INSIDE: Do you wonder if it’s possible to live off half of your income? The good news is it is. Learn how to get started and some real world advice from someone who did it.
One of my most visited posts on this site is on living off 50% of your income back in 2012. It wasn’t the most well written or Earth shattering article ever done, but it did open up some great discussions on what’s possible out there from plenty of people doing it.
In the 118 comments left so far, people fall into the following categories:
- Those who wish they could save 50% or more right now
- Those who ARE saving 50% or more right now!
- Those who used to be saving 50% but have since scaled back
- Those who are *about* to start saving 50% or more
- And then those who say it’s stupid and not possible
Today’s post is for those who think it’s not possible to live off half of your income :) It may not be for everyone at every single stage of their lives, but it’s certainly doable during many of them. Depending on how badly you want it of course. And I’ve personally gone in and out of these stages myself over the years (a 90% rate at my peak, and a negative % at my low – when you spend more than you earn!). Life and motivation always get in your way, but it still doesn’t mean it’s not attainable.
Comments About How to Live Off Half of Your Income
To better help this sink in, I thought we’d feature some of the comments people have shared on this post over time to help inspire us. And they come from all walks of life and situations!
I’ve done this for almost 5 years since I graduated college and started working. I budget $2200 in expenses and bring in about $4400 after taxes and Pre-Tax deductions (401K, medical, etc). Not surprisingly, I have 113K in cash and my 401K and Roth IRA add up to about 70K. My goal is to put a down payment on a house of about 50% and ideally my mortgage would be about what I pay in rent right now.
We did this over 2 years ago. We went from spending ALL of our money to spending only 1/2 of what we earned. We put one salary towards our debt and the other to our expenses. We both made about the same. In 7 months we had paid of $35,000 in credit card debt. Next we tackled our car loan and emergency fund. This past year we BOTH lost our jobs. It was not a time to freak out but to thoughtfully decide what we wanted to do next. It did put our savings plans on hold (or so we thought). When we looked at the end of 2011 we had still saved over $6,000!
It sounds so easy when I type it out into these simple clean sentences but it wasn’t and it was. We have two teenage kids that we didn’t want to ‘scar’, there were times we wanted ‘stuff’, but we made cutting back into a hobby. That’s the best way I can describe it!
We (my husband and I) have lived off of about 50% of one income for several years, even when he was in the military. He makes significantly more now post-military, but we generally live well below our means. I would say our quality of life is pretty good, neither of us (or our children) really go without. If I go back to work, my paycheck will go straight into retirement or savings and we will adjust living off of one paycheck as needed to cover additional expenses like gas and day care, but we will most likely pretend we are still at 50% of one income for day to day expenses. Some months, we are above 50% of his paycheck for expenditures, but it is mostly due to medical expenses for our child with some pretty severe health issues.
We saved between 65-75% of our income for about 10 years and then quit our jobs (we also made more money than a lot of people — our expenses were about $40K/yr including the mortgage — we now live an extravagant life on $20-24K per year with mortgage paid off)… but, when you realize that stuff is not what makes you happy, you end up leading a richer and more frugal life forever and somehow it becomes really easy and quite freeing…
Imagine if we all stopped buying so much stuff and spending so much time working/commuting? If we could all volunteer our time, be with our families more often, and build communities and gardens together? I think our society and the health of our planet would be much better off… That’s my dream anyway. :)
We’ve cut our expenses to the basics so that we can live on ~55% of our take home pay… Because we live on way less than we earn, we have a weekly opportunity to fund unexpected expenses or little splurges, but most of the time it all gets moved somewhere sensible. I find that by not budgeting for entertainment, clothing etc we don’t feel entitled – as if we’ve pre-approved ourselves to spent that amount without pausing to question whether we really need it. Instead there is no planned budget for these items and anything we spend is coming out of what would otherwise be available for the Friday transfer to savings or the mortgage.
Two months after 9/11 occurred I quit my job to stay home with my 2 children without even thinking about the consequences. We went from a 2 income earning family down to 1. I had no idea where we were going to come up with the difference. On top of that we had just bought a brand new house.
We did it though. It was tough. We cut back on everything from cancelling Satellite TV, the newspaper and magazine subscriptions. We didn’t go out to eat which saved on dining out and the cost of a baby sitter. I no longer had to pay daycare expenses or for the wear and tear on my car not to mention clothes for work.
I cut coupons and made most of our food from scratch. I even washed out my ziplock bags. Vacations for us were walks on the beach or a picnic at the zoo.
Fast forward 10 years. My kids are in school and I’m still a stay at home mom. We are debt free, have a 6 month emergency fund, our retirement account is fully funded at 15% as well as the kids college. We go on at least 2 nice vacations a year and life is good. Living on one paycheck or 50% of your pay can be done you just have to want to do it.
I have a RIDICULOUS amount of student loan debt and decided to sacrifice living on my own (moved back to the parentals’ house) to save money and pay off my debts. Half of each of my checks go completely to my living expenses (car stuff, insurance, food) and my outstanding debts (credit card and student loans). I’m feeling the buckle, but I’m realizing how much money I blew on stuff that I really don’t need! And it’s nice seeing my money owed numbers dwindle and my savings amount grow soooo much faster. I’m gonna live with these people until they drive me nuts, but at least I will have made some progress… lol
I do not live on my salary. I live on 35% of my income, so to live off half of your income means investing less. When you have multiple streams of income, you get to depend less and less on your salary, and eventually do not depend on it anymore. It starts with living below your means, paying yourself first, and investing your savings in assets, starting from fixed income investments
My husband and I are currently living off of less than 20% of our pay. Even so, we live pretty freely, and honestly by just saving on simple things like using cloth napkins instead of paper, using laundry detergent sparingly, only throwing trash out when the bag is full, etc. we save enough to splurge on a nice dinner or something every few weeks without going above the 20% line. Of course, once we have kids, that will change, but that’s one of the reasons we’re putting that other 80% in savings :)
I am 40 years old and I live off 50% of my income. The cons: I live with parents, I have bad credit, I am a single parent. The pros: I have a six-figure bank account. When I get my credit straight, I will finance a home or I just may pay cash.
We did this (lived on one paycheck even though both of us worked) when we were about to start a family. It was a SCARY time because we tried to pretend like we didn’t have any of the second income and overdrafted many times before learning how to manage. It’s hard going from living on two incomes (eating out, spending money like fools, etc) to cutting back 50%. But it was so worth it and I’m proud to say 7 years after quitting my job, I have not once felt the need to go back due to financial strain. I won’t say it was easy, but so worth it. You can really learn to live on less if you’re willing to make sacrifices.
And Personal Finance Bloggers are Hip to The Game Too:
- How We Save 65% Annually @ Frugalwoods
- How I Save 85% of My Income @ First Quarter Finance
- The 60% Savings Challenge @ Dividend Diplomats
- Are the Experts Killing Our Savings Potential? @ Blonde on a Budget
- How Mr. Money Mustache Retired At Age 30 And How You Can Too @ Forbes.com
There’s even a 50% Savings Club! :) And it’s not just about the *savings* aspect here either.
As many of those commenters shared above, there’s a ton you can do with 50% of “extra” money outside of merely saving it. Such as paying off credit cards, crushing mortgages, changing careers, starting businesses, donating, and more. With the biggest reward being that of financial independence.
And anyone chasing early retirement knows it all comes down to how much you need to live off that determines when you can call it quits. It’s the major key to forecasting. Some go by the “magical number” you need to safely retire, while others make up their own personal calculations altogether. Either way you look at it, expenses is a major factor.
The Takeaway Here
The takeaway here is pretty obvious: If you can live off half of your income you’re a freaking baller. It doesn’t come without some sacrifice and shift in mentality, but these hustlers above are proof that it’s very much attainable. And quite frankly, we all know what we have to do to reach it, the question to ask ourselves is, how badly do we want it?
This message is as much for me as it is for you, btw. I ain’t saving no 50% these days, that’s for sure! Hell, I’m not even saving 25% right now and it pains me to admit that out loud. I have plenty of valid
reasons excuses for this, but it still doesn’t make me feel any better financially.
So it’s time for me to have a nice long chat with myself about it too :) And I hope you’ll join me today, and as we go into the weekend, as well. You don’t have to make any rash decisions of course, but it never hurts to pause and do some good reflecting. Where do you want to be in 1-2 years? How about 5-6? (Or even 50-60 for some of you millennials?)
That’s the real takeaway here today. Fighting for what we want in our lives.
And just like we did on the original post almost three years ago, I’d like to now open it up to all you and ask that you share what your saving rates are looking like these days… Let’s see if we can top our old post, shall we? :) It would be interesting to hear updates from any of you who chimed in back then too!
How much of your income are YOU living off right now? What have you been able to accomplish because of it? What does the future look like?
PS: If you’re in need of even more inspiration, check out this proof on how getting out of debt is very much possible, as well as how it’s attainable to become a millionaire too. And not the lying type ;)
[Money cats photo by edenpictures]
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!