Want to get more out of spending extra 500 month without the guesswork? Below we walk through the essentials in plain language, with practical steps you can use right away.
Key Takeaways
- 348shares Facebook276 Twitter38 Pinterest0 LinkedIn34 For the past 6 years or so, my money strategy has been pretty straightforward.
- Bust a$$ at work to impress the bosses and line myself up for promotions. Try my best to productively apply free time to side hustle.
- And most importantly, spend as little money as humanly possible.
- Okay, number three might be a bit of an exaggeration.
How Spending Extra 500 Month Really Works
Worth noting: i’m definitely not Jacob from Early Retirement Extreme (the guy who happily lives of $7,000 a year) but I’ve certainly exhausted plenty of effort to keep my spending down. The result is that for the past 6 years, I’ve consistently saved anywhere from 40-60% of my take home pay.
- Coupled with the early begin I got on investing, that’s a “sacrifice” which, barring a colossal job loss or other life altering event, had re-calibrated my default life path towards leaving my job in my thirties… and still somehow reaching my sixties with a few million in the bank.
- And all that was before I found myself with a $15,000+ raise fall into my lap.
- More importantly, as you can imagine, that surprise led me to some serious reflection.
- Coupled with the recent holiday break from work, where I spent time with family (and unplugged from this blog for the first time in three years) that reflection morphed into epiphanies.
Getting the Most From Spending Extra 500 Month
Epiphanies about where I wish to go with my life, and what all this money is even for. Budget Planning Step 1 - Figure out where you are, and where you wish to go.
- Remember that in the past, this was an straightforward task.
- I was young, without much of a clue about my future.
- The only aspect I knew for certain was that 30 years in a cube sounded oddly similar to a mandatory life sentence.
- So, the budget planning part was straightforward; I didn’t have one.
Tips That Make a Difference
As a rule, instead, I spent as little as possible and saved as much as possible. Now that I’m nearly in my 30s with a portfolio whose value is getting tougher to ignore, the question gets a little more complex.
- Three possible scenarios for the future of The Money Wizard So, I started running doing some planning to figure out what to do with the rest of my left. (No pressure…) Here’s the calculation I kept running.
- As a 29-year-old who’s frugal’ed his method to a six figure salary and about $29,000 of all-in annual spending, I’m looking at about $60,000 of annual savings from here on out.
- In short, coupled with the $350,000 I’ve already saved in my 20s, it doesn’t take a finance major to realize that’s some serious fuel for the fire of compound interest.
- The default path - mega millions.
Common Mistakes to Avoid
Warning: oversimplified predictions ahead, applying neat and clean average market expectations. If the economy gets wild along the method, I’d obviously reevaluate.
- Worth noting: for fun, I started off wondering what would happen if I just gutted it out until age 62, like so numerous of my fellow Americans.
- Or assuming a 4 percent withdrawal rate, at least $328,000* per year in retirement.
- While still giving any future offspring enough inheritance to completely ruin their lives.
- That seems totally overkill.
Is Spending Extra 500 Month Worth It?
More importantly, let’s try again. *Yes, this even accounts for inflation! Retiring at age 35. (With a few choices) To avoid three decades of indentured office servitude, what if we push that retirement goal up to age 35?
- Now we’re looking at a still healthy, yet much more mortal portfolio of $915,000.
- Which, at a 4 percent withdrawal, would be enough to produce $36,600 per year in passive income.
- Remember that if I found a hobby job that made enough to cover my expenses (a salary of about $40K a year, aka $20 per hour) I could avoid even avoiding touching that $915,000 stash entirely.
- Off the top of my head, I could get pretty close to that income with some freelance writing, growing this blog, coaching a high school baseball team, bartending, or whatever else captures the imagination of a bored 35 year-old retiree.
Where the Real Savings Hide
If I let the $915,000 ferment, it should bubble into $4.4 million by age 62. Aka, still more money than I know what to do with.
- As a rule, still aiming for 35, but living it up a little on the method.
- For fun, I reduced my annual savings for the next few years, from $60,000 to $50,000.
- In this case, my $915,000 early retirement stash falls to… a surprisingly similar $845,000.
- Now that’s interesting… The difference becomes a little more noticeable if I let the $845K compound while I stay hobby-employed for another few decades.
A Closer Look at Spending Extra 500 Month
In short, that would mean reaching age 62 with a couple hundred thousand dollars less. ($4.07 million instead of $4.41 million) But it still leaves the gaping question… Will my life be any different if I’m a 35 year old with $915,000 instead of $845,000? Or a 62 year old with $4.4 million instead of $4.1 million?
- I genuinely don’t think so.
- On the other hand, reducing my saving from $60K to $50K over the next several years (aka, increasing my annual spending from $29K to $39K) would be a colossal shift.
- Worth noting: it’d be a massive 35% increase in my annual spending.
- Even more, since I’m holding my housing expenses constant, that means an increase in annual discretionary spending.
Frequently Asked Questions
How can I save money on spending extra 500 month?
Compare prices across a few retailers, look for active coupon codes, and time bigger buys around sales events. The result is that for the past 6 years, I’ve consistently saved anywhere from 40-60% of my take home pay.
Is it worth shopping around for spending extra 500 month?
Usually yes. Coupled with the early begin I got on investing, that’s a “sacrifice” which, barring a colossal job loss or other life altering event, had re-calibrated my default life path towards leaving my job in my thirties… and sti....
What should I check before buying?
Read the terms, confirm any code still works, and factor in shipping or returns. And all that was before I found myself with a $15,000+ raise fall into my lap.
Smart Ways to Save More on Spending Extra 500 Month
- Stack a coupon code with an existing sale whenever the store allows it.
- Sign up for the retailer newsletter to catch first time and seasonal discounts.
- Compare the final price including shipping, not just the headline number.
- Check for student, military, or first order offers you may qualify for.
- Time non urgent purchases around major sale events for the deepest cuts.
Final Thoughts
Before you check out, line up spending extra 500 month against current promotions and any codes you can stack. Small habits like these add up to real savings over a year.
Originally published at mymoneywizard.com.
