I thought that title might get your attention. It just so happens, I saved $50,000 in the first 24 months after becoming debt free. My average salary throughout that time period was….. well… let’s just say it was less than $55,000 per year. You can do it too, and here’s how:
Track Your Finances
How do you think I came up with that $50,000 number and the 24 month timeline? The data is sitting in my Mint.com account, that’s how. I have 3 and a half years of income and expenses sitting there for me to slice and dice and evaluate in any way I want. I can see how much I make each month after taxes. I can also see how much I spend each month after everything is paid. The difference that’s left over is my net income, or if I was spending more than I make, my net loss each month. If you’re going to save your money on purpose in order to reach big goals, you need to track your finances. How do you do this? You sign up for Mint.com, immediately. Here’s how to get started.
Cut Your Expenses
Back in early 2010, I was well on my way to tracking my expenses. Once I realized how high my spending was, it brought on a lot of stress, because I spent a lot of money. My fixed bills were even high. I had that $350 car payment, my student loan payment, HD cable and internet, etc. Something had to give because I just wasn’t making much progress. And then….. I planned a vacation. And then…. I had to get emergency dental work done (and I didn’t have dental insurance). To make a long story short, I was spending as much or more than I made. Dammit, is what I finally said, because I was sick and tired of being broke. It was time to cut.
So I cut my cable TV subscription that I loved so much. I cut my eating out. I cut my free flowing entertainment budget. I just said, “that’s it”. I stopped spending my money. And during that summer of 2010, I didn’t do much at all that required spending money. And you know what? I was out of debt 7 months later. It…. paid…. off….
Get Out of Debt
That’s right, I made a decision to get the hell out of debt. I could have made excuses for why I should stay in debt. I could have said, “well, it’s only $150 per month” or “it’s a low interest rate”, but I didn’t. I listened to what the rich were saying, which was “get and stay out of debt”. The truth is people, debt holds you down. As long as you keep your income tied up in payments, you’re not going to build any wealth. In case you’re wondering, “How do I get out of debt, Kraig?”, boy do I have news for you. It’s simple, you start listening to Dave Ramsey, immediately. He has a live radio show every day during the week from 2-5pm EST, which you can listen to in two ways:
Start Saving What Will Now Be YOUR Money
WOW, did it feel good when I was finally out of debt. It felt good because finally, it was MY money that I was saving. It wasn’t GMAC’s money. It wasn’t the Federal Student Aid’s money. Dangit, it was my money. And so I started saving it. I mean, it was on auto-pilot at that time. I had already cut my lifestyle. Now, I just needed to keep living the way I lived while digging myself out of debt. It wasn’t that hard to do, honestly. A crazy thing happened while I started saving my money after being out of debt for the first time…. I got a couple of raises. Weird…..
To save 50 grand after getting out of debt there really is only one rule: SAVE…..YOUR….MONEY…. Pretty straightforward, isn’t it?
Just last week while dining out at a very fancy and tasty restaurant for my 29th birthday, my friend’s girlfriend once again called me a cheapskate. It’ll happen when you’re saving this kind of money. The truth is, I’ve been saving over half of my income for 3 years now. That doesn’t happen while living the most exciting life of all your friends. It happens by being boring. Yes, I missed out on the joy of buying fellow drinkers at the bar a round of shots. Yes, I wasn’t able to fly to Mexico last winter and to Tahoe for skiing last month. Darn, I even missed out on the fun of upgrading my car to a fancier SUV with navigation. Oh, and the most boring of all, I have stayed in my 800 sq ft run-of-the-mill one bedroom apartment for coming up on 6 years instead of buying a house of my own like many of my co-workers have done.
Gosh, I could have a yard for grilling out, a garage for polishing my car (or even parking a classic car or Harley in), but I don’t. I have a one-bedroom apartment with a small deck (that I can’t have a grill on). The point is, it can be a boring life when you’re saving money. But by boring, I mainly mean that you won’t be showing it all off. It’s likely to be mundane. That kind of thing happens when you’re doing incredible things.
The final and most important step to being able to save $50,000 in two years on a regular income is to keep going. I didn’t quit when the going got tough. Saving half of your income is not easy. It’s tempting to want to spend it. It’s tempting to go buy a house when you reach a 20% down payment. It’s tempting to go and get what you “deserve”. But I had and still do have bigger and better goals in mind than “stuff” or “lifestyle”. I am on a mission to change my future, reach financial independence and start and build a business of my own. You’ll need to be willing to keep at it once you start if you want to make this happen in your own life.
That’s how I did it. I saved half my income for over three years. I’ve also been fortunate in other ways by inheriting some money from my grandma and buying mutual funds before a major upswing in the stock market so I’m doing even better than the progress I’m mentioning here. Guess what happens when someone who’s saving half their income receives a blessing such as a financial windfall or a major upswing in the stock market where they’ve invested a big chunk of money? They save it. Once the habits are formed, they are hard to break. If you’re where I used to be, broke or in debt, you can change it. It will, however, take time (sometimes a lot of it), a significant amount of internal motivation and perseverance.
You can do it. I believe in you.