A Financial Advisor’s Blueprint to the Starve and Stack Plan

In this article I will show you how to execute Starve and Stack Plan. This is a financial advisor’s blueprint to the starve and stack plan…

What is Starve and Stack

Starve and stack is centered around the power of compound interest. The idea is for young people to commit to living lean (starve, but not literally) for a set period of time. 12-24 months is a great goal. During that time, live on 50% of your income, and save (stack) the rest. Saving a large nest egg while you are young and able to can be a game-changer in the long run. If 50% isn’t doable, find another percentage that is aggressive but won’t sink your battleship.

Too often, families share with me that they are waiting for a shoe to drop to start saving and to take planning for retirement seriously. When you kick the retirement savings can down the road, you robbing yourself of compound interest. Saving a large nest egg early on in life is far superior than trying to catch-up when you are in your 50’s. Take a look at the following chart:

A Real-Life Example of the Starve and Stack Method

Explaining what starve and stack is isn’t going to cut it. Today, you’ll get a real-life example of how to implement this plan. This will be based on real people, but for the sake of their privacy, I’m going to call them Larry & Louise Legend.

First thing’s first, Larry and Louise needed to sync up their finances and have discussions about their long-term financial goals. It’s important that they both felt strongly about getting a jump-start on retirement savings. They are recently married and believe that after 18 months of starve and stack, they would likely start a family. Their goal is to frontload their retirement savings now, while they are willing and able.

Larry and Louise’s goal is to starve and stack for 18 months. The majority of those savings will be for retirement. However, they also plan to save for a larger down payment on a future home. They enjoy their current home but don’t think it their best option for the long-term.Larry and Louise’s Goals for the next 18 months:

  • Down payment = $18,000
    • They already have some cash savings and own a home. The influx of $18k added to their savings and current equity will supply a sizeable downpayment for a long-term home.
  •  Retirement = $52,000
    • We’ve seen the power of having a sizable nest egg at a young age (take another look at the chart above). This aggressive savings amount, on top of what they’ve already saved, made them feel better about lowering investment contribution percentages when kids enter the picture.
  •  Reward Themselves
    • Starve and Stack is a big undertaking. I convinced Larry and Louise to reward themselves once they reach these big goals. They decided that they’d treat themselves to a fun vacation together as reward for 18 months living on an extremely disciplined budget. Having something exciting to look forward, on top of supercharged investment accounts, can help them stay on track.

Execution of Starve and Stack

Goals are great and all but, “A goal without a plan is just a wish.”Here is how Larry and Louise will implement this strategy:


Louise has a 401(k) plan through her employer. She plans to max out her employee contributions over the next 18 months. The employee limit for 2018 is $18,500. Add in the extra six months and this equates to $27,750 of contributions. She receives a match but for the sake of starve and stack we are focusing on their contribution amounts, not the employer’s.

Simple IRA

As a co-owner of a small business, Larry doesn’t have a 401(k) plan. His company utilizes a SIMPLE IRA. The contribution limits for SIMPLE’s aren’t as robust as 401(k) plans. The max Larry can contribute in 2018 is $12,500. Larry plans to max this out. So over 18 months, that is $18,750 of employee contributions.

Roth IRA

I am a big fan of Roth IRAs. Larry’s employer plan has a lower contribution limit and I encouraged him to have tax flexibility during retirement. Larry plans to max out a Roth IRA over the next 18 months. For 2018, the maximum contribution for someone his age (in his 30’s) is $5,500. So over 18 months, the plan is to contribute $8,250.

Down Payment Fund

As the Legends recently got married, they needed to combine incomes. I helped them set up accounts with Ally bank. The savings account has a much better yield at 1.35% than their local banking options. Also, Ally makes monthly transfers to different accounts simple and easy. The plan for the Legends is to save $1,000 a month into their down payment fund into a savings account at Ally. 18 months = $18,000.

Conclusion: A Financial Advisor’s Blueprint to the Starve and Stack Plan

Is Larry and Louise’s plan to starve and stack going to be easy? Hell no. It would be much more fun to upgrade to a newer car, go on some big vacations, or go out to eat 2-3 more times a week. But will it be worth it? Yes – it will change the trajectory of their financial future. It’s aggressive, I know, but they are willing to sacrifice some luxuries today for financial independence in the future. You can do the same! The best thing to do is set up your goals and then automate contributions as much as possible. Then stay disciplined, stick to your plan. Do this, and you’ll be on your way to living your best financial life.

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