Well Hot Damn, Frugality Works! Our 2014 Savings Rate Revealed.
Mr. Frugalwoods and I finally did the arithmetic on our 2014 savings and expenditures (as I’m sure you’re all relieved to know). While in any given month of 2014 we vacillated between saving 65%-82%, our average savings rate for all of 2014 is 71.4%. Woot!
How did we determine this savings percentage for the year? I’m so glad you asked! Turns out, that simple number is pretty complicated behind the scenes. There’s no “right way” to calculate your savings, but here’s the Frugalwoods methodology:
Calculate our annual change in liquid net worth. Take the balances of our checking and taxable brokerage accounts on December 31, 2014 and subtract the balances as they were on January 1, 2014.
- Subtract any major non-salary inputs. For us this includes investment appreciation (or depreciation!) and our decently sized tax refund from our 2013 taxes. This gives us how much we “saved” this year (another way to think about it is that this is the remainder of our paychecks that we didn’t spend).
- Divide by our net take-home salary (the total amount of money we make every year, minus taxes and 401K contributions).
This number does not include two other major forms of “savings”:
- 401Ks. We both max out ($17,500 each in 2014), and our employers each match a certain percentage.
- Mortgage principal. And it’s not chump change.
We don’t exclude these from our savings percentage for any ideological reason, it’s just that we’d do those things anyway. We want to know how much money we could’ve spent, but didn’t.
If we include both of our 401K contributions (not the employer match, just the money we put in), our savings rate is 93.07%.
Pretty nuts, and not entirely straightforward since it’s a pre-tax deduction and we’re using a post-tax denominator… but you get the idea. We’re really pleased with these figures!
I go into depth on our specific tactics for attaining these high savings rates in my post How We Save 65% Annually and so I’m not going to recap those here. If you’re interested in the steps you could take to boost your savings, I encourage you to check out that post as well as my Uber Frugal Month Challenge and How We Manage Our Household Finances.
What I want to share today is how Mr. Frugalwoods and I arrived at a point in our lives where this level of savings is possible and not painful.
Frugal From Birth?
A question I’m asked all the time, both online and in real life, is:
Have you always been this frugal?
My answer is usually a quick “no” followed by,”well sort of yeah, I mean…” and then I either get into a protracted conversation or quickly change the subject to Frugal Hound. Mr. Frugalwoods and I have always been frugal–it’s just how we’re wired–but we haven’t always been frugal weirdos, as we so fondly call each other nowadays.
And I don’t think that’s a bad thing. I admit that we tend to the extreme in our frugality and it would’ve been challenging, if not impossible, for us to be this frugal without having first experienced a slightly more, shall we say, spendy lifestyle…
I’m Glad We Were The Spendywoods
We used to spend more money! Gasp! It’s true. But I don’t anguish over decisions we made in the past that cost us percentage points off our savings rate. Over the years, our rate has waxed and waned and was rather low at the outset of our marriage (we just didn’t have any money!). In more recent years, it’s been anywhere from 50% to 65%. But we’d never saved 71% before 2014. And that’s OK.
Before we could comfortably settle into extreme frugality, Mr. FW and I needed to test out a range of consumerism. For me, it wouldn’t have been possible to commit myself so singularly to this level of saving without prior bouts of spending. Neither of us was ever much of a spender, so in addition to avoiding debt (other than our mortgage), we didn’t leak exorbitant amounts of dough.
However, we used to go out to dinner once a week, we bought vastly more expensive groceries, and we were just generally less conscious of our monetary outlay. Believe it or not–we didn’t even monitor our spending all that closely! We knew we wanted to save a spectacular portion of our incomes every month, but we weren’t the hawk-like stalkers of our expenditures that we are now.
No Regrets (YOLO, sort of)
Far from regretting our former quasi-spendy ways, I’m grateful for them. Sometimes I have a pang of remorse and bemoan buying our rowing machine or taking those vacations to Europe or the Michelin-star meals we’ve eaten, but I snap myself out of it and realize how fortunate I am that we had those experiences and were able to spend that money. Each of those things helped us evolve into the Frugalwoods.
That’s why I’m now so fully bought into our life of frugal autopilot. I don’t crave coffees out or new clothes because I know what it feels like to buy that stuff on a regular basis and I don’t want that more than I want financial independence. Mr. FW and I know how lovely it is to eat at a different local restaurant every week, but we don’t want that more than we want a homestead in the woods. I know what it feels like to buy as much thrift store clothing as I please, but I don’t want that more than the freedom from my 9-5.
Everything in life is a trade-off, and unless you’re a billionaire or Frugal Hound, you’ll have to make choices on how you allocate your time and your money. I’d like to quote the fabulous Paula Pant of Afford Anything: “You can afford anything, but you can’t afford everything.” So perfectly said.
Another reason why I have no regrets about our previous spending is that we didn’t have the homestead vision back in those days. We honestly didn’t know what we wanted our lives to look like and we were still exploring what fulfilled us and made us tick. In much the same way as we lived in cities for years before deciding that our true calling is life in the woods, we needed to eat dinner out weekly to realize that’s not what we want out of life. I don’t feel deprived on our current regime of savings because I don’t need or want the things that my money can buy me.
Just Start and Do It Now!
The origin of Frugalwoods, our homesteading plan, and our epic savings rate are synonymous and all began on Saturday, March 29, 2014 (thank goodness I obsessively track everything in our shared google calendar… please tell me I’m not the only one). Mr. Frugalwoods and I were having a coffee date (at a coffee shop! try not to faint) on this particular Saturday afternoon and we were both in a funk. We were frustrated with our jobs and the apparent trajectory we were on.
We’d been loosely tossing around the homestead idea, but hadn’t made any concrete plans. But that afternoon, we were fired up and our conversation morphed into an absolute, watershed turning point.
I distinctly remember us agreeing: “we need to change our lives and we need to start today.” It sounds overly simplistic, but it’s not. If you want to change something in your life, you can literally start right now. There’s no reason to wait until next week or next year. I’m not kidding you, folks, just freaking start right now. That’s what we did.
And so, on March 29, 2014, we decided to go all in on the financial independence/homestead dream and set a target date of fall 2017. From that point forward, every single decision we’ve made has been in service of that larger goal. We’d actually planned to go out to dinner that very night and we didn’t. It was night one of eating every meal at home.
There’s never a perfect time to ramp up your savings rate or get married or start a new job or pay off your debt or move to a rural homestead. You just make these decisions as they organically rise in your life and then you do everything it takes. If you want something badly enough, you will make it happen.
This laser-like focus on our goal is what has brought about our 71.4% savings rate. It’s frugality yes, but it’s frugality in service of a larger aim. We haven’t deviated from this plan since that fateful day in late March. And without this level of intensity, I don’t think it would be possible for us to propel ourselves forward on such an aggressive timeline.
Frugality without a goal or vision is terrible. That’s when you devolve from being frugal to being miserly. But when you’re working towards a defined goal, frugality ceases to be about what you’re giving up and becomes about what you’re going to gain.
Mr. Frugalwoods and I find that minimizing the number of exceptions to our “we’re not going to spend any money” approach has fostered our success. This is largely because I have a hard time with exceptions.
For example, with my no-clothes-buying ban, if I allowed myself to buy only, say, work clothes, you better believe I’d be trying to pass off some yoga pants as “work” trousers. Nice try, Mrs. FW. Same deal with eating out. If we allowed ourselves to order take-out “when we’re really tired and/or stressed,” I bet you Frugal Hound’s tail we’d be “tired and/or stressed” at least once a week. And if we allowed Frugal Hound to have a limited texting plan, you know she’d be texting her hound friends about BYOB(one) parties all night long, running up our wireless bill. Hence, much easier just not to give her a phone (she is a dog, after all).
While this “no exceptions” policy might seem harsh at first blush, it’s actually quite liberating. When something isn’t an option, you don’t have to labor over making a decision. As I shared on Monday in What A Year Without Clothes Did For Me, I don’t engage in protracted battles over whether I will or will not buy a certain article of clothing, because it simply isn’t an option for me to do so.
I liken this approach to the timeless proverb: “Mrs. FW can’t eat just one Cheeto.” It’s a solid fact that I’m a menace around Cheetos (yes I know they’re fake cheese, I don’t care, I love them). I indulged in Cheetos while I was in grad school because I thought I could moderate myself, well, let me tell you what–I gained 20 lbs (which, thankfully, I subsequently lost).
But why did I eat the Cheetos in the first place?! Because I allowed myself a major exception. It may just be me who has ridiculous trouble with moderation, but I tend to think it’s an ingrained part of our psyche. I operate as a creature of habit and if my habit is never to eat Cheetos, then I really don’t think about them at all (except for right now because I just wrote the word Cheetos a million times. Dang!).
Now Mr. FW and I aren’t militants or robots, so we obviously don’t have ZERO exceptions. I realize this sounds like an exception to a no-exceptions rule, but hear me out. Here’s an example: we last ate out (BBQ take-out) for Mr. FW’s 31st birthday in August and I think we’ll next eat out for my 31st birthday in March. So while those are technically exceptions to our no-eating-out policy, they’re quite rare and contained.
All I’m saying is, you’ve got to be reasonable and know what’s going to fit with your life, but, I find that exceptions are where spending and bad habits creep in.
Making That Money
I haven’t talked a lot about the earnings side of our equation before and I think we’ll do a more in-depth treatment in a future post. But, I do want to share that Mr. FW and I have always considered the income side of things to be as important as the savings side of things. Though what we espouse is extreme frugality, you kinda need to have money to save.
Something you might not know about the two of us is that we’ve worked incredibly hard to scrabble our way up the ladder in our careers. We’ve both advanced and increased our salaries and bonuses over the 8 years since graduating from undergrad. While I think you can save money on just about any income (much like I saved $2,000 of my $10,000 stipend while working for Americorps in NYC), you’ll certainly be able to save more if you make more.
I consider Mr. FW and I to be fortunate products of our environments. We’ve been extraordinarily lucky to find and keep good jobs and we’ve avoided major financial catastrophes, which is certainly due to a combination of kismet and hard work.
That being said, we don’t make absurdly high salaries–thus, the stupendously high percentage of our income that we save every year could easily be spent on the consumer carousel. We don’t go out to eat, we don’t drive a new car (in fact, Frugalwoods-mobile recently celebrated her 19th birthday), some of our shoes actually have holes in them, I haven’t cut my hair in over a year, the sheets on our bed are hand-me-downs (from a family member, stop panicking). But these things are immaterial to us. We could care less. We have our eyes on a peaceful life of fulfillment out on our future homestead and the road-bump opiates of lattes and lunches out won’t stop us.
I doubt we’ll increase our savings rate much, if at all, in 2015. Part of enjoying our frugal existence is knowing when we’re at maximum frugality. Constantly trying to increase our savings percentage year after year is impractical, and at a certain point, impossible. The luxuries that we enjoy right now include travel, plentiful organic produce, good coffee beans, long drives to breath-taking mountains to hike, Frugal Hound (yes, pets are a luxury), seltzer (even the franken-seltzer costs some money), hot showers, and a host of other tidbits that make our lives as the Frugalwoods pretty phenomenal in our frugal book.
Recognizing when you’re at peak frugality is a lot like recognizing when you’re content with life. We don’t ever want to burn ourselves out on frugality, so we make sure to spend on things that add value to our lives–such as our weekend trip up to Vermont to hike and homestead hunt in November.
We’ve optimized, we’ve maximized, we’re at peak frugality, and now we’re coasting. The key for us in 2015, honestly, will be to not mess it up.
How do you motivate yourself to save money? What are your thoughts on exceptions to rules you give yourself?
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That savings rate is fantabulous. I think we averaged around 70-75% our last few years using some form of calculation similar to yours (but maybe it was gross savings divided by gross salary marked up for 401k matches??). Regardless of the formula you use, that’s pretty damn impressive and you guys are well on your way to catching FIRE! And all that money you have invested will do nothing but be fruitful and multiply (long term; no promises short term).
Thank you so much! That means a lot to me coming from someone who is already living the dream :). Congrats to you on your spectacular % as well!
Interesting — I had my own “I’m changing my life and starting right now” thing in March, too. Maybe it was something about the (long, long, long) winter. 🙂
I did not consider salaries at all when choosing a career path, or I sure as hell wouldn’t have chosen teaching! I have the occasional regret about that, but mostly I love my work, so it’s more or less ok that I’ll be doing it for the next thirty years or so. That said, even on my (by PF community standards) low salary I’m aiming for a 50% (of net) savings rate this year. If you don’t make much, got to save even more.
Congratulations on your rate! I love your straightforward focus and peacefulness.
That is interesting about the March time frame, perhaps it was the symbolic start to spring (though it was still freezing here 🙂 ). And, it’s wonderful that you love your work! Good luck with your 50% savings this year–that’s an admirable goal! You can do it!
All I can say is WOO HOO!
“we needed to eat dinner out weekly to realize that’s not what we want out of life” -is I guess a different way of saying you live, you learn.
Great post (again) Mrs. FW, and just like you I have thought of some of the luxuries I wouldn’t give up easily and hot showers is definitely one. My showers are not long but they are hot!
Thank you so much! Very true about living and learning–I am absolutely fine with trying things out and realizing they’re not for me. Agreed on the hot showers! Just can’t give them up 🙂
I really like the part about how frugality without a goal is miserly. Thanks for this post, it is so thought provoking.
I think your DIY goal for 2015 should be home haircuts! Maybe you already do this? I could have missed that post, I was just inferring from the no hair cuts for a year part that you outsource this.
You’re welcome–I’m so glad you liked it! That miserly comment is an insight that Mr. FW had and I think it really resonates with me because we don’t feel miserly or deprived, which I do attribute to our goals.
Great point on the haircuts! I’ve been cutting Mr. FW’s hair for years (it’s easy, he has a buzz cut 🙂 ), but we haven’t ventured into cutting my hair yet. It’s on the list though, we just haven’t quite gotten around to it. Do you have any resources/techniques you recommend?
I have cut my husband’s hair and my own for years now. We both get regular compliments. I will say that we both have thick wavy hair, which is pretty forgiving. If you have very thin, fine, straight hair, this may not work for you.
Here is my method. You will end up with long layers with this. I only know this one single female long hair cutting method. I cannot convince my husband to cut my hair for me. But there are loads of videos on YouTube, entire channels in fact, if you want more options.
1) Get a pair of very sharp scissors. Don’t use scissors that you have ever used to cut paper or anything other than hair or fabric bc they will very painfully rip your hair out.
2) Brush all of your dry hair (much easier to cut off the correct amount with dry hair bc wet hair will shrink as it dries) forward and twist it into a very tight twist straight out in front of your face, holding the twist at the bottom.
3) Cut straight across the bottom of the very tight twist. Remember that you can always cut more off, but you cannot reattach your severed hair, so be conservative.
4) Let go of the twist and see what you have wrought. If you hate it, drink a glass of wine and read something inspiring about feminism. Remember that it is winter so you can wear a lot of hats for awhile.
Thank you! That sounds like a great method! My hair is also very thick and wavy, and it’s extremely long right now. So, the good news is that we’d have to accidentally cut off a lot for it to look bad, I think. I really like step #4 🙂
That is freaking amazing! I am so impressed with your savings rate. We do an OK job, but still way less than you – of course, my husband is still quite anti-frugal. Anyways… I have some of the same pangs for travel that you do, that is the one thing that I want to spend more money on and have conflict over. Mostly because right now we are in Houston – and there is nothing cool to drive to from here with a car load of kids. We are contemplating taking our first airline trip with the whole family this fall – and the ~$2000 it will cost for airfare for 4 is just eating at me…
I hear ya on travel, but, I do always find that I don’t regret the trips we’ve taken. We often fly at unusual times in order to save money (like going to visit my family in mid-January rather than over the Christmas holiday or flying abroad over the Thanksgiving holiday). But, sometimes you just gotta bite the bullet and buy the flights.
I’m curious about your husband’s anti-frugal sentiments, what does he dislike about it? Can we convert him :)?
There is no hope to turn Mr. SSC truly frugal… he was raised poor, by parents with bad financial sense, so instead of embracing frugality, he has more of a negative connotation with it because it reminds him of his childhood and his parents stressing about if bills could get paid and such. I have hopes that over time he will see more of the positives of frugality, and how much fun it is – but I fear it will take years – but that is better than never!
I motivate myself to save money by “paying myself” first. So I set a reasonable amount to save every month and when I run out of cash I need to either cut my expenses or find a way to earn more. For 2015 I’ve set a goal for my annual savings and I’ll raise that monthly rate step by step to achieve it.
Sounds like a good system! I like the either cut expenses or earn more philosophy–certainly gives you options that way. Thanks for sharing!
Wow that’s pretty impressive. I consider myself a pretty frugal person and my savings rate is pretty good – or so I thought – but this blows me out of the water. Well done!
Thank you so much, I appreciate that! We were pretty excited ourselves when we ran the numbers 🙂
Don’t get me wrong, I am beyond impressed at your high rate of saving/investing! What impresses me even more is your consistent focus and commitment to your goals. That is the true source of fuel and power behind the success you are experiencing and it’s a lesson that many would do well to learn. Yes you make a very good income and yes you have a natural proclivity towards frugality but without that kind of combined dedication and action to support your desire to become FI and move to the homestead, you wouldn’t have reached this awesome rate of savings. Chapeau! (loose translation of the expression “my hats off to you” in French).
Thank you so much, Kassandra! That is beautifully, and very kindly, said. We definitely feel like without our goals to guide us, there’d be no way we could do this.
No words…like Aldo said, I consider Mrs. Frugal Rules and I to be quite frugal and this past year was our best savings rate year ever but man you and Mr. FW are seriously killing it! I could not agree more on your thinking on exceptions. True, we’re very much not robots but those exceptions can become slippery slopes and we all know where those take us. You just have to ask yourself what you’d rather have more…that thing you might want in the moment or what that money will do for you in 5, 10, 20 years and so forth. I’d much rather have the latter.
Many thanks! I really appreciate that! You’re exactly right about the “what would you rather have” question–it’s something that guides our daily lives and decisions. Like you said, it’s actually pretty easy not to spend money when you think about it in those terms.
Congrats on having your best savings rate ever last year–that’s awesome!
93.07!? And that figure doesn’t even include mortgage principle paydown. I am beyond impressed. You’ll be living in that Walden-esque house in the woods in no time. Fantastic work you guys!
Thank you very much! Here’s hoping! (Although our house will need to be slightly larger than Walden’s–we went to Walden pond and saw a reproduction of his cabin. He was basically the first tiny house dweller :). Pretty sure Frugal Hound wouldn’t fit if Mr. FW and I were both inside. But Walden-esque, YES!…).
I appreciate your kind words–and I know your savings rate is probably just as high, so congrats right back at you!
Yay! Well done =)
I agree that we all seem to have different ways to calculate savings rates, and it’s not so much a big deal as long as we’re internally consistent to be able to compare personally from year to year.
Our preferred way to calculate it is to look at is is using X = our gross earnings from our jobs + pre-tax profit from our rental. Then Savings Rate = (X – Spending)/X. Where spending includes everything like mortgage principal, state taxes, and even health and personal expenses that we might get reimbursed for. (This year it was $50,495.)
Best guess is that our savings formula will come out to around 75% this year, maybe a little bit more? (Still haven’t gotten our W-2s so I don’t know what Mr PoP’s gross was.) The last couple of years our spending has been in the range of 25-30% of X, with federal taxes (FICA + income taxes) taking up another 22-24% or so. It gets a little muddled since the past several years we’ve had non-cash compensation that we’ve had to pay taxes on, but we never see any monetary value from and we’ll have that again this year.
oops, formula is (X – spending – fed taxes)/ X !! Can’t forget those taxes!! =)
In which case it’s a value usually closer to 55% =) Darned taxes.
That method makes total sense. And I completely agree that the method doesn’t matter as much as being consistent to allow comparison.
The model we’re using is mostly in service of a larger model for homestead finances. Slicing our expenses, spending, and saving in certain ways makes it easier for me to project and tweak future finances in a very different situation 🙂 Post on that is coming up…
..and I DID faint when you said you we’re in a coffee shop together!! All I can think of in my head is a David Attenborough-type narrarator in a wildlife special whispering,
“Here is a truly rare sight to behold. The Frugalwoods female and Frugalwoods male out in a social watering-hole, clearly communicating back and forth… what they are saying none of us know…”
who said you were the only frugal weirdos 😉
Hahah! That’s hilarious. If I see a zoom lens pointed at us in the future, I’ll know. And, you can still find us in a coffee shop these days anytime we have a gift card 😉
Thanks so much for stopping by!
Just started to write this comment after picking myself up from fainting… coffee shop! *gasp* JK 🙂 I love how detailed you two are. The fact that you knew exactly the date when you both decided to with your plans amazes me. I love how you identified your financial peak and honestly, I don’t think we are there yet but we are going to get there. Thank you for the inspiration. 🙂
Don’t faint ;)! We are indeed pretty detail-oriented, which I totally know is a bit odd… but what can I say, we’re frugal weirdos! Good luck to you and I’m so glad I can provide a bit of inspiration. Thanks for stopping by!
That is awesome! I like how you are so passionate about your goal and dedicated to it in everything that you do. This impressive savings rate is proof of that. I also love how you mention testing out a range of consumerism. I had to do this also in order to realize that it was not that I wanted and I had bigger goals. Once you do the whole eating out, blowing money, and consumerism thing and drift away from that lifestyle you start to realize that you aren’t missing out on anything.
Exactly! I’m glad we were a bit more spendy in the past–it really helped us to refine and hone our goals. Congrats to you for doing the same! Thanks so much for your kind words 🙂
I agree that frugality needs to serve a purpose! It’s about enabling life, not cutting just for the sake of cutting. Congratulations on a great year of savings!
Totally! That’s perfect said–“it’s about enabling life.” Love it. Thanks so much!
Very impressive but not a suprise. You guys got it gowinon! It’s interesting to note that the longer you live frugal the easier it is. That’s probably why your savings rate bumped up without you setting that goal or anything. It just becomes life.
My thoughts on my own frugality while I was reading your post:
I need to be more careful myself to not let my frugality make me a slob. I met with a friend yesterday (no, we didn’t go out for coffee. We had water. At her house.) and she noticed the hole in the armpit of my sweater. If you guys can rock the trash find clothes, then there’s no need for me to be so lazy in my clothing myself. All I need to do is sew up the hole anyway. Geeze, lazy Mrs. WW.
And also, I’m glad to read of your “splurges.” They may sound tame to normal people but it can get pretty guilt inducing for frugal weirdos. Mr. WW and I do like to take our ridiculously long hot showers (yeah, frequently blowing through the whole tank of hot water!) I feel badly about it. But not bad enough to stop apparently!
Thank you! So very true about the ease of frugality after living it for awhile–it’s 100% second nature for us at this point. It seriously would take more effort for us to spend money!
Never you worry, Mrs. WW, I have plenty an armpit hole I need to sew up myself. Dang armpits! And, agreed on the splurges. It’s been important for Mr. FW and I to have those, but to recognize them as such. Love those hot showers!
Amazing! I would never believe you just started this journey 9-10 months ago, seems like you’ve been at it for years. Reading your story motivates me to save more. 🙂
Thank you so much, Brian! I appreciate that 🙂
This was a great, inspiring post. We are having an alcohol-free, eat-all-meals-at-home January. Reading this made me really think about how much I’m actually missing those things, and hugely surprisingly to me, it’s not very much. We’ve already lost weight, and my husband is on a kick of cooking so I haven’t had to, and everything he’s made has been delicious. I think it’s going to be a good year and I look forward to following your journey through 2015!
Thank you so much! Sounds like a great challenge for January! It really is interesting to me how once we commit ourselves to doing/not doing something, it’s actually not that hard to follow the plan. I always have the most trouble making the initial decision to commit.
Congrats on loosing weight already and on having a husband who cooks ;)–I am most thankful for my personal chef, Mr. FW. Let me know how your January challenge goes! Good luck!
After reading this great post (and passing along to a friend) I thought about my motivation and realized it was my daughter. At 12 years old she has everything a tween could want. When we buy her things, she is appreciative but looking at it, most of the items fall out of favour pretty fast. I want her to understand financial health is not luck or only for the rich and famous. I need to be the role model and teacher in this area because they certainly don’t learn it at school. Thank you for such an inspirational post.
I think it’s wonderful you’re modeling and teaching good financial habits to your daughter. I certainly never learned anything about money in school–it was all thanks to my parents and the excellent examples they set.
Thanks so much for reading :)!
What a year! I wish you and Mr. Frugalwoods all the success you hard-working, kickass, frugal folk deserve! 🙂
Thank you so much! Best of luck to you in 2015 too! Let’s make it an awesome, frugal year 🙂
Man you guys really crushed it last year! We’ve never been spendy really and have never had credit card debt, but I’m sure there are always things to cut. And kudos to Mr. Frugalwoods for the shirt from the trash!
Thank you! Way to go on avoiding credit card debt–that’s fantastic. We love that shirt of Mr. FW’s, it’s probably one of our greatest trash finds ever 🙂
You are my hero! I am no where near saving like you guys, but I know I am much less of a consumer than anyone I know. But I still feel like I spend too much, so hubby & I are trying to track spending & budget diligently in 2015! You are such an inspiration, and I love reading your blog. I can’t wait until you start your homestead so I can rent a yurt and meet you in person! 🙂
Thank you so much, Gira! That’s really kind of you to say! I’m so glad that you find Frugalwoods helpful :). Tracking your spending is definitely a great first step towards saving more. You gotta know where your money is going first :). Best of luck to you and let me know if you have any questions. Thanks for reading!
It is good to see the results that come from being frugal. We are putting any “extra” money that comes in immediately into savings and looking at each expenditure before purchase to see if it is a must. With adult kids who still need some support, it makes it challenging to be as frugal as we want. Also, with three greyhounds, food and care can get expensive. But giving them homes is a priority for us. Also, as we free up money, I increase the amount that goes into the 401(k) since we are approaching retirement. Thanks for the post!
Sounds like you have a good system with saving extra cash and increasing your 401K contributions. Thank you for giving three greyhounds a home! They’re such wonderful animals and they really do need loving homes, so I think that’s fantastic. Thanks so much for reading!
Love this post. I’m glad you explained why you won’t be trying to further increase your frugalness and savigns rate. That makes perfect sense!
Thanks, Kayla! Yeah, I think at a certain point we just needed to declare peak frugality 🙂
This is what laser-like focus on an exciting, fulfilling life goal looks like. What an inspirational post – thanks for sharing it.
Thank you so much! I’m so glad you enjoyed it :). Thanks for reading!
You had me at Cheetos! I bought a small bag after a year of none and proceeded to eat the entire thing in 4 days. 😀 No more Cheetos for a long time. My bad.
You both are doing so well and should give Frugal Hound an extra pat for being laser focused. Right now I am beating the monthly grocery bill down so a bit busy but will give our kitty an extra love.
Oh Cheetos! What is it about those things?! So good but so bad… I’m impressed your bag lasted 4 days, if I bought one it probably wouldn’t last 4 hours!
Good luck with your grocery bill–you can do it! I’ll be sure to pass along your pat to Frugal Hound. Same to your kitty 🙂
That deserves a hearty round of applause! Hitting numbers like that I’d have to imagine your well on track to hit your goal in 2017. Are you gunning for 72% in 2015?
I think most people have to go through a period of freespending in order to figure out what is important. Even the godfather MMM has confessed to buying a *gasp* motorcycle in his past.
Thank you! I think you’re right about needing to spend some in order to crystallize frugal goals–it certainly helped us.
Like I said, we consider ourselves to be at peak frugality at this point and won’t be trying to increase our savings rate in the future. We’ll focus primarily on maintaining the levels we’ve reached–and just try not to mess anything up :)!
Congrats on the high savings rate. Looking over the past few months it looks like you average + mortage around 4k a month in spending…around 48 k a year. If you do a % of that and take out taxes / 401k it seems that you are earning combined quite a bit. Do you foresee any anxiety in giving up those jobs because of their relative high income level? Or holding out till 2018 just for extra protection?
We do make a lot, and that’s a major reason why we’re able to retire in 2 years instead of 10 years. But in terms of early retirement… it’s all about the spending. We’re confident that our spending level is sustainable, and the financial model for the homestead has multiple incomes in the plan. We’ll certainly never make again what we’re making now… but we won’t need to in order to live the life we want to live.
Ho Lee Fuk.
I’m tempted to leave my comment at that. I used to use delta NW as part of the numerator (which is close to what you’re doing if I understand), but that means market returns make a huge impact on your calculated savings rate.
I use (401(k) self contributions + other savings + debt principal pay down) / net income + 401(k) self contributions. With that formula we ended the year about 50% on a net income of $54K and something absurd like $9-10K of what we “spent” was money wasted down the interest black hole….
But, no shame, no blame. The past is the past, and I think present day me and the entire goblin clan is pretty darn awesome and I’m super excited about 2015. We’re making major expansions on our urban “farm” and I already have a tentative agreement to ‘lease’ garden space from a neighbor. I’ll tackle that after my own land improvements and I get the chicken coop built (barring something unforeseen with the permit approval).
I’m so excited to see your garden posts for 2015! How cool that you are gobbling up nearby land and turning it productive! I bet they’ll appreciate the lease “payments” all summer long. Dang good idea…
Phenomenal savings rate! Congratulations!! Mr. Bug and I definitely spend too much. Our focus for 2015 is to save more and spend less and you are a true inspiration. Keep up the great work and keep sharing 🙂
Thank you so much, Mrs. Bug! Best of luck to you on saving more in 2015–you can do it :)!
My math came out very odd (334%???). Probably because our net liquid is only Roth contributions and a small leftover net take home. Plus our take home net is low given the number of pre-tax accounts we’re maxing.
We became extra motivated to save (increasing our savings 46% compared to last year’s savings) after doing some math on a projected retirement year and assessing expenditures. Now it’s looking more like 4-6 years until ER (with constant assessing along the way of course, nothing is set in stone). Could it really be? Unreal! Like you a defined goal, is really the motivator here! These articles surely help too!
Oh so glad it’s helpful! The math the way we do it can definitely come out lopsided depending on the ratio of tax-sheltered income to net income. I noticed that this year when projecting some future year’s behavior :-).
Wow 93.07% with everything considered? I’m speechless right now. What a year! I hope you are able to buy some goodies for Frugal Hound to celebrate. 🙂
Thank you so much! We were pretty excited when we realized how high it was with our 401K contributions taken into account :).
I think your picture could be in Wikipedia beside laser focus. I don’t know if I’ve ever seen a couple who were so in sync with a plan. Our closest was when we took 18 months to pay off credit cards, and even then there were some arguments about wants vs needs. We are certainly not as frugal as we could be, but it’s head over heels better than in the past. I think those bad habits are what make you able to find a different way. Otherwise, you’d wonder what life is like on the other side.
Wow, thank you! That’s quite a compliment! I agree with you on the power of bad habits to teach us what we truly want out of life–it has certainly been a key to our success at this point. And, I think you’re fabulously frugal!
I love the approach you guys have to saving. Having such a clearly defined goal is crucial to this type of savings rate. You know exactly what your end game is, so it’s easier to forego eating outside of the home in favor of saving for the homestead. If you just had an amorphous goal to save money because saving money is good, I think it would be much harder to do. That’s why it’s so important to know what your values are and then to use your money accordingly. And as you said, to get started right away.
Absolutely! That’s definitely how we feel. And yes, I really do believe in the concept of just start and do it now :)! Thanks so much for reading!
Do you guys share your income? I’d love to put that savings rate into perspective so I can stop feeling guilty about mine!
We don’t currently, though I imagine we will in the future. Suffice it to say that we make a very good salary, but aren’t in the 1% 🙂
Its fairly easy to back calculate it from their 401K contributions and the % increase in savings rate change from said contributions.. Gives you a rough idea.. AWESOME WORK!! Frugalwoods Family!!
That’s great! I’m trying to calculate our savings rate for comparison’s sake, and it’s already so insanely complicated that I’m about ready to give up. I’m not even trying to measure the change in net worth, minus appreciation, interest and dividends. I don’t even know where to find that. Do you all include property taxes as “spending” or just exclude it alltogether with income taxes?
We do include property tax in spending, though ours is insanely low thanks the Cambridge’s burgeoning biotech industry.
Most of the numbers are found in our bank statements, though the tricky part is finding what your appreciation was through the year when you’ve had multiple investments. I’m sure I could get that from the statement, but I just keep track of all my new investments during the year… which makes it easy to figure out at year’s end.
That’s a phenomenal savings rate, particularly considering that you live in one of the most expensive areas in America. But, then again, you knew that. ;D
2014 was a good year in the Palazzo di Mandalay as well. 3.5 years ago we decided to sell our McHouse in the ‘burbs of Richmond, Virginia and buy a sweet condo in a gorgeous national historic district in the city. In November? WE PAID OFF THE MORTGAGE. Being completely debt-free is awesome, and while we won’t get anywhere near your savings rate (we’re old) we’re maxing out the Roths and the 401ks. We’ll retire in five years. After that, the adventure begins!
Huge congrats on paying off your mortgage! That’s awesome. And, way to go on downsizing–that’s a hard step for a lot of folks. Enjoy your upcoming debt-free retirement :)!
Thanks so much for reading and for sharing!
So proud of your awesomeness. I’m loving your savings rate, loving that you enjoyed some nice meals and travels but now feel totally focused on the homestead. Quite the inspiration. 2014 was one of our worst years in terms of spending and so we’re really trying to make 2015 awesome.
Kids will suck that money right up like a Hoover…
But think of the adorable little bundles of bean-joy you gained in 2014 :). I have confidence your 2015 is going to be awesome!
Congrats to the Frugalwoods family on an awesome year!!!! You guys are a great example of what goals setting, focus and teamwork can do for your finances!!! Can’t wait to see how you top it in 2015. 🙂
Thank you so much, Shannon! I really appreciate that! Not sure we’ll be able to top it in 2015, hopefully we can maintain though 🙂
I wore a pair of sox yesterday w/ so many holes I may as well have been going barefoot. If I buy a new pair, i’ve already broken my no new clothes rule 10 days into the new year… What should I do?
Frugalwoods have me all screwed up b/c they are saving so much and I’m so competitive that I want to try and keep up. I know I can’t though b/c I have cable $60 monthly and I have NHL season tickets.
This might be a question for FrugalHound, but what would you do?
Sounds like you might need some new socks! No shame in buying something you truly need :).
And as far as cable and NHL season tickets go, I think that’s a personal decision and should be all about your spending priorities. Everybody has their luxuries that they spend on, and if those are yours, then I’d say don’t worry about it.
Great job! As someone living in NH, I know how expensive Boston can be and I admire how much you have saved and how frugally you live! Your blog is so inspiring. You’re keeping your eye on the prize, your VT homestead and that is the best way to get through those moments when you may want to buy a new sweater at Kohl’s or grab a coffee out. 🙂
Thank you so much! Boston definitely does have a high COL going for it :). We certainly try to keep our sights set on that homestead anytime we’re tempted to spend. Thanks for stopping by!
Okay that’s an awesome savings rate. Here I thought I was doing alright at a 50% savings rate. Apparently I need to cut some expenses or make more money.
Thank you so much! I think everyone has to find the savings rate that’s right for them and for their goals. A 50% savings rate is awesome!
“Classic Mr. FW: holding bread he baked, next to the wall he built and the cabinets we painted, while wearing a shirt from the trash.” That’s one of the most epic captions I’ve ever read haha. Congrats on saving so much, sounds like you’ll be on track for your retirement plan and starting a homestead!
Hah, thanks! Glad you enjoyed it–it really is classic Mr. FW :).
You are so right that “when you’re working towards a defined goal, frugality ceases to be about what you’re giving up and becomes about what you’re going to gain.” Hubs and I found our common goal last weekend. I’ve had my student loans to drive me, he didn’t have a (frugal) dog in that fight. They wasn’t his loans or his education, it was mine. Now that we’ve set goals that drive both of us, the difference is like night and day.
Damn, 93% if you take pre-tax money into account! 😀
Great job guys! Keep showing how it’s done!
Good luck for this year,
Thank you, NMW! Good luck to you too–I know you’ll be crushing your goals!
Holy cow, congrats! As I was reading your post, I kept thinking “wow, these guys are amazing”! Keep it up!
Thank you so much, Connie! You’re so sweet :)!
This really is fantastic and considering that it doesn’t include your 401ks and mortgages! Wow, I am truly impressed and hope to get to half of that in 2015! Awesome job!
Many thanks! We were pretty thrilled ourselves :). Best of luck to you in 2015!
Hot damn! Hope I can get my yearly savings up there around yours someday! Heck even your monthly! Great Job!
Why thank you! I wish you all the frugal best–you can do it 🙂
Great job on the savings lady!! Y’all are such an inspiration!!! 🙂
I love when you said No Exceptions, and gave the example of purchasing work clothes. I do thinks like that too. I am an all or nothing kind of person. I am either going to do it or cut it off.
Thanks so much, Allison! Haha, yes, I definitely seem to work best with all or nothing :). It’s good to know yourself!
Woo! I saved about 68% in 2014, which was lower than 2013’s 75%. My minimum goal is to save at least 50% of my regular net pay and then 100% of my bonuses, which I did succeed at. I think I’m going to set my goal of regular net pay saved for 2015 to 70% since my base salary is going up a lot. My goal is to get to 80% overall saved soon, though I may also quit the tech industry and go to grad school in the next few years, which would severely drop my income and thus savings rate – we’ll see where life takes me! My spreadsheets forecast reaching FI around 2018-19, if I continue working.
Wow, Leigh, those are awesome numbers! Way to go!
One note on grad school–not sure if you’ve considered this before, but, I actually worked full-time at the university while earning my MA and thus received free tuition. Although you still have to pay the taxes on the tuition, it was vastly cheaper than the sticker price of the degree. You may have already considered all angles of this, but just throwing it out there in case. Best of luck to you!
That is a pretty insane savings rate! Mine is not that high when I include the retirement contributions and match from work (I include the match as income to try and make it sensible). I am happy with our incremental improvement in 2014 and hope to beat it in 2015, though I doubt we will ever get to your level.
Good luck in 2015! Also, I really like the shadow picture. Very creative.
Thank you so much! I appreciate it! Best of luck to you in 2015 🙂
Amazing Mrs. Frugalwoods. Maximizing my 401k this year is my financial highlight and you seem to have done it very well. I am planning to increase it by 20%. Some plans allow me to contribute money on an after-tax basis. I am checking with my financial advisor for cases when this might be advantageous in my situation.
Thanks so much! Best of luck to you in 2015!
Pretty awesome to be able to save so much by living differently. The no exceptions is great to have rules, for the sake of the greater goal. I don’t think you need any advice, as you are the top 1% in frugality. Keep it up and looking forward to the savings rate of 2015. (Shall we say 105% including rebates and matches) HAHA
“Top 1% of frugality”–I like it! Thank you! We’d be well over 100% if we included employer matches and rebates and mortgage principle, which would be pretty funny. As it is, I doubt we’ll increase our savings rate in 2015–I think the name of the game will be to maintain.
I’ve enjoyed reading a few of your posts and this one is a nice recap of your year and all the changes you’ve implemented, though it sounds like you were hitting about 50% before your March 2014 decision.
Just a few comments about your homesteading dream: we just moved from the country close to a city and even though the property is more expensive than the 10 acres we had, our life is INFINITELY less expensive, so make sure to factor in the high utility and repair expenses of country living! Also, if you are planning on kids later, they are expensive, and once my daughter was born I wished we lived in a neighborhood so I could meet other moms without driving 10+ miles.
But, if you are cool with those things your plan sounds great! Happy house hunting. Oh, and if you plan to garden – have your soil tested. It will save you a lot of money and stress in the long run.
Thanks so much for reading and commenting! And, thank you for your homesteading advice–most appreciated!
You have the most impressive savings rate I’ve ever seen. Seriously, that’s insane. Y’all are frugal machines! I’m totally inspired by you!
Why thank you! I’m honored! 🙂
My jaw dropped at your savings rate. That is totally awesome and keep at it.
Thank you so much! Will do 😉
O_O that’s an amazing savings rate! Ayoooooo!!!!
That is also a superb beard Mr Frugalwoods is sporting. Giving me beard envy.
Keep it up guys (I assume frugal hound actually runs the show?)
Thank you! Frugal Hound definitely runs the show around here :). Mr. FW’s beard really has grown to epic proportions lately… hah!
Your savings rate is impressive, but your commitment is more so. You are so right that “when you’re working towards a defined goal, frugality ceases to be about what you’re giving up and becomes about what you’re going to gain.” Hubs and I found our common goal last weekend. I’ve had my student loans to drive me, he didn’t have a (frugal) dog in that fight. They wasn’t his loans or his education, it was mine. Now that we’ve set goals that drive both of us, the difference is like night and day. You’ve really been an inspiration to get us moving. Thank you.
That’s so fantastic, Kate! That makes me so happy to hear :)! It really is all about the goals for us. We’re so focused on what we want out of life, that none of our frugality feels like a sacrifice in the least. It’s just work in service of a dream. I wish you all the best and I’m excited to hear more :)!
I just wanted to tell you that this is the first month we’ve saved about 60% of our income. We saved my husband’s net income and 10% of mine. We just paid off our home and I’ve been recording every purchase and expense we’ve had. I’m so excited to try to continue to this. You’ve been my inspiration.
CONGRATULATIONS! That is so awesome! Way to go! 60% is HUGE. I’m so excited for you! And, I’m deeply honored that I’ve been your inspiration–wow, thank you! Frugal on, my friend 🙂
what do you use to track your spending?
I love YNAB
“Everything in life is a trade-off, and unless you’re a billionaire or Frugal Hound, you’ll have to make choices on how you allocate your time and your money.” This is a brilliant statement! It sums up everything so nicely. From finance being personal, to understanding Capitalism as a person in the U.S., to our most limited resource of all (Time), you really captured everything here! And of course it’s always fun reading your frugal stories!
Thank you, Natalie! I appreciate that 🙂
See, the whole “you have to have money to save money” part is rather crucial frankly. Statistically, about half of america now lives at, below, or just marginally above the poverty level, which itself, is wildly out of date.
That means people who even make say….40k a year, are in the upper echelons…..In fact, I find most of the folks with blogs on saving and frugality (things i am tending to agree with more and more), tend to be by relatively accomplished white/or asian middle class folks. Not rich, but vastly more comfortable than most of america.
The real trick, is how do regular working folk generate this kind of income to even attempt to save…..
You bring up a great point. It’s something I feel keenly and you might enjoy my post about privilege and how inherent I think it is to the quest for financial independence: The Privilege Of Pursuing Financial Independence
Ridiculously good savings rate. I use the same calculation you used to get the 93% which is insane, I’m struggling to keep mine above 50% at the moment!
I just made Mrs TFS read your post about not buying clothes for a year. Hoping that will help 🙂
Hey, 50% is awesome–congrats! Good luck with the clothes effort 🙂
Oh Man Sept was a bad bad month for us! I use YNAB and my focus my energy on our everyday expenses as most of our bills are fixed. Shopping came in a bit under but my Rossmans category (where I buy my toilet paper and wine strange I know) came in like double the usual amount. Household goods and misc was way up. We bought a night table at Ikea and a new kitchen light. Been needing one for a while, way too dark for this old eyes and found a great deal on a very bright LED light at the local discounters. Our dog has Addisons and his meds are no longer available in Germany so after an initial panic when we were told we couldn’t get them any more we found out that we could order them from abroad. Even better is they are half the price even taking into account shipping costs. But we had to order a year’s supply!
What really killed us was a week long trip to Rome. Got a fantastic deal on flights hotel and half board. Only thing we needed was a car rental and I got a great deal on that as well. Years of budgeting have honed my skills on estimating costs. Ran the numbers and with car rental and insurance and gas I came in with an estimate of 500 to 800 Euros for the week and that should have been on the high side. I mean even the S-Bahn to Munich airport was included (a 50€ savings) Since breakfast and dinner were included our biggest cost would have been having a coffee or beer and tip for the many free tours that run. In the end it came out to an insane 2500€. I’ve never gone so far over my estimate!!!!
Best I can figure is that Rome is so overwhelmly chaotic that it put my ADD in to sensory overload. It was 30€ to get into Rome (really good deal actually) than we needed change to use the toilets (change machine didn’t work) so that meant buying an overpriced coke (they won’t give out change) than same with the metro, won’t take bills, so had to buy another super overpriced coke to get change again. Coliseum was 30€ than we sat down and order an overpriced beer (15€ for 2) to try and get our bearings. Than we hired a bike tour (wife’s feet were hurting her) that was 30€ walking back ordered a coffee, well you get the picture. And we went into Rome twice!
This along with along with some major dental work has pushed our budget seriously into the red (I knew and planned for this all along) so it’s made me hyper focused on keeping our costs low.
In 3 weeks we’re making a trip to Frankfurt (something we do 3 times a year) so I’m out to buy a travel kettle and smallish microwave. I’m a total coffee addict (5-6 a day) and Starbucks on the road can seriously add up. So I’ve started taking a travel kettle and instant coffee. It helps that now unlike 15 years ago you can buy paper cups. Two Starbucks and the kettle is paid for. Our normal routine is to eat breakfast at the hotel (if included) or bring cereal and milk if not, skip lunch and eat dinner out. This time to save costs, we’ll bring a microwave and some frozen dinners. We’ll do breakfast at Micky D’s (7€ for both) as it’ll keep us to dinner. Considering eating out can run 40€ there’re are some serious savings to be had.
Anyways thanks for letting me rant
Great blog! I have a similar goal with my partner to become as self-sufficient as possible, which ends up being another way to say ‘frugal’, but coming from a different motivation, I suppose. We make very modest salaries (total $47,000 net), though, so in order to establish a time frame for financial independence, can I ask roughly what range your combined household income is? Sorry to ask such a personal question, but having a ballpark figure helps put things into perspective. If we use many of your tips and tricks, I doubt we can expect to save the same percentage of our salaries. But at least it will give us a sense of what to expect.
OMG a 93% savings rate?! I’m so jealous! We just reached 54% and are so happy that we’ve made it this far! But you guys are showing us that we could always take it further. We’ve got work to do. 🙂
i’m so inspired! i thought i was saving a lot among spendy people 🙂
now i don’t feel like the odd ball out. there’s so much joy in being creative and enjoying things that can’t be bought.
it’s sad how average americans are overfed and undernurished financially.
keep up the great work, what an inspiration!
Hi Mrs. Frugalwoods,
I am so happy reading every day your adventures, and I would like to ask why do you think index funds are better than mutual funds?
I put my money in mutual funds but now I am not sure if is the best option.
Many thanks for your help!!
I too, did Americorps in NYC! However, I was NOT able to save any money (I don’t regret the choices I made, because it has made me even more frugal today) but I was able to take advantage of all that NYC has to offer that is cheap and/or free. So glad I found y’all’s blog!
OMG a 93% savings rate?! I’m so jealous! We just reached 54% and are so happy that we’ve made it this far! But you guys are showing us that we could always take it further. We’ve got work to do. 🙂 Very good!
“It may just be me who has ridiculous trouble with moderation,”
Oh my gosh, yes! I’ve always had such big problems with moderation. We keep trying to moderate ourselves, and it’ll work for a while, but then fall apart again. Perhaps I should just accept it as part of my psyche and incorporate more no-exception rules!
Our normal routine is to eat breakfast at the hotel (if included) or bring cereal and milk if not, skip lunch and eat dinner out. This time to save costs, we’ll bring a microwave and some frozen dinners. We’ll do breakfast at Micky D’s (7€ for both) as it’ll keep us to dinner. Good.
You have a large lot to work with. If we were to heat our home with passive solar and solar panels rather than wood how big of a lot do you think we would need for a homestead? Could 10 acres work? Thanks.
Your book is very inspirational. I’m working on our financial plan as we speak. My girlfriend and I have a similar story with our first child on the way this October. Our first step has been eliminating debt. My next goal is going to make it so she doesn’t need to work. I wish I would have started sooner but I think I can still pull it off within the next year.