How to Save More Than Half Your Income

How to save more than half your income -

“Must be nice,” I thought, when I read about someone who suggested saving more than half your income as a way to take control of your money.

Oh, sure, I’ll save half my income.

I thought, “maybe, once I’m completely out of debt I’ll be able to save half my income.”

But then I talked with a friend, who said, “Guess what? Your debt repayment counts as savings. So, take another look, and see how you’ve done.”

I really had to wrap my mind around this. Paying off debt counts? Even though I’m not actually saving any money?

Of course it does, and here’s why:

Let’s say you owe 10,000 on a credit card, 7,000 in student loans, and 5,000 on a car loan. Okay? So that’s 22,000 in money owed. Now, let’s say your car is worth exactly what you owe and you have no other assets to speak of.

You’re in negative net worth territory. I’ve been there, too. It’s not fun, is it?

Now, let’s say you’ve found room in your paycheck this month to throw $1,000 into the equation.

Where should you put it?

  • Your savings account, which is earning .01% interest
  • Your credit card
  • Your student loan
  • Your car loan

In terms of net worth math, it’s a zero sum game, and the extra $1,000, as long as it doesn’t go toward something that increases your debt, is good.

But let’s talk about interest for a minute.

Let’s say, in the thought experiment, that your debts are charging more than your savings account is earning. It’s a real leap, I know. :) So, you put your $1,000 toward your credit card (because that’s either the most interest or the most pain). Since they’re charging you more than 10% interest, you’re essentially earning that money back.

Because each month, the interest is being charged on a smaller and smaller amount, until, one day, you can put that $1,000 directly into savings.

The Case Against “Paying Debt Is Saving”

Paying toward your debt is not saving if you’re still using your credit card. We’re talking about this in terms of a life strategy.

To get to the point where you’re in control of your money, you must be out of credit card debt. So, don’t go reading the first part of this article and pat yourself on the back because you paid $1,000 on your credit card after spending $1,000 on your credit card. That’s not how this works.

If the goal is to save as much money as you can (and I’d argue that it should be), start counting your debt repayment as savings.

I was shocked to find that when I added those to the equation, I was saving nearly half my income, even when I made $33,000.

Debt Repayment Counts as Savings — So Does Mortgage Principal

So, if you want to save more than half your income, step one is to count debt toward that number.

In fact, you should be counting mortgage principal toward that as well. Why? Because principal is the piece of the mortgage puzzle that turns into equity. It’s the one piece that makes the case for owning versus renting, because at the end of 30 years, the person paying toward principal is working toward owning their home free and clear, while the person paying rent is … still paying someone else’s principal.

Now that we’ve gotten the “loopholes” out of the way (quotes here because they really aren’t loopholes, they’re just saving in vehicles we can’t see as well as the bags of cash laying around), how do you save more than half your income?

You start automating things.

Pay Your Future (Wrinkly) Self

Start with maxing out your IRA (either traditional or Roth, whichever you prefer). That’s $5,500 right off the bat.

Does your company have any sort of 401(K)? Do they match? Contribute at least as much as your company will match. More, if you have any leftover.

Get Creative

If you’re having a hard time getting to half simply by counting debt, mortgage principal, and IRA/401(K), it’s time to get creative. You may need to downgrade your home or your car, or you may need to pick up extra work.

Because if it’s hard to save half, you either have a lifestyle problem or an income problem (as in, there’s not enough of it). It’s a bit simplistic to say “the best way to save half your income is to make more money,” because seriously, you can save more than half at just about any income level (unless you’re a single mom who has to work retail or something, then holy smokes it is difficult to get ahead). It’s just a matter of creativity.

Can you sell some of your stuff? We’re talking books, jewelry, extra things you have laying around the house.

Can you sell some of your skills? Maybe work on the side as a {insert the thing you’re great at here} consultant.

Are you saving half? How are you doing it? I’d love to feature you in an upcoming post!

Oh, and also, I would be remiss to post on Veteran’s Day without acknowledging that part of the reason we are free to discuss anything is because we stand on the backs of those who fought for our freedom. Thank you to everyone who served.

Frugal Portland Sunday Deals: Prep for the Holidays


Please welcome our newest contributor — Pamela from! She’ll be posting weekend deals to save you money. Take it away, Pamela!

With November upon us, a lot of us are beginning to think about the holidays and all the things we need to do like send greeting cards, coming up with something unique to give to that person that has everything, or trying to find ways to entertain out of town guests. Well, Frugal Portland has you covered and at a discount no less! Take a look at these amazing deals.

 Holiday Cards

Right now, Vistaprint is offering 50% off on holiday cards plus 35% off everything else! So, get a jump start on your holiday greeting cards while saving a bunch of money too.

Something special for the person who has everything

Trying to find the perfect gift year after year for that special someone can be difficult, but right now Canvas People is offering a free 11×14 canvas (you just pay shipping). Use any photo and have a custom canvas created of it for your loved one to hang on their wall. It doesn’t get any better than that… except that it’s free!

Spend time with family

The holidays are typically a time of year that family comes to visit. Plan an amazing family outing and save 50% at the same time! Use Goldstar to help you find discount tickets to events in your area.

A little something for yourself

While you’re making all these plans of what to get everyone else, why not get a little something for yourself? Register with QualityHealth and get free samples for winter!

Perfect Is Not in Our Price Range

Perfect is not in our Price Range | Frugal Portland

Perfect is not in our Price Range | Frugal Portland

Hey, it’s okay to admit. Perfect is not in our price range, and I’d gather, it’s not in yours, either.

In fact, it’s kind of liberating.

Gives us freedom to find something that is just fine thank you, and not perfect.

See, for us, there is no such thing as a perfect home.

Brent wants to be close to work, I want to live in a fun neighborhood.

Brent does not work in a fun neighborhood.

We both want a yard.

We both want a bit of breathing room.

I want an amazing kitchen, Brent wants a place where he knows how to use the appliances.

I get distracted by Pinterest, but you know what?

Living in a Pinterest-perfect home runs counter to what we want to do with our whole lives.

So, do we remodel an imperfect space?

Or do we make do with what we have, and, crazy thought, replace things when they’re broken?

Let’s go for the latter, to start. Paint? Sure. Update base plates? All right!

But let’s leave the bajillion dollar renovations for another day. Or another lifetime.

Why Save Half? You Have More Options

Why Save Half? FrugalPortland

Earlier this week, Eric wrote that he’d put an offer in on a house in an adjacent neighborhood. He and his wife live about a half mile from me now, so I was both excited for them and intrigued. Where were they going?

Still biking distance away, he assured me.


I looked on Redfin to see if I could tell where they were going (I’m a sucker for those photos in real estate listings, what can I say?) and couldn’t find it.

But while I was on Redfin, I thought I would just look.

Here’s the thing: you can’t really just look at real estate. That’s like just looking at a room full of free puppies.

Anyway, that part of the story is still in progress, but the point is, if we wanted to buy something, today, we would have the down payment because we’ve saved almost $75,000.

Now, we weren’t necessarily saving it for a down payment, but our space is a little tight for Brent. I’m happy in a tiny home, but he is not a small man, and would like a little more space to spread out. So we’ve been talking about the next step.

Last week we wandered into an open house, where the sale price was $600,000. That gave us the impression that we’d be in tinyhouseland forever, which made us a little sad.

The point is, though, because we’ve saved half our income this year (!!!), we have more options.

We’d be in a position to move without a contingent “we sell our house, then we buy yours” situation that would almost assuredly mean we’d be the least attractive offer any seller had ever seen.

Why Save Half?

Why, indeed.

When we talk about saving money to our friends who don’t talk about money all the time, they wonder why we’d save half.

I think the answer is pretty simple: the more you save, the more you’re in charge of your own money (and, if you want to go there, your own destiny). If you work for someone else (which most of us do!) and you only save 10-20%, you’re leaving a lot up to someone else.

But if you save 50%, or 60%, or more?

You get to make all those decisions.


There are those who would argue that it’s simply not worth it to scrimp and save in order to shave a few years off retirement, and frankly, I’d agree.

You didn’t land on this blog post to find ways to reuse plastic bags.

Living frugally doesn’t mean living like a monk, though you’re certainly allowed to do that, if you want.

Life shouldn’t be about deprivation. It shouldn’t necessarily be about indulgences, either, except on Thanksgiving, where all bets are off.

Life is so short.

So, so short. Losing my mom before she turned 60 shows that life can be swept away from us even before we knew what we were losing.

But saving half, while still living a life you enjoy (filled with conscious spending, and automatic savings!), will help you hit the sweet spot.

If we end up buying a new place, we’ll have failed at our mission to save half.

But will we really consider it a failure?

I don’t think so.

The new home in question is not perfect. Perfect isn’t in our price range.

I like that. Maybe I’ll make it a quotable.

But it is something we can consider, even though we already own the condo.

What is Conscious Spending?

What is conscious spending?

The Frugal Portland philosophy, in bullet form, looks like this:

  • Save more
  • Spend consciously
  • Take control

And it really is that simple. Order matters, here, too, because you must save more before you can spend consciously. We’ll talk about saving more in upcoming posts, because that topic is very popular, but by now you should be aware that more means a lot more. Shoot for 50%, and if you don’t get there, you’ve still saved more than the average Joe. (Heh, not that Average Joe, he’s a big time saver!)

But what do we mean when we say to spend consciously?

A Working Definition of Conscious Spending

Conscious spending is being mindful of where your money is going. It only happens after you’ve hit your savings goals for the month, but it can happen.

To me, conscious spending is understanding that treats and splurges are part of a frugal life.

That’s right, I said splurges.

Living a frugal life is not all about deprivation. It might be to some, but not me. Living a frugal life is much more about taking control of money, instead of letting money control your life.

In my world, that means the following are allowed in my frugal life:

  • Enjoying the occasional fancy dinner (with friends, when we can) in a restaurant
  • Buying a nice bottle of wine at home
  • Going on vacation, either near or far from home. Expanding horizons gives a different perspective on the way we live our lives, and helps us reevaluate our priorities
  • Having an expensive gym membership
  • Paying for a great haircut (curly haired girls in Portland, go see Michelle at Bouffant Salon)
  • Compromising with my sports-loving husband by agreeing to a cable package
  • Buying real food at the grocery store or farmers market

How do the above fit in a frugal life?

Well, when you start with saving, you have a more limited pool of money to work with. So, necessarily, your available pool of spending money is necessarily more limited.

That means there’s no room for mindless spending.

Mindless Spending

Your definition of mindless might be different than mine, but mindless spending is where money leaks out of your account without you noticing.

To me, that includes:

  • Drive-through food (the very definition of mindless is something you eat while driving!)
  • Daily coffee in a coffee shop
  • Going out to lunch because you didn’t bring leftovers from the night before
  • Not eating leftovers ever
  • Ordering drinks in restaurants (we’ve found that our dinner bills are half (!!) of what they were when we ordered drinks)
  • Buying clothes at the mall
  • Take out when you’re too lazy to go to the store

Or any other of a zillion ways you spend money without noticing, and especially without even enjoying it.

So, if you eat out all the time, you end up eating out just because that’s what you do — not because you like it. We notice this when we’re on vacation. “We’re sick of eating out!” we say after five or six days of restaurant food. But you know what? Restaurant food is not priced on a sliding scale, where it’s cheaper when you don’t feel like eating it.

Restaurant food costs what it costs, period.

So you might as well sprinkle it in your life as a treat. You’ll enjoy it more.

How You Can Spend Consciously

Take a look at Mint.

Where are the leaks in your account?

Now, take those leaks, and turn them into rules.

If, on Wednesdays, you always drive through for dinner because you have a Wednesday night meeting, make a rule that you’ll cook at home. Maybe even a double portion on Tuesday, so you can eat leftovers.

If you slip, then, it’s a treat, not a habit.

If you typically order dessert, restrict it. The cheesecake will taste better if you don’t eat it all the time.

Now, here’s the real plan:

Every time you take your credit card out of your wallet, think about what you’re doing. Ask yourself:

  • Do I want what I’m about to buy?
  • Or am I buying out of habit?
  • Will I really enjoy this?
  • Is it a treat?

Don’t judge. Just think.

That’s what being conscious is all about.

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