Once you’re out of debt, you’re ready to start saving for retirement.
(Before you’re out of debt, you’re probably better off just focusing on that, though I think an exception is fair for extremely large debts like mortgages).
A good rule of thumb is that once you’re ready to save for retirement, 15% of your income is a good amount to save.
Sure, the FI/RE movement wants you to save 97% of your income while subsisting on moss and lichen, living on a rock in the middle of the woods while harvesting rain water.
But back here in the real world, let’s stick with 15%. Personally, I’ve found that showing off extreme feats of frugality is actually counterproductive, since it can lead to feelings of futility and hopelessness, not motivation.
You can do more, I just wouldn’t recommend less.
But 15% of what? How do you calculate this 15%? Is it gross or net?[Read more…] about Is the 15% rule for investing before tax or after tax?