1 The Year We Saved $10K: Paying the Imaginary Mortgage | The Billfold

The Year We Saved $10K: Paying the Imaginary Mortgage

catan cropped

In the latest installment of the Saved $10K series, J A Y tallies up his income, expenses, and savings:

J A Y: I’ve always saved $20-30K/year on a salary of around $50K by cutting expenses without undue suffering. I’ll try to make up for “boring” with “numbers”—a strategy that has never, ever worked.

2007–2011 was when my goals were clearest. I had left my basement apartment and bought a house ($240K with $140K mortgage). It was my first experience paying interest and I wanted to pay it off ASAP.

Monthly budget:


$3,481 to $3,947 (net)


Food: $150

Fun: $200 (anything that was not food/shelter)

Utilities: $250

Transport: $175

Taxes: $250

Mortgage: $866 regular + $866 extra


~$1000/month left over, mostly applied yearly to mortgage

Stuff that I didn’t miss:

Coffee, alcohol, furniture (childhood futon/desk), cell phone, vacations, air conditioning

Stuff that helped:

Friends with inexpensive hobbies (board games, RPGs, online games), living close to work, discount produce, low interest rates, online amortization tables

My savings ended up being ~$30k/year, all put towards mortgage, which ended up being paid off in those 5 years plus a few months. My bank balance was always close to zero, but my safety net was that I could forgo mortgage payments up to the amount that I had paid in advance.

These days, I still pay my imaginary mortgage into savings ($800 bi-weekly). My income has increased to just over $50k and my lifestyle is a bit more normal. It feels like luxury.

TL;DR: high salary, low spending


Photo: chispita_666 (cropped)


37 Comments / Post A Comment

I make a little over 50K and net a full $1,000 less (hah! now everyone knows, oh well) a month ::cries::
California is a cruel mistress

garli (#4,150)

@polka dots vs stripes 50K a month? If that’s not a typo, please give me your job.

@garli Ahhh should be 50K a year, net a $1,000 less than the OP per month.

CaddyFdot (#2,686)

@polka dots vs stripes Yep, I make about 60K per year and still net less than/the same as the author by month. I also am in CA.

BUT, I note that he mentions taxes in his monthly budget, which means they come out after he calculates net monthly income, while my taxes come out before, as do my health insurance and retirement contributions.

@CaddyFdot I figured that was the difference – this doesn’t say anything about healthcare or retirement either – but still….

@polka dots vs stripes I make 65K a year and net less! I spend a lot of time trying to do the math. Also 150$ on food? I can’t imagine. I spend 100$ a week on food, I end up eating everything I buy and definitely need another trip by the end of the week. Mind blown!

j a y (#3,935)

@CaddyFdot Oh, actually – taxes… those are property taxes (around $3k/year nowadays…), not income tax. Income tax was already taken off the monthly figure, that’s take-home pay and what comes out of it.

j a y (#3,935)

@polka dots vs stripes Regarding healthcare and retirement… I’m in Canada, so my healthcare is deducted from my salary along with my income tax and it is a PITTANCE compared to what the States is. Um. Looking it up… around $600/year according to my tax forms. I’ve gotten crazy angry when I hear about medical bankruptcies (the most common type!) in the states.

I’m lucky enough to contribute to a pension at work. And that comes off the paycheck so it’s not included in the net pay either. I think it’s a hundred bucks a paycheck or so? It disappears into the ether… they stopped giving paper stubs.

j a y (#3,935)

@j a y So that $50k figure is net (I rounded up the monthly net income) so if you are earning $50k gross, that’s a much smaller income to work out of! Sorry, should have been clearer. The monthly figures are more precise (so if you multiply $3947 * 12, you get a yearly net income of $47k which was what I rounded to 50k)

@j a y okay this makes much more sense now. I was really sitting here figuring out how you pay so little taxes hahaha

ATF (#4,229)

@polka dots vs stripes – don’t feel bad! I make just shy of $80K a year and I only take home (checks bank account) $4082 a month. So he’s taking home nearly as much as me even though he makes almost $30K less a year. #AMERICA

savagerenata (#7,701)

@j a y actually regarding your healthcare, your $600 a year is EXTRA benefits through your work – you still get a lot of free hospital shiz just for being Canadian. There are a lot of things we don’t have to worry about. Need to go to Emergency for _______? Go! you won’t pay a cent. Diagnosed with _______? get it fixed! no problem.

Just to clear it up for our American counterparts – we are covered regardless, whether we get extra benefits through work or not.

j a y (#3,935)

@savagerenata Actually, that’s the Ontario Health Premium for basic government. My extended healthcare from my work is like… um, more, maybe like 50 bucks a month? But it’s auto-deducted as well so not in the net. I never use it because I generally don’t get above the deductible (which is only 200 bucks but I don’t go for checkups/dentist visits/eyecare/etc).

But yes, Canadian healthcare is awesome. My mom is going through a second bout of cancer and though it sucks, we at least don’t have to go through financial worries!

chevyvan (#2,956)

Tell me how to only spend $150 (or the Chicago-equivalent) on food!

theotherginger (#1,304)

@chevyvan OMG i want to know too. I follow budget bytes (I rarely make her recipes) and this month she is doing the SNAP challenge. I was inspired, and then was like, no.

elizabeast (#629)

@theotherginger It’s doable if you’re a single person, but I wouldn’t say it’s fun. During a few stretches of unemployment I was able to live on ~$30-$40 per week for food, but that felt extremely restrictive to me. I never ate out and I went without a lot of things at the grocery store (most meats, hummus, cereal). Since I was unemployed, I had enough time to walk to the three grocery stores and one farmers market nearby, compare prices, and buy the cheapest items…but this is a weird luxury that no one else in the world has. I also dug pretty far back into my cabinets and used up the random crap that I had bought but never used (bulgur?!).

So…yeah, it can be done, but I hope I never ever have to do it again because it totally sucked.

j a y (#3,935)

@chevyvan It’s harder these days – food prices have gone up and my tastes have gotten more expensive. I’ve also gotten a Costco membership which encourages expensive meat and specialty fruit.

But back then, I basically ate no processed food whatsoever. Meat on sale was $1/lb and sometimes was close to expiry with a 50% off coupon. That’s hard to find nowadays (whole pork shoulders, mostly…) Veg on sale was like 99c for a bag of carrots/beets/onions, celery, head of broccoli, etc (actually, veg hasn’t gone up much).

Produce on sale is usually half to a third cheaper than full price, even now. So being willing to eat whatever is on sale helps tremendously (and also tends to be seasonal). I scored some large chickens the other day for $5 per which feed me for 5 days or so. (And then I splurged on $22 on 3 beautiful AAA Costco steaks that I cut in thirds.)

Also, eating out comes out of the “Fun” budget. The cost of eating out is so much more than groceries that it has to be considered a luxury. For $10 at McDonalds, I could eat for several days. (I love McDonalds, though… and more expensive restaurants too.)

Nowadays, I budget closer to $250/month on groceries. Running a quick query on my database (automation geek here)I’ve averaged $1.8k over the last 6 months. (Edit: $300/mo) Although the last 2 months I was feeding my parents a bit since mom was recovering from surgery. That’s what AAA meat and fancy cheese will do :(

Also, rice and flour and potatoes are basically free – I don’t eat much of that anymore, but back then I ate a lot of it (baking my own bread was great! grocery bread was too expensive and didn’t taste as good)

j a y (#3,935)

@j a y Also, marked down chicken? You cook RIGHT AWAY. Smelly chicken is not appetizing. Today I’d throw it out. Back then, I’d curry it!

j a y (#3,935)

@elizabeast grocery flyers prevent the walking around! And the groceries around me price match each others flyers so usually I only have to go to one.

j a y (#3,935)

BTW, it was TOTALLY Cataan to start, but also other stuff, because my friends were totally into board games. And it’s not a cheap hobby, but I wasn’t the one buying/selecting games.

As they get fancier, they get closer to chess and farther from dice. And I was not great at it, because I’ll pit my luck against anyone’s skill but… I could not match the people planning out their end strategy after reading the rulebook.

beastlyburden (#6,122)

@j a y Yowza. Super super impressive. Are you planning to retire early, or is it more about feeling secure?

j a y (#3,935)

@beastlyburden I’d like to retire somewhat early (56? which I think I can, because of the pension at work – I can go early at a reduced pension), but it’s mostly about feeling secure.

Which comes not so much from having lots of money, but knowing that I could now live on minimum wage if I really had to…

cryptolect (#1,135)

“My bank balance was always close to zero, but my safety net was that I could forgo mortgage payments up to the amount that I had paid in advance.”

Do you know this for sure? I assumed it worked this way because that is how my student loans worked, but my mortgage broker assured me it does not. Is it different in Canada?

EmilyAnomaly (#4,238)

@cryptolect I’m curious about this, too. I work for a mortgage lender in the US and any extra payments/funds get applied to principal right away unless the mortgage is in default or foreclosure.

j a y (#3,935)

It totally depends on the individual mortgage contract. Mine was with Royal Bank of Canada (still a private bank, despite the name), and while extra payments were applied directly to principal the terms stated that I could skip payments up to that ‘extra’ amount. (which then of course would be added back to the principal owing)

http://www.rbcroyalbank.com/mortgages/skip_a_payment.html (see the last paragraph in the first section)

Of course, there is some minor risk – the doubled payment security only lasts until the term of the mortgage is up (in Canada, most mortgages are only 3-10 year terms, as opposed to American 30 year terms).

Actually, reading that, it was even more flexible than I thought. After skipping payments that had been doubled, you can then REPAY those payments at any point! Anyway, I lucked into the mortgage – but it shows how important it is to really understand your individual contract.

j a y (#3,935)

@j a y That being said… I went fixed rate (being a fraidy cat) and of course the variable rate was like 2.5% LESS than that for the entire duration of my mortgage. Can’t win em all…

And I did that with the knowledge that historically variable rates do better than fixed… I’m just risk averse.

sea ermine (#122)

Wait so is the net income before or after income taxes (+social security, medicare, etc)? I ask because I make ~44k (so, pretty close to the author) and my monthly take home is around $2500 and I’m so confused how that’s happening.

sea ermine (#122)

@sea ermine oooh ok I just saw above the 50k was after taxes never mind.

I love these but I really wish we could get some more details on the saver’s lifestyle i.e where they live so we can adjust for cost of living, whether they are married/coupled/sharing with roommates/on their own, how many beds/baths they’re getting for their rent/mortgage, commute, etc. It would just help identify more where they’re making choices and sacrifices to save.

j a y (#3,935)

@JNC Musings Factory
Single, living alone (the one luxury I afford myself as long as I can possibly do so). Kids will blow any budget :)

3bed/2.5 bath (too big for just me but…) Housing prices have gone up crazy in the last 8 years. I bought at $240k and now the same houses are listed at $417k. I should’ve bought even earlier, rather than saving for years for a down payment.

Commute – almost nothing. The other luxury that I allow myself is to live close to work (because for a while I had a 4 hour commute on public transit). Technically, I don’t even need a car (though I have one now) because my work + 4 major groceries + 3 major hardware stores + Costco + biggest mall in town are within 3km of my house. (I think that’s why property values have skyrocketed…)

But before that, I was commuting via bus and subway.

j a y (#3,935)

@JNC Musings Factory oops missed one… I live on the outskirts of the greater Toronto area. Toronto is the second highest cost of living in Canada but being a half hour away reduces costs somewhat. (Though apparently my modest attached house is almost a half million now…)

Still, it’s nothing near NYC or San Francisco.

Runawaytwin (#2,693)

The articles here are getting more and more mustachian. It is fine in that I enjoy reading that blog too- i just come here for a slightly more ‘real’ perspective.

Still- amazing job. Im dreaming of the day i save enough to buy property in (or around) Manhattan. HAHAHHAHAHAHHAHA

j a y (#3,935)

@Runawaytwin I dream of downtown Toronto! But it’s impractical for me even if I could afford it.

And while I don’t like the tone of MMM, I admit that I’m closer to that in my personal spending. I actually have yearly spending targets now on fun that I’m not allowed to save… If I don’t use it, it gets rolled into the next year’s fun budget… Although as I get closer to the end of the year, I’m thinking that half of it could go into savings…

clo (#4,196)

@Runawaytwin Yeah, I agree. I live about 90 minutes from San Francisco and this just wouldn’t work for me. I would love to move somewhere cheaper but I’m waiting for my wife to finish school. My rent alone is double the morgage payment stated in the article. I want more articles about saving 10k for married people who have student loans, average incomes, cell phones etc.

jenny0 (#6,933)

I so badly want to be *this* kind of person one day. Ah, the discipline is so worth. How do I start?!

j a y (#3,935)

@jenny0 I think some of it is just ingrained and there’s a lot of luck too.

But mostly it’s just tracking expenses (you can tell I’m extreme about that) and making sure they don’t increase. If you can hopefully earn more over the years, then it won’t ‘hurt’ to save.

I started working at $36k gross. I couldn’t save much at that income but as I made more, I made sure that I didn’t increase my spending by too much.

drydenlane (#5,919)

Re the tags I *WISH* everyone played Catan, or maybe I need a new crew.

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