save 15% of my income for one year

I didn’t post a lot on this goal, but I’m pleased to say I accomplished it. I’m taking it off the official list, but I’m going to keep at it. This time, though, I’m going for 20%. I’m old, after all, and need to save as much as I can!

To achieve this goal, I’ve been saving money out of every paycheck before I even attempt to deal with my bills. What this means is that I consider my take-home pay to be whatever’s left over after taxes and my savings. It’s really curtailed my spending. And it means that I’m really “encouraged” to be creative with my holiday shopping.

Of course, I’m able to do this because I paid off all my credit-card debt first. But I used the same principle to get out of debt. I established a relatively tight budget and applied as much as I dared to the credit-card debt until it went away.

What is important about saving like this is that while I have less $ to spend on extras, I also have less desire to spend my money on extras. I like the feeling of control I’m getting from stashing money into my bank account. It’s better than a security blanket!

I have to admit, though, I’m not saving as much as I could. I’m making progress on building up an emergency account, but I haven’t opened an IRA yet. My new plan is to continue to contribute to the emergency fund until the end of the year without any more belt-tightening. Then after the holidays, which is admittedly a time of heightened expenses, I’ll reassess my budget and open the Roth. That way, I can spend a bit more money-not necessarily on gifts, but on travel, donations to charity, social occasions-without guilt. I just have to keep reminding myself that changing my money behaviors, from splurge-y to save-y, takes a series of small steps.

I’ve been doing really well embracing my new frugality. (I used to be cheap and easy, now I’m just cheap.) To encourage me to save even more money, I’ve just filled out paperwork for a new savings account with Emigrant Direct.
Their American Dream Savings Account earns 4APY. This account will house my (slowly growing) emergency fund; I figure if I can earn a little interest while I save money I might become motivated to save even more!

...unfortunately, it’s not for humankind. It is, however, for me and I’m pretty happy to have finally made it.

I’ve put my first chunk of money into savings today, the first paycheck I’ve had in 4 months. (Bcause of my profession, I don’t get paid during the summers…or rather, I choose to get paid in the 9-month option rather than the 12-month one. Then, because of a switch in administrative software, our paychecks were delayed for another month. I hadn’t budgeted for that, so that’s been a bit rough.)

So finally, one month after I started back to work for the academic year, I received my paycheck. It’s a bit of a cliche, but I paid myself first. I managed to save my goal of 15%, but not much more because I had to pay off a month’s worth of unexpected living expenses. Still, I’m glad I’ve taken that first baby step. Debt-free and saving money? I don’t even recognize myself!

I’ve read in different places that the average American saves between 1-5% of her after-tax income. Last year, I wouldn’t have even made that paltry sum. I was in debt, deep in debt, so deep that only my bullheaded-pride stopped me from filing bankruptcy. But thanks to some serious belt-tightening, a few unexpected financial windfalls, and a roommate, I paid off all my credit-card debt. I still have student-loan debt, but I’m now in a postion to start saving.

After all those years of grad-school poverty with white-collar consumption, I feel a need to make up for lost time. Because I had already budgeted to the bone to pay off the debt, I think I can manage 15% for the first year and readjust (hopefully up) after that. I intend to save 15% of my pre-tax income in three ways: 1) my 403(b) up to my employer’s match (a paltry 3%, can you believe it?); 2) build up my emergency fund from 0 dollars to 3 months salary; and 3) open and max out a Roth IRA for 2005 (another goal here is to open an IRA).

Wish me luck!