Tuesday, September 29, 2015

Free round trip flights to San Jose on Southwest!

I just booked us 2 free round trip flights on Southwest Airlines for a wedding we will attend in San Jose in November 2015.  It’s a great feeling to have enough rewards points to be able to travel almost anywhere at anytime.  I like to regularly share how easy it is to redeem credit card rewards points towards free travel.  Here’s how I did it.

Once we determined our travel dates, I started looking on Southwest Airlines, American Airlines, and Virgin America to see which airline offered the best redemption of points from Orange County (SNA) to San Jose (SJC).  Chase Ultimate Rewards points transfer to Southwest Airlines (if you have a Chase Sapphire Preferred, Ink Plus, or Ink Bold credit card).  Citibank ThankYou points transfer to Virgin America (if you have the Citibank Premier or Prestige credit card).  Both cash price and points redemption for the flights we wanted were cheapest on Southwest. 

Each one-way flight on Southwest would have cost $102 for a total of $408 ($102 x 4 for me and my wife).

The same one-way flights cost 5,724 Rapid Rewards points and $5.60 for a total of 22,896 Rapid Rewards points and $22.40. 

Flying on American Airlines would have cost 50,000 miles.  Flying with Virgin Atlantic would have cost 16,188 elevate points, which converted from Citibank ThankYou points would have cost 25,900 points (1,000 ThankYou points = 625 Virgin elevate points currently).  Also, Virgin Atlantic flies from LAX (Los Angeles) to SFO (San Francisco), not exactly the airports we want to depart from or land in.  

We used Chase Ultimate Rewards points towards our flights since it gave us the best redemption value of our points.  

I don’t normally carry a large balance of Rapid Rewards points.  I usually transfer my Chase Ultimate Rewards points into the Southwest program last minute as needed.  Transferring Chase UR points to travel partners is extremely fast and easy.  I just logged into my account at www.ultimaterewards.com.  Then I selected 23,000 points to be transferred into my Southwest Rapid Rewards account.  

The points were transferred to my Rapid Rewards account after I re-logged into my account.

Once I had enough points in my account, I booked the flight right away.  In my experience, you should book your award travel as soon as you are absolutely sure about your travel plans.  Prices seem to always go up.  By redeeming 22,896 points and $22.40 towards this flight, we saved $385.60 ($408 - $22.40)!

Where will your points take you?

Monday, September 21, 2015

Another major milestone reached: over 100K invested in my 401K

In June of 2014, we hit a major milestone when our total investments surpassed 100K in value.  I logged into my 401K account today and noticed that we hit another major milestone:  I now have over 100K invested in my 401K plan! 

What is a 401K?
Let me remind you that a 401K plan is a type of salary deferral retirement account that allows you to contribute part of your income towards your retirement.  Most large companies offer 401K plans and automatically enroll workers when they first get hired.  If you work for a non-profit, your equivalent plan will be called a 403B.  Your 401K plan uses pretax money for investment. Investing with pretax money allows you to make larger initial contributions.  None of your contributions get taxed until you withdraw money for retirement (after age 59.5).  Other investments such as Roth IRA or taxable investments use after tax money.   

When it’s time to leave your job, you can transfer your balance over into an IRA or roll it into another 401K.  If you cash out your 401K balance before age 59.5, you will incur a 10% early withdrawal penalty and be subject to income taxes.  Remember, the money in your 401K is meant for your retirement, not a new car or house remodel.  If you are in an emergency and need access to cash, you can borrow money from your 401K, but I would not recommend it.  Money in your 401K should be growing for your future retirement needs.  

Contributing to a 401K is simple and automatic
Without a doubt, contributing to my 401K has been my easiest investment.  My 401K contribution money gets deducted from my paycheck twice a month automatically.  I don’t need to log into any investment accounts to buy any shares.  I’ve set up my accounts to rebalance automatically as well.  With 401K investing happening automatically, I can use my free time to do other things.  For many workers, companies typically automatically enroll people into a 401K plan, forcing them to save something for retirement.  Studies find that when employees are automatically enrolled into a 401K plan, they are likely to keep it instead of opting out.  It’s a simple and forced way to save for your future.      

Company matching is like getting a free raise
Many companies offer 401K matching up to a point.  You may need to check with HR to determine how much money your company will match on your contributions.  It’s important to contribute at least up until the match.  By not contributing up to this amount, you’re leaving free money on the table.  Taking advantage of your company’s 401K match is like getting a free raise.  Don’t leave free money on the table.  My company offers a match of 3%.  Other companies may offer 6% or even 10%.  

Dollar cost averaging with your 401K
While the U.S. stock market has been performing well over the last few years, market volatility has been much higher lately.  This will not change the way I invest in my 401K.  I receive a paycheck twice a month, and $750 is deposited into my 401K with each paycheck.  $750 deposit x 24 months equals the maximum 401K contribution of $18,000 per year (new rules starting 2015 if you are under 50 years old).  These regular deposits help me dollar cost average my investment contributions into the U.S. stock market.  When the market is down, I purchase extra shares and when the market is up, I purchase less shares.  Automatic dollar cost averaging helps me stay invested in the market during downturns, taking my emotion out of investing. 

A long journey with my 401K
I first started investing in my company 401K plan in October 2011.  I started off slow with a 3% contribution per paycheck.  I then gradually increased my contributions by a few percentage points every few months.  By June 2014, I finally reached the maximum contribution amount in my 401K, which was $17,500 per year at the time (company matching contributions do not count towards the maximum individual contribution amount).  In 2015, the new rules allow me to make a maximum contributions up to $18,000 per year into my 401K.

In my 401K, I’ve kept my investments simple by choosing funds that best mimic Vanguard’s total stockmarket (VTSAX) index fund.  My investment includes 81% U.S. Large Cap stocks, 6% U.S. Mid cap stocks and 13% U.S. Small cap stocks.  This keeps my investments diversified.

My company provides me with profit sharing and when our organization is financially successful, I get extra deposits into my 401K.  I’d rather have these deposits go into my 401K instead of directly into my bank account, because this directly goes to fund our financial freedom and retirement.  If I received a sudden large bonus in my bank account, we may be tempted to spend all of it.

The bull market of the last 6 years has really helped to boost our investment returns.  While 100K in my 401K is not enough to retire on, it’s a nice milestone to reach and encourages me to stay the course with my investments.  I just wish I started investing more significantly back when I first started working in 2008.  If I had, my portfolio would be a lot larger by now.  The stock market can crash at any time, and my 401K will still be on autopilot.  I’m not touching this money anytime soon.  Aside from the real estate that we hold, my 401K is currently our largest investment. 

If you’re just getting started, I recommend contributing enough to reach the company match.  Then contribute to your IRA until you max it out ($5,500).  Afterwards, increase your 401K contribution by 1% every few months until you max it out ($18,000).  A 1% increase is small enough where you won’t notice a significant difference on your paycheck.  Over time, your 401K balance will continue to grow and will support you in your future.  

I make these posts not to show-off or compete with anyone, but to keep track of our financial goals year to year.  If you don't track your financial progress, you won't be able to understand or improve it.  I only started contributing to a 401K in October 2011 and a Roth IRA around the same time.  If we only started investing earlier, we would be further along our progress towards financial freedom. 

Where are you at with your 401K contributions?  I think it’s time to increase your contribution amount, even if it’s just 1%.  

Wednesday, September 2, 2015

August side hustles 2015

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.

Welcome to September, another new month!  Our 2.5-month-old son and our dog have been keeping the both of us very busy.  It’s not easy being new parents, but we are trying to enjoy every moment of it.  Our dog Abby has been adjusting well to our son.  She’s very gentle and genuinely curious around him.    

Anyways, here’s our monthly summary of side income that we have generated in the previous month of August.

Award Travel
On 8.4, I redeemed 14,208 Southwest Airlines Rapid Rewards miles (mostly converted from Chase Ultimate Rewards points) to earn a free flight for my wife from LAX to PDX, saving $219.40 after paying flight taxes and fees.

Cash Back
On 8.1, I received a PayPal deposit of $45.13 from Mr. Rebates
On 8.5, I received a $5 statement credit from AMEX Offers on my Premier Rewards Gold Card (Spend $25 at Exxon Mobile and get $5 back)
On 8.6, I received a $100 statement credit on my American Express Premier Rewards Gold card for using their $100 airline credit feature towards a discounted Southwest flight.
On 8.22, I received $0.13 statement credit on my AMEX SimplyCash business card.

Search and Win
On 8.8, I received a $5 Amazon gift card from Swagbucks
On 8.13, I received a $5 Amazon gift card from Swagbucks

No more Bing Rewards :( 
The both of us recently got our Bing Rewards accounts shut down for violating the terms of service through use of a Bing search bot.  Oh well, it was a good run!  We’re just going to continue to use Swagbucks to earn Amazon gift cards.

Paid surveys
On 8.11, I received a $3 PayPal deposit from PineCone Research
On 8.26, I received a $6 PayPal deposit from PineCone Research
On 8.31, I received a $3 PayPal deposit from PineCone Research

Side Job
On 8.10, I received a check for $137.50 from the local university where I teach part time.
On 8.20, I received a check for $412.50 from the local university where I teach part time.
On 8.29, I received a check for $275 from the local university where I teach part time.

Rental Income
On 8.1, we received a net profit of $430 from our rental property

Monthly Totals:
Our side hustles increased slightly in August.
We saved $219.40 on award travel with our Southwest Rapid Rewards miles
We earned $150.26 in cash back
We earned $10 worth of Amazon gift certificates from Swagbucks
We earned $12 in cash from paid surveys
I earned $825 from my side job teaching at the local university
We earned $430 from rental income

All of this totals $1,646.66 from our side hustles for the month of July.   A big chunk of this past month’s side hustle income came from me doing more part time work.  It’s great because I really enjoy teaching and find the work fulfilling.  My teaching hours are flexible and I only do 4-hour shifts.  Is there something that you enjoy doing that can also help you hustle on the side for extra income?
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