Showing posts with label automatic savings plan. Show all posts
Showing posts with label automatic savings plan. Show all posts
Monday, December 7, 2009
Investing in Mutual Funds in Health Savings Account
Having a high deductible health insurance plan and a health savings account has proven to be very beneficial to me thus far. I am a healthy individual and the greatest thing is that my health savings account (HSA), which my employer 100% price matches, is growing into a decent nest egg that will stay with me for my lifetime. Recently I have decided to take up the option to invest a portion of my HSA funds into a few mutual funds available to me. Out of about 15 available funds I carefully researched all of them and chose what I felt were 4 winners that were no load, having a great morningstar.com rating, and a prospectus that I found worthy of my money. I chose a minimal amount to maintain in my health savings account that was $1000 higher than the absolute minimum in order to make sure I can meet my high deductible should a medical emergency happen and also in order to help earn enough interest from the savings account to pay the $3 monthly fee. As my HSA savings account grows past my minimum balance the extra money will automatically be transferred into an investment account and then invested into the mutual funds by the percentages I set. Hopefully I will earn a great return in the long run by making the decision to invest the bulk of unused money into mutual funds from my HSA. With a large HSA nest egg in the future I will be able to use the funds to help me as I get older and my health begins to fade. As long as I have a high deductible health insurance plan I can contribute to an HSA. If I build up enough of a nest egg through the use of mutual funds and compound interest even if I can no longer contribute because I switched back to a traditional health insurance plan my HSA should continue to grow. In the future I will still be able to use the HSA funds tax free for medical expenses. It's best compared to an IRA but instead of retirement an HSA is for medical expenses. Although if I really needed to I could pull the money out to use it for non medical expenses or emergencies but I would be subject to taxes and other fees. I will later report how my mutual fund choices are working out and also update in the future my thoughts good or bad on having an HSA.
Monday, November 30, 2009
Failure is Always an Option, That is Why Success is so Good.
2009 is coming to an end and it's time to set some real goals for next year. Here is my list my personal finance accomplishments this year (2009) followed by my list of goals I plan to accomplish next year (2010). I have spent 2009 learning to save, paying off debt, and appreciating wealth. I made a lot of changes including the decision that I don't want to be poor living paycheck to paycheck, I want to own the things I have and not pretend like I do, as so many indebted Americans do. In my quest to attain wealth I did the following in 2009.
1. I increased my pretax 401k contributions from 1% to 5% taking advantage of my employers price matching of up to 4% of my contribution on July 1, 2009 at one of my company's two open enrollment periods.
2. I maximized my Health Savings Account pretax contributions taking full advantage of my company's 100% price match on January 1, 2009.
3. Over the course of the year I began to setup automatic savings plans for my Roth IRA, my Investment Account and multiple Online savings accounts. I started with one account at a time and increased how much I put more into savings and investments little by little.
4. I paid off my highest interest credit card as well as another credit card account, and implemented the practice of paying off any balance in full every billing cycle. I still have one last credit card with a balance that I am working on.
5. I made the decision to go back to school and have almost completed my first semester back in six years (Fall 2009). I am also shooting to get my moneys worth out of school as an adult. I have a few weeks left of school and am looking to finish this semester with great success. I am expecting a 4.0 GPA for this semester and I have high hopes to continue my success until I attain my Bachelors. Sacrificing free time and my personal life in order to study more is helping me to spend less because I can no longer go out and spend money regularly.
6. Although it hasn't been fulfilled, I did converse with my boss about a raise, and even though I did not and will not attain this in 2009, I have had very promising discussions with my employer the possibility of it in the future, sad to say it may not be near future, but through my discussions I received acknowledgment of my constant hard work and excellence at my job which at least was very rewarding even without a raise.
Below are my goals for the year 2010.
1. On January 1 my first Open Enrollment for my retirement plan at work I am going to increase my pretax 401k contribution from 5% to 10% of my pretax income taking more advantage of paying myself fist by saving more money before taxes.
2. Based on my 2009 automatic Roth IRA contributions I set up in the middle of the 2009, in 2010, I will Maximize my Roth IRA automatically with my automatic savings plan at Sharebuilder.com.
3. If possible, with any extra money and extra income I plan to maximize my 2009 Roth IRA contributions before the April 15th deadline.
4. I plan to further pursue a pay increase with my employer, especially if the economy starts to turn around. With our current economy my company is currently in a slump and that has a large effect on the freeze of pay increases.
5. At the second Open Enrollment for my retirement plan at work, July 1 2010, I plan to maximize my pretax 401k contributions to my company's max of 15% finally reaching my goal of truly paying myself first.
6. Finally I plan to come up with new ways to reduce my spending and still maintaining a lifestyle I can enjoy. I will continue to practice and develop good habits for saving, investing, and growing wealth.
Through the above goals I plan to increase my net worth, improve my savings and investments, make the most of my retirement accounts, and eliminate my leftover debt.
1. I increased my pretax 401k contributions from 1% to 5% taking advantage of my employers price matching of up to 4% of my contribution on July 1, 2009 at one of my company's two open enrollment periods.
2. I maximized my Health Savings Account pretax contributions taking full advantage of my company's 100% price match on January 1, 2009.
3. Over the course of the year I began to setup automatic savings plans for my Roth IRA, my Investment Account and multiple Online savings accounts. I started with one account at a time and increased how much I put more into savings and investments little by little.
4. I paid off my highest interest credit card as well as another credit card account, and implemented the practice of paying off any balance in full every billing cycle. I still have one last credit card with a balance that I am working on.
5. I made the decision to go back to school and have almost completed my first semester back in six years (Fall 2009). I am also shooting to get my moneys worth out of school as an adult. I have a few weeks left of school and am looking to finish this semester with great success. I am expecting a 4.0 GPA for this semester and I have high hopes to continue my success until I attain my Bachelors. Sacrificing free time and my personal life in order to study more is helping me to spend less because I can no longer go out and spend money regularly.
6. Although it hasn't been fulfilled, I did converse with my boss about a raise, and even though I did not and will not attain this in 2009, I have had very promising discussions with my employer the possibility of it in the future, sad to say it may not be near future, but through my discussions I received acknowledgment of my constant hard work and excellence at my job which at least was very rewarding even without a raise.
Below are my goals for the year 2010.
1. On January 1 my first Open Enrollment for my retirement plan at work I am going to increase my pretax 401k contribution from 5% to 10% of my pretax income taking more advantage of paying myself fist by saving more money before taxes.
2. Based on my 2009 automatic Roth IRA contributions I set up in the middle of the 2009, in 2010, I will Maximize my Roth IRA automatically with my automatic savings plan at Sharebuilder.com.
3. If possible, with any extra money and extra income I plan to maximize my 2009 Roth IRA contributions before the April 15th deadline.
4. I plan to further pursue a pay increase with my employer, especially if the economy starts to turn around. With our current economy my company is currently in a slump and that has a large effect on the freeze of pay increases.
5. At the second Open Enrollment for my retirement plan at work, July 1 2010, I plan to maximize my pretax 401k contributions to my company's max of 15% finally reaching my goal of truly paying myself first.
6. Finally I plan to come up with new ways to reduce my spending and still maintaining a lifestyle I can enjoy. I will continue to practice and develop good habits for saving, investing, and growing wealth.
Through the above goals I plan to increase my net worth, improve my savings and investments, make the most of my retirement accounts, and eliminate my leftover debt.
Friday, November 6, 2009
Automatic Savings Plan
Saving is difficult, paying yourself first is difficult, and spending less than you earn is difficult, however, I have found the easiest way to trick myself into saving more. I simply force myself to have less money available for spending automatically. Through the use of automatic savings plans set up at multiple online savings accounts and even my investment accounts I am able to pay myself first every Friday after I get paid. My direct deposit happens on Thursday so the money is available for my savings plans to take the money from me first thing Friday morning before I even know it's there. By the time I check to see how much money I have in my checking account that money is on its way to a savings account that I do not have immediate access to.
Out of site out of mind. Online savings accounts are great because they keep the money where I can not quickly access it which helps to prevent impulse buying because "there is no cash burning a hole in my pocket". Reducing the amount of money in my checking account immediately means that I don't miss it. It simplifies saving because I don't have to do anything. This forces me to simply learn to live on what is leftover. My current goal is to slowly increase the weekly amounts I put into my online savings accounts via automatic transfers after I have learned to live accordingly on the lesser amounts. Care must be taken not to go overboard reducing the means I live on to much too soon. The changes should be done gradually starting small, the goal is to reduce my means an saving the difference not burden my life. With the knowledge of living on less I will be ready properly handle money should I get a pay raise or a bonus. Instead of just spending the extra money I will easily be able to add it to my savings and never miss it.
It is a dilemma to make more money with poor spending and money habits, I am guilty of that myself. Far to often earning more money means spending more money, but automatic savings plans are a great way to save and to teach yourself that you can live on less. I only wish I learned this lesson earlier in my life.
Out of site out of mind. Online savings accounts are great because they keep the money where I can not quickly access it which helps to prevent impulse buying because "there is no cash burning a hole in my pocket". Reducing the amount of money in my checking account immediately means that I don't miss it. It simplifies saving because I don't have to do anything. This forces me to simply learn to live on what is leftover. My current goal is to slowly increase the weekly amounts I put into my online savings accounts via automatic transfers after I have learned to live accordingly on the lesser amounts. Care must be taken not to go overboard reducing the means I live on to much too soon. The changes should be done gradually starting small, the goal is to reduce my means an saving the difference not burden my life. With the knowledge of living on less I will be ready properly handle money should I get a pay raise or a bonus. Instead of just spending the extra money I will easily be able to add it to my savings and never miss it.
It is a dilemma to make more money with poor spending and money habits, I am guilty of that myself. Far to often earning more money means spending more money, but automatic savings plans are a great way to save and to teach yourself that you can live on less. I only wish I learned this lesson earlier in my life.
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