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Archive for October, 2010

Realization

October 13th, 2010 at 03:50 pm

So I had a realization over the past few days about saving which many people probably already know, but which is a new thing for me. I realized that the only number that matters is the percent of my income that I save into permanent assets. The total amount saved doesn't really matter since it has no relation to how much I spend.

This means I have to count some of my savings (for a car, house, trip, etc) as actually spending (just debtless spending). If these items counted as "savings" then the ultimate goal would be to avoid debt, but my ultimate goal is to build wealth.

So to buy a $15K car every 10 years, that would be about $1.5K a year in savings (in the avoid debt model). Or that could be $37.5K in assets (in the wealth building model) which would create approximately $1.5K a year.

This change in mindset was inspired by www.earlyretirementextreme.com. The guy is a bit crazy, but his ideas are both onerous and liberating.

Vacation!

October 10th, 2010 at 06:36 pm

So my husband and I have been struggling for the past 3 years to find a time to go to San Francisco to see the city and visit his Aunt and Uncle. He decided (for my sake) that we had to go before the end of next summer. The problem was, I couldn't find a good time. Work, holidays, school, etc just got in the way. Finally we realized the only time we could go was next month!

So we called his Aunt and Uncle and we are staying with them and taking 2 days in San Fran and 2 days in Napa. So exciting! The only problem is, we don't have the money saved up yet. We decided screw it! We are going to borrow from one of our other savings plans or tighten the budget for that month, but if we don't go now, we will never go. Plus, it's not like we will be going into debt for the trip, just reallocating savings.