Maximizing my 401K

It has been a lot of work and a long time coming but at my companies open election period every 6 months I have been increasing the amount deducted from my paycheck for my 401k. I am now 28 years old and have been contributing to my 401k since I was 21 and I regret not doing this when I first was able to contribute to my retirement account.

Although back then maximizing would have made it impossible to live, however, had I put at least the full amount my employer matched it would have been better than the measly 2% I started out with.

On July 1, 2010 I will make the final step from my current 10% to the maximum allowed which is 15%. This is a large jump and will reduce my take home pay by quite a bit, however, I have spent the past 12 months reducing my frivolous spending, adhering to a simple budget, and learning to live on less.

Looking back last year was the first year I began maximizing my Roth IRA, but if I could do it all over again beginning say at 25, when I started to make enough money to live on and contribute to retirement, I would have maximized my 401k first because of the huge tax advantages of reducing my adjusted gross income with pretax withdrawals as well as my companies matching. Although I regret not doing this earlier, live and learn and pass it on, I feel it is better late than never. I know lots of people who have 10 years on me who haven't yet maximized their retirement savings. My recommendation for everyone working is to take care of yourself first by paying yourself first. It can automatically happen with a 401k provided from your employer so why not invest the most towards a happy and perhaps wealthy retirement.

I have mentioned this tool before in previous posts however I will recommend it again as it is quite accurate as predicting payroll adjustments and how they affect take home pay.

How Will Payroll Adjustments Affect my Take Home Pay

Betting on the Bad Guys

Here is an article I read that was posted earlier this month I figure I would share. To me it makes a good bit of sense and provides a bit of humor as you read. It is really nothing more than food for thought, but it makes a great point of considering the companies you hate the most as good investments.

Always Bet on the Bad Guys.

The creator of Dilbert easily has me convinced and checking on how much I could have made had I invested in a few of the companies I hate back when I began to hate them. The hatred doesn't have to be blind hate, it could be jealousy of the addiction to their products or success with limited ethics or morals. Either way investing in companies you like is apparently riskier statistically according to this article than investing in companies you have no strong emotional tie. Think about it.

Increasing my Financial Knowledge with Personal Fincance Books

Here is a simple list of books I have read in order to guide my thought process on investing, retirement, and personal finances:

Grow Your Money!: 101 Easy Tips to Plan, Save, and Invest

The Ultimate Dividend Playbook: Income, Insight and Independence for Today's Investor

Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money--That the Poor and the Middle Class Do Not!

The Automatic Millionaire: A Powerful One-Step Plan to Live and Finish Rich

The Bogleheads' Guide to Investing

The Five Rules for Successful Stock Investing: Morningstar's Guide to Building Wealth and Winning in the Market

The Complete Personal Finance Handbook: A Step-by-Step Instructions to Take Control of Your Financial Future

Your Money Ratios: 8 Simple Tools for Financial Security


The list will continue to grow as I seek personal education and knowledge to help me take charge of my financial future.

Improving Health

What good is investing and saving money for the future if in the future it is all lost to medical bills and health expenses, or worse, not living long enough to enjoy it on account of poor health. I am an overweight desk job working individual and on top of that attending college after work eats up the rest of my free time outside of work. Exercise and eating properly is a luxury that I don't have the time for. I usually have coffee for breakfast and fast food for lunch, and by the time I get home at the end of the day even though I try to eat healthy for dinner I snack on junk food for the rest of the evening on account that I didn't eat enough during the day. This repetitive problem has left me overweight and drastically out of shape. As I have disciplined myself to save more and improve my personal finances, I have now decided that I need to improve my health by trying to loose some weight. I am still an incredibly healthy person who never gets sick, however, as the years go by I get more and more out of shape I fear that my blessings of good health are going to run out. Loosing weight in 2010 is going to become a higher priority for me.

Due to my problem with a lack of time how I loose weight creates a challenge. I need to try to fit in a proper breakfast, lunch, and dinner into my life without over eating. In the past I've tried various means to try to manage my time properly to include exercise and better eating habits with no success. At this point I have decided that I am going to use a simple managed system that will allow me to follow a weight loss program without thinking. Seeing how eating fast food for lunch alone costs me about $10 a day during the 5 day work week I have decided that I to try the Nutrisystem Flex 5 day program for a month at a daily cost of $9 per day for three meals. I am going to see if in 30 days I can loose any weight on the program while forcing myself to eat healthily including breakfast, lunch, and dinner.

Trying the Nutrisystem program will actually save me money every day and hopefully help me eat healthier by cutting out the large amounts of fast food that I eat. If I have any success during the first three weeks on Nutrisystem I will allow the program to automatically renew for a discount making the cost per day even less. Loosing weight would be great and the increased savings can allow me to increase the amount of money that I am saving.

Improving My Quest for Wealth early in 2010

"Spend less than you earn" a timeless statement that has been proven to be the simple way to get rich and attain wealth over time. But thinking of spending less than you earn means controls have to be put in place in order to reduce your spending. Although I did a good job of this in 2009 it proved to require a lot of focus and effort. I prefer to work smart, not hard. An easier way I am going to follow the lesson of spending less than I earn is to save a piece of every dollar I make. Out of all of my income I will take 15% of all income to savings and investments. This 15% does not include the automatic percentage deduction of my pretax work provided investment accounts such as my 401k and HSA. If I can save 15% of my take home income on top of my 401k retirement account and my Health Savings Account I think I will be well on my way to thoughtlessly spending less than I earn. After having saved 15% of what I earn I plan to enjoy the rest on enjoying a couple of beers while going out or buying a new gadget I want.

What I Think of Budgets

Everyone wants to get the most of their money, however, living by a strict budget can become a tedious and boring task that proves hard to commit to. The problem is in order to attain wealth it is a must that I seriously commit to my finances. Most budgets are too time consuming for me to upkeep and maintain. So for 2010 here is my solution to keeping up with your expenses in a budget like way and using the proper tools to keep track of my finances as if I was maintaining a proper budget spreadsheet in excel or some other program. I simply want the results of hardcore budgeting but in a much simpler way.

First, I keep track of your expenses by using Mint.com which is one of the personal finance tools mentioned in my blog: Personal Finance Tools and Informative Sites. Using a personal finance tracking site I am able to keep track of my expenses to the penny which is a necessary task when attaining wealth. Mint.com actually creates a very nice budget for me based on my spending history which is fantastic, but isn't necessarily a budget replacement. Second, instead of standard boring and tedious budgeting I have simplified the process. Instead of trying to contain my spending and money usage with a standard budget, instead I track every paycheck and every bill. I start with my weekly income from my paycheck and then list all of the bills that must be paid on that paycheck. I know the exact dates my bills are due and I know the exact dates that I am going to be paid and because I am a salary employee I know exactly how much my paycheck will be every week. I know how much spending money I will have available using simple subtraction of all my bills being paid from each paycheck, I also include in my bills my automatic payments to myself every week into various savings and investing accounts. From the leftover balance I treat it as if that is what I got paid and I splurge it on whatever I want. If I have any leftover at the end of the week it goes into next weeks play money adding up for extra frivolous spending that happens from time to time. I find it easier to know how much I will have available for spending weeks in advance. I find it much more satisfying to let this leftover cash burn a hole in my pocket when I want and not having to worry about sticking to complex budget or not saving enough. I simply don't care what I spend my money on, no restrictions to any areas of my spending other than the total amount I have available to spend. Technically this may still be a budget, but it just seems simpler and less time consuming to me.

My First Semester Back in College After 7 Years

One word describes my acceptance of a challenge I made to my self to go back to school: Success. My plan to attain my a Bachelors of Applied Arts and Sciences in order to further my education, knowledge, and improve myself is well in progress. I have officially completed my first semester back in school and will soon begin my next semester and the feeling of success from hard work and determination is great. I used to hate school when I was younger, but now I actually enjoy the challenge and knowledge I am receiving. Although getting my Bachelors will probably not warrant any increase in pay or promotion with my current employer it will improve my work and overall mood towards life. Succeeding at completing my goals provides me with a great feeling inside, and to me providing better work to my employer and feeling more successful overall is worth the cost of college. During the 2001 and 2002 recession I chose to enter the work force after completing an Associates in my field of interest instead of following through to complete my Bachelors. I did this on account of I had already attained a professional job in the downed market where others were being laid off and struggling to find work. I am now pushing 10 years of professional experience with an Associates Degree related to my field of employment, and I am now pushing to complete a General Bachelors which I feel will allow me to study a broader field of subjects and avoid the focused subject path that a specified Major and my Technical Degree offer. Instead of specializing I want to broaden my skill set to open up future possibilities that could benefit from my growing experience and my soon to be had proper education. I was happy with my Associates until the recession of 2008 started and I began to see the lay offs in my field. I saw people suffer on both sides of the education/experience spectrum unemployed for over a year trying to find work. I witnessed employers lay off those that I know with minimal education and lots of experience as well as those with minimal experience but lots of education. I don't want to experience that problem in the next recession especially if it doesn't happen until I'm much older and more reliant on steady income. The completion of my Bachelors will greatly increase my marketability in any possible future downed markets where employers want the most bang for their buck out of every employee.