My Savings Rate January 24
I have been doing some number crunching on my savings rate. I currently save 25% of my income. This is split between retirement savings and after-tax savings. I am not including the money that goes into my money-market mutual fund that is earmarked for my yearly property taxes. I do not escrow so this money my “escrow” account. The nice thing is that I earn the interest on the escrow money instead of the escrow company. I also do not include debt service payments. Whether to count debt service as savings is an interesting quandary. The principle portion of your debt service payment is very much like saving. It increases your net worth and has a built in rate of return since you no longer paying interest on the principle portion.
I have three areas of debt service. I have a mortgage for my townhouse, a car payment, and the two credit cards from my app o’rama. I do not carry credit card debt other than the two. The app o’rama is defined and detailed here. The car loan is a four-year loan which I am almost half-way into. I look forward to retiring this debt. The mortgage is a 20 year note. That leaves two credit cards that I have a balance on. The interest rate is zero percent till September. I pay quite a bit more than minimum since I got as much free money as I could on these.
Compared to 12 months ago, I have $49,533.44 more assets and$10,945.49 less debt. That puts my net work $60,478.93 more than it was 12 months ago. I think this change is very good. I know I am only giving deltas which make it almost impossible to draw a worthwhile conclusion on. I do this since I feel like I am giving out a lot of personal data here. I am only comfortable giving out deltas than absolute figures.
Am I saving enough? Only the future will tell. I almost have my emergency cash fund built to a level that would allow me to go five to six months without worry. I could go into major low spending mode if need be to increase this out. I hope to have my car paid off in 20 months. This would retire the car loan six months early. After I got the car paid off, my emergency fund will last longer.