(Guest post by my girl Paula Pant while J$ hangs out with his newborn boy :))
Last January, J. Money wrote a post asking what life would be like if you lived off 50 percent of your pay. That’s what we do.
My partner Will and I pledged to spend the year 2012 living on roughly 50 percent on our income. We want to invest the other 50 percent.
Will holds a traditional j-o-b while I’m self-employed, so we budget by living entirely on his steady paycheck while we shovel my sporadic pay into a separate checking account that we don’t touch. We reasonably guess that we’ll earn roughly the same amount this year, which means we’re saving about 50 percent.
Functionally, we’re a couple living on one income, which isn’t that strange. Lots of couples do this, including J. Money (and he’s got J. Junior to feed!)
But while J. Money says he feels pressure to provide for his family now that he’s the sole breadwinner, Will and I have the opposite reaction. We feel lazier. Yep, saving 50 percent of our income has turned us into lazy bums!
We know that we have a decent cushion, so we tend to be a little more lax about watching where our money goes. That said, we’ve never had to tap that cushion – my income – to cover our normal living expenses, so I suppose our newfound laziness hasn’t translated into hog-wild spending.
So far, we’ve used my income to:
- Max out my Roth IRA (we haven’t started on Will’s Roth yet, but it’s coming!)
- Fix up a foreclosed rental house that brings us $4,400 in net passive income each year.
- Um …. I don’t know what else we’ll do with it. Realize how indecisive I am?
At the moment I’m sitting on about one month’s pay, trying to figure out our next move. Should we buy another rental house? Should I try to flip a house? Or should I pour money into redesigning my blog and hiring assistants?
I’m not trying to throw a pity party, but investing 50 percent of your income is tough. It’s not just the saving-money part that’s a whopper, it’s the deciding-what-to-do-with-the-money part that becomes a real head-scratcher.
Questions We Usually Get
I know someone will pose the question: “How can y’all afford to save 50 percent of your income?”
As an Atlanta girl, I applaud you for saying “y’all.” Here’s my answer, at least in part: Will is 32. I’ll be 29 soon. We live with roommates.
“Aren’t you too old to live with roommates?”
Maybe. But they pay a good chunk of our $2,200 mortgage. You see, we live in a triplex. Our roommates pay $1,100 and the tenants in the other units pay an extra $1,450. This means we bring in $2,550 each month. So not only do we live for free, we also positive-cash-flow on our own home. That’s a huge help.
In addition to our housing costs being covered, Will and I both drive old, used cars that were bought in cash. (Will drives a 1997 Honda Accord. I drive a 1998 Toyota Camry).
Otherwise, we don’t have a lot of expenses. Food. Beer. Clothes. Health insurance. Contact lenses. Cat food. The occasional vacation. Frankly, I’m surprised to see us spend even half of our income. I wonder where it all goes?
Guess I should stop being so lazy and read the bank statements to figure it out. I’ll start tomorrow :)
Today’s guest post is written by J. Money’s dear friend in the Peach State, Paula Pant. Paula has traveled to 27 countries and her latest obsession is buying rental properties. Her blog, Afford Anything, is based on the radical idea that money should never hinder your dreams. Check it out!
(Photo by Howdy, I’m H. Michael Karshis)
PS: Some of my favorite tools:
|Personal Capital (FREE) -- If you’re looking for a robust financial tracker, Personal Capital is the way to go! They’re like Mint, but on steroids and have much better tools for investment and net worth tracking. // Full review|
|Digit (FREE) -- A super easy (and automated) way to save. Every day Digit analyzes your income and expenses and will push money aside for you any time it sees extra sitting there. I've saved over $4,000 myself using them so far! // Full review|
|Acorns -- Having trouble finding money to invest? Check out Acorns – they round up all your transactions to the nearest $1.00 and drops the difference into an investment portfolio for you. Easy way to start investing! // Full review|