Net Worth Update Q3 2017 and a Successful Frugality Challenge

Q3 was another successful frugality challenge for the Distilled Dollar household as we reached an all time high of a 62.4% savings rate! (Silent shouts heard from Chicago as we’re still celebrating over here.) We did that despite purchasing a home, and spending over 10K of Q3’s blog revenue back into the blog. Today’s post will detail 1 of the 3 approaches we are using in 2017 to save over $70,000, along with a brief recap of our Net Worth Update Q3 2017.

(If we had kept all that blog income for ourselves, the savings rate would be 73.3%, although I wouldn’t feel quite right pocketing every dollar from the blog. Hence, that’s why I’m reinvesting it back in as detailed in Sunday’s post on our Blog Income Report Q3 2017.

Successful Frugality Challenge


Frugality is our financial cornerstone, as it helps to be efficient with money and time.

Without frugality, the DD household would never be ready to embrace such a “radical,” approach to saving and investing our money.

People always tell me frugality is a sacrifice, but then I look at my investments bringing in more and more income, and then I just…scratch my head.

If the point of investing is to earn more, let those earnings compound, and then live off those earnings, then frugality is the jet fuel necessary to reach financial independence, ASAP.

Quick Recap: 1st of 3 Principles to Save $70,000 in a Year

On our previous net worth update, we highlighted how the single decision to invest has led to an extra $7,000 added to our net worth in 2015 and again in 2016..

The alternative approach, that I see many people do instead, is they focus on eliminating their debt, to the detriment of their net worth.

Regardless of the numbers showing it is beneficial to invest, I’m convinced the habit building process of investing in our future far surpasses any other potential benefit. I’ve always heard my elders say, “I should have started investing earlier,” and rarely hear anyone say, “I should have paid off my debts sooner.”

To provide one final example, our total interest expense from loans this year will be about $5,780.30, BUT our investment dividends alone will be $6,000+ this year and surpass the interest expense.

NEW:
2nd of 3 Principles to Save $70,000 in a Year

 

The first American early retiree once quipped, “Your net worth to the world is usually determined by what remains after your bad habits are subtracted from your good ones.”

When we consider habits, we should consider both the creative/healthy habits along with the describe/negative habits we engage in.

If you’re familiar with the Power of Habits, then you know a habit can never be eliminated, but only rewired. The reason is because our brain develops a substance known as Myelin, which acts as pavement for our brain signals to travel smoothly. The more we engage in a habit, the more myelin is used to reinforce that neural pathway, and the habit becomes ingrained over time.

As Warren Buffett put it, “The chains of habit are too light to be felt, until they’re too heavy to be broken.”

Even small habits can lead to an extra 1% in savings which can lead us to retire 2 years early. So, start small and keep letting your actions compound in your favor.

They add up.

One final tip that has been a big eye opener for me the past few months. Focus on creating the new habits, as opposed to “destroying,” the old habits.

Socrates summed this up as, “The secret of change is to focus all of your energy, not on fighting the old, but on building the new.”

3rd Principle and Conclusion

This pst quarter set new records of saving 62.4%, which has helped us save a total of $63,554.19 in 2017 so far. To help us achieve these new levels of savings, we’re focusing on investing (easier said than done), rewiring negative habits and creating new productive habits.

I am also focusing on a 3rd principle this year, that I will provide a longer update on during the Q4 blog income report.

What negative habits are holding you back from saving more of your money or saving more of your time? How was your Q3?

-Matt

P.S.  We hit a new savings rate record of 62.4%! Not bad considering we invested 10K into the blog and we purchased a home during the 3 month period.

To listen to more of the takeaways, along with many of the nuts and bolts tactics I used, check out the two podcast episodes below – one was at the start of the challenge, and the 2nd was near the end:

P.P.S. Thursday’s post will detail Lessons Learned from Failing to Double Our Savings Rate, Three Years in a Row. I’m really excited to get the post out as sometimes it is hard to communicate how to save 60% or 65% of our income. Thursday’s post takes me back a bit to my origins, and some of those early struggles we all face on the road to saving 5%, 10%, 20%, or more.

2 comments… add one
  • The Grounded Engineer Oct 17, 2017, 7:19 am

    Great job, Matt! Hitting 70% is a crazy high savings rate. I thought I was doing well hitting just over 35% but it looks like I need to challenge myself a little more!

    • Distilled Dollar Oct 25, 2017, 8:24 am

      Thanks Taylor! I don’t believe near 70% will be repeatable for Q4 for us, but we’re still eyeballing a 70K savings for the entire year, which is 40% higher than last year. It helps to have these ultra frugal quarters as the habits built up tend to create a natural higher savings rate in the following quarters as well.

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