401(a-oK)!

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Apart from doing my taxes, my favorite thing about this time of year is the smug and self-congratulatory feeling I get from maxing out my 401(k). No doubt I am a little nutty about retirement savings, and I feel very lucky and grateful to be in a position where I (1) have a 401(k) and (2) have the ability and wherewithal to max it out.

To be sure I don’t take that luck and gratitude for granted, I take it to a bit of an extreme. I make a point to max out my 401(k) as early in the year as possible, a habit I started when I began my “real” (cough cough) career in 2007. At that time, my employer would allow contributions of up to 50% of my paycheck, so that’s what I did. My current employer does not cap contributions, so I’ve opted to contribute 100% of any bonuses and 50% of my salary.

Whaaaaa? Why do I do this?

  • I’m impatient. This way I’m done with my 401(k) contributions by summer, so I can rest easy by the lake.
  • I’m greedy (when it comes to savings). Contributing such a high percentage of my income forces me into a greater than 50% savings rate, a habit I (mostly) maintain even once I’m done so that I can keep barreling towards FIRE.
  • I like getting a 50% raise several months into the year, every single year. Ok, it’s not a raise, exactly, but having a little more cash on hand for the rest of the year can come in handy. I don’t increase my day-to-day spending after my 401(k) contributions are done, but it’s nice to have a cushion for summer home improvement projects and travel.
  • I believe in investing early. To put it eloquently, markets go up over time, so the more time your money has to go up, the more up it goes. There are different philosophies about investing lump sums at once v. dollar-cost-averaging (investing the same amount over a longer period of time to average-out market fluctuations) and there is no question both methods work well. I dollar-cost-average my non-retirement investments by automatically investing a certain amount with every paycheck (an amount that goes up once my 401(k) is done!), but for long-term retirement savings, the earlier in the better. (If in doubt, check out this calculator.)
  • I can put my FU money to use guilt-free. On days when I’m feeling like I should just walk away from my job, one thought that holds me back is failing to take advantage of my great 401(k) plan. If I can max it out early in the year, that restriction evaporates into several months of potential no-strings-attached freedom.

So what’s the first thing I do when I’m done with my 401(k)? Max out my Roth IRA, which I’m pretty sure stands for I’m Really Anxious about retirement.

Capsule Re-Cap(sule): How my New Wardrobe is Going

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It’s been about four months since I started my capsule wardrobe experiment. I’ve gotten a lot of questions, such as how do I decide what clothes to keep? How do I decide what new clothes to buy? Don’t I get bored? Happily, there are an equal number of questions I have not asked myself over the last few months, such as what should I wear today? How do I have so much stuff in my closet yet nothing to wear? Where the @%$# are my favorite pants?

Based on this last bit if nothing else, I am calling the capsule experiment a tremendous success.  Continue reading Capsule Re-Cap(sule): How my New Wardrobe is Going

Frugality in Beast Mode

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As an aspiring professional athlete,* one of my favorite kinds of stories is the kind of story about professional athletes who do amazing things with all their professional athlete money. Amazing things like completely ignoring it.

Last year, my favorite story was about Daniel Norris, an MLB (that’s baseball, goofball) pitcher who lives in a van. A van!

This year, hands down, the best thing to come out of the NFL (football!) is from my neck of the woods, now retired and truly FIREd** Seahawk Marshawn Lynch. Apparently he never spent any of his NFL salary and instead lived off side gigs like product endorsements and saved money through standard frugal favorites like avoiding fines by performing at press conferences.

So now he’s retiring at age 29 with a cool $50 million in the bank. Assuming a conservative 4% withdrawal rate, that leaves him $2 million per year to live on without ever touching his principal or earning another penny. That’s a lot of Skittles!

I’m hoping to do something similar, though maybe on a smaller scale (?). Just as soon as my product endorsement checks start rolling in . . .

 

 

*I am not an aspiring professional athlete.

**FIRE = Financially Independent / Retired Early. Not “fired” as in terminated from employment. Duh. Nobody would fire Marshawn! Sad to see him go, but I support his decision 12,000% and wish him nothing but the best. And I really hope he reads this post.

Who Ate My Pie? January Spending Roundup

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The beauty of spending a month not leaving my house is that I am not tempted into buying things I don’t need . . . the flipside is I discover all sorts of things I never knew I needed.

  • Amazon — light bulbs for kitchen, special kind for can lights that won’t melt the fixtures (learned this one from experience, ha?) — 24.99
  • Rite Aid & Amazon Prime Now (as in RIGHT NOW — I scoffed, but so useful in an urgency) — surgery stuff — bandaids, gauze, ice packs, etc. — 78.49
  • Amazon — half a Pandemic board game, shared with Sweetie Pie — 13
  • Bartells — shampoo & makeup — 32.42
  • Shell — gas — 29.65
  • Aveda — more shampoo; after horrifying/itchifying skin rash from the last attempt, I’m giving up on the cheap stuff — 43.84
  • Wayfair — two small rugs and non-slip pads, following the heartbreaking observation that Cheddar Pup’s aging hips really can’t handle the slipperiness any exposed wood floors these days — 70.92

Total: $271.78

So long 2015, Onward and Onward to 2016!

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Ever since I was a kid I’ve been very goal oriented and weirdly motivated by the endorphin rush that comes from checking something off my to do list. So it should come as no surprise I enjoy this time of year — reflecting back on what goals I accomplished the past year, kicking myself with a few face punches (metaphorical) for the ones I didn’t, and looking ahead and making lots and lots of lists for the coming year.

2015 was a mixed year for me, though I would say I leave it with a sense of generally pretty spectacularly amazeballs awesome — overall, financially, it was a very solid year, though not without some important lessons. Personally, it couldn’t have been better — Sweetie Pie moved closer to me after being in a different city for two years; I traveled a lot and saw many, many old friends; I started to feel like my house is becoming my home; and I started exploring all sorts of new pursuits outside of work (like this blog!), and somehow managed to achieve some balance of not feeling perpetually “busy” (I chalk that one up to good old fashioned gratitude!). Professionally, however, last year was a disappointment — I had some tough days at work and have been embroiled in some deep soul searching about where I might want to go next, how to get there, and the best recipe for lemonade in the meantime.

In terms of my specific goals, here’s the rundown: Continue reading So long 2015, Onward and Onward to 2016!