Today is pay day and I have good news to report: Not only did I manage to save $1,000 last month, but I actually ended up with $95.45 left over – after all bills and expenses!
Was it stressful? A bit. I'm not used to watching my money so closely. Can I repeat next month? Sure.
The bigger question is whether I can keep it up long-term.
The budget I’ve outlined doesn’t leave much for extras. I realize I’ve neglected both dry-cleaning and clothing purchases. And you can only go for so long without either of those.
Why is my savings plan so aggressive? Simple: I don’t want to work until I’m 65.
My goal is to retire by my mid-40s. Unfortunately, that means my plan isn’t quite aggressive enough. I believe it’s possible to retire or at least semi-retire on as little as $500,000 (at a rate of 6% it would generate about $30,000 annually).
Saving $12,000 a year for the next 13 years at a return of 6% would net me around $240,000 by the time I’m 45. By that time, if I keep working full-time, my pension would be worth about $150,000.
What I would really like to do is ramp up my savings to $2,000 a month, which would put me over $500,000 (taking into account the current value of my pension) by the time I’m 45. I don’t want to plan much around future pension income, as my overall goal is to gradually move away from 9-5 work in order to pursue other ventures.
Do you think it’s achievable? To do this immediately I’d have to get a higher-paying job, and then work on building my freelance income in my spare time.
Do you have a monthly savings goal? How does it fit into your long-term plan?