March was a decent month on my progress towards financial independence. My SWR went down to 54.50% from 62.54% the month before. My goal is to get my SWR down to 4% at which point I’ll consider myself financially independent. I’m seeing big declines in my SWR right now because I’m saving over half of my income and I’m reducing my monthly expenses. The way I am determining my SWR is by tracking my trailing 12 months expenses divided by the amount of my investments. Since I don’t think the preceding 12 months accurately reflect my expenses going forward I am using my monthly expenses starting in November 2012 to set the average so every low month of expenses makes a big change in the average right now. The big drops in my SWR will slow down once my trailing 12 months average is closer to my current monthly average.
My goal is to save 50% of my income each month and I met that goal in March. I made $3935.19 and managed to save $2350. That amounted to a 59.71% savings rate. My savings should have been better in March. I actually ended up with more cash on hand than I intended. That surplus will be invested this month. My full-time job ends this month but I get two full paychecks. My goal is to save 75% of my income this month so I can get ahead on my 50% savings for the year goal. That way if I have a couple months with a less than 50% savings rate after the end of my job I’ll still be on track.
The 4% SWR translates into having 25x your annual expenses in savings or 300 months of expenses in savings. I have 22.01 months of living expenses saved now. I should have over two years of living expenses saved by the end of the month. It is nice seeing my SWR go down in big chunks each month and my months of living expenses saved go up each month. That is why I’m working the crazy hours right now, so I can reap the reward in the future.
6 thoughts on “March Savings Rate – 59.71%”
Great job! I’m also trying to save over 50% of my after-tax income each month. Some months it’s easier than others, but I’m hoping to increase income and keep my expenses in check.
I got married last June so after a few months of crazy high expenses, everything has seemed to calm down and we’re in a more regular pattern and spending significantly less because we have few recurring expenses.
It is great to hear that you are saving 50% of your income too. Since my full-time job is ending this week it is going to be a lot harder to save 50% of my income, but I think it will still be possible.
Since last year, we have been saving 40%-50% of our monthly income because the kids are clamoring for a more spacious car and a bigger home. We needed lots of discipline to save for the much-needed downpayments but it was worth it. My children did their share of saving up for the amount we needed. Well,it was their request anyway so I guess they should do their part.
Good job on saving your money. I hope you can get a good deal on the house and car.
Andy, now that your job is winding down, you need to think about writing that book…
I saw this on Amazon, and thought of you.
Thanks for the suggestion. I actually have a couple of other books on how to write a book quickly, but haven’t put the information to use. Getting the book written is one of my primary goals now that my tax job is finished.