Monday, December 9, 2019

Milestone reached: over 300K invested in my 401K

A 401K is a retirement savings plan sponsored by your employer that allows you to contribute part of your paycheck towards your retirement before taxes are taken out.  Contributions into your 401K lower your adjusted gross income, which may lower your tax liability.  

I just hit a new milestone in my 401K: my investments have surpassed 300K in value! 

I started contributing into my 401K a little over 8 years ago in October 2011 with a 3% contribution from my paycheck.  When I first started contributing to my 401K, I couldn’t imagine it ever being possible to max out my contributions to $17,500 (the limit back then).

I increased my contributions over time, just 1% every few months.  Slight increases in my contributions made it easier to adjust to slightly decreased paychecks.  Salary increases also helped make increased contributions and lifestyle adjustments easier.  By June 2014, I was finally able to max out my 401K. 

During the last 8 years, the market has gone up and it has gone down.  I continued to make contributions with each paycheck.  When the stock market declined, I picked up more shares of my index funds.  When the market reached new highs, I picked up less shares.

Time in the market is much more important than timing the market.  Investing in a 401K consistently puts money into your account with each paycheck, whether the market is up or down.  You’ll end up fine even if you only invest at market peaks, as long as you stay the course with your investments and not panic when the stock market has a crash or correction.
  
If your employer offers a 401K, I highly recommend contributing to it.  It’s the best way to consistently invest on autopilot.  And since your contributions are taken out of your paycheck directly, you won’t miss the money when you get paid.  If your company offers a match, definitely contribute up to it.  Saying no to a 401K match is turning away free money.  Match contributions from your company do NOT count towards your maximum individual contribution amount.  

My 401K is 90% invested in 3 funds designed to mimic VTSAX, the Vanguard Total Stock Market (71% S&P Fund, 6% Vanguard Mid Cap, 13% Vanguard Small Cap Growth) as well as 10% into a Vanguard Health Care index.  

Starting next year in 2020, the maximum contribution for 401K will be $19,500 (for those ages 50 and over, the additional "catch-up" contribution limit will rise to $6,500).  I’m looking forward to the increased limits.  If you are not currently maxing out your 401K, try to increase your contributions.  Even 1% increases can make a huge difference over time.   

Sunday, December 1, 2019

Side hustles November 2019


­The great thing about doing side hustles to generate extra income is that you can hustle on your own terms.  The more hard work, time, and creative effort you put in, the more extra money you can make.  You can hustle as little or as much as you want, whenever you want.  It’s your extra money, and you can choose how you want to spend it.  Instead of focusing on what ideas don’t apply to you, try focusing on different side hustle ideas that you can implement to work for your situation.

Once a month (usually on the 1st), I like to post a short summary of our personal and financial situation for the previous month.  While I don’t often post articles, I am committed to documenting all of my side hustle income.  Here I’ll share some of what’s been going on with our lives and our side hustles. 

Welcome to December!  Did you have a good November?  It’s been another adventure packed month for our family. 
We visited the La Habra Children’s Museum 3 times this month.  It’s a great place to spend a few hours exploring all of the children’s exhibits.  This place is like a second home for our family.
We visited the Aquarium of the Pacific in Long Beach 2 times this month.
Our daughter loves sea turtles.
The big highlight of our month was a 5-day, 4 night stay at the Legoland Castle Hotel.  It was quite a busy vacation, with 3 visits to Legoland and 1 visit to Sea World in San Diego.  It was great staying at the Legoland hotel because daily free breakfast buffet was included.  We also had early entrance to the Legoland theme park every morning.  Our son rode his first rollercoaster: the Coastersaurus!  He loved it!  The best part about our trip was that there were no crowds this time of the year and no lines for the rides we went on.  On many of the rides, the attendants allowed us to stay on for another ride.
In other news, this month I turned 39.  It’s hard to imagine that I am almost 40 years old!  I continue to try to pursue a life of happiness and meaning while enjoying the here and now with my family.  Time passes so quickly. 
Thanksgiving this year involved spending quality time with family, having office potlucks, and holiday dinner parties with our friends.  We have much to be thankful for.  We are thankful for our health, our families, our friends, and our financial stability.   
In sad news, our dog has been suffering from many health issues this month.  She was diagnosed with a urinary tract infection after she had blood in her urine.  Later on, she had uncontrollable vomiting and was diagnosed with chronic pancreatitis.  She has been on multiple medications and now needs to permanently be on a prescription low fat diet.  Her veterinary bills have totaled $1,059.83 this month!  I am thankful that these big expenses are not major setbacks for our family. 
Here’s our monthly summary of side income that we have generated in the previous month of November.
Award Travel
On 11.19, I redeemed 34,492 Southwest Rapid Rewards points towards 2 free flights for my wife and our son to fly home from visiting the in-laws during Christmas.  Paying cash for these flights would have cost a total of $503.96.  When redeeming points, I only had to pay taxes and fees totaling $11.20 for both flights, saving us a net $492.76 on ticket prices!
Cash Back
On 11.21, my wife received a $43.92 statement credit on her AMEX Gold card from the Airline Travel Credit benefit of her card.  This was cash back on a Southwest Airlines ticket flight for my wife and son to visit the in-laws.  We paid the majority of the flight costs with previously saved up Southwest $100 gift cards that AMEX reimbursed.  Unfortunately, the AMEX Travel Credit benefit no longer reimburses airline gift card purchases.
On 11.25, my wife received a $11.20 statement credit on her AMEX Gold card from the Airline Travel Credit benefit of her card.  This was a reimbursement for taxes and fees paid on award travel flights.
On 11.29, my wife received a $10 statement credit on her AMEX Gold card from AMEX Offers.  This offer was for 10% back on any insurance purchase, up to $10 cash back.  We used her card to pay our homeowners insurance.

Rental Income
On 11.5, we received a net profit of $450 from our rental property. 

Survey Income
On 11.2, I received a $10 check from M3 Global Research for completing a medical survey.
On 11.6, I received a $10 check from E-Rewards Medical for completing a medical survey.

Miscellaneous Income
On 11.4, I noticed that the two Legoland annual passes (with 2 bonus day passes included) I purchased at Costco had dropped in price by $20.  A quick phone call to Costco helped us get $40 refunded as a price match. 

Monthly Totals:
We saved $492.76 on award travel
We earned $65.12 from cash back
We earned $450 from rental income
I earned $20 for completing online surveys
We saved $40 by price matching a price drop from a Costco purchase.

All of this totals $1,067.88 from our side hustles for the month of November!  One more month to go before we start another year.  Keep hustling.

Tuesday, November 5, 2019

Over 500K invested


Our investment accounts have hit another financial milestone, surpassing $500,000 in value!  This includes money in our 401Ks, Roth IRAs, taxable accounts, and 529.  This does not include money in our checking accounts, savings accounts, home equity or rental property equity.
Here are some of our previous investment milestones:
June 2, 2014: 100K
March 12, 2016: 200K
June 5, 2017: 300K
July 15, 2018: 400K 
April 16, 2019: 450K
Our investments are simple and our contributions are automatic.  We invest in index funds that track the US stock market (63%), international stock market (27%), and US bond market (10%).  Index fund investing allows us to diversify our portfolio and keep our costs very low.
We’ve had a good run, but we could have a stock market crash any day now.  Stock market volatility is normal.  In the long term, I expect that our balances will continue to hit all time highs.  We will continue to stay the course with our investments on our way towards financial freedom.  I'm looking forward to sharing more of our progress.


Here's a fun read from Stop Ironing Shirts regarding the power of saving $500,000 early on: The First $500,000.  At this point on our investment journey, we can coast our way towards financial freedom.  
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