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401K Decisions and other Tidbits

November 21st, 2014 at 02:40 pm

I've decided not to make any changes to my 401k contribution percentage next year. The deciding factor is my marginal tax rate. The tax savings make it worthwhile to continue to contribute the maximum my plan allows even though my investment options could be better.

I'm still able to max my IRA contributions. (If I weren't I'd put less in the 401k and prioritize the IRAs.)

I'm also not making any changes to my 401k investment choices. I'm glad that the decisions have been made and I can stop thinking about them.

I went ahead and rebalanced my account; it was unbalanced by only 1% (had already rebalanced once earlier in the year) but since I was already poking around in it and it's as easy as a couple computer clicks, I just went ahead.

In other financial news, I finally found a bank bonus deal worth pursuing (they have been few and far between this year). Found it on the ever-reliable DepositAccounts.com web site.

And we're all set for our final weekend getaway of the year! I've already "warned" DH that I plan to treat myself to a bottle of beer when we go out for dinner ... A treat I have been looking forward to as I plowed through my most recent work assignment. Smile Even with that splurge, I'm pretty sure we will come in under our vacation budget for the year.

I really need to change my sub-category and stop calling it "Intelligent"(???) Investing because there's no reason to apologize for our conservative investing style. It works for us, we are ahead of schedule with our retirement savings, the funds are there to finance DH's dream if he decides to pursue it, and perhaps most important we don't shift course depending on the way the financial winds are blowing. We have a strategy that allows us to "stay on target ... stay on target" (that's for my fellow Star Wars fans).

P.S. - I think I forgot to mention that awhile back DH gave me the go-ahead to purchase an additional bit of Series EE Savings Bonds. A friend approached us about doing a private mortgage for a home he was purchasing; while we decided not to do the mortgage in the course of the conversation I asked DH why he would consider a 30-year mortgage but say that holding a bond for 20 years was "too long." Also, I think that he is feeling much more optimistic about his life expectancy since he had the minor medical procedure. Silly guy.

Open Enrollment Season

November 11th, 2014 at 08:17 pm

My out-of-pocket (well, actually it's out-of-paycheck) for medical/dental/vision insurance for DH & I will increase 6.5% in 2015, which is right in the ballpark of what I was expecting.

I have not yet decided if I am going to adjust my 401K contribution, but I will probably keep it unchanged. While I'm not thrilled with my investment options within the 401K, I already max out IRA savings so a reduction in 401K contributions would mean more post-tax savings. The tax savings is probably enough to stay the course with the 401K ...

P.S. - Oh my goodness, I have read and listened to so many books since I last updated my sidebar!

Today's Financial Doings

August 6th, 2013 at 05:56 pm

Purchased some EE Savings Bonds from Treasury Direct after checking WHO Life Expectancy Tables and assuring DH that the statistical odds are that we BOTH will still be here in 20 years. Big Grin (EE Savings Bonds are currently paying interest at the paltry rate of 0.20% but they are guaranteed to double if you hold for 20 years. That doubling translates to 3.50%. Doesn't make much sense to buy if you won't be around in 20 years.)

DH suggested that we go out to lunch which was a nice surprise. We eat out from time to time, but it's infrequent enough that it's a treat. When we do eat out, it's for brunch, lunch, an early bird special, or with some sort of coupon type deal.

We followed lunch with a shopping excursion looking for bargain-priced gifts to bring on our overseas trip next month ... the number of DH's relatives who plan to join the family gatherings when we go to his native country is growing by leaps and bounds, and because gift-giving is a critical part of the culture, we need to buy lots and lots and LOTS of gifts. It was a pretty successful excursion; there are still many more gifts to buy, but we got a really good start.

Minor Investment Shifts

April 10th, 2013 at 06:50 pm

Had the day off today so did a little financial housekeeping:

- Issued a purchase order for I-Bonds through Treasury Direct (had to transfer funds to my linked bank account first).

- Made a minor adjustment to the allocations on my 401K. Shifted to a very slightly more conservative mix.* (A few days ago I had done the same with my IRA accounts at Vanguard.)

*I'm really not happy with the investment choices in my 401K. I've been contemplating doing something kind of crazy and writing to the Committee within the company that Administers the Plan and let them know how I feel. My number one complaint is the lack of transparency in the Stable Value Fund. How can I as a plan member know if the "safe haven" offering really is safe? I don't expect the Committee to actually listen to what one lowly employee has to say, but I just may write to them anyway. Crazy, right?

This 'n That

January 25th, 2011 at 09:00 pm

1. Tax-Deferred Retirement Savings: Finally moved from Wellsley Income to a mix of Target Retirement 2005 & Target Retirement 2010 (all Vanguard funds). It means I am now invested a bit more conservatively but more diversified, and expenses are a bit lower. Had been considering a move for months. I tend to chew on "big" decisions for what to some must seem like way too long time (plus I take the time to actually read the prospectuses), but once I make a decision I usually take action right away. I made my decision over the weekend and did my Exchange Order online, so the exchange was done yesterday. DH decided not to make a change for now, so we now have a little bit of a friendly competition going to see whose funds do better!

2. Work: The organization I volunteer with wants to hire me. If all works out, I would work for the non-profit part-time and continue working with my current employer part-time from home. If it doesn't work out it's OK because I'll just keep doing what I'm doing right now.

3. Mattress Cover: When I took our mattress cover off to wash it, the zipper "broke" (the pull tab came all the way off). I am NOT a seamstress. I have an old Singer, and I can sew more or less a straight line when I need to, but I rarely sew. I'm also not clever at all when it comes to mechanical things. But other than the zipper the mattress cover is in perfectly good shape, so I knew I had to try to figure out how to fix it. It took over an hour, it was not easy for me, and at one point I had to recruit DH for an extra pair of hands, but I did it! It's now fixed! It looks a little funny because I had to do something to make sure the zipper pull wouldn't come off again, so once I got the zipper teeth put back together and the tab back on, I pinned teeny safety pins at the ends, one on each side. It may not be pretty, but it works! Didn't have to buy a new one ... didn't have to take it to a repair shop ... Don't have to leave it unzipped (losing the anti-allergen effectiveness). It's ridiculous how proud I felt for being able to fix that zipper. DH was really happy too and gave me a big high-five. (He never would have been able to figure out how to fix it. I don't think he has ever held a needle in his hand.) It may be of interest to my fellow frugalites that the teeny safety pins I used came from sewing kits that I got in hotel rooms back in the day when I used to travel for business. Smile

4. Groupon: I signed up for Groupon months ago (last summer I think) but just recently made my first purchase. It was for $14 at the restaurant Which Wich and it cost $7. I redeemed it today for DH & I ... 2 sandwiches & a large shake that came to exactly the face value of $14 (yes, I planned my order so I wouldn't go over the $14). Usually the Groupons are for things we don't buy (spa treatments, expensive restaurants, etc) and while they do offer golf packages regularly they aren't that good of a deal so DH has passed on all of them. While we were happy with today's deal, I'm not sure if it's worth the time of getting a daily Email when there are so few offerings that we would use. Anyone else had better luck with Groupon?

Our Stock Trading Days are OVER!

December 13th, 2010 at 06:47 pm

Almost 2 years ago we opened a Schwab account. Since then, we've made a grand total of two stock trades (or four, depending on how you count them ... Twice we bought shares in a company, and then sold it).

Today I called & liquidated the account because my poor DH just couldn't stomach it. After we bought the stock, he'd sit there and watch the price constantly, and even after we sold it he would sit there and STILL watch the price, second-guessing the decision to sell.

Poor guy was a nervous wreck. It just wasn't worth it.

Once he practically screamed at me "How can you be so calm about this???" Well, the answer is that even if we had lost every penny we had put in to the stock we still would have been fine. It wasn't like we had bet the farm. And I knew that my getting excited about it wasn't going to change the price of the stock one bit.

When we sold the last stock, I told him that we either had to: 1) choose some dividend-paying stocks to buy & hold, or 2) cease buying individual stocks forever. He chose option 2. As soon as our last sale had settled, I made the phone call to Schwab and a check is on the way. The check will go in to our savings account, and we will continue with our plain-vanilla investments.

P.S. Since inquiring minds will want to know, no, we didn't lose money. (We made a little in fact.) That's not why we liquidated the account. It was purely for my DH's mental health.

Why I Bought My First Series EE Savings Bond

October 14th, 2010 at 03:23 pm

OK baselle, since you asked:

Did something recently that I never thought I would do ... I purchased a Series EE Savings Bond in my Treasury Direct account. Until recently, I've been able to find better options for cash not needed in the short term (such as CDs or High-Yielding MMAs). And although I own TIPS and used to buy Treasury Notes, it has been quite awhile since I bought a Treasury since, to be blunt, the yields suck. And Series EE Bonds always seemed to be just about the worst.

That was then. Welcome to 2010, and the age of ever-shrinking yields on bank accounts.

Last month I was looking for a place to park a bit of cash that I knew we would not need until our retirement years. (Our IRAs would have been my first choice, but they had been maxed out.)

After scouring rates on CDs and MMAs, I was getting frustrated at the low rates I was finding. Not expecting much, but figuring I had nothing to lose, I decided to poke around on the Treasury Direct site.

Found out that Series EE Bonds Savings Bonds purchased through Oct 31 are earning 1.4% interest. Not so good. For some reason I kept reading & I learned some interesting tidbits:

- A Series EE Bond earns interest for 30 years
- You have to hold the bond for at least 1 year
- After 1 year, you can cash out the bond any time
- If you cash it out before you have had it for 5 years, you will pay a penalty of 3 months' interest
- That means that if you hold the bond for 5 years, you can cash it out any time after that for no penalty
- THIS IS WHERE IT GETS INTERESTING: Your bond is guaranteed to double in value in 20 years! (I had to double-read that part to make sure my eyes weren't playing tricks on me.) Based on my calculation, that means that if I hold the bond for 20 years, the US Treasury will add enough value to the bond so that my interest earned equivalent will be 3.5%.
- TO MAKE IT EVEN MORE ATTRACTIVE: Interest income on federal taxes is deferred until the bond is redeemed. (I think state income tax is also deferred, but I'm in a no income tax state so didn't verify that.)

What this means for me is that I'm guaranteed 1.4% (tax deferred) holding the bond for 5 years, and 3.5% (tax deferred) if I hold the bond for 20 years. In 5 years, I'll see where interest rates are and decide if I want to cash the bond in and move the money or continue to hold it.

If anyone else is interested, I recommend going directly to the source and confirming all information on the US Treasury's web page: www.treasurydirect.gov

And if you have children & are saving for their college education, be sure to read about the tax advantages to using Series EE Savings Bonds to pay for their education. (If I had a newborn & knew I could earn 3.5% for 20 years, probably tax-free, I'd be buying an EE Bond!)

Sneakers On The Ground

May 9th, 2010 at 08:41 am

Tho I've not been around SA much lately, I am still actively involved in my household's personal finances on a daily basis.

I started this blog to chronicle our relocation to a lower cost part of the country (plus join the $20 Challenge), and now that we are firmly established in our adopted home of Austin, I just haven't been blogging as much.

In a nutshell, these are the major PF-related things that have been happening:

1. Wills Re-Done: Finalized (witnessed & notarized, including Affidavits, copy sent to Personal Representative) in early-March. I bought the NOLO book & used their software & created the Wills myself. I would have preferred to use an attorney (DH was not willing to pay the fees to have an attorney prepare our estate documents), but I am happy with NOLO and did the best job I could. The book was clearly written and I got quite a bit of helpful information from it. For me, the way the book was laid-out seemed very organized, and was a great way to think and work through the process. I recommend it for anyone else thinking of doing a DIY Will. I made an effort to keep things simple, in order to minimize the risk of making a mistake. For example, I decided not attempt to create a Trust myself. I also read up on Special Needs Trusts (I have a brother who is developmentally disabled who is a major part of my estate planning), but found out that he does not need one because he does not collect Social Security Disability Insurance.

2. Second Car Purchased: We finally bought a 2nd car. Paid cash. New car. We have owned both new & used, and I believe both are reasonable ways to go (I'm not a believer in "one size fits all" when it comes to PF). Based on how we have owned previous cars and how we feel about cars, I realize that for DH & I, Jonathan Pond's motto of "buy used if you love cars, buy new if you hate cars" is the way to go. In other words, if you are a "car person" and like to change cars frequently, go for used cars. But if you are NOT a car person (like DH & I), keep your cars forever, and do not necessarily like the car-buying process (but put a lot of time & research & mental anguish in to the decision-making), then buy new. Only once did we buy and sell a car within a short period of time, and that was a special scenario. Other than that, we have owned our cars for very long periods of time (our current "first car" is a 1999 model that we bought new, has almost 150K miles and we expect it to last for at least another 50K). We bought a Prius, at the height of the "anti-Prius hysteria." We had looked at the Prius for a couple years, but felt they were overpriced. For a very brief period Toyota offered a $1K Customer Loyalty rebate (if you blinked you missed it), and one dealer in our area offered previously-unheard-of discounts on a couple stock vehicles. On top of that, I was getting ready to restart my full-time seasonal job & we had been sharing one car for several years, so while it definitely wasn't "the best car deal ever" it was enough of a deal and the timing was perfect so we jumped off the fence and wrote a check (plus $5K on the Am-Ex ... for the points ... paid off when the bill came in). Boy that dealership was dead at that time; the salesman said we were his only sale that month.

3. Still Studying the Possibility of Buying a Vacation Rental + Looking at a Self-Directed IRA: At the turn of the new year, I had looked in to buying a 2nd home in our area to use as a vacation rental, then put it on hold because the real estate market in was firming up (didn't think we could get a very good deal). But now that the New Homebuyer's Tax Credit has expired, I think there may be another dip, so we continue to keep a close eye on the market. I am reading "How to Rent Vacation Properties By Owner" by Christine Hrib Karpinski, and that got me thinking about establishing a Self-Directed IRA. I had been wondering if an IRA could own an investment property, and it turns out that a Self-Directed IRA can. Also, I have been perturbed thinking that I could not own individual Treasuries in an IRA (can't see paying a fee to a mutual fund company to buy something I can buy myself through my Treasury Direct, but a Self-Directed IRA may be a way to do just that. These are my current "Big PF projects" ... learning more about vacation properties & self-directed IRAs.

4. Sneakers On the Ground: For some reason, I often ponder "big PF questions" while out walking the dog. On one walk recently, I was thinking about our investment style. While our MF investments are very conservative, we have made bold & risky moves such as DH quitting his job & starting his own business, me starting a small business, relocating to a lower cost part of the country, and now thinking about buying an investment property. I don't think you can categorize us as "risk-takers" or "conservative." I think the military expression about "Boots on the Ground" is fitting ... We like to be very hands-on, looking & observing & participating in what we are investing in; we willing to take risks as long as we have quite a bit of control over those risks and know exactly what is going on.

5. And Speaking of Sneakers: OK, this is not a "major PF thing" by a long stretch, but I did want to point out that everyone, no matter how firmly they have their personal finances under control, struggles with temptation. While it was definitely NOT the case in my younger years, I do feel that my DH & I do a pretty good job overall of managing our finances. But the "consumer bug" still bites from time to time. It's a constant job to keep things in balance. Right now I am hearing the siren song from those "Shapeup" sneakers by Skeechers. Just love the idea of getting extra toning (and maybe some health benefits) while walking just by wearing a certain pair of sneakers! But the rational side of my brain can't see spending $100 for them. So I've decided that if I ever see a pair for $50, I will buy them. I'm hoping they will come out with some awful color scheme that no one wants and they will put them on clearance (I won't care about the color), or maybe it's just a matter of waiting for the market to become more saturated. I will allow myself to indulge in a pair, but only if the price comes down by half.

Hope everyone here has been doing well ... I have stopped by to read folks blogs from time to time, but feel I am out of touch.