Last year we were really motivated to save up for house purchase. It was exciting to see a set percentage go to our savings account, so that one day we could buy our very first house. The down payment savings account increased every month little by little. The goal motivated us to watch our spending.
Now that we have bought a house we need new goals to motivated us again. Especially me. I like goals. Without goals I tend to just drift away aimlessly.
For us, it’s much easier to save an allocated amount every month. We are not very good at watching our spend and hope we come under in order to meet our budget.
So our plan this year is to set automated saving withdrawals every month.
How does this work?
For example, one of our goals this year is to maximize our retirement contributions. I already have a set percentage being withdrawn from my paycheck that goes straight to my 401K. Last week I also set up a monthly ROTH IRA contribution with Vanguard. This will ensure by the end of 2013, I will have my ROTH IRA maximized. My husband does not have a retirement plan available through his work. I’m going to set up a Traditional IRA with Vanguard. Every month a set amount will be withdrawn from our savings account to the Traditional IRA. This will ensure have retirement covered.
I’m considering starting a brokerage account with Vanguard (After-Tax) and having a monthly contribution go to a set of mutual funds. This probably won’t be a huge amount but at least I know it’ll be set aside for our future.
My husband and I have been talking more and more about financial independence. We don’t want to be stuck in the grind forever working for the man. One day we hope to have the freedom to say F*** You!
A forced savings plan is one way to get there. It’s also psychological. Just like every month I make sure all our bills are paid, I will make sure there’s enough in the account for our contributions to be withdrawn from on a periodic basis.
I have found myself buying things for our house and I realize when start making updates that the house needs (remember, it’s a fixer upper), our costs will be higher than when we were renting an apartment.
Have you started automatic savings? Has it been helpful so far?
I’m $230 richer! All because I invested a little more than the required amount to get my company match last year.
On Monday, I received a letter from my company that said:
Every year, your employer reviews matching contributions to the company US 401(k) plan to make sure employees receive the maximum contributions for which they are eligible. This process is a normal part of a 401(k) plan and is called a “true” match up.
You can be eligible for a true-match up for several reasons. Matching contributions can stop during the year if your reach the pretax/ROTH 401(k) contribution limits, choose to stop your contributions, or if your contribution percentage fluctuates during the year. If you start contributions mid-year and miss a number of eligible payrolls and potential match, you may also be eligible for a true match up.
Based on your eligible pay and the timing of the contributions you made in 2012, it was determined that matching contributions to your account different from the amount you were eligible to receive.
The company match was calculated at 100% of your pre-tax, ROTH 401(k) and/or after-tax contributions up to 3% of your Eligible Pay, and 50% on the next 2% of eligible pay you contribute.
You adjustment amount: $230.80
This is an automatic return on my 401(k) investment I was so excited!!!
So, if you haven’t looked at your 401(k) contribution, you must! Figure out how much you can invest and do it!
Because they way things are going, we can only depend on ourselves.
Disclaimer: I’m 22 and honestly, have no idea what the heck I’m doing while I’m investing. Most of the time I’m throwing darts at an invisible target.
I opened up my 401K in July when I was eligible to start contributing. I’m immediately 100% vested, and my company has a match. Here are the funds available from my company:
As you can see, fees are pretty high. I actually had no idea they were high until I read Joe’s post My Overdue Portfolio. When I first invested in mutual funds at age 18, I didn’t even consider expense fees. Yup, crazy me! Here is my first plunge into my 401K.
After reading Joe’s post I realized I was investing in American Century Equity Income and paying an extreme fee: 1.95%. I also noticed I was paying an expense fee of .95% of Colombia Acorn International A-Z. Since I already had mid growth and large value funds, I decided to eliminate those funds.
As you can see, I still have funds with high expenses. I’m looking at the American Funds EuroPacific fund with a .84% expense fee. I know 401Ks have higher fees than other mutual funds, but I wonder how many people ignore those fees? I sure heck did. I’m still thinking of eliminating a couple of my funds with high expense fees like AEPGX. I’m thinking I can find a similar fund with better returns in Vanguard for my ROTH IRA.
I, also, took the plunge yesterday and invested in my ROTH IRA with Vanguard. I invested $3,000 in VGHCX. It’s a mutual fund concentrated on healthcare companies. Look at how low that expense fee is .35%, and that’s not a super low fee compared to other Vanguard funds.
My husband does not have a 401K, so I can’t show his portfolio. I will open his ROTH IRA later this year.
Have you looked at your portfolio lately? How do you feel about investing?
I was born in 1990, back when people still relied on pensions for their retirement. Remember those days? I don’t. So I digged up an old picture of a protest. Check it out. Fair pensions for all!
By the time I retire, there will be no social security and I will have to depend on my own portfolio if I ever want to retire.Young adults face some major challenges on our way to financial independence. High student debt and a weak job market is making it hard to increase our piggy banks. I have a friend who has 40K+ in student loans and doesn’t even have any job prospects.
Retirement is at least thirty to forty years away but thanks to the personal finance blog world, I know that if I start early, I will have more! Time is on my side here. And putting money away prevents from having lifestyle inflation. I think its, also, awesome that I am part of a DINKS couple! One of the many advantages of being married is combined retirement funds.
So, I am going to be aggressive on my retirement goal. I plan to max out my 401K. Yes, I am going to be putting $17,000 away. I, also, plan to max out my ROTH IRA ($5,000). I hope to use my bonus to fund my ROTH IRA at the end of the year. This won’t leave much left for my check, especially after taxes and my SPP contribution. It’s going to hurt this coming year, but that means any raises in the future can be all mine. I will not have to worry about increasing retirement contributions! This is a pretty aggressive move. I am not sure if I will regret it or not, but I think I need to do it. I can do this because we currently have no debts (school or cars). Some of the advantages of this plan are:
- Paying less taxes now
- Taking advantage of compound interest
- Meeting retirement goals
Some of the disadvantages of this plan are:
- Not being able to save as much for a house down payment :/
- Not being able to buy more clothes or shoes (…maybe this is good)
- Not being able to break away from the student broke life. It might improve a little bit.
Hopefully, I can become a millionaire sooner too! Because according to Northwestern Mutual, I am going to need more than $1 million to retire some day.
So what do you think? Do you max out your 401K? How old where you when you started? If you haven’t, do you want to?
Hello fellow bloggers! I Crazy day is over! We spent 3 hours at a local dealership driving a Nissan Sentra and a Honda Civic. We walked out unsatisfied. We did not get great offers and they prolong the process so much. I am a pretty straightforward person. I know what I want and how much I want to pay for it, and I am not going to budge. We decided that the 2007 Honda Civic we saw the night before was it for me (post to come soon).
After leaving the dealership, my hubby dropped me off by the university and I met up with a girlfriend to have lunch. She is leaving for Canada Friday morning for two months, and I wanted to say farewell before she left. While we were eating lunch, I received a call from Company A’s recruiter with their salary offer. 15 minutes later the director of the department called me to congratulate me on the offer and hoped I seriously considered it. Let’s just say I was trying to keep my calm! All I wanted to do was scream: YES!!! YES!!! YES!!! I, then, proceeded to call Company B to ask them if they had completed their offer. A couple calls later with my mom, professors, etc., I received a call from Company B with their offer (post to come soon). Lots of good things happening in my life right now. May 31, 2012 will forever be remembered as a great day!!!
I am not sure if this is worthy of a complete post, but I just wanted to share what benefits Company B offered me:
- Vision Plan
- Employee, Child, Spouse Life Insurance
- More insurance
- Flex Spending Account (Min $250, Max $5000)
- Holidays and Sick Time
- 5% 401K contribution, as long as I put in 5%
Company B’s benefits just don’t match Company A’s benefits. So there it is! The life of a post college/graduate student! Buying a car, negotiating offers, and trying to remain calm throughout it all!
So, today I received the benefits package for Company A. I still have not received a salary offer, but expect to see it by the end of week. Here is what they are offering me in terms of benefits:
- Medical- POS II (company pays premiums for my eligible dependents and I)
- Dental- PPO Plan (company pays premiums for my eligible dependents and I)
- Vision Plan
- Employee, Child, Spouse Life Insurance
- More insurance
- Healthcare Spending Account (Min $250, Max $5000)
- Tuition Reimbursement (up to $8,000 in a calendar year)
- Holidays and Sick Time
- Volunteer Program
- Matching Gifts Program up to $1,000 matched to a non-profit
- 7% 401K contribution, as long as I put in 5%
- Stock Purchase Plan (I can purchase up to 7.5% of after tax base salary. Company will match each share after a 3 year vesting period)
According to a couple employees I talked to, their medical package is great. I know that their 401K contribution is also great especially in this economy. If I remember correctly, Company B offered 5% last year, I am assuming they will be offering me a similar package. I love the tuition reimbursement! As you know, I have 3 classes left in my MBA program ($6000), and this could potentially cover it! Also, the stock purchase plan looks nice! If I start with this company, I would definitely contribute 7.5% of my salary to stock, especially since the company would match it after three years, then I could sell the stock. Anybody have any experience with this?
I need to do more research on the medical package and what it entails. Right now, I only care about being able to see my urologist; I have been under his care for the past 16 years.
I wanted to share this because I realize there is not a lot of information on what benefits people receive. Especially right after graduation. Some people are uncomfortable sharing this information. I am not. Probably, because I blog anonymously. It’s great to compare! It, also, helps to establish a baseline. How do you know if you have awesome benefits, if no one wants to talk about them??? To me, it does not make any sense.
So what do you think? Is it a good starting point? Any questions I should be asking?