How Much Did I Save in 2006?

In 2005 I was able to I was able to save 56% of my income. It now time to see how I faired in 2006.

2006 was a big year for me - I bought a second property, an engagement ring, and had a temporary assignment for work. I know I won't be setting any records, but lets see how I was able to fair given these financial challenges.

Calculating how much I save on an annual basis isn't a trivial matter. I started by figuring out what I consider income and what counts as savings:
1) I am going to say my earned income is that what my employer reports to me as pensionable earnings. I don't know if this is 100% accurate but its good enough for my calculations. Its more accurate than my Social Security earnings because it doesn't include life insurance benefits, etc.
2) Any capital gains, dividends, interest, investment returns, etc will not be counted as earned income or savings. I have done my best to exclude investment returns as any capital gains, dividends, interest are passive income and I don't want to count them as savings.
3) Gifts, rebates, freebies, gambling profits, etc will not count towards income, but maybe be counted as savings.
4) Rental income will not count as earned income or savings. 2006 was the 1st year I had a cash profit from the rental. This net cash was deducted from my savings amount as I consider this an investment return.
5) I calculated a saving rate with and without mortgage principal payoffs. I am not sure if one should necessarily count property downpayments or mortgage principal repayment as part of savings, but I know many people that use their property equity as a savings account.


Savings Rate

SR (no MP)













*SP (No MP) = Savings Rate ignoring property equity changes

I believe this is a good approximation of my savings rate. Keep in mind its on the high side because I don't factor in gifts, freebies, rebates, gambling profits, and other unaccounted money in my income. However, I would estimate these other incomes are insignificant and at most account for 1-2% of my savings rate.

I'm a little disappointed my saving rate dipped below 50% for the first time. However its not unexpected and I know going forward it will continue to be a challenge to keep such a high savings rate given a pending wedding and everything that comes with it.

Also see my post on calculating my 2005 savings rate.

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Comments (7)

Great job, 2mil. My wife and I only hit ~ 25% this year, after buying a house (with the affiliated furnishings) as well as two vehicles (our previous vehicles were a combined 30 years old and had a combined 341,000 miles). I'm aiming for 50% in 2007.

The wedding will be tough. You just have to grin and bear it, and not hold it against your wife. Luckily, my father in law paid nearly the entire cost of our wedding two years ago, which amounted to $3,000. I had just about the cheapest wedding I've ever heard of.

That is huge--Congrats!

Good for you! I hope more people read your blog, because when I tell others I save around 50% of my income and have for at least the last 5 years they roll their eyes in disbelief.
BTW, I have always counted mortgage prepayments as savings for this reason: I am not spending that money so I will not need to replace that income with investment returns to retire early.

Hi 2M: Did you turn off the comment for your latest post (passive income)? I was trying to make a comment, but didn't see that option is available.

Hi 2 Million,

Congrats, I think you're at the top end of the savings curve. Given that the national household savings rate is really low, I think you're way, way ahead of the game.



Sorry - looking into the comment problem - should be fixed soon.

Great job 50% is still very good. I just recently got married and wow! the unexpected costs are what really affecs the bottom line (extra flowers, last minute decorations, extras on the honeymoon etc...

Good Luck,

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A personal finance weblog of my journey to reach my goal of $2 million + the value of my primary residence.
Current Net Worth: $1,938,393


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