Living Simply Practically

A Comparison of Two Families

The Jones vs. The Simpletons

The Lowdown

Jones

• College Degrees

• Married at age 25

• Both currently work

• Total annual income: $48,000

• Monthly Income = $4,000

Simpletons

• College Degrees

• Married at age 25

• Both currently work

• Total annual income: $48,000

• Monthly Income = $4,000

The Houses

Jones

• House Cost $200,000

• 20% Down = $40,000

• Mortgage- $160,000

• 5% Rate for 30 Yrs.

• Bought House 1 year into marriage

• Monthly Payment = $858.91– Not including taxes & ins.

Simpletons

• House Cost $125,000

• 20% Down = $25,000

• Mortgage - $100,000

• 5% Rate for 30 Yrs.

• Bought House 3 years into marriage

• Monthly Payment = $536.82– Not including taxes & ins.

Transportation

Jones

• Bought 2 new cars every 5 years

• 2 cars at $15k each = $30k

• $30k at 6% for 5 years

• $579.98 total monthly payment

Simpletons

• Bought 2 used cars every 5 years

• 2 cars at $7k each = $14

• $14k at 6% for 5 years

• $264 total monthly payment

Eating Out

Jones

• Dine out 8 times per month

• 4 times at an expensive restaurant – Avg. meal = $100

• 2 times at moderate– Avg. meal = $50

• 2 times at modest– Avg. meal = $25

• Total cost per month = $550

Simpletons

• Dine out 4 times per month– 1 expensive restaurant = $100

– 1 moderate = $50

– 2 modest ($25 each) = $50

• Total cost per month = $200

Vacations

Jones

• One expensive vacation per year

• Average cost per year = $4,500

• $4,500/12 = $375 per month

Simpletons

• Two vacations per year

• One with family = $1500

• One simple one= $500

• $2,000/12 = $166.67 per month

Entertainment

Jones

• Expanded Cable and Internet Package = $150

• 2 Movies Per Month = $30

• Golf 2x Per Month = $100

• Total Monthly = $280

Simpletons

• Simple Cable & Internet Package = $50

• 2 Movie Rentals per month = $5

• Golf 1x per month = $50

• Total Monthly = $105

Shopping

Jones

• Clothing $50

• Groceries - $500

• Items for House - $50

• Miscellaneous personal items = $200

• Total Monthly = $700

Simpletons

• Clothing $20

• Groceries - $300

• Items for House - $20

• Miscellaneous personal items = $60

• Total Monthly = $400

The Comparison

Joneses

• House: $858.91

• Transportation:$579.98

• Eating Out: $550

• Vacations:$375

• Entertainment:$280

• Shopping:$300

Simpletons

• House: $536.82

• Transportation:$264

• Eating Out: $200

• Vacations:$166.67

• Entertainment:$105

• Shopping:$400

The Comparison

• Simpletons Spend Less Each Month:– House: $322.09 Less

– Transportation:$315.98 Less

– Eating Out: $350 Less

– Vacations:$208.33 Less

– Entertainment:$175 Less

– Shopping:$300 Less

Total = $1,721.40

The Potential Impact

• $1,721.40 Additional margin• Save/Invest $1,000 per month

– At 6% in 10 years = $162K

• Paid an additional $200 towards mortgage each month– Home is paid off 13 years earlier

• Gave rest to their church– In 10 years they’ve given over $60,000

– Doesn’t include paying cash for cars or education savings

– All by the age of 41

Savings Growth Over 30 Years

$0.00

$200,000.00

$400,000.00

$600,000.00

$800,000.00

$1,000,000.00

$1,200,000.00

Year 1

3 5 7 9 11 13 15 17 19 21 23 25 27 29

Plus a Paid Off House