$100k salary, $50k lifestyle.

One of my observations of what people do - tend to fill up their income - as it increases - with more lifestyle spends.
For investment purposes; it is not sensible to do it.
Does anyone consciously practice this strategy of living like you earn far less to free up more income for investing?

 

My PPOR mortgage + cost of living all up is well under 50k pa. I live a modest lifestyle.

This does not seem to matter to lenders who say no problem with you or your servicing but we dont feel like investment lending so go away as you are rent reliant.

So I spend my money on my animals instead these days. The dog and cats are pretty cheap to keep but the horses are a direct money to poo converter that you shovel cash into endlessly....

 

I agree with the statement, i myself earn 48k a year and am forced to have second casual jobs.

I am very poor even though I am probably asset rich owning my own PPOR and a another city unit but loans on the Wagga , Bathurst and Wellington properties have made me poor.

I realise I cannot afford to go overseas this year or even next year.
I am now forced to watch every penny which isnt a bad thing i guess
But earning such a low income u have to spend less.

I sometimes feel sorry for myself not having want I want.
I was in Woolworths last week to see gorgeous teddy bears at $15 , I said to myself will I or won't I ?

 

Scaled up, if I earned $100k, I would spend around $15k total each year. The rest goes on investment. I have spent nearly 2 years doing a big reno (diy) and a build where we have supplied a lot of materials, organised trades and even done some of the work myself. I guess working on properties is my lifestyle, hobby and investment.

 

I do this but not for that reason. I simply earn more than I can reasonably spend to meet all my lifestyle desires without feeling ostentatious so my money stash keeps growing to give me even more income in a positive feedback loop. Early retirement was one of the side effects of this philosophy.

 

Does that 15% of your salary include all your expenses - ie. rent or mortgage on PPOR, insurance, transport, food, clothing, Xmas presents for family etc?

 

Sure does. All of that. I don't spend a lot. I had to work out exactly what I spent in a year when I got a loan last year. I think it was $12k all inclusive.

 

Nope.

The wife and I (both retired and self funded pensioners) spent $50K on overseas travel each year .

 

I spend about $250/month in total.

My wife on the other hand...

*blacky Ducks*

Blacky

 

This question, or some variant, is asked a lot on this forum. I find it self-congratulatory.

 

12k a year probably doesn't even cover all our food. .. don't know how you do it ..

 

12k a year might cover the kids extra curricular activities, just.

 

You don't have spud shed

We make a lot of food from scratch. It's cheap to make and tasty too. I really enjoy a good home cooked meal.

 

I wouldn't call you poor though...you have some assets, but a cashflow problem. I commend you for making that effort where many don't.
You are sacrificing lifestyle for longer-term wealth building...maybe you have over-sacrificed at this point in time...that takes the fun out of wealth-building.

 

I don't view the "living on a lesser wage" mentality as self-congratulatory. I do think though that it is something we should encourage all people to do.
We are all here on PC to try and create wealth through property, whereas a large percentage of the population are doing nothing about that (creating wealth of any sort other than their Employer Super Guarantee) - other than their 9-5. The 5% (or even 1%) who earn massive incomes from their job don't need to work as hard to get wealthy as the person on average wage or below - which is the majority.
To live on a much reduced amount of money - even though you could spend more because you can, is the first step towards creating wealth (through property or any other investments).
So my question was merely to see how many of us here are actually practicing that; because from my observations many don't, and then complain because they can't get ahead in life.

 

Spend....less....than....you.....earn....

Simple.

How much less equals how much quicker financial independence arrives.

 

Re self congratulatory I personally think it's very important to recognise your successes and celebrate them. Pat on the back et el is important for the psyche and reinforces the 'success loop mindset'.

 

Agree. I will add though that what you then do with the savings is the crucial part. SLTYE is only one part of the equation.