Thursday, October 23, 2014

New 401K maximum contribution limits for 2015

The IRS announced some exciting news today regarding retirement accounts.  Starting in January 2015, the maximum contribution limits for your 401K or 403B tax-deferred retirement accounts will be increased to $18,000.  If you want to max out your 401K and you get paid bimonthly, you just need to divide $18,000 by 24 for a deposit of $750 per pay period. 

If you’re over age 50, you can now contribute a maximum of $24,000 per year.

While not every working individual can afford to save the maximum 401K contribution amount, it’s certainly a goal to reach for.   Start by saving up to the company match, and then slowly increase your contributions 1% at a time, every pay period.  It took me two and a half years before I could start maxing out my 401K.       

You can read the IRS announcement here.  There’s some good discussion about the new 401K contribution limits on the Bogleheads forum here.

It’s a shame that the IRS did not increase the contribution limits for traditional and Roth IRAs.  Not every worker has access to a company 401K, and the current limits for IRA contribution of $5,500 ($6,000 if over 50) a year is ridiculously low.  Hopefully we will get an increased contribution limit for our IRAs in the future. 

If you are getting paid to work, you should be thinking about your retirement.  Otherwise, you will either work until the day you die or hope to live on social security and government assistance.

Tuesday, October 21, 2014

1 free night in San Francisco

We are looking forward to our upcoming trip to Tokyo (Japan), Taipei (Taiwan) and Okinawa (Japan).  We’re also excited to experience Cathay Pacific’s first class cabin on our flight home.  In order to book two first class tickets with our airline miles, we needed to adjust our itinerary to include one overnight stay in San Francisco, California.  This is because we specifically wanted to fly on Cathay Pacific’s first class route from Hong Kong to San Francisco.  We our flying home from San Francisco to Los Angeles on Envoy (a OneWorld partner airline) first class the next day.

This means that will need to stay in San Francisco for one night.  This is where our Starwood Preferred Guest (SPG) Starpoints earned from our American Express SPG card credit card become useful. 

The Four Points by Sheraton Hotel & Suites San Francisco Airport is only 1.5 miles away from the San Francisco International Airport (SFO) and very close to the downtown area.  They provide free shuttle service to and from the airport.  As usual with most Starwood properties, high speed internet, bottled water, coffee and snacks are complimentary.

If we were to pay cash for this hotel room, it would cost $144 per night. 

Thanks to Starpoints, we are able to stay here for 7,000 SPG points and $0 cash!

Saving money on a free flight or a free hotel stay allows us to use that money towards attractions and food on our vacation!

Sunday, October 19, 2014

Another new iPhone, another new activation fee waived

When the new iPhone 6 Plus came out, I knew that I had to get my hands on one.  My eyes have been getting strained while working on my iPhone 5’s smaller screen.  This is Apple’s largest iPhone to date, and has some great features like optical image stabilization, Apple Pay, fingerprint sensor, all with amazing battery life. 

While there are much cheaper cell phone providers out there, we stay with AT&T because their cellular coverage in our area is excellent.  I need to have a reliable wireless network because I am regularly on call for my company.  I am thankful that my company subsidizes $100 towards our cell phone bill every month.  If I did not get my cell phone bill paid monthly, I would consider cheaper telephone service options such as T-mobile and Republic Wireless.  I’ve previously written about saving money on your cell phone bill here.

Since we have no intention of leaving AT&T Wireless anytime soon, I went ahead and upgraded my cell phone and signed up for another 2-year contract.  When you upgrade your phone on AT&T (and other carriers like Verizon), you wil get charged with a one time “upgrade fee.”  This year, AT&T charged me $40. 

Sunday, October 12, 2014

Is now a good time to invest?

The S&P 500 last week
The stock market has been down about 5% in the last week.  Crude oil is crashing.  Dubai stocks are crashing.  Asia stocks are crashing.  Europe stocks are crashing.  The Dow dropped over 330 points in one day last week.  Our investment accounts are down a little over $5,000.  Is it time to sell all of our index funds and start hoarding cash?

Staying the course
We have our investments exactly how we want them to be.  We won’t be selling our funds.  In fact, we’re buying up more shares on sale while we can.

“Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.”  Warren Buffet

Don’t try to time the market
The stock market will go up and the stock market will go down, this is a fact.  The problem with trying to time the market is that it can’t be done reliably or consistently over time. 

Research consistently finds that investors who buy and hold their investments end up with a lot more wealth than those who panic and sell when their investments start to lose value.  Investors who sell in a panic tend to also be the type of investor that only start buying more stocks once the market starts to rise in value (and get much more expensive).

To truly properly time the market, you need to be right two times: when to get out, and then when to get back in.  Making one, or both mistakes can be costly.

Research shows that typical mutual fund investors perform much worse than the mutual funds they invest in.  This is because they tend to buy after a fund has done well, and sell after the fund has done poorly.  Buying high and selling low is a recipe for poor performance.

Wednesday, October 1, 2014

September side hustles 2014

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.

Not all of the following side hustles may be applicable to you.  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.

Here’s our monthly summary of side income that we’ve generated in the month of September.  Are you making money on the side?
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