Here’s how one married couple began “hiding” their income from themselves — and paid off their mortgage in just three years. Learn how one woman got herself out of a negative net worth in this video:
Making it work is brought to you by wealth simple which gives everyone access to simple affordable investing on cruise control i spent the first half of my 20s in a pretty familiar boat low income and low expenses sure my three college jobs didn’t pay well but i had four roommates and did my best to cook my meals or eat on campus my first couple jobs after college
Also didn’t pay extremely well but i had a little bit saved up for my summer camp jobs it didn’t feel like a big reckless thing to save almost nothing my grad school years which ended on my 26th birthday were no different i just had to keep my monthly income and my monthly spending pretty similar and i could use my savings as a buffer however during this time i
Wasn’t saving toward a house or toward retirement or really toward anything it wasn’t until i faced getting married and combining finances that i figured out there were upcoming expenses and a lot of them when we started talking about our finances together honestly my fiance and i realized that we needed to start preparing for the future fortunately for us our
Incomes were about to go up we have he was just through his first 90 days at his first world time job and i had a promise of employment secured for after graduating for my master’s program we were a little nervous honestly about having our income go up we would still be entry-level in our respected fields but money more of it than we’d ever seen would be landing
In our new joint checking account very soon we made a choice then that just seemed like good sense at the time but that in the end has served us very well we decided to try to hide our increases in income from ourselves rather than keeping a big checking account buffer that would help us feel at ease in our finances we didn’t give ourselves any excuses to spend
Extra we attempted as much as we could to hide our newfound disposable income here’s how the first hiding place automatic retirement and hsa deductions i knew that fica and other taxes were coming out automatically from my paycheck but then i met with hr in my first full-time job i also signed up for a full ten percent of my salary to go straight to retirement i
Figured it this way if that was too big i would always be able to change it and if it wasn’t a matter i could live with i’d probably never bother to bring it down i never get used to having that 10% this doesn’t work for everyone but it can be applied to things like debt payments for instance automate a payment that is a few percent more than the minimum and see
How hard it is to live on the remainder if it is too hard definitely go back to the minimum the point is to find a space where there isn’t excess disposable income taunting you to spend not to scrimp miserably even if you start with 1% or 2% of whatever your employer will match hiding that money immediately keeps you from getting comfortable with your new income
Before you choose to save every time i get a raise even a little one or we cut down an expense yayyyyy for calling the internet company and getting a lower rate i try to bump my retirement savings i’m at 15% now and i also max out my hsa each year since the money is tax advantaged and i could definitely use a little medical related emergency fund in the future
The second hiding place making extra mortgage payments this path is definitely for the privileged folks who are living in an area where affording real estate is possible but there are still places out there in the areas we were looking a hundred and fifty thousand to two hundred and fifty thousand was pretty normal for a nice suburban home which is not true in a
Ton of metro areas weirded out by being able to afford a mortgage on our entry-level salaries we went really conservative buying a hundred-year-old home in a less affluent city for under a hundred thousand dollars ninety-three thousand five hundred to be exact all the monthly payments including insurance and taxes came in at under $800 we were each paying almost
That much for our small apartments before we got married so the idea of reducing our expenses by buying a house was nerve-racking to say the least we decided that upon moving into the house we would do at least two things pay ahead on the mortgage approximately as much as our housing had cost before and save a decent chunk in a savings account for repairs there
Were quite a few needed yay homeownership the result was that we were cutting the principal on our mortgage fast if by the end of the month we had a little left over and my paycheck was about to hit we throw a few hundred at the mortgage – the result was that we didn’t feel deprived because remember we had been somehow managing our apartment rent before but our
House is now paid off in full in only three years now that our mortgage is paid off we are hiding money for a new adventure adoption of a baby immediately folding our past mortgage allocation into the safer baby account has been a really gratifying step forward in our savings journey this is i’m it a flashy way to explain a not so flashy principle however we have
To pay attention to those moments no matter how cash-strapped you are you will eventually face a tiny increase in income be it a raise or a side hustle or a tiny reduction in expenses in that moment you can either grow comfortable with having more room in your budget a totally fair choice after scrimping a lot or you can try my hat and hide the money from yourself
You are smart and capable and can make that choice for your own circumstances but i can definitely vouch for how great it has been to hide money from myself and reap the rewards whether you’re looking to buy a home take a dream vacation or make any other major life decision make the financial aspect as easy on yourself as possible with a company like wealth simple
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Automatic deposits as well as set up a smart savings account with higher rates than big banks for your shorter term goals you’re writing your next great adventure or that handbag you need they also have a socially responsible portfolio that invests in green stocks and companies that support gender diversity the fees are much lower than big banks and tfd viewers
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Transcribed from video
The Savings Hack We Used To Pay Off $93K In 3 Years By The Financial Diet