Merry Christmas!

Have a very Merry Christmas and happy holidays to you and your family.  I hope you have a peaceful and joyful day.

Saving money with a Dependent Care FSA account

Our open enrollment is taking place right now for employee benefits.  For the first time ever, I looked into starting a Dependent Care Flexible Savings Account (FSA).  I’ve always heard that having an FSA is like getting an average 20 to 40% discount on dependent care costs.  Since our son is now in daycare, it’s the perfect time for me to sign up. 

The way that a dependent care FSA works is that you set aside pretax money for child care costs you anticipate for the upcoming year.  Since the money is set aside from your paycheck before taxes, you can save 20% to 40% on childcare expenses.  You won’t have to pay any federal taxes, social security, Medicare, or state taxes on this amount.  The FSA also reduces your adjusted gross income (AGI).   

In order to have a dependent care FSA, you and your spouse both need to be gainfully employed.  The FSA is intended to help people who are working and have dependent care costs that enable you to work.  Your dependent can be any child under 13, a disabled spouse, elderly parent, or any other dependent that is unable to take care for themselves (due to mental or physical disability).  If your spouse is a stay at home parent, you cannot participate in a Dependent Care FSA.  If one parent attends school full time, it is an exception. 

Married couples (like us) can elect a maximum of $5,000 annually, whether separately or jointly.  Daycare expenses can then be paid either with your FSA debit card or you can submit for reimbursement online and get a direct deposit in your bank account.

One downside of the Dependent Care FSA is that the IRS only allows a maximum of $5,000 a year for individuals or married couples filing jointly.  Even if each parent has access to a separate FSA through their employer.  Another downside of the Dependent Care FSA is that there is no roll over of unused FSA funds.  Any unused funds are forfeited by the end of the year.  I know that daycare expenses for our son will definitely exceed $5,000, so I’m not worried about leaving any funds unused. 

In the future, our Dependent Care FSA funds can be used for summer day camp, before and after school care programs, and even payment to a relative age 19 or older that cares for our son.  I never thought I’d be so excited to save money on taxes; I guess I’m a real adult now.   Then again, saving over $1,000 a year on daycare costs is a nice break. 

November 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 December, another new month.  There is only one more month to go now before we finish 2015.  This is the busiest time of the year for us.  For most people, I believe this is also the most expensive time of the year.   Did you score any hot deals for Black Friday?  While we are normally pretty frugal, we couldn’t resist on a deal for a cordless Dyson vacuum cleaner that I found online.  It should make cleaning up around the home faster and more efficient.     

With my wife starting work again for the last couple of weeks, we are back to a two-income household.  While it’s been sad for her to leave the little one at home (with me for the last 2 weeks), we know that two incomes will help us reach financial freedom much faster than one income alone. 

The little man starts day care today, and it’s going to be a sad day for all us.  We have been lucky to have almost 6 months of time to raise our son all by ourselves.  Now it is time to trust him in the hands of professionals.  I'm also sad for our dog Abby, who has been accustomed to someone home with her during most of the day.  I’m glad that his day care is only about 5 minutes from my office, so I will be able to check in on him during lunch for the first few days.  For the foreseeable future, I’ll be dropping our son off to day care in the mornings and my wife will pick him up in the afternoons.  She gets off work at 3:30pm.  Thinking about our son at day care is a huge motivator for us to continue to work hard and save aggressively.               

Here’s our monthly summary of side income that we have generated in the previous month of November.