I save like a G

I love today’s title because it holds double meaning. I originally meant I save like a G (as in Gangsta). If you didn’t know, I’m the ghettoest (is that a word?) personal finance blogger this side of the Mississippi Milky Way.ย  I love rapping, hip hop music, making beats, and learning about compound interest. If that’s not straight hood, I don’t know what is. Not only does “I save like a G” mean I’m a gangsta, but it also can be taken literally. I really do save about a G (as in a grand) each month. In fact, last month I had $1,800 in discretionary income.

Today’s blog post was inspired by a loyal reader who commented on yesterday’s post. MattyIce wrote…

What is your Percentage of Savings? Is it 15% and then that 15% is divided among your IRA, Savings, and Student Loan Payment?

Well MattyIce, here is my super-dee-duper-uber-complicated formula for my savings…

Basically what I’m trying to say is I have no savings plan. Here is how I actually decide what I do with all that discretionary income.

First, I take my baseline net income (I know each month the minimum amount of $$$ I will bring home is $2,700). Generally, I supplement that with a couple hundred dollars in side income. I also know that my expenses each month generally hover between $1,500 to $2,000 (depending on the month). Thus, I usually have about $1,000+ each month in “do whatever the heck I want” money.

Most people, pay themselves first. Meaning they treat their savings as an “expense.” Before they pay any bills, they throw X% of money in to their savings account. While I totally understand why people do it, I don’t really need to. I don’t have a problem saving. I’m frugal by nature, and frugality leaves me with discretionary income.

So what do I do with my discretionary income? It’s pretty simple, I take all of my left over moolah and throw it in my savings account. Sometimes, when I’m really feeling anti-debt, I’ll take a thousand dollars out of my savings and throw it towards my student loan. Other times, I pay minimum on the loans, and keep the discretionary income in my savings account.

As far as saving for retirement, I have 5% of my gross income thrown in to my 401K. I don’t actually use a dedicated savings account for Roth IRA purposes. Since I am able to hoard so much cash, I don’t have to set aside my retirement savings separate from my main account. Periodically throughout the year, I will make contributions to my Roth IRA, from my one savings account. There is no method to my madness, but it’s what works for me.

Essentially to answer your question MattyIce. I have ABSOLUTELY NO SAVINGS PLAN. Instead of subscribing to a super complicated method, or trying to manage 8 different dedicated savings account, I throw all of my discretionary income in one account and take from it when necessary (i.e pay down student loan, contribute to Roth IRA, buy an engagement ring).

Let’s look at a few past months to see what my savings rates were…

January 2010: 48% (of net income) saved

September 2009: 11%ย  saved.

July 2009: 53% saved

As you can see, my savings rate is all over the place. My “non-plan plan” is much different than a lot of methods, but it’s what works for me. How do you all decide what you are saving? Do you pay yourself first? Do you save an exact percentage? Or are you like me, and just throw all your leftovers in a savings account? Do you have multiple savings accounts for different things (i.e. new car account, retirement account, kids college, etc)?

21 thoughts on “I save like a G

  1. Looks like you will average at least 25% of your net income, which is good!

    BTW, nominated you for the Plutus Award category of most humorous blog. I think you will do well, if for your raps alone!

  2. I set up savings and loan prepayment goals at the beginning of the year, then I knock them off as year the goes. Since lots of stuff comes up, one month I may have more money to save than in another, so I don't really set up automatic savings. I like the freedom to play. I'm a good saver naturally, so there isn't much of a worry with nothing being left over to set aside for savings..

  3. We don't have a set savings plan either, aside from what's deducted from Mr's paycheck for his retirement accounts. We know approximately what our monthly bills will be, so we try to make sure where within those norms every month and whatever's leftover after buying anything else we need goes into savings.
    Sometimes it's only ~$200 and sometimes it's ~$1,000 depending on what time of the year it is (high gas bills in winter, insurance payments in July, etc.) and whether it's a 3 paycheck or bonus month.

  4. I'm with Sam. Sometimes I'm tempted to belittle your blog or say something stupid just so that you trash talk some humorous blurb back. Hey, that's a great idea.

    Ninja, you're about as gangsta as a argyle sweater vest.

    • How dare you of accusing me of lacking the "gangsta" gene.

      I once walked by a person that I think was in a gang. Yeah that's right, I WALKED BY HIM! That makes me pretty much a member in his gang.

      Keep talkin' that smack and I'll bust a cap in your 401k's a$$ ๐Ÿ™‚

  5. If the recession ever takes down tutoring, give comedy a shot for some side mula.
    Your savings plan = my savings plan. 9% bi-weekly into 403b and anything else I DECIDE to throw in my savings account is just gravy but looking at my past 12 months I've averaged a 23% total savings rate. Not bad when the national rate is what, 4%? We're sitting pretty my friend ๐Ÿ™‚

  6. We have money taken from the paycheck to go into 401k and a seperate savings account each month. The amount going into the savings account is about 20%. Then we do take some out at times for bigger purchases (last year we paid cash for a car out of this account.) So, by the end of the year the rate is probably more like 10-15% I like having things automated because otherwise I just forget to do it. This is why we have enough in savings that we could pay off the mortgage if we wanted to (from the 2 truths and a lie). Speaking of 2 truths and a lie, which of yours were the lie?

  7. We like to do a little bit of everything!

    We were putting 5% into my work 401K (not including match of 3%) and another 5% in what used to be a high yield savings acount. Another 8-9% went into a savings acount to pay cash for Mr's tuition. And then at the end of the month, all of our leftover cash gets scooted over to the savings acount (which ends up being anywhere from 10-15%. It has worked great for us so far, but we don't have trouble saving money either.

    And we just paid the last semester of tuition. Yay for a 8-9% raise!

  8. Right now I have a set amount put aside into a Roth IRA and a regular IRA, and the rest of my discretionary income, around $750, goes toward credit cards. Once those are paid it'll be split between the car note and a wedding, and after the wedding me and (my then) hubby will have to determine where we want our monies to go.

  9. After 401k's and insurance etc are deducted, our take-home income is broken down like this: 50% budgeted expenses, 25% to savings, 15% discretionary cash. Any math-magician will notice there's an unaccounted for 10%. Well, we haven't figured what to do about that yet. Right now, it just stays in checking to keep us ahead of the game. It will eventually make its way to savings.

  10. I have to pay myself first to ensure that something goes into my saving each month. This month we have about $700 left over, so some is going to pay off debt, and then rest in savings.

  11. We pay bills first because we have almost no extra. H puts in 6% to his 401K and his company matches in tiers. I don't contribute to my 401K but my company does. After all of our bills we have jars (similar to the envelope system) and they're categorized into Priority (Primary), Secondary and Indulgence. Two of the secondary jars are savings-type jars for Auto and Grooming; there are 4 Indulgence jars that are savings: Clothing, Travel, Garden, Real Estate License (for me). Each of them get 10% of whatever is left after everything else. Anything additional after those goes into savings. I have a break-down on my blog, sparked by your post!

  12. We are pretty much the same. I do have :19% for TSP, $416 for Roth, $800 House downpayment, $300 car and $200 vacation funds. The rest remains in my checking. The automatic allotments make up 50% per month. Monthly expenses are about $1600. OK, maybe we are not the same. ๐Ÿ™‚

    I did your method when I had student loans, credit card and car debt. I would stockpile money and attack when moved to do it. The sl/cc were the last to go. The other difference… I did use I-bonds to bundle up savings to through at debt. I would wistfully look at the stockpile and then it would go into the abyss of debt.

  13. I pretty much go with the "pay yourself first" method and have money moved to savings every month out of my checking account. I also have money put into my Roth IRA every month. $5000/12 each month. And right now, just 4% of my paycheck goes into my 401(k), but that's also done automatically. Basically, I've managed to build up a lot of savings by setting up a transfer and then completely forgetting about it.

  14. I pay myself first and last. I don't use a percentage – I just list out the things I'm saving for, then make sure to set a fixed amount towards each right when I get paid. It changes each month, depending on expenses and priorities.

    Right now I'm putting money towards an emergency fund and vacation fund (which serves as an emergency fund as well by default).

    At the end of the month, I normally have money left as I'm frugal. I zero out my account before I get paid again, putting the money towards emergency fund normally.

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