Since I’ve been a bit MIA lately when it comes to visiting some of my favorite personal finance blogs, I took some time on Sunday evening to catch up. A comment on one blog post that discussed how living below your means allows you to save more money (sound, sound advice) struck me — the commenter mentioned s/he had accrued $1 million before turning 30. As I’m now 31, it really made me stop and think about why I hadn’t reached that milestone myself.
It comes down to one main issue: I moved out on my own at 19. It took working 2-3 jobs at a time (one full-time, two part-time). For as long as I could remember, I’ve been an independent person. So when the opportunity arose, I grabbed the bull by the horns and made it a reality.
I remember having about $1,500 to my name — after a $500 security deposit and $500 for the first month’s rent, I had a whopping $500 left, which I thought would be plenty as an emergency fund (I would freak out if I were in that position today, knowing what I know now). Each month, I would be left with about $20 after paying my bills. It was pretty interesting — I was living paycheck to paycheck — but I made it work.
The Cost of Renting
Before Mr. Saver and I bought our home last June, I had spent ELEVEN YEARS renting apartments — sometimes shouldering the entire rent myself, other times splitting it with a significant other (I never had an actual roommate). The grand total spent on rent in that time? Nearly $86,000 — PLUS utilities. Seeing that number computed for the first time ever is insanity. Over the years I was able to save up a good chunk of money that we used toward our 20% down payment, but that $86,000 could have been a nice investment, but my independence was worth a majority of the cost.
I can’t go and change the past, but that $86,000 would have been a nice addition to my net worth — that’s 8.6% of a million bucks!
Other Influences Stopping You From Saving Your First Million
For me, rent was the big money-suck. I know I want Mr. Saver and I to have a nice cushion for retirement, although I have yet to arrive at a specific number — $2 million for both of us sounds reasonable, but I still need to sit down and do the math. Is it feasible? That’s another issue, as is the knowledge that inflation will make that $2 million worth less than it is today. But that million-dollar mark is mainly a mental milestone.
Sure, there are people who just can’t save money at all — they spend what they earn (or even more), rack up credit card debt and don’t put anything toward retirement. They can’t see the forest for the trees. I’ve never been like that, but I do know there are times when life gets in the way of saving for a lot of people. Some of the more common issues that put a damper on saving:
- Babies. Those things are expensive! Your savings become their savings, too.
- Income. If you make $40,000 a year, you have a harder time saving money for a rainy day than you would if you made $100,000 yearly.
- Illness. Medical insurance is expensive. Getting sick is also costly. If you don’t have insurance, you’re doubly screwed.
Saving money is important. I don’t think I’ll ever get to see seven figures in my bank account, but I’m hoping our total net worth reaches $2 million by the time we’re 65, thanks to the magic of compound interest and wise investments. Right now, we’re only about 8% of the way there, but it’s a start.
Have you reached that mythical $1 million mark? How did you do it? If not, do you think it’s an achievable goal?