Posts tagged with: 401K

Fully Vested and Planning for Retirement

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Just as I was getting my monthly budget together, the quarter was up and I was given the opportunity to invest in the company sponsored 401K plan…fully vested immediately.  The company matches up to 5% of my salary.

It has been a LONG TIME since I had a company matched 401K opportunity. So effective this week, I am investing 20% of my corporate job’s income in the 401K. I can change it at any time, but I have some catching up to do.

What do you think? I’ve picked a pretty mixed portfolio but lean toward more aggressive options.  I’m so excited.

Any tips or trips would be greatly appreciate for this as really it’s been years and I was in a VERY different place back then.

I have an idea of how this will affect my take home pay, but won’t know for sure until the end of this week when I get my first check with the deduction taken out.  Then I will post my new monthly budget.


Ashley’s March 2016 Budget Update

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Hey guys! Only a week behind with March’s budget update. Trust me, one week behind isn’t too bad for me right now. heh. Work is a bit in overdrive, but I love it. I’m gearing up, getting ready to be out of town for a solid 8 day cruise and working like a crazy person to try to get everything set just right to run on auto-pilot (fingers crossed) while I’m gone.

Here’s how the month of March went for me:

 

Place Amount Spent
Rent 1200
Down Payment Savings 2000
Electricity 176
Water 61
Natural gas 105
Cell Phones (2 lines) 89
Cable/Internet 97
Trash 35
Preschool 1085
Gift-Giving 189
Restaurants 157
Entertainment 102
Kids Activities 142
Groceries 573
Gasoline 108
Household Goods 144
Clothing 157
Rainy Day Savings 1580 (minus deductions, see below)
Savings Goals 800 (minus deductions, see below)
Debt Payments 2134
Total Budgeted $10,934

 

Comments:

Down Payment Savings ($2000): This is right on track.” The goal is to get to $10,000 by summer time. I’ve had a couple questions about the house-hunting journey. We have NOT started “hunting” yet (though we’ve been doing searches on Zillow just-for-fun and grabbing flyers from homes that are for sale just for comparison). With everything going on, we decided to wait until after the cruise to start hiring people (e.g., realtor, mortgage lender). Our goal is to move late summer or possibly early fall. Our current lease is up at the end of August but our landlord will let us go month-to-month at our current rate (no increase) if we haven’t closed yet by that time. The ideal situation would be to close in late August so there’s just a little overlap of about a week or so. But I know these things can be so unpredictable and we’re lucky to have flexibility with our current landlord. We do NOT, however, want to move much earlier than August (since we’d then be paying double rent/mortgage). So we are not actively on the house-hunt yet. 

Electricity ($176): Remember our outrageous electric bill from February? Fortunately, we only got caught by surprise that one month. Since then, the A/C and heater have both been turned OFF. There have been some hot days (and some cold nights), but it’s been within a range that we as a family could deal with (nothing too extreme). It’s been in the mid-90*s a couple times this week already, so we’ll see how long we can go without any A/C. I already got the bill for April and it’s UNDER $100!!! I’m loving the lower electric bills right now but, like I said…we’ll see how long this lasts (Tucson’s summers are brutal!) The A/C will have to go on at some point.

Gift-Giving ($189): Similar to last month, almost all of this was a charitable donation I made so we could max out Arizona’s tax credit. $25 was for a wedding gift, which was the only non-donation portion of the gift-giving.

Entertainment ($102): A few bucks of this was for music on itunes. The rest was from a date night. As promised, hubs and I are planning to do about one date per month this year (in the past 2 years we rarely ever had date nights). So expect this category to be a bit higher this year in compared to previous years.

Kids’ Activities ($142): This was a high-spending month for kids’ activities. The bulk of this was from our weekly swim lessons (April is the last month for our lessons; we may re-start once it’s summer time, but the initial point of the swim was to get the kids comfortable around water before our cruise. They’ve been making great strides with safety and although they aren’t fully able to swim, of course, they have learned all kinds of life-saving measures if they were to fall in. Safety was my main concern). $40 of this was from horseback riding lessons and farm time that we did while the girls were on Spring Break. The person who does it is a friend-of-a-friend. She is the Benson Butterfield Rodeo Queen. She lives on a nearby farm and lets kids come out and experience “farm time” (basically feeding and petting/playing with all the animals) for $15/hour and horseback riding lessons for $20/hour. I split the lesson so each child had 30 minutes of instruction and tipped an extra $5 just because she was extremely accommodating. Still kind of spendy for us, but it was a ton of fun and was a great way to spend a couple hours during Spring Break week.

Groceries ($573):  After months and months of struggling to keep this number below $600, we finally pulled it off this month. I think it helped that I had increased flexibility over Spring Break (so I was at the house, able to do more food prep, etc.). I’ve also been making a really conscious effort to prep foods on Sunday for the week to come. I’ve gone so far as to portion out daily portions of fruits and snacks; I’ve pre-cooked chicken breasts for lunches; I’ve pre-washed, peeled and chopped up carrots into sticks for snacks; I’ve pre-made breakfasts (e.g., like making a big batch of pancakes that can be refrigerated/frozen and re-heated in a toaster), etc. etc. etc.  It’s tedious and time consuming and not always the way I want to spend my Sunday afternoons (I typically do everything while the girls nap), but it’s made my life MUCH easier during the week when I do my prep versus when I don’t.

Household Goods ($144): This category is pretty high this month because I spent $100 on stuff for my office. I bought a 5 x 7 rug, a big wall clock, and a painting (all from Big Lots).  I started this job last July, but it just now looks like I’ve actually moved into my office space. It’s really nice, especially since I spend a lot of time there.

Clothing ($157): This is a bit higher than normal for us. A good chunk of it was new shoes for the girls. Kids feet just grow so fast, I tell ya! But we’ve gone the cheap shoe route and they tend to fall apart, so we opt for slightly nicer tennis shoes. This also includes a couple of new work shirts from me from Wish (see my review here) and new summer PJs for the girls since they’ve gotten hot and sweaty a couple of times at night in their long-sleeved jammies (still using no A/C, remember?) ; )

Rainy Day Savings ($1580): I deposited $1580 into my various rainy day funds (though some money was also withdrawn from these accounts.) See below:

  • 3-6 Month EF: $1,000 (goal is to get to $5,000).
  • Birthdays: $200. The girls’ birthday is on the horizon in June. To date, we’ve never had an actual birthday party for them, but we want to this year for the first time. It will still be simple (at our house, not another venue), but we’re going to start throwing a couple hundred a month toward this savings category so we don’t get caught by surprise in June.
  • Travel/Christmas $50. We like to save at least $50/month in this category, as finances allow (sometimes we skip it if needed).
  • Annual Fees: $280 deposited (though I withdrew $484 for a vehicle emissions inspection and registration for 2 years. That leaves us with $150 still in the account currently)
  • Girls’ College Savings: $50. This is a standard auto-payment that we do every month. $25/month per child isn’t a lot, but it’s better than nothing and that’s what we’re comfortable doing right now while we’re still financially focused on getting out of debt (and buying a house!!!)

Savings Goals ($800): $800 was deposited but there were also withdrawals. See below:

  • Savings for 2015 Roth IRA: $300 deposited. Another note about this is listed below.
  • Cruise 2016: $500. I also withdrew $35 from my cruise fund to buy some new clothes for the trip.

Debt:  I gave a full debt update here.

Final Thoughts:

We ended up putting more toward debt this month than we’d originally thought we would because the balance transfer really needed to be paid off before April (and we did manage to make that happen). It all worked out, though, because we still hit our goal of $2,000 toward the house down payment fund, and we still started hitting several of our other savings goals. We’ll continue to beef up our emergency fund, specifically, in addition to our other “rainy day savings” funds in the months to come.

Related to savings, I didn’t report the “withdrawal” above because it technically occurred in early April, but I took $1500 out of the “savings for 2015 Roth IRA” and put it into our Roth account (last year was the first year we opened a Roth, with a meager $1300 contribution). Our contribution this year wasn’t great either, but it’s better than nothing and 10% of my paycheck is auto-deducted and invested into a 401(k), so this is actually a little deceiving because we certainly saved more than just $1500 this year.

So there you have it. The big goal remains the same: Save up money for a downpayment for a house, beef up our emergency fund, and continue knocking those student loans in the face. It’s more like little jabs right now while we’re saving so much. But soon it will be full-blown punches! I’m coming for you, student loans! Mwhahaha (<evil debt-paying laugh).


Year Of Becoming An Adult: Final Status

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Back in October 2014 I wrote about wanting to use 2015 to really “become adults.” To me, this meant taking care of some much needed issues that were in addition to my 2015 financial goals. I wrote a few posts throughout the year with updates (January update, March update, September update, October update), so this will be my final update of the series.

  1. Wills. Wills were actually drawn up at the beginning of 2015, but it took us awhile to actually get them notarized. This task was completed by mid-year. Final status = Complete
  2. Life Insurance For Hubs. We had intended to start working on this mid-year, but didn’t actually get around to applying until October. In November hubs completed all the bloodwork and in early December he was asked to supply some additional information (all stemming back to his mysterious illness at the end of 2013 where our medical bills are from). He finished everything on his end but we’re still waiting to hear back from the company. When I first applied for health insurance it took about 3 months to all be processed so I’m thinking this is normal (and not something directly related to his mystery illness). If he doesn’t hear back sometime in the next couple weeks we’ll check back with them but I’ve got my fingers crossed everything is in order and our next interaction will be mailing off a check to actually finish the process. Final status = Well underway, but waiting to hear back from insurance company
  3. Open Retirement Accounts. We opened up a Roth IRA in April 2015 and a 401(a) through my work in July 2015. I fund 10% of my pay to the 401, and we’ve saved a little extra here and there for the Roth (but a truly minimal amount…something I’d like to increase in 2016). Final status = Complete
  4. Open College Savings For The Kids. We opened up one 529 for each child in October 2015 and we’ve been funding them with $25/month each ($50/month total). Not a lot, but every little bit helps! Final status = Complete

Overall, not too shabby. I wish we’d started the life insurance stuff a bit earlier in the year so it was all wrapped up and done by now, but at least it’s well underway and if it doesn’t work out it will be because we were denied (not due to our own lack of trying). But hubs’ health has been great and, especially with his weight loss, I’m really hoping everything goes through smoothly and he’s able to be insured. It will certainly give me great peace of mind.

How have you done on your financial (or other) goals in 2015? Do you have any new goals or resolutions set for 2016? I’d love to hear them!

 


The Year of Becoming an Adult: September Update

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In October of last year I wrote about some of the financial goals we have for the year 2015. I called it “The Year of Becoming an Adult” as a way to acknowledge that, at the ages of 31 and 32, we really should have had these tasks taken care of long ago! It was long past time and 2015 was our year to tackle these important adult milestones.

There were four things, specifically, that I had mentioned. Time for a little status update on each of them:

  1. First, we’re going to make a will. This is finally done! I actually made the wills on my birthday (December 31st), but it took us MONTHS to get them notarized! In our state we had to have two witnesses and we had a hard time getting people to be our witness. We asked bank employees (nope), we asked friends (yes, but had a hard time finding a time that worked for 2 separate friends at the same time), and finally we got it done when hubs’ mom and grandma came to visit a couple months ago. Kind of ridiculous that it required two people coming to visit us who could serve as our witnesses, but the bottom line is this task is finally completed and behind us.
  2. Second, husband will get life insurance. Quick recap for newer readers – hubs had a mystery illness at the end of 2013. In summer of 2014 I got life insurance and tried to get him some, but he was rejected due to the mystery illness (doctors never found out exactly what was wrong with him). He was advised to wait a year and try again. So initially we were going to reapply at the beginning of this summer. But hubs has been on a hard-core mission to lose weight and wanted to wait until his weight-loss is complete so he can try to get better prices on life insurance. He started his weight-loss mission on June 1st and in the 3 ½ months since then he’s lost a total of FIFTY POUNDS!!! Yes! It’s incredible! Like watching an episode of extreme weight loss in front of my eyes! He wants to lose another 20 lbs. but I think we’ll probably initiate the life insurance process early next month (October). I remember from last time around that it was a couple-month process – not a quick overnight thing like I had expected. So this should still be done by the end of the year, but hasn’t been handled yet.
  3. Third, we’re going to open retirement accounts. Success! In April (before tax day), we opened up our first Roth IRA for 2014. It was a meager contribution ($1,000), but it was a start. For most months this year we’ve been setting aside $100 to be added to the Roth. But then when I started my full-time job in mid-July things really kicked it up a gear. I’m now contributing 10% of my full-time job income to a retirement account, which is being matched up to 7% from my employer. In addition to that, I’ve opened up a FSA (flexible spending account) for dependent care. I contribute $500/paycheck of pre-tax money so I can pay for the girls’ care with pre-tax dollars. I actually haven’t made a withdrawal from the account yet (and I need to!), so I need to figure out how to do that. But the point is that we’re now contributing to various retirement accounts (mostly through my employer’s 401a but still a little in a Roth), as well as taking advantage of a tax-advantaged FSA.
  4. Finally, we’re going to open college savings accounts for our girls. This one still hasn’t happened yet. Starting in June (the month of their birth), we’ve been setting aside $25/month with the intention of opening up a college savings account. Honestly, I’ve been so overwhelmed with work and stuff happening with my Dad that I haven’t been able to investigate into this further. Matt made it sound like it was super easy-peasy when he opened up an account for his niece, so I just need to bite the bullet and do it. In the meantime, the money has been earmarked for this purpose (I categorize it using YNAB’s budgeting system), so it’s available when I finally do get around to actually opening an account. I’ll go ahead and put this on my To Do List for the beginning of October, too. So I’ll call this a half-success since we’ve actively started saving the money but haven’t actually funneled it into an appropriate account yet. The intention is there, so now it’s just a matter of the follow-through!

Those were the main things I had discussed in my original Year of Becoming an Adult post, but I’m also happy to announce that hubs is finally getting a handle on his dental issues, too (never mind that it took an all out emergency to make that happen). Actually, TODAY is the day he’s getting his first quadrant of work done! He’d gone to the dentist right after the emergency but had to be put on antibiotics before any actual work could be done so today is the D-Day (D as in Dental work). We’re hoping to knock out one other quadrant before the new year (to max out our dental insurance benefits), but that probably won’t be scheduled until late November or December sometime to allow us a couple months to try to save up some more money. Remember – this round of dental work cost $665. I’m not sure what the next quadrant will cost but I’m assuming it will be pretty comparable. Allowing for a couple months’ buffer to restock our dental savings account is really helpful for us.

So there you have it!

#1 = check!

#2 = in progress

#3 = check!

#4 = in progress

BONUS (dental work) = in progress

 

I’d love to report more successes/check-marks but with the cards life has dealt us this year I’m pleased with our progress. When life gets crazy, baby steps is all we can ask for. As long as we’re moving forward we’re moving in the right direction! : )

I’ll be sure to update in a few months when I can hopefully report that ALL of these items have been checked off the “Year of Becoming an Adult” list!


Retirement Options

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Let’s talk retirement.

Until just this past year, hubs and I had saved absolutely nothing toward retirement. And, even this past year, we had just started saving $100/month (only in the months where we had an extra $100 to spare). In April we opened our very first Roth IRA for 2014 with a whopping $1,000 investment. That’s it. That’s our full retirement.

I’ve had in the back of my mind that I would start more aggressive retirement contributions after we’re completely consumer debt-free (the only thing left is the car!). But now that I’ve landed a full time job things are shaking up a little.

One maybe odd thing about this job is that they require mandatory retirement contributions. I’ve never heard of that before (but this is my first full-time job, so maybe it’s more common than I think???). Also, there are two separate retirement options. At first I mistakenly thought I could switch between the two, but that was inaccurate. After reading more (and speaking with HR), I’ve learned that once I select a plan – that’s it. There’s no changing the plan. Ever. For the entire duration of my career at the university, I am locked into the retirement plan (note: I can still change investments within the plan, see more below).

The big difference is that one plan is a defined benefit plan, whereas the other is a defined contribution plan. The defined benefit plan has a higher mandatory contribution and match (currently 11.48%, compared to 7% for the defined contribution plan), but it scares me that someone else is entirely in control of the investment. Plus, the defined benefit plan pay-out isn’t based solely on the amount contributed (like the defined contribution plan), it’s based on years of service, average monthly salary, and an actuarial formula.

In contrast, the defined contribution plan benefits are based solely on the amount I’ve contributed and how the investment performs across time. It allows me to select the investment company and investment allocations myself. So even though the match is a smaller percentage, I may be able to make it up with interest and growth across time (and benefit pay-outs aren’t contingent upon years of service, average salary, etc.).

There are lots of other factors to consider as well (e.g., the defined benefit plan offers health care subsidies after retirement and better long-term disability than the defined contribution plan). It kind of sounds, to me, like the defined benefit plan is similar to a pension….only it’s not free money from the employer. It’s money that has been paid-in by the employee (and matched by employer) all throughout the employee’s career. When I googled “defined benefit versus defined contribution” everyone says to participate in the defined benefit plan, at a minimum, and to add the defined contribution plan if possible, too. But I think this is different because the websites I looked at were assuming that the defined benefit plan was paid in full by the employer (not by employee contributions). Also, at my job it is not possible to participate in both. It’s an either/or (and no moving between them).

I’m leaning toward the defined contribution plan simply because the peace of mind of being in control of MY money instead of relying on someone else to be in control (also, I don’t like that the percentage of contributions in the defined benefit plan varies and that vesting doesn’t apply until termination of employment).

Reader thoughts or opinions? For anyone who would like to see the fine print, I’ve attached a retirement comparison chart I received. Thanks!!!

Retirement_ComparisonAug_2014

If you had the option, would you select a defined benefit plan (similar to a pension, but with mandatory employee contributions) or a defined contribution plan (just like a regular 401(k), with a 7% company match)? Why?


Juju’s Debt Introduction

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Note: Juju wrote this post as an introduction of herself for the blogger position for BAD. Please take the time to read, then ask questions or leave comments on what she has written. You can find information about the BAD blogger position here

I have been reading this blog for about a year now. I have always been interested in personal finance (the savings part, not the debt reduction part). I started really evaluating my own debt when I married my husband in 2012. Prior to our marriage I was a single working mother going to school in the evenings to attain my MBA. I went into labor with our son (my second, his third) a few hours after my final presentation for my Master’s degree. Talk about timing! Soon my family of two became our family of six. We have a 10 year old boy, 6 year old twin boys and our now 2 year old son.

We decided back in 2012 that what my husband lacked in education was made up for by his determination to become the best father to our sons. We decided that I would go back to work while he stayed home with the kids. This solution was perfect; however, this meant we needed to really look at our spending also known as the dreaded B-U-D-G-E-T. Previously, I was living the high lifestyle of supporting only two people but now I am supporting four on one income plus child support for the twins.

First I had to do research, which is how I stumbled on this blog. Though I am used to saving I had never really focused on debt reduction. I set things off in motion by paying off the $14,000 left on my car loan within 5 months. This freed up $388/a month in my budget! This allowed me to invest money in our next purchase.

We bought a 1950’s rambler in a good neighborhood within walking distance to an award winning school. I never thought I would ever be able to buy a home, especially in the Puget Sound market so this was another major accomplishment. Unfortunately, because we used up most of our savings to pay off the car, I had to get a 401k loan to pay for the down payment. Fortunately, around this same time my manager decided to retire and I was promoted which increased my income.

With my increased income I decided to bump up my 401k to 12% and my H.S.A. to $100 a paycheck. $225 a paycheck goes to my savings leaving my take home after taxes and employee benefit deductions to $3000 a month. I also receive child support for my oldest son. Of course higher income and assets means higher debt and liability. We are far from being debt free.

Debt:

  • ACS Student loan (undergraduate): $6,026.64
  • Nelnet student loan (graduate): $49,544.76
  • Mortgage: $143,674.69
  • 401k loan: $7,233.44

Yep, that is $206,479.53 in debt. No sweat, I am up for the challenge. My first course of action is to pay off my 401k debt. That would allow me to eliminate debt and increase my savings at the same time-a win-win. I should be able to do this by summer. I have a goal and a plan to be debt free but I will also need the help and advice from others to guide me along my journey.


Investments, Part 2

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$11,889.19 in my work 401K and an additional $10,288.31 in Restricted Stock.  I will be vested in February 2013.   This 401K is the only investment account I am currently adding to with a 4% withholding (reminder: this is a recent increase from 3% after a raise kicked in so I wasn’t accustomed to getting the money yet so it was easier to add to savings.)  My company uses Fidelity and I spent some time exploring their website and learned some basic info.  I’m invested in a “life plan” Vanguard  that is designed to grow gradually more conservative as I move toward retirment.  I used 2035 as my retirement date which would put me at age 63.  I think I was in the default fund and it was too conservative for my current age.  I don’t know for certain right now but if memory serves me correctly, my husband’s 401K sits in the same range.

I also used a couple of retirement calculators to see where we are at and what we need to do in order to get where we want to be by age 60.  While certainly not in a fantabulous position, we also aren’t destitute.  With the debt payments decreasing in the next couple of years I would hope that by retirement we are talking about living expenses, medical expenses (which I know have got to be horrendous), housing and basic living stuff…maybe we won’t need to die within 18 months of retirement.  Funny timing as I was doing these calculations today, my husband was dining at what he did not know was a “Senior Friendly” restaurant on his current business trip. I’m sure as he enjoyed what he described as exceptionally bland food…surrounded by the senior crowd…he really wanted to see a text from his wife about retirement!  :-)

Anyway,  I’ve gathered all the retirement numbers and that prompted me to get things moving on the account transfers and such so that’s a plus to posting this info.  I really hate this stuff–like almost rather eat a big bug instead of look at and thinking about my retirement accounts.  Sigh.  I know it is a reality but it is like I have a teflon brain for getting this!  In some ways I think it is simply a mental roadblock that will eventually lift on its own…other times I am pretty sure I will never understand investing.  Maybe there’s a community education course I can look into to help–b/c not even reading books on my own is doing it!  This reminds me of high school geometry when even the very patient teacher finally just gave me a D to get me out of her class!  My only D ever and she was so good about telling me she knew I was working so hard and giving it all I had…but…it was time for me to go!  Ah…good times!


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