A Quiet Fortune: Coulda, woulda, shouldas? Or can and will?
September 3, 2017
Note: I don't like writing about numbers all that much, but sometimes looking backward at them can be surprising.
Six years: It's been six years since we got married.
We still don't have it. Enough.
But what if we had started right when we got married and just said, "OK. We'll start saving a little bit of money today. Not later on, but right now." What might have happened?
Let me think. Six years ago I was making … well, just about what I make today. I've only had one raise since then. And my salary was barely enough even at the time.
But what if we had started anyway? No, we couldn't possibly have saved 10 percent, like that Tightwad Lady says. But she keeps nagging people to start, even if they only begin with 1 or 2 percent and add a little bit more the next year and the next. OK, I'll do some made-up calculations for a few minutes.
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I made $45,000 back then. Took home $36,000. Ridiculous. Jeannie had a clerical job that helped. If by some miracle we had been able to save 2 percent of my take-home pay, by the end of that first year we would have had … $36,000 x .02 = $720.
Not very impressive.
But in the second year what if we had sacrificed and cut out some stuff we didn't absolutely need? Could we have saved 4 percent?
I'll pretend that we did. By the end of year two we would have saved over $1,400. Add that to the $720 from year one and we would have had $2,120 …our money, not money we owed to some company. That's more than I have today.
What if I had found a relatively safe investment fund that averaged 5 percent-6 percent each year? That would have earned at least $106 (that's $2,120 x .05). Added to our $2,120, we'd have $2,226 by the end of year three.
Hmm, maybe I would also decide during year three to get a job on the weekends and make $200 more a week, then invest part of that.
OK. That gives us more:
I'm making an extra income of $200/week: ($200 per week x 52 weeks: $10,400).
Maybe I can save 50 percent of that: $5,200.
And I'm still saving 4 percent of my salary: $1,400.
In our investment fund we already have: $2,226.
For a TOTAL of at least: $8,826.
Really? Would we actually have had nearly $9,000 by the end of three years if we had started saving and investing when we got married? Hmm.
Now I'm on to year four. That was an expensive one. Jeannie had the baby and plenty of money went out. But I think we still could have saved money from my salary if it was automatically deducted and if I kept my Saturday morning job.
I think we might have been determined by that time to keep stashing something away, no matter what.
I'll pretend that in year four we save that $1,400 from my salary, but it can't possibly go higher. Maybe I could still save $2,000 from my extra job, even if most of it goes for baby and other expenses. We're still earning about 5 percent on what we've invested, so that's $461. I'll add those three amounts to the $9,226 that we had at the end of the previous year. That's a total of $13,087.
Good grief. After four years we would have had over $13,000 invested if we had just begun earlier.
I think I have to stop. I'm getting a little bit sick. For six years we've been waiting to save until we had enough. But "enough" never came. You know, if we had just had a clue about what was possible, we could now have at least $20,000 in our investment fund.
I think we'd better change our minds about our money. We'll go to the bank and start a savings account. Today.
Yet another note to the reader: This is a story about a fictional young couple. Plug in your own salary and see what happens. Don't want to do the math? Go to bankrate.com, and under "banking" see "all banking calculators."
Terrie Drake is the author of the book "A Quiet Fortune," and a retired teacher and librarian. She and her husband have lived in Glenwood Springs since 1974. She is not a financial adviser; consult a competent professional for your personal financial solutions. She can be reached at firstname.lastname@example.org.