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.

Taxes Hackses 101

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One of my (many) pet peeves of the modern era is the evolution of the word “hack” from meaning what you do with a dull axe (OK), to then meaning trying to break into a computer (OK), to, now meaning any and every kind of “amazing” tip or trick or — often — just the way something is designed to be used (not OK). I came across this recently in a blog post about “ceiling fan hacks,” which included the suggestion of adjusting the direction of the fan to blow up in winter and down in summer to save energy and money. Umm . . .  that’s great, but that’s not a “hack,” it’s just how ceiling fans work.

So, I’m sorry (not sorry) to say it, but this post is not about hacking your taxes. There is no way to “hack” your taxes. You just have to do your taxes . . . sorry (not sorry). But ’tis the season, and there are some tried and true tips that I keep in mind to make the tax-reporting and paying process less painful: Continue reading Taxes Hackses 101

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.

I’m back!

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I can’t believe it’s been a month since my last post! Time to declare failure on the ole “publish once a week” goal for 2016 … ha! Oh well. I feel A-OK about this.

I had high hopes that my recovery and attendant absence from work would entail lots of activity on the personal front. Alas, and I’m sure not surprisingly to any of you who have been through something similar, no. I’m not sure what I’ve even been doing, but it’s like being in a weird time warp where the days slowly stack on top of each other like a house of cards and then suddenly all disappear at once. I’ve been working remotely the last couple of weeks, which has been great for turning the brain back on, but it’s meant than any other entertainment has gone out the window — I haven’t even binge-watched a new favorite tv show, so I have no new favorite tv shows to show from this experience . . . and that’s fine.

One interesting/not-interesting thing that happened over the last few weeks is that I completely lost interest in, well, pretty much everything. When I paid my monthly $4 hosting fee for this blog, I actually thought seriously about just throwing my hands up and saying poops it all, why bother, this is dumb, I should just quit, I do not need to be spending $4/month on something I don’t even want to do when I have nothing to do . . . thankfully, I didn’t quit, paid the bill, and here I am back at it again.

Over the last six months I’ve been here, I have generally enjoyed having this blog as an outlet/journal/dump for my thoughts and as a way to keep me accountable to myself and my financial goals. I have realized, though, that it doesn’t need to be work and I don’t need to force it. If I need to take a month off, that’s ok, because I’m only doing this for me anyway, and the beauty of that is that I can do whatever the hoot I want with my time and energy — just like, say, the whole point of this FIRE (financially independent + retiring early) idea that I’m here for anyway . . . funny how that works!

So, yay, here I am. January financials and a couple of book reviews coming soon. I guess I haven’t been completely idle . . .

 

FTPH: Holiday Gratitude

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Dear Cheddar,

Don’t you just hate winter? It’s cold and dark and the holidays are the WORST. I hate spending so much money and my family drives me crazy!

Everyone Else

Dear Everyone,

Au contraire, my friend, I love this time of year — here in the Northwest, it’s cold, rainy, wet, and glorious. From Halloween to New Year’s Day, I get such a warm and cozy feeling from the food, the cheer, and spending time with people I love. Sure, there are occasional holiday stresses, but for the most part, I’ve found a good balance of being able to make time for myself, celebrate with loved ones in ways that don’t feel forced, and frugalize my gift giving in ways that don’t detract from the generous spirit of the season. I get along with my and Sweetie Pie’s families, find a strange amount of joy in decorating my Christmas tree, and love the extra snuggle time I get with Cheddar Pup. And there is nothing like a good cup of tea with a Youtube Yule Log.

I hope you all find similar warmth in your holiday celebrations wherever they may take you! Thanks for reading and for encouraging me to keep up with this blog. It’s been a fun year.

Love,

Cheddar