What we’re saving for.

One of my long-term goals for our family is to increase our savings rate.  Right now we currently save 12% of my husband’s net monthly salary.  We also usually save about 90% of our found money.  You know, things like bonuses & tax refunds.  This bumps our annual savings rate to about 34% of our net income.

Not too shabby, but there’s always room for improvement.  So, why are we doing this?  We have four large targets that we regularly contribute to.

1. Replacement Vehicles: Our cars won’t need to be replaced for another 5-10 years, depending on the car.  But there’s no time like the present to start saving.  We purchased our used Honda Pilot with cash and the feeling was so liberating we hope to never need a car loan again.  To that end, each month we put $334 aside in an interest-bearing account.  It may not buy us a pair of luxury vehicles,  but we’ll each end up with reliable vehicles that suit our needs.
2. College Education: Have you read any of the recent projections of college costs in 20 years?  It’s enough to make me break out into a cold sweat.  While we may never be able to send our kids to private schools, we’d at least like to give them a head start.  So, we are putting $3000 each year into a 529 account that is invested for aggressive growth.
3. Retirement: Right now, my husband puts away 6% of his pre-tax salary into a 401k.  It’s enough to get the maximum matching from his employer but he’s still has some ways to go before maxing it out.  Ideally, as we continue to cut our expenses, this number will steadily creep up until he’s hit the federal maximum.  A financial planner once told me that we might not be able to retire in CA, but if we max out the 401k, at least we won’t be eating Alpo in our golden years.
4. Mortgage Freedom: More than anything, this is the carrot on the stick that keeps me true to the budget.  We’re $25,000 away from paying off the second mortgage.  But that first mortgage… oh, to be free from its unholy reign.  I’m not even going to mention how much we owe (no need to depress myself right now). Believe me, though, there’s a lot that I would sacrifice to never have to make a payment to that stinkin’ Bank of America ever, ever again.

Of course, there’s other, more consumer-y, things we’ll probably get sidetracked with.  Like a trip to see family in Spain…  Or new Corian countertops…  Or maybe that patio that the architect down the street offered to draw blueprints of…

Anyway.  We’re really & truly committed to these goals.  Which is why I find myself struggling with the decision to spend money on things that  we could easily afford.  In this house, a dollar saved isn’t just a dollar earned.  It’s one step closer to far-reaching goals that have the possibility of changing our lives.  That’s a lot to compete with!