I may have missed it.
Is there a post that defines savings and some set of posts where folks agreed to that definition? (note it would be best of the OP provides the definition and asks folks to use that for the purposes of the thread. Many will wander off to other definitions because few can hold a definition for the purposes of a given thread but that is another issue.)
If not than I'll stick with my point.
This is a very common problem here and elsewhere. Folks have their own, often unstated, definition in mind and assume everyone has the same definition in mind. And so a long debate ensues but no common ground is found because there is no shared definition.
Added: if you want to use your definition which is fine by me I think the next debate is going to be what is "outgo". I think perhaps there is income, outgo and move sideways. Is principle outgo or sideways? I think of it as moving cash from liquid cash to illiquid real estate, so is neither income or outgo. Folks in the "Well I'll never sell my house so it is not an investment" might call it an outgo. I don't happen to agree with them, but unless we carefully define terms and all agree to those terms, no progress will be made.
I did propose a definition in an earlier post that I will re-state here.
Put in words, I consider savings to be the change in my net worth in a given period that is not accounted for by the change in value of assets. Meaning if my net worth increased by $10,000, but $6,000 of that was because my assets went up in value, then I know the other $4,000 was savings. Whether you want to divide that by gross or net income (or how you define those terms) is your own business to find a savings rate.
Put in a formula, it looks like this:
Net worth at end of period - Net worth at beginning of period - increase in valuation of assets = savings for that period
savings for that period / income for that period (net, gross, whatever you want) = savings rate
So for example, if your net worth started out at $100,000, and then rose to $110,000, but you know that $6,000 of that increase was because your house/stocks/bonds/mutual funds/whatever went up in value, then you know the remaining $4,000 was savings.
If your net worth went down from $100,000 to $90,000, but you know that $5,000 of that decrease was because your assets fell in value, then you know that you had negative savings of $-5000 that period.
Can we agree on that definition of savings? I feel like it's the only logical one. Everything else is laden with emotion, where people change rules to make things seem more "conservative" but they're really just making it less accurate.[/quote]
Yours one was of the posts that I had in mind. As Rodc points out there was not a deafening response acknowledging that your definition somehow offered helpful clarification. I think it does offer helpful clarification. One thing that would be included in your definition if the OP wants the scope to extend to mortgages is that mortgage loan liability is included in assets. Thus if the liability decreases, there is an increase in assets that might be part of that $4000, hence there was savings. However, that is not the same thing as saying that the act of paying the mortgage makes the payment savings. As another poster pointed out making the mortgage payment was just a transaction that reduced assets in cash and increased assets in the mortgage.
I think that to be complete two pieces are required here. One is that savings is the excess of income over outgo and the other that savings must appear as in your definition that savings are a contribution to change in assets balance. Lastly, income, outgo, and assets accounting must be self-consistent.
I personally would find it very strange to both include mortgage liability as an asset and also call payments on mortgage principal outgo. On the other hand, if mortgage liability is not an asset, then payments on mortgage principal must be outgo.