Our 2018 budget and savings rate

Few words are so widely known to strike fear and angst into the hearts of (wo)man like the b-word.  One might say, budgets are the financial equivalent of burpees.  We hate to do them…but dammit they work!

This is partially due to the mass mis-education of basic math principles in our country which has contributed to Americans losing an estimated $280 billion dollars, according to a recent survey study by the National Financial Educators Council.  With that said, you could argue that entire industries are propped up by financial illiteracy.  Without it, companies that sell mortgages, credit cards, student loans and other financial services wouldn’t be nearly as profitable.

While it may seem counter-intuitive, we don’t believe that the remedy to this problem is more education.  Rather, we see it as a really really big marketing problem.  Think about this for a moment.  How many times a day do you think you are shown an advertisement that encourages debt?  Think about all of the car commercials, furniture ads with no money down, credit card commercials, mortgage ads claiming you’ll be approved in minutes, convenient product placements in films, TV shows, radio, podcasts brought to you by X, halftime shows brought to you by X brands, instant replays brought to you Y banks and Z insurance companies, emails, magazine ads, for-profit colleges, billboards, newspapers, t-shirts and on and on and on.  It is widely believed that Americans are exposed to over 4,000 ads on a daily basis.

Now compare that to the number of times you might be encouraged to save your money?  It’s not even close, even if you’re a hardcore saver like we are.  This means that at all times you are physically and virtually surrounded by messages encouraging the separation of you from your money.  THIS is where a budget can help!

A budget is a commitment to yourself to allocate a pre-determined amount of money in specific areas.  It therefore works as a shield to protect you from things that seek to infiltrate your wallet, including yourself.  On the other hand, your budget is also a reflection of your values.  To highlight this point, below is a breakdown of our household budget highlighting the percentage of our take-home pay in seven general categories:

  1. Invest– funds we use to invest
  2. Housing– really just our HOA but does not include property taxes
  3. Food/Home – groceries, home supplies
  4. Utilities– gas, electric, gas for our cars and cell phones
  5. Entertainment– television, subscription services, travel fund, eating out, splurge money
  6. Personal– Personal grooming/hygiene, giving, babysitting
  7. Insurance– Life, auto, car, home etc


rich & REGULAR monthly budget by %

If you’ve seen our 2018 Plan and/or our long term plan then this may help you understand how any of this is possible.  Couple of things here worthy of mention:

1. That savings rate tho…

We save/invest about 49% of our take-home pay.  This does NOT include 401Ks, IRAs and HSA contributions.  Those combined contributions are what push our total savings rate into the 70% range and ultimately will put us in a position to retire early.

THIS is the result of dual income, paying off a mortgage, living small, paying off credit cards, car loans, student loans and avoiding new debt like an ex at a family reunion.  This is also the result of us placing a higher value on early retirement and financial freedom than other things we could spend our money on.

2. We are frugal but far from cheap!  

Besides investing, and since we’ve paid off our mortgage, entertainment is the next largest expense at about 20% of our take-home pay.  This is mostly fun stuff that we love to do like drink good wine, reading, travel, watching an independent film and discovering a new/underground musician.  It also includes our television “package” which is Netflix, Hulu, Amazon Prime, HBO Now and NBA League Pass.

What this doesn’t include is a big fancy cable tv and internet package.  Instead, we use good ole’ high speed DSL to power our 4 iPhones,  2 iPads, 2 Apple TVs, 2 laptops, Amazon Echo and Nest Camera.  For basic channels, we use an over the air antenna.

We have a generous budget of $350 for wine/spirits, a dating budget and give each other a no-questions-asked allowance to do whatever we want with each month.  The vast majority of our groceries come from Whole Foods, Baby r & R drinks  fancy a$$ organic, non-dairy formula and the average cost of a bottle of wine we drink is about $18-$20.   Given Mr. r &R’s culinary background, he cooks at home often and we bring our lunch to work regularly.

We also have a dedicated amount set aside for giving.  This includes supporting a child’s business, supporting a friend in need or gifts for a loved one.  In the coming years, this amount will likely grow as we set our sights on a more structured and far-reaching approach to philanthropy.

3. Balance, balance, balance

As  we mentioned in our 2018 plan, we’re STILL looking to make some spending cuts particularly as it relates to insurance, at-home and utility costs.  However, trimming our food or entertainment choices is not on the table.  To “trade-down” on the things that we really enjoy (e.g. wine, food, travel etc.) would make this early-retirement grind less comfortable and introduce a degree of misery into our lives.  Obviously, if the $hit hit the fan, we could pare down some things but I can say with absolute certainty…we ain’t going back to YellowTail. #noshade #nosir #nomaam


So long as we’re making progress against our investments and bills are paid, we really don’t stress about the rest.  Once a month, we review our budget and spending in Personal Capital, toast to the growth and keep it moving.

Try it free TODAY!

So why do we share this?

We share this in hopes to push you into taking a deeper look at whether your spending is a true reflection of your values and priorities.  If you really don’t care about cars, then is it worth having a car note that comprises 15% or more of your take-home pay?  Do you really enjoy Showtime movies more than you want to pay off your student loans or get a personal trainer?

We’ve found that most of the tradeoffs we made were actually much easier to let go than we thought they would be.  Similarly, the growth that we’ve seen personally and financially have far exceeded our expectations, particularly given the bull-market we’re experiencing right now.

Yes, it’s obviously easier to do this with two relatively high earning incomes but I can assure you, there are plenty of people that make more than us that can’t make this math work because they’ve already bought into a really expensive lifestyle.  Whether you’re married, single, high income or low income, the process is the same.  Eliminate debt> re-route debt payments to investments> continue to live small and track your spending> let compounding interest do what it does.


  1. Your savings rate, pre-retirement accounts is very impressive.

    Curious to know if you would reduce the savings rate in order to erase your mortgage more quickly to live the ultimate debt free life?

    • Hi. Thank you for the note. We’re technically living that ultimate debt free life now. Our primary mortgage is paid off and our tenant pays for our rental. Our goal for the year is to also pay off the rental so that we maximize that cash flow and can be 100% debt free. Either way, it won’t last long. We’re house-hunting and will funnel rent collected from both properties to go against our new mortgage. More on that later though…

      • Wow, now I am really impressed. Enjoy the Super Mario Star Power while it lasts!

        Well done!

  2. I have just found your blog and have a question. How do you track your monthly spending? Do you carry a notebook and write as you spend? Use a debit card and keep all receipts? Take out a set amount a cash per week? I find tracking to be really hard. Thanks!

    • Hi Ann. We do all of the above. We have regular meetings about our budget, use Mint and personal capital. The ‘trick’ may be an accountability partner or joining a community of others with similar goals. Good luck!

  3. Way to go. I save 53 to 73% of my take home pay. I suggest investing REITS instead of the physical real estate as there are less headaches. I can get as much as 12%.

    • Why choose? We may end up doing both. The headaches can be painful but so far, it’s been worth it.

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