An Interesting Observation from Survey Data

This blog is about being frugal, and one of the advantages of being frugal is that you might be able to retire earlier or retire on less than the ‘norm’.

One of the internet forums that I peruse on occasion is the community is full of individuals and couples that are looking to retire securely and possibly even decades earlier than the conventional 65-67.

This summer, there was an open survey on that forum, that asked participants a variety of questions concerning their personal finances.  Just recently, the results of that survey have been posted.  With over 1300 responses, there are some interesting conclusions that can be drawn, but I just want to focus on one.

Savings Rate vs Income

We all know what income is, for example if you earn $40k/yr and your spouse earns $20k/yr and you have no other sources of income then your gross income number would be 40k + 20k = $60k/yr.  Savings rate, is the percentage of that gross income that is left over after all of your yearly expenses, taxes, healthcare, etc are deducted from your gross income.  In the above example, if you have $10k left over at the end of the year then your savings rate would be 16.6%.  As a reference, Vanguard recommends that households put away 12-15% of their gross income away for retirement each year.

The forum members on financialindependence are not representative of the general population.  Most of them are SINKs or DINKs (Single Income No Kids or Double Income No Kids) living in HCOL (high cost of living) areas such as the East or West coast cities.  Usually, they have very high incomes that are multiples of the median US household income, $52k/yr.

With all of that said, you would think that the higher the income became, the higher the savings rate would be.  After all, if you made one million dollars a year, surely you could stash away 90% of that.  Couldn’t you?

It turns out, the data says something different.  While savings rate does trend upwards, it is a very, very weak pattern.


Households making $100k/yr, nearly double that of the median household income in the US, are stashing away about 50% of that (keep in mind these are for people pursuing early retirement).  Now look at the households making twice that, $200k/yr.  The savings rate is still around 55%, a mere 5% increase despite a 100% increase in income.

What Gives?

There could be any number of reasons.

  1. Higher income households may have more student loan debt (doctors, lawyers, etc)
  2. Higher income households have a higher tax burden (28%+)
  3. Higher income households could be located in higher cost of living areas (NYC, San Francisco, D.C.)
  4. There could be a psychological barrier (I earned it, I deserve something nice)

I am not sure what exactly is going on behind the numbers, but I find it fascinating regardless.

What About the 1 Percenters?

If you widen out the chart to include truly preposterous incomes you’ll see two things happen.

  1. There aren’t as many data points, so it becomes harder to identify trends
  2. The existing trend doesn’t change much


Why Should I Care?

That’s a good question, and it has a simple answer.  The time until you can retire doesn’t depend at all upon your income, it depends on your savings rate.  The greater percentage of your income that you can save for retirement each year, the earlier you can retire.  A popular early retirement blog explains the idea.  For example, saving Vanguard’s recommended 15% of income each year equates to 43 working years.  Saving 50% equates to 17 working years.

The question isn’t, “how can I earn more so I can retire faster” but instead, “how can I reduce my expenses and be more frugal so I can retire sooner?”

You can see some more of the survey results represented in purdy pictures here.

Odds and Ends

Summer is cruising by and we have been keeping busy.

I read a great murder mystery book by an up and coming new author.  Okay, the book was penned by my sister AND I got a copy for free, but I still enjoyed reading it.

Frugal Boy has finished up his summer reading program and now has a bag full of coupon goodies.


After many months of trying to hawk the Microsoft Surface tablet that we won in a cereal box sweepstakes we finally found a buyer and unloaded it for $325.  Then the buyer had problems registering it and was upset so we found a happy resolution at $225.  Whatever, we found $225 in a cereal box.  Color me happy.

In less drama filled gadget news, Shae’s Fitbit wristband doodad gadget had started to peel and bubble around the display.  She wrote in and asked if there was something that she could do to fix it and they just sent her a brand new one.  When she asked if they wanted the old one back, they said no, just toss it.  Guess who has a ‘new’ Fitbit.  😀

We had a pizza party and movie after Frugal Boy got his 100th potty training sticker.


We have also been playing with ‘blocks’ (Lego Duplos) a lot lately.  I gave Frugal Boy all of the parts to build the fire engine and this is what he came up with on his own.


It has been hard to sleep at night because of the heat and humidity so people have been getting naps in wherever they can.


The babysitter was shocked to find out that we don’t have air conditioning.  What I didn’t go into detail about was that we are saving up money for a downpayment on an investment property.  If we end up pulling the trigger, I’ll do a more in-depth numbers post, but for now, here are a couple of the properties that we have taken a look at.



I picked up what should be the last load of lumber for rebuilding our front porch.


The 23 boards above are for the skirting that goes around the bottom of the porch.  I stopped updating my porch rebuild spreadsheet, but based off where I left it and a general idea of how much I’ve spent since then, I figure this whole project will come out to around five grand.

I decided to get cutesy with the skirt design and stole inspiration from here.  It wasn’t too hard to recreate.


The treated lumber that I picked up from Menards has been utter crap.  They looked alright when I picked them from the stacks, but the high humidity has been causing all sorts of grief.  Hopefully, they won’t completely twist, split, shrink, or crack when all is said and done.

Our garden has been outputting daily vegetables.  Japanese beetles have done a number on our bean plants, but tomatoes and carrots have been doing well.


The $3 Potty Training Program

Love it or hate it, every parent eventually has to potty train their kids.  We are currently on attempt #2 with Frugal Boy.  For the first attempt, we read a book written by a professional trainer (parents pay her money to deal with it).  The author encouraged parents to target the 20-30 month old window because the child is old enough to be capable, but young enough not to dig his/her heels in completely and be obstinate.  We thought that Frugal Boy might have been ready at 20 months so we gave it a go.  And the going kept going for two months before we finally admitted defeat.  You can’t say we didn’t try!

Now that we are finished globe trotting for the time being, we decided it was time to give it another go.  This time, we made some changes to our plan of attack.  Mainly, we were going to bribe the heck out of Frugal Boy.  The book author discourages bribing, but we tried her way and it didn’t work for us.  We went to Dollar Tree and picked up $3 worth of incentives.


The first $1 was spent on a two pack of a “Count to 100” poster.  This serves as our progress tracker slash game board.  The next $1 was spent on a booklet of stickers.  The last $1 was spent on prizes in the form of Paw Patrol temporary tattoos.

Each successful use of the potty earns 1 sticker to be placed on the chart/game board.  A #2 is worth 2 stickers (hehehe).  We arbitrarily draw red circles around some of the numbers and when Frugal Boy reaches one of those special numbers he gets a Paw Patrol tattoo.


He LOVES Paw Patrol and can name each one and its tagline.  The pink dog is named Sky (or Skye? I don’t know the spelling).  What matters is that he is motivated.


The tattoos wear off in a day or two, so he has to keep up with the program in order to keep his pals with him.


We are on day 4 and he is already up to 31 stickers (plus a handful at the babysitters).  More importantly, he is self initiating!  Woohoo.  The book talked about the four steps of progress.

  1. The kid is clueless and wets themselves
  2. The child recognizes that they are wet after the fact
  3. The child recognizes that they are wetting themselves right now
  4. The child recognizes that they have to go potty before they wet themselves.

Eight months ago he was mostly at 1 and 2.  Today he is at 3 and 4.  I have yet to meet a kid that takes off their diaper and goes straight to potty trained on their own volition.  It takes practice, nudging from parents, and time.

I like to think that our new program is to credit for his recent success.  We modeled it after video games.  There is a mechanic in games were beginner players are rewarded for doing simple, easy tasks.  These early, ‘low hanging’, payoffs encourage the player to keep going.  The payoffs get farther and farther apart and require more work.  A good write up of all the psychological traps used in a ‘simple’ game such as Candy Crush can be found here.