You can reach your goal much faster by saving more each month. Whether or not you can accomplish that will depend on how much you are willing to sacrifice. Even an extra $300 per month can mean arriving at your savings goal years, or perhaps even decades, earlier than you otherwise could. Is that worth driving a used car or not ordering anything but water at restaurants? That depends on your priorities and no one can answer that question for you. I addressed this in The $25,000 Bouquet of Roses.
Several years ago, I made a commentary about the situation in Detroit. Given the skyrocketing unemployment, poor job prospects, and unfavorable demographics of the area, I was asked what I would do if my family were in the city. My answer: Move. I’d pack everything we owned, find a more favorable economic climate, and move there. The odds of catching something (in this case, a high paying job and good schools for the kids) would be much improved by casting my line in a pond with a lot of fish.
A handful of people responded strongly that I was completely out of line for suggesting that families uproot themselves. I’m not sure how to say this politely, so I’ll just put it out there: If you aren’t willing to inconvenience yourself for the chance at a better life, you better learn to be content with poverty. That’s all you’ll ever have.
In my own life, this was a decision I made early. Unlike virtually all of my friends, I refused to buy a car until I was more than 23 years old because as a teenager, I realized they had huge ongoing costs in the form of gas, insurance, and more. It took discipline (and certainly wasn’t always pleasant), but when I finally did by my first vehicle shortly after graduating college, it was a beautiful Jaguar that I got at an incredibly attractive price. At the time, I had little to no debt, my taxes were paid, and I had built a substantial investment portfolio thanks to working my way through school. My saving and investing had paid off, despite having to put myself through college. My friends lacked patience, wanted instant gratification, and bought their cars at 16 with auto loans that charged interest.
The rule of thumb can be summarized as the more you are willing to give up today, the faster you can reach your savings and wealth goal. One warning: Do not take this to the extreme. As famed economist John Maynard Keynes pointed out, “In the long-run, we are all dead.” Money exists only to allow you to have the kind of lifestyle you want and open doors of opportunity for your family. As my father told me before he and my mother left me on the college campus all of those years ago, never trade an opportunity or experience for money because it will be a poor bargain. I certainly did not live like a pauper (far from it). Most of this was possible because my early discipline allowed me to avoid the massive interest charges most Americans pay on their homes, credit cards, cars, student loans, department store charge accounts, and more.
You can use the same calculator from earlier in the article to increase the savings amount you are willing to put in each month. It will generate a new answer, showing you how soon you will reach your goal. In the case of our earlier example, the 25 year old that was willing to kick in the extra $300 per month would be able to retire on schedule at 57 years old and 10 months, or nearly 7 years and 2 months earlier than planned. Is that worth it to you? Is giving up $300 a month worth an extra 7+ years of retirement? Again, only you can answer that question.