amount of savings, you eventually realize that you don't have the energy to do as much as you did before and can't really spend the money. That's when you're going to regret not having more fun in your earlier years.
Banned
Apr 23, 2015
994 posts
163 upvotes
Toronto, ON
krazykanuck87 wrote: OP, my bet is that if you do retire at 40, you're going to continue living frugally in your 40's and into your 50's for fear that you have no money to live into your 80's. Then when you're in your 60's with a huge amount of savings, you eventually realize that you don't have the energy to do as much as you did before and can't really spend the money. That's when you're going to regret not having more fun in your earlier years.
What's your idea of living frugally?

Just because I take public transit, don't own an overpriced Toronto home, and don't waste money on a new iPhone every year doesn't mean that my life isn't fulfilling. When will people realize that material possessions don't increase happiness?

Focus on experiences, people, exercise, and travel.

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