Category Archives: 401K

401k Rollover, The Fear

I stared at the stack of 18 papers in front of me.

What am I going to do?

Maybe 18 pages doesn’t sound that scary, but think about it this way. If you had to read and 18 page medical journal and then present on it to prove that you understood it, well I’m sure your probably feeling overwhelmed right now too.

That’s what it is after all to most people. Ask them to read a 401K rollover document from their 401K provider and you might as well tell them to go rent a physics book from the library. Not only do they have no interest in reading on the topic. It’s also seen as so high level that you’re intimidated before you even start.

It’s a recipe for ….well for getting nowhere.

Continue reading 401k Rollover, The Fear

Goals: 2nd Trimester Review 2015

At some point  this trimester I realized I needed to focus my efforts. It’s not that it’s impossible to work on multiple things at once. It was more the fact that I needed to do a lot of learning. See sometimes you have all the foundational knowledge to accomplish something you just need to take up the challenge to push yourself farther, harder.

But that wasn’t the case for a lot of what I was trying to do. I didn’t have the background. So one task would split into several other smaller things that I needed to learn first. In essence my one goal might actually require me to jump 5 hurdles before even being able to address my goal.

I knew that on some level. That was part of the challenge of the goal. To learn something new. But I just didn’t gauge the amount of time I would need.

Not to mention these goals where made under different circumstances, chiefly me being on day shift.

So I had to reevaluate.

Being on 2nd shift has turned out to be extremely stress inducing.

So the key moving forward was Focus and Stress reduction. I knew I would feel like a failure if the end of the year came and I had not at least tried to achieve each and every one of my goals. So some just has to go.

I took comfort in knowing that even though I thought they were important they really weren’t relevant to the over all picture. Ruthless prioritization, am I right? So I crossed out all the following.

Changing tide, changing goals

  • Crossed out all of spirituality
  • Crossed out 2nd organized run
  • Crossed out Chinese
  • Crossed out class with Mr Roamer
  • Crossed out girls night with sister and mother.
  • Crossed out paying for my blog by AdSense
  • Crossed out job interviews
Picture of the goals I carry around in my planner. The one in my planner is actually all marked up.

Spiritual Awareness

  1. Attend 4 churches in a year( attend 4 times a month ) 1  2  3   4
  2. Write in  Journal, reflect 15 min what I am thankful for 1/wk (Total of 52)

I mentioned on my first review that this area was in trouble of being struck out. I decided that this wasn’t a main focus for me this year so it is officially crossed out. You won’t even see it in my year end wrap up.

Health

Warrior Dash in march. Tonya and I getting ready to get muddy...(that is not my real hair :) )
Warrior Dash in march. Tonya and I getting ready to get muddy…(and yes, I did give myself crazy hair and a smile to try and conceal my identity).  🙂

3.  Run two 5ks, 1 Jan-June and then 1 July-Dec.

I actually completed the first run in the first trimester review. I crossed out the 2nd so this one is complete and no longer on my plate.

Run: 100% complete 

4. Dance 1/ month @ home

Though this hasn’t been the rigorous dancing that will keep me in shape, Minnie Roamer enjoys dancing and I will dance with her often. As an exhaust 2nd shift mama I am in serious need of some endorphins. Dancing make me happy so I need to keep it up. Plus we also attended a wedding so got in extra dancing. ?

Dancing: 66% complete 

5.  Take 1 class (yoga, dance ???) With Mr. Roamer.  Crossed out

Languages

6. Read 1 book in Spanish.

7. Read 4 books this year.

I am really trying to also get my learning through books. I finished reading I Will Teach You To Be Rich (should I do a review?). I still need to finish 7 Habits of Highly Effective People (pg.144 of 340). Currently though I am  100% focused on Financial Samurai’s How to Engineer your Layoff. Because I’d like to leave my job and if I can do it profitably then why not.

Reading: 45 %, slightly behind

8. Chinese 2 characters/month  Crossed out not relevant to my current life trajectory.

Relationships 

Our June date. Dressed up to go out for sushi at our favorite place.
Our June date. Dressed up to go out for sushi at our favorite place.

9.1 date a month with each child.

With kids off of school I had lots of chances to spend one on one time together. I did a lot better this trimester.

Jr. Roamer time: 33%,  back on track with last 3 months in a row completed 

Minnie Roamer time: 50%, back on track

10. 1 date a month w/ Mr Roamer.

Mr. And I are actively dating. We even went on 2 this past month. I think for the most part we are also doing well with our spending. For our anniversary I put aside $300 to splurge. Even though we went to eat where we really wanted to (sushi) we probably spent only $60. Including getting some Cold Stone’s ice cream. ? I guess sushi is a lot cheaper for 2 then a family of four.

Dating husband: 66% complete, on track

11. Sister & mother 1 date/ 6 months  Crossed out, off my plate

12. Write in kids memory books.

I missed July and August. And there is no way to catch up because I can’t go back in time.

Memory book: 33% , missed months so can’t get 100%

Financial

This whole section is predominantly on auto pilot. The only one I need to actively worry about is earning side hustle. These goals also build on each previous month and I have the option to catch up. So I wanted to include some charts.

13.  Earn side hustle  $500

I am just not doing well here. I’ve had a few sales but nothing I am truly amazed by. I’ve made $172 extra.

Hustle: 34%, Behind,  need to up the hustle.

Hustle status

14.  Max out 401k ,18k/ person

Max out 401k on track to be done by Dec. I just need to make one adjustment in December and up it 1%

 

401K: 85% & 92% complete, on track

401k Status
401k Status

15. Save 30k for house($2500/month)

This was behind last trimester because we were funnelling our earnings into front loading the 401ks. Now though we are right on track.

House fund: 63% complete, On track

Home
Home

16. Both Max out IRA, 11 K total (New goal)

This is a soft goal. I just want to keep it up in our view to max it out if at all possible given our other 2  financial goals. The math is looking promising so I am adding it on.

IRA status

Blog

17.  Write  2 1 posts a week.

Crossed out my 2 post per week goal and put it at 1/ wk. Amusingly enough I’ve been posting twice a week consistently for a whole month. My  new weekly updates have really kept the writing juices flowing. And it gives you the reader a quick way to see what we are up to. Still I’m going to leave it at 1/month just in case I hit a metal block, I’ll force myself to write at least 1.

Posts: 62%, on track

18.  Add AdSense when hit 35 posts. Have blog pay for itself.

It’s added, but I couldn’t careless about earnings, focusing on content.

Adsense: Complete 

19.  Attend Fincon

This one is as good as in the bag. It’s September and plane, hotel, room is booked. Vacation is approved and I even found roommates. Horray! I would say this is on track to be done this month. FinCon here I come!

FinCon: Can I even score this?

Work

20. Reevaluate job in July

July came and I decided it made more sense to push through to the end of the year then to try and find a new nightshift position somewhere else.

21.  Hunt for new job / interview 3 times.

22. Get pay increase of 5% .

This is also 100% and in July I finally got my paychecks reflecting the 10% increase in pay due to shift differential. So that means I actually got gip on the raise but instead got a shift differential. Which means if I ever go back to days I would loose it. Still for me it has set a new baseline for what I can earn moving forward.

Pay increase: 100% complete

I have no more open tasks for work. But I have to add one more to prepare for what’s coming next.

23.  I have reading and hw for Engineering my layoff.

Now you might be thinking. What in the world was that. After all this is all you see for my goals here on the blog….

Goals as they appear on the blog
Goals as they appear on the blog

Well I wanted to really check in with all of them so that is why I referred back to the goals I presented to you in the new year. Now another reason I brought up the blog vs. my other goals is that here I include my travel goal.

Travel

24. 1 family trip 5+ days

We made it to Colorado and back. We spent time with family and it was great. But this year is also the year we do Christmas with Mr Roamer family. We have booked our flights. Yes! For closing out the year with Travel. We will bring in the new year in Michigan.

Travel: 100% complete and more to come!

So why am I sharing with you? Well like I said you all help to keep me accountable. My strengths are clearly saving. It was also helpful to recheck goals to see where they stack up and realign objectives. Which included striking some from the list. I went from 24 separate goals down to 18. Out of those 18, 5 are complete, 3 are on auto pilot. Which means just 10 to focus on each month.

Any pointers? How do you manage multiple goals at once? Let me know down below. Also do you do goal reviews let me know  I’d enjoy checking them out. Leave a Comment.

Signature

 

 

 

2014 Financial Goals Reviewed and Net Worth Revealed

FinancialTime to review our Financials. We were on track to reach our 3 financial goals.

  • Pay off all Student loans by July
  • Open MMA
  • Celebrate with a splurge activity for the family

As you can tell these are some measly goals. Is one of them really open up a new account ,in other word break up with my bank and take my funds earning less then .01% to a better place(Hey breaking up is hard, right?).

So at the start of 2014 we had over 35K of Debt. Some of that was student loan debt.

Student debt

Mr. Had finished paying off his the year before and so we had a talk to discuss what we would do with the newly available funds. We deferred them to my student loans.

With that plan I was all set up to finish paying off my loans in July however sometime in February, maybe March I discovered MMM and he open my eyes to the fact that I had money sitting around in a savings account earning less then .1% and I had loans earning up to 6%.  This in itself made me transfer around 4 grand into my loans.

I wasn’t worried about an emergency fund because those were my personal funds and Mr. and I had a combined emergency fund.

So with those tweaks I was able to pay them off at the end of April. Goal: Complete.

Open MMA Account

I did my research and did not find any Money Market Accounts which seemed desirable. What I did discover was high interest savings accounts. This goal is poorly worded, my goal was to put my money in a better vehicle. In the end I did just that. Complete.

Celebrate with a Splurge activity

By the time we paid off student loan debt. I was already changing my perspective I had budgeted about $500 for this. In the end I think we might of had some sort of dinner.  However no where near $500. In the end I Failed at this goal. Still I’m not bummed in fact I’m pretty proud about it.

The reason I was proud was because I found that I could put the money to better use. I found that I could be more aggressive financially, that led to some new goals

2014 goals new

Pay off Cars

After paying off all the student loans we moved to paying off the car loans. I wanted to pay mine off because it had a 2.99% interest rate, and again it just didn’t make sense to save money in a bank account yielding us less then that, when we had some thing charging us even more. So we funneled some of the money first to mine and then we discussed about Mr.’s car which had an even lower 1.99% interest rate. The car was very new so we still owed a lot on it. We could pay it aggressively with the money we had used for the student loans but we went a step further and chose to deplete our emergency fund down to 5K and use the rest to make a lump payment. Before doing this I ran multiple scenarios on my excel doc and showed Mr. That if we paid it off sooner. We would be able to get our emergency fund back up to 10K in a little over 2 months. So we moved forward with Mr. using some of his personal funds also. By July we had paid off both cars. Goal Complete.

Sadly we were dealt a poor hand right before Christmas and we are now waiting to pay an extra $1000 for the insurance deductible.

Save 50% of Income, Increase 401K to 20%

I guess this depends how you calculate it. Also these last ones are getting into the realm of double dipping.  To max out our 401K last year we had to invest over 20% of our income. Goal Complete.That percentage plus the amount we used to rebuild our emergency fund, plus the amount we used for debt repayment, amounted to more then 50% of our income. By that calculation, Goal Complete.

Open Peer to peer lending account

I did not open the account. Goal Fail.  What I did do was open my own IRA and transfer the rest of my personal money into it. Mr. Roamer also opened an IRA.  Again not too bummed as money was still moved to a better vehicle then my brick and mortar bank.

Earn side hustle of $250

This year I embarked in some side hustle. As a whole I didn’t do so well. I had some good returns on my time investment and some not so good returns. For example the over 4 hrs spent at a yard sale was really bad ROI. Earning extra income was no easy task. Selling items I made an extra $98. So I didn’t meet the goal….

Unless you count the raise I got!

In November I was able to switch positions and increase my salary. It breaks down to $400 more a month, which started in Dec. All in all I brought in $498  extra in 2014.

Mr. Roamer also hustled in the sense that he maximized spending for the best return on his money. That meant switching all his spending from Chase to Discover to take advantage of a cash back offer. By doing this he earned a cool $100 and he didn’t even have to do any extra work. Just switch which card he used for a month or 2. So I’m going to say Goal. Complete.

The Big Net Worth Reveal

Finally what you have all been waiting for. Given our aggressive moves in 2014 our Financials have taken a nice climb upward.As you can see in the chart we achieved 100% debt freedom.

 Net Worth
Net worth of The Roamer and Mr. Roamer as of Jan 3 2015

Since we are following Mad Fientist advice and front loading our 401Ks we expect to break 6 digits sometime after march. I’m excited!

How are all these funds broken down?

401K The Roamer-  $39,131.62

401K Mr. Roamer-  $19,356.18 (First year investing)

Barclay Savings Account (Cash)- $19,332.39

IRA Mr. Roamer- $4,179.67

IRA Roamer – $3,872.54

Assets Chart 010315

So we have 22% in cash and the rest (78%) in stock/bond investments. The cash is our Emergency fund but it is doing double duty. This number is just going to keep growing as we start to save to buy a house so for the next year I see us just increasing our cash holdings. Which is why it was so important for us to have it in the best savings account possible.

Little Roamer son’s net worth

When my son hit about 5, I told him that he would have to save 50% of any money got/ made and the rest he could spend. We didn’t do a very good job with being consistent in the beginning, but still he has accumulated $255.61. I also make it a point to open his online account to show him how much interest he’s earning.

Little Roamer daughter’s net worth

Currently baby girl has no net worth we use all her gift money to buy the necessities. Read diapers and wipes.

If you enjoyed reading my Net worth check out the FI blogger’s Net Worth Tracker @ Rockstar Finance

The Roamer

* I am super glad to finally be done with all my 2014 wrap ups.

401K I like you more then Presents

A bit a ago I wrote this article about the 401k and how we would use it.

I think it wasn’t super clear so let me paraphrase.

I talked about how I had an ah ha moment, that I didn’t have to wait until next year to max out my 401k, that I could do it now.  For this year!

Well at the end I said I would make the changes which I made.

Well Mr. Roamer then asked, I thought we were already maxing them out.

No sorry honey, like I mentioned in the previous post I had done the math for 12 months of contributions. Or I guess a rolling 12 months. But that’s not how taxes work so if we want to max it out for this year then we need to make some adjustments.

After, we calculated the new numbers. With those numbers we could guesstimate how much we were going to be bringing in for the following months. We couldn’t be sure since we didn’t know how much exactly would be taken out for taxes.

What was obvious was that since we only had a limited number of months it meant we had to set more aside all at once.

As things would have it December has turned out to be the month with the lowest take home  after the 401 K deduction.

1260.93 for her +1005.57 for him. We were only bringing in $2266.5.   Now this isn’t peanuts but as you can see this is very small amount of money.

If you break it down it works out to each of us earning a little over $7 per hour.

Extreme Goals call for Extreme Measures.

Fortunately since we have conquered our debt our monthly expenses have dropped substantially and are almost all covered by this. We keep a $500 cushion which will cover everything else.  And to top it all off I had much more success this month with side hustle. I was able to sell some baby clothes and made $60. Wohooo! Way better pay off then my yard sale experience.

Travelling wallet clothes
The Roamer makes $60 selling some baby clothes

So it really sounds like this is no big thing to us. WHY is it extreme at all?

Well I guess its extreme in context.

First off we are a family of 5 living in good old Southern California. That’s right SoCal and our so called cost of living.  We are saying that we will make it through a month just fine with funds that total $2826.5. Not only that I am saying that we will make it through the holidays just fine. December the month when most people increase spending will be the month we have the least amount to spend.

All because we want to meet a financial goal.

At the end of this month and end of year we will have accomplished another goal. We will have maxed out our 401ks*

Would you do that? I really want you to leave a comment and tell me what is the most extreme thing you’ve done to meet a goal?

How it’s safe for us

So I told you why its extreme, now I’m going to tell you why its a very calculated risk. Why really it’s even safe.

A long time ago we discovered and started practicing the, use last month’s funds for this months bills plan. Mr. Roamer gets paid once a month on the 15th and I get paid twice the 15th and the 30th. This means we also have a month cushion building as this month progresses. So in all truth it was November which was the lowest earning. However, that money just piled up until December rolled around and December is when we have to make it work.

Since we both make good pay it was a bit of a shock to see how little we brought in. I ran my numbers again just to be safe. I didn’t want to pull money out of our savings account. I’m looking forward to making it to the end of the month and seeing that we did fine and hopefully even save some.

* we will actually leave some dollars on the table due to everything being in percentages. I will lose out on $.71 and Mr will lose out on $46. If anybody out there can advise us I’m all for it. Can we over contribute and have them take out the exact 17500 or will we lose it because its over. This is what I’m concerned about and why we will lose some dollars to ensure we get what we can.

So working on this post prompted me to go see HR again to clarify. I mean I didn’t want to sacrifice $46.71 that could be funneled into my 401K. I was pleased to learn that the best thing to do when the amount you need to contribute is between percentages is to use the larger percentage. So over shoot.  Our HR personnel assured us that it would take out all the $$ that qualified and then everything else will show up on our paychecks. Well see how it all works out on pay day Dec 30.

So tell me what goals are you trying to reach? How extreme are you willing to go? Or as J money says how bad do you want it?

Why Didn’t I think of that?

Today I had an Ah-HA moment.
Honestly, it was a face palm moment and I really did think. Why in the world did I not think of that.

Lately I have been learning a lot about finances. I’ve been getting nice and friendly with the idea of investing, and dipping my toes into optimization. So understanding the purpose and usage of a 401K has been one of them. So we finally committed to maxing out our 401K’s every year. To do that we did the math and figured out what percentage of our paychecks we had to contribute to get there.

The Problem

When we started doing this calculation we were assuming a year of contributions. Which means how do we need to spread this out in a 12 month period.

Why was this a problem?

Well we were in July not January, This means we were ignoring all the potential of this year and saying “OK, lets just make sure next year we get the $17,500 into each of our 401K.” (making and awesome plan like that is not a problem)

BUT what about this year?

This year we started with lower percentages in our 401K and just recently scaled it up to the percent we need to max out.  We would have only contributed ~$13,382 and ~$9471 to our respective 401Ks. While this is a lot better then the national average it is not the maximum contribution.

These numbers leave about ~$12,000 on the table.

The Solution

So what to do next?

So I ran the numbers again (since I am the money managing being in the house) This time with the goal to max out the contributions allotted for this year, but still have enough paycheck to pay the bills for the next 4 months.

So the math looked something like this

Max contribution- $$ already contributed-$$ taken out for next paycheck= total left to contribute

$17,500- $6,969-$712=$9,819

Then divide that by the number of months left. Then divide by 2 since I get paid twice a month.

$9,819/4=$2,454/2=$1,227

This means that for every paycheck I need to be contributing $1,227 to get close to maxing out my 401K.

Well that’s all nice and dandy but my 401K works on percentages.

So now I just divide this by my paycheck gross.

$1,227/$2,299= .53 x 100=53%

So there you have it I need( and did ) up my contribution to 53% to make sure I capture as much of my tax saving 401K money as possible.

One thing you do need to think about is you do still need to leave enough money to cover all the other draws on your paycheck. For example your medical premium, taxes, FSA and such. Even adding all my other costs I will still be able to bring in a paycheck. So make sure you do that final check.

Maybe you won’t be able to max out your account this year, but if you find your self with more money because you have payed down your debts and are living more efficiently. Well I would definitely look into dropping more money into that 401K.

Another great reason to know how to do this little calculation is that if you are planning on leaving a job (for whatever reason) and don’t have another one to go to. Well you can still get all your $17,500 while you work you just do the math. Lets say I’m planning to quit work in June 2015. Well I can just divide $17,500 by 6(# of months) and then I’ll know how much I need to contribute each month so that I contribute the max.

 

Have you had any financial Ah-ha moments lately? Let me know maybe it will inspire me to have another.