Tag Archives: 401k

How lazy and bratty people can save money and buy expensive junk

I’ll be honest here – I am kinda lazy. But, I have managed to save money, maintain a good credit score, and live healthier.

1. When you make a dinner, make enough for 2-3. Ingredients are cheaper to buy in bulk, and if you are one to get tired of eating the same thing night after night, go ahead and freeze a meal so you can microwave it the next week or so. I know everyone’s heard this before, but buying and cooking your own food not only saves money, but keeps you healthy, because you know exactly what is going into your food. I’m also incredibly forgetful and get lazy after I eat, so right after I’m done cooking and before we sit down to eat, I put some food into containers and stick them into the freezer.

2. Use a rebate site if you are purchasing online. You’ll get back 3-6% of your total purchase (usually less shipping). If you don’t feel comfortable setting up an account, a simple online search can usually yield a coupon or two that helps cut costs.

3. Automate your bill paying. Trying to pay the bills on time monthly myself would drive me nuts. I have automated everything and it’s so simple – not only do we not have to pay stamp fees, but all the transactions download into Mint.com and we can track our budget

4. Automate your savings. Similar to automating bill payments, you should be automating savings as well! If you have a 401k, have a fixed amount direct deposited into the 401k, or if you have a Roth or regular savings, have it go to that account. That way, if you don’t see it, you don’t miss it.

5. Track your finances weekly, if not more often. While I can’t manage to pay the bills on time, I check the status of our finances almost daily. I know it woulds weird, but it gives me great comfort. I also know if we’ve overspent a little too much the first 2 weeks, and if we need to cut back to keep on track for the next week or two. You’d be surprised how little expenses add up, and how soon we forget them! I also check my credit score for free on sites like creditsesame.com and pull the free annual credit report for a more detailed view.

6. Credit card rewards. This can and can’t be a way to save money, but I think we have a way that makes it work. I used to be dead-set against using credit cards or maintaining any kind of debt, but after a friend ran the numbers and explained the rewards game, I think I can deal with this. I love expensive makeup, I think the products really look better and are of better quality. That said, paying $50+ for an eyeshadow gives me heartburn. So we put most of our expenses onto Amex, and every day or so, I’ll transfer the money we spent on the Amex into a checking account just for paying off credit cards. That way, the money is no longer in our account and not “available” any longer, but we gain the rewards. With our current spend, I can buy a nice new face cream or whatever and feel like a big spender without blowing the budget.

I’ve considered paying the mortgage on a credit card, but that’s a little more than I’m comfortable with for the moment.

What lazy tips do you have? 

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Dividend stock love

I’ve fallen in love with dividend stocks – I don’t know why, but I’ve never paid much attention to them and have always just focused on long-term gain. How short-sighted of me though! Several months ago, my co-worker was talking about his father living solely off of dividend income for the past ten years. He has only begun tapping into social security and 401k. It took me a few minutes to absorb, and my first reaction was “That’s crazy! How many millions does he have invested?!”

But upon second thought, it’s not that crazy. Assuming a 4% quarterly return (a reasonably conservative estimate), to bring in $5,000/mo ($15k/quarter), you would need to have $375,000 invested. Broken out over 20 years worth of saving, that would be slightly over $1500/month to save. Even if you could manage to put aside $500/month, after 20 years, your dividends would be bringing in a cool $1600/mo, not to mention what they would be earning you during this time! If you just reinvested those earnings, it would increase that much more. This is so motivating.

I have a work 401k which is pretty much on autopilot, but I plan on monitoring that much more closely in the future. We have a separate stock account that we purchased random stocks (read: trendy and overpriced). Throughout the past few years, I’ve managed to pick up a few dividend stocks, and while they haven’t done amazingly well in terms of growth, dividends have generated on average of 5-10% on average for the past few years.

What are your thoughts on dividend stocks?

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401k/ESOP Rollover

Yikes, it’s been such a while since I’ve posted.  It’s been a little hectic, I was running back and forth between the old and new companies, training my replacement at the former, and training with the one I’m replacing at the latter.  There was a limited amount of time I had with the one I am replacing, as he is leaving to manage the project from another country, so I had to pack it all in to a week.  It definitely wasn’t enough time, but I’ll try to figure it out.  It’s good that he will still be available by email though.

Now that I have a few days off, I wanted to look into 401k/ESOP transfer options.  My previous employer offered both, so I went ahead and put money into them.  I could do any of the either:

1) Leave the 401k with the previous employer.  I don’t think I will do this, because their fund selections are terrible and returns have been been really depressing.

2) Cash out.  Did you know this was the most popular option in the US?  I didn’t know – it seems unwise for the long-term – if the balance is cashed out, approximately 20% will be withheld for tax purposes, and a 10-15% penalty is due for early withdrawl.  So essentially, I would be out 30 – 35% immediately.

3) Roll over into the new company’s 401k.  With this, there won’t be any taxes or penalties, and it would definitely be easier to manage if it’s all in one place. This is the option I will most likely be choosing.  I just received the packet with the new fund options in the mail, so I’ll be spending some time reviewing them.

My question is though, what about the ESOP?  I haven’t been able to find any info about this – can I roll over the entire amount into a Roth IRA or the new 401k? One of my colleagues told me that ESOP is a mandatory cashout, but I’m not sure if that’s correct.  The previous company requires it to be in for 5 years before considered fully vested. I was only there for 3 years, so am not – how does this work?

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