Reinvest Your Raises

Few people can say they are living on the same amount of money they were more than a decade ago — and enjoying it. Gloria Brown can. Back in 1992, she was earning $45,000, lived on about $25,000, and saved and invested the rest. Fast-forward to today. Although she now makes around two-thirds more than her former salary, she’s still spending like it’s 1992.

Brown has worked for nearly 30 years at Sara Lee Corp. The 48-year-old, single Winston-Salem, North Carolina, resident is a poster child for DOFE Principle No. 2: to save and invest 10% to 15% of my after-tax income. Having risen through the ranks into middle management, Brown holds a position as a product development technician, fitting and testing new products in the hosiery division. Not only is she putting 15% of her salary into the company’s 401(k) plan (the maximum of $13,000 a year), she also makes regular contributions to a Roth IRA, a brokerage account with Scottrade that she manages herself, and an investment club that she’s been a member of for eight years. She also puts money into her checking, savings, and money market accounts. Her penchant for saving has given her a retirement fund of nearly half a million dollars.

For Brown, saving is simple. “I live within my means,” she says with a quiet laugh. She also developed a very healthy habit: “Every time I got a raise, I found a place for it, like putting more into my 401(k) or my Roth IRA, so that I didn’t spend it.”

To her credit, she also isn’t someone who wants the latest and greatest of everything. “I don’t want a lot. I’m not materialistic, and I don’t enjoy shopping,” says Brown. “I shop when I need something.”

Although she is single, Brown buys in bulk when she shops, and she frequents discounters like T.J. Maxx, Ross, and Marshalls. She watches vigilantly for sales and then makes her move. Another way she lives within her means is by rarely leaving home without her grocery store bonus cards. “Something is always on sale that I want, and this is the one place where I spend the most money.”

But even when she spends, Brown has been careful to stay clear of debt. Other than the three-bedroom condo she bought in 1992 for $55,000, she has no debt. She has but one credit card, an American Express, which she likes because she must pay the bill in full each month.

Brown’s financial discipline started out as a plan to enable her to stop working at 35. “I thought I would retire early and travel to Europe and beyond,” she says. “I had in mind this life where I would go wherever I wanted and do whatever I wanted.” While she couldn’t retire at 35, Brown is confident that she’s on course “to retire quite comfortably by the time 65 rolls around.”

Another influence on Brown’s saving habits was her uncle, who gave her some good advice when she started working. “He said to