PF Under 30

Paying off debt and finding my financial lifestyle

Archive for category 401(K)

My Voluntary Deductions

Nov 2

Posted by kiki in 401(K), Insurance | No Comments

Since I just got a new job that has a company HSA (Jumping for Joy!), I thought I would take the time to show you how cool they are, and how much it’s made a difference to my bottom line.

Here it goes:

  Deductions
per year		 You Pay
per deduction		 Employer Pays
per deduction
Medical
Anthem Blue Cross And Blue Shield: Lumenos High Deductible HSA Opt5
Coverage: Yourself and Your Spouse.
Coverage effective beginning 11/01/2009
Family members covered: The BF		 24x $70.36
($1,688.76 per year)		 $211.10
($5,066.40 per year)
Dental
Guardian Life Ins Co Of America: Guardian Dental
Coverage: Yourself and Your Spouse.
Coverage effective beginning 11/01/2009
Family members covered: The BF		 24x $10.00
($240.00 per year)		 $10.74
($257.76 per year)
Life
The Hartford: Supplemental Life and AD&D
Coverage: $150,000.00 (+ $350,000.00 contingent on insurance company’s approval).
Coverage effective beginning 11/01/2009
Beneficiaries: My Living Trust (Primary, 100.00%).  
24x $25.00
($600.00 per year)		 $0.00
($0.00 per year)
Spouse Life
The Hartford: Spouse Life
Coverage: $75,000.00 (+ $175,000.00 contingent on insurance company’s approval).
Coverage effective beginning 11/01/2009
Family members covered: The BF		 24x $8.75
($210.00 per year)		 $0.00
($0.00 per year)
STD
The Hartford: Short Term Disability
Coverage: 60.0% of salary to a maximum of $1,000.00 per week.
Coverage effective beginning 11/01/2009		 24x $0.00
($0.00 per year)		 $8.31
($199.44 per year)

Yeah, Medical and Dental for the 2 of us is $160/month. What we had before was $329 a month with no dental and the equivalent of a $10,000 deductable for two. Now its a $4000 deductable for two. And they give us $2400 per year into our HSA account.

Assuming we get approved for the increased amount, Life Insurance is an additional $68 per month, which includes $500K more for me and $250K more for the BF. This will meet my 2009 goal of 1M in Life Insurance and move his up to $750K. Neither of us are up for a physical this year, and the fact that he could get life insurance at my younger age bracket sort of made it a no brainer.

I will also be having a 4% 401K contribution with a 100% match by my employer. This will increase once I reach baby step #4, but until then, I’m only doing enough to get the maximum match.

That’s it for me…. definately lots of deductions, but all worthwhile given the great HSA benefits and the fact that I can cover the BF as a “domestic partner.” We’ve never felt so lucky to be “domestic partners.”

7 Money Mistakes to Avoid

May 21

Posted by kiki in 401(K), Credit and Debt | 1 Comment

I found this on USAA.com some time ago, and continue reading it repeatedly. We all have done (or are still doing) at least one of these things. This list is really a goal checklist for me and my financial freedom. Hopefully, one day I will have every single of these things in the “Already taken care of” pile.

Seven Money Mistakes to Avoid

Posted: 09/01/2007

 

1. Piling Up Debt

Using credit cards responsibly can help you build good credit so you qualify for lower interest rates on loans. But charging your cards to the max and not paying them off is a sure ticket to trouble. Pay in cash instead to keep spending within your means.

2. Ignoring Murphy’s Law

Bad luck would have it that you’re involved in an accident the day after yourauto insurance policy expires. If that happens to you, the financial fallout can be devastating. Be sure you stay fully covered with auto, homeowners (or renters), health care and disability insurance at all times. And if someone else depends on your income, include life insurance.

3. Procrastinating on Saving

In the world of investing, time can be your best friend. Thanks to the power of compound earnings, your chances of achieving financial independence shoot up dramatically when you start at a young age. By waiting even just a few years, you make it much harder to meet the same goal. So find a way to start today.

4. Missing the Match

If your employer offers a 401(k) plan with a company match, make sure you take full advantage of it. Simply put, a company match pays you. If you’re not contributing enough on your own to get the full match, you’re giving away free money.

5. Not Using Cruise Control

Basing your investments on what you have left over at the end of the month will get you nowhere fast. Instead, set up an automatic plan that takes money out of every paycheck. You’ll probably never miss the dollars you don’t see.

6. Co-Signing for Loans

Next time a friend or family member asks you to vouch for them on a loan, politely run the other way. When a bank requires a co-signer, it’s because the person applying has no credible history of paying debts on time. If the person who received the loan is late on payments or simply doesn’t pay up, you’ll be responsible. And it could damage your credit.

7. Driving Upside Down

Let’s say you buy an expensive new car and finance it for five years. Since new cars depreciate quickly, after a short time you may owe more on the loan than the car is worth — being “upside-down” on the loan. To get the most for your money, put at least 20% down or, better yet, buy used and drive it till it dies.

  1. Is my #1 Problem (and my #1 Priority right now.)
  2. Life, health, homeowners, and car are all HANDLED! Point!
  3. I consider this non-retirement savings – which I have about $530 to my name right now. This is my next priority after #1.
  4. Always been a problem. Of course, that would require the companies I work for to actually match me. Costco did, but I wasn’t vested when I left so I lost the $500.
  5. I am very automatic w/ my debt reduction. Until the AMEX is paid off though, I’ve suspended my Auto – Roth IRA contributions.
  6. Covered! I would never co-sign a loan! Point!
  7. Doubt I am driving upside down on my car. However, next time I’m taking out zero loans any buying a car with CASH! (Sorry, USAA. Just don’t like that “car payment” feeling.) Point!
I’m good with less than half the items on this list. Where do you stand?

Company 401(K) – why I WON’T be contributing

Nov 27

Posted by kiki in 401(K) | No Comments

So upon reading all the paperwork that came in the mail for new hires, I found out that my new company offers a 401(K) after 6 months of service – and they match 30 cents to the dollar, up to 10% of your income. Cool right? Wrong!Just got an email from HR today on the 401K thing – they moved it up to 30 days of service, not 6 months. Cool right? Wrong!The 401K administrator is a crappy no-name company. They have crappy funds too. Also, employer match is on a vesting schedule. After a whole year with the company, they’ll let you keep 20%. LAME! Mind you, I work for an OK company that provides services to a very cool company. I am on site at the very cool company as a contractor/vendor. I fully intend to go permanent with the ultra-cool company instead.Anyway, on top of that nonsense – I also have other priorities. I need to contribute $5000 automatically next year to my Roth IRA. I also still need to contribute the $4000 to my Roth for 2007 – a goal that I set back in January. The gist is, my retirement egg will still be attended to.On top of that, I need to build up an E-fund, pay down CC debt and contribute an extra $100 per month to my mortgage principal. Very hefty goals for 2008 but very doable considering the recent change in living arrangements.Stay tuned for further updates…..

Cashing out $9K 401(K) would cost me $415,000

Oct 19

Posted by kiki in 401(K), Credit Scores, Credit and Debt | No Comments

I was considering cashing out my modest 401(K) rollover to put exclusively toward credit card debt (10% APR or less) when I decided to jump online and check out just how much it would cost me in the long run.

According to my nifty Excel calculator, if I left that money alone and never contributed another penny to it, at a 10% rate of return I would have approx $415,000 at retirement. At a 12% rate of return, it would be around $858,000.

I guess that’s not a good tradeoff for paying off around $7,000 of debt now (that would be the after tax takeaway.) And especially since it’s borrowing at around 4% APR or less. Still, it is pushing down my credit score because of the debt to credit ratio and I would really like to get rid of it.

So, if I can’t use that money, the next bet is to Sell Car Sell!

Will find a way to post the Excel Calculator as soon as I can. Not sure where I got it from, but it is very useful, and simple too.

Savings and Retirement: Set It and Forget it!

Aug 15

Posted by kiki in 401(K), CC Debt Progress, Emergency Fund, Roth IRAs | 1 Comment

So with my newfound knowlege about Emergency Funds since being laid off, I’ve already come up with a new plan on what to do with my next paycheck (as soon as I figure out where that is.)

First of all, let’s talk about what I was doing wrong. As I said earlier this year, my goals were Roth contributions, debt reduction, credit score increase, and bill consolidation.

As of the last post before I lost my job I was putting in 10% to my 401(K), contributing nothing to my Roth or Emergency Fund, paying extra on my mortgage, being agressive on my car payment, and putting the remaining $150 I had toward paying down a credit card that had a 0% APR.

HELLO!

  1. I was fighting wars on too many fronts at the same time. (401K, credit cards, car payment, mortgage)
  2. I wasn’t even being smart as to what I was fighting on.

So with my next paycheck – here is how I am setting it up.

  1. Claim 7 on my W-4s. I was only claiming 3 last time. According to the Kiplinger’s calculator, this was way too low.
  2. $192 a paycheck into my Vanguard Roth IRA. This will be the same amount I put in for 2008. 26 equal payments equals maxing out the Roth. (Will need to make some catch up contributions for 2007, but I have until April 15th, 2008 to do that.)
  3. $250 per paycheck into my E-fund. This will take me roughly 20 months to complete to get to the $10,000 I need for 3 months living expenses, but I really need to do it.
  4. Car payment: now $377 spread over 48 months. This I will pay the minimum for now.
  5. House payment: pay the minimum.
  6. Credit Cards: pay minimum on Citi Diamond and Costco Amex. Agressively pay down Gold Amex. (Dell is now at $0)

This program will all be accelerated once I sell the Civic (wiping out the Gold Amex.) It will also get a big kick start when we get rid of the apartment at the end of September, probably freeing up over $600 of my monthly income. This would be a nice extra MONTHLY kick into the Emergency Fund.

Amex Gold Debt. E-fund. Roth. In that order. Everything else is secondary.

Ready, set, GO!