When I first read about this new, on-trend way to save money, I had my doubts. At first, it sounded too simple. Then it sounded too hard. But the more I thought about it, the more it makes sense! Starve and Stack - Let’s break it down…
“Starve and Stack”, in the simplest sense, is living off one of one person’s income and banking the rest for a short, pre-determined period of time. In other words, Income A covers regular household bills and expenses, freeing up all of Income B to save toward a big financial goal, like paying off debt, investing, or buying something special.
Nick Vail, financial adviser and author of the Remove The Guesswork blog, came up with this concept when he heard the businessman sitting next to him on an airplane talking about how he and his colleagues would eat below their per-diem allowance and pocket the difference for personal use.
Now, before I lose you, let me make one thing clear. This concept doesn’t mean that you actually starve, or that you struggle to makes ends meet to stash a chunk of cash in your savings account. If you just can’t afford to live on one salary, then get as close as you can. The idea is to tighten the purse strings, sacrifice some of the luxuries, like going out to dinner or buying the fancy car, to be able to save as much as you can over a short period of time.
This original idea that Vail introduced was for newlyweds to live off of one spouse’s income and save 100% of the second for the first 18-24 months of marriage. That savings would be invested, and compound interest would take over, starting the couple off with a nice nest egg that would give them financial flexibility down the road.
However, as a someone who isn’t too far away from retirement, I worry every day that we won’t have enough when that day comes. So this challenge would allow me to give one last boost to my current retirement investments to give me a little piece of mind. Anyone with more than one income stream can put Starve and Stack into action.
So what about you? Do you think you could do it? What would you invest in? A new home, your dream vacation, college for the little one? We’d love to hear from you. Just leave a comment below!