First Person: I Managed to Save $100K While Making Less Than $40K a Year

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I recently wrote an article about how I saved, and then lost my first $100,000. Saving that money was a lot of work, and doing it on a fairly low income made it even harder. I managed to save that $100,000 in a period of about five years, and it was during a timeframe right after college when I was still paying off student loans and not at the height of my earning power. It took a lot in the way of self-sacrifice to accumulate that nest egg, but for those who feel it might be impossible to attain such a goal without a substantial income at their disposal, I'm here to tell you that it isn't.

My Income over Five Years

When I decided to write this article, I got out my old tax records to review to see just how much I made during the time in which I was working to save that $100,000. I wanted to see exactly where I started and where I finished when it came to income during that five year timeframe.

Before doing this, I knew my income wasn't excessive, but I was somewhat surprised to find that my income never exceeded $40,000 during this period. The first year, my adjusted gross income was just over $25,000, and the last year, it was close to $38,000 with one year in between in which I earned just over $39,000.

So with an average adjusted gross income coming in right around $32,000 a year, how did I manage to save so much on so little?

What I Did and Didn't Do After College

It can be easy after college to let costs start getting out of control. However, I didn't let this happen in my case. I kept a level head, didn't let a steady income lead me to start spending more, and avoided big ticket expenses. Here are a few of the things that I did and didn't do after college that helped me keep more of what I earned.

What I did:

  • Start saving immediately
  • Start making extra payments toward student loans (I paid off over $6,000 in less than a year)
  • Start making use of employer-sponsored benefits like a 401(k) and stock purchase plan
  • Work lots of overtime
  • Expense share with my future wife

What I didn't do:

  • Rent an expensive apartment
  • Buy expensive new furniture
  • Buy a new car
  • Go out to eat a lot
  • Go on expensive vacations

Keeping Costs Minimal and Sharing Expenses

Maybe one of the most significant aspects of allowing me to save substantial sums in those first years out of college was keeping my costs low while expense sharing with my future wife. By combining our ability to share expenses -- things like rent, utilities, and food -- I was able to cut some of my more major expenses in half, taking items that might otherwise have cost me $10,000 or $15,000 on my own, down to half those amounts. This substantially minimized my cost, and allowed me to stash more of my cash and put it toward income earning investments like my 401(k), stock purchase plan, certificates of deposit, and similar extra income generators.

Maximize Benefits

Employer benefits can go a long way in helping to save and even make money. I utilized programs through my employer such as discounts on food, dry cleaning, and transportation to help cut my costs. I also added to my savings by contributing to an employer-matched 401(k) and a discounted company stock purchase program that provided almost guaranteed returns due to the size of the employer contributions. By utilizing these benefits, I was essentially able to take employer money and make it mine, which increased my savings substantially.

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