My husband and I got married right out of college at ages 22 and 23. In the beginning, we felt very poor as we were single income living on a Ensign’s salary while I was going to school for my master’s degree. One of the goals we established early on in our marriage was financial independence. Our goal was when my husband could retire from the Navy with a pension (god and Navy willing) that we did not need to find another job. We knew that to accomplish this goal we would need to maintain a high savings rate while heavily investing it in a high-producing, cash-flow oriented investment.
Over the years, we found the best way to maintain a high savings rate was by living below our means, managing our salaries/raises, and creating investments that produced cash flow.
Living Below our Means
*Roommates/In-Law Suite– Whenever we could save money on housing we would. One of the ways we did this was by renting in-law apartments and having roommates. In our first year of marriage, we shared a house with a single friend. Through living conservatively and even sharing cost of meals and household necessities (toilet paper, paper towels, etc), we were able to save $17,000 while paying for graduate school and other costs.
*Being Unconventional– When rents and house values became too expensive in comparison with BAH, we bought a boat and now live on it. This way we could continue to enjoy life while keeping our savings rate on par with what we need for our goals.
*Move Earning Potential– We are at our fifth installation in 6.5 years of marriage, so we move often. The Navy gives us the option of doing either a DITY move or using the Navy contractors. Whenever we took the option of doing a DITY move, we would spend 50-75% on us as “play money”. The idea was to reward ourselves for the extra work while still giving us some instant gratification.
*Living Frugally– Over the years we learned to save money on anything that didn’t mean something to us. When my husband deployed in 2014, I made freezer meals for one, and moved into a friends house. I learned how to eat out and still save money.
Managing our Salaries/Raises
*Raises– Any time my husband received a “raise” we would bump up his TSP account. This way we were able to reach our goal of maximizing the TSP with a miminium amount of pain.
Took Higher Jobs with Better Paid Sacrificing Life– Not only did I take different positions for my husband’s military position, I also took took the jobs that would pay the best even if it meant a worse life. For example, I took a job with a 30% pay increase, but that also meant a 50% increase in houses. This was a HUGE benefit financially as it allowed us to buy two houses with the $60k we saved in 10 months. It was horrible because I missed so many military events, even my husband’s port call in Australia. Still, it was worth it because of its long term benefit.
*Living on one salary– When we first got married, I was in grad school, and we scraped every spare penny we had to pay for gas and the tuition that was left after we used residual money left over from undergraduate school money. When I did work, it was VERY sporadic so we automatically had it going to the savings account. Once I graduated and we moved to VB, I got an awesome job. Since we had budgeted off one salary, we didn’t need mine.
* Worked Multiple Jobs– My husband worked long nights, weekends, and was gone on military “business trips” aka TDY’s. So whenever he was gone I would pick up extra shifts. In 2012 during tax time, I worked 40 hours, at night, and weekends as a tax consultant for Military OneSource. Before and after that position, I would pick up extra hours through care.com as a nanny and evening sitter. That extra money was awesome and VERY helpful in the early years. If we hadn’t have had the money, we would never have been able to buy our first two Charleston houses.
Creating Investments that Produced Cash Flow
*Bought Houses Instead of Renting– In the beginning, we lived very sparsely and knew we didn’t want to feel required to live like this forever. Therefore, not only did we invest in a $401k, but we also heavily invested in real estate. This was one of the best things we ever did. The rental house now produces more than my corporate salary allowing us to still meet our savings goals without needing the husband’s salary raises.
*Distressed Property – We bought distressed properties (aka short sale) and foreclosures because it allowed us to get a great deal with even better cash flow than traditional sales. This allowed our investment to make an even higher cash flow helping us to buy more investment. The negative is the amount of work. From hiring handymen, dealing with the mistakes and issues of foreclosures, and the extra paperwork of short sales.
*Reinvesting our Investment Earnings – We reinvested every penny we could from the house and our current savings to expand into more real estate that meets our numbers. This allowed us to make more than my corporate salary in profit, effectively doubling my salary.
There are tons of ways to save tons of money without giving up things that are precious to you. Even while we were savings tons of money, we still traveled internationally over five times, including Fiji and Bahrain. I still was able to drink starbucks and do everything that was important to me.
The thing is to not give up what you love, but to eliminate expenses on things you don’t cherish so you can do more of what you do!
What are your tips to savings tons of money?