Friday, February 29, 2008

Savings Rate

I recently computed my post-tax savings rate. It appears to be about 50%. Is this amazing?

There are currently about 6.5 billion people on earth. Assuming a total world gross "domestic" product of somewhere between 66 and 72 trillion dollars in 2007 (see wikipedia), that puts global per capita income right around $10,600. Of course, the median income must be far lower, due to the immense concentration of wealth in the wealthy.

With this in mind, it might seem foolish that I, who would like to save up for house-building and restaurant start-up funds as quickly as possible, must spend $17,000 on myself every year. How can I cut costs?

The biggest cost is rent: about $8,400 annually, including utilities. By moving to a more densely populated house, I could conceivably bring that down to $5,000 or $6,000 without getting rid of possessions. The hard thing would be finding such a good deal and still have room to host guests.

Next is food. Maybe $3,000 per year. That could drop a thousand if I focused more on beans and rices.

Car depreciation, insurance, gas might run $2,000 per year. I could sell my car and stop traveling.

My bike maintenance is about $250 per year. No need for that. I can run.


Blogger current typist said...

Yes, it is amazing. I commend you. Want to buy me a laptop? Just kidding. But you do make a good point, about prioritizing having room to host guests. People before money, I occasionally remember to say. We'll keep that in mind as we look around for efficient and affordable housing that can hold all of our stuff and us, too.

5:56 PM  

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