Thursday, December 11, 2014

401K Fun

As I learn more about finances, I'm realizing just how much there is I need to know. I recently learned one big lesson the hard way and it's been an interesting pill to swallow.

When I left my last job in April, I had a 401K with that company. They had matched 3% to the 6% I contributed so it was sitting just under $6,000.

I regularly saw that money on my Mint account and loved that tiny investment portion of my finances. Even after sitting down with 2 financial advisers, I didn't realize I had to do something with that money after leaving the company. However, when I recently logged into my account, there was a notice that said I hadn't taken action on my 401K after 6 months of not being employed with that company so the account would be liquidated.

Oh.

Apparently I was supposed to roll it over into an IRA if I wanted to keep the funds for retirement. I guess that makes sense because I wasn't vested with my company so they couldn't keep their match tied up with me when they could get it back. I just didn't know and admittedly didn't make the effort to learn.

So after the company match, taxes, and the 10% fee were removed, I had a check for about $3,000 in my hand. It bums me out that I don't have that money for retirement anymore and come to think of it, I could have just re-invested it. But I didn't.

Debt has obviously been a big struggle for me and it was my first instinct to knock out $3,000 worth of debt with that money. And that's exactly what I did. At the unfortunate sacrifice of retirement, I'm happy to announce I will be ending 2014 completely credit card debt free.

Going forward, I will also be working to save towards retirement because now I'm really behind. I have been with my current company for 6 months now, which means I am eligible for a 4% match that is 100% vested at the start of the new year. I will take advantage of that and the rest of my extra income will still go towards debt repayment. 

It is a huge relief to kick off 2015 with a financial focus on student loans. I felt incredibly guilty having credit card debt because it's obvious proof of not spending wisely despite the mountain of student loans I have. As the spending challenge continues, I want my hard work to reflect smart spending habits.


Monday, December 1, 2014

Spending Challenge: November Totals

November 1st Balances
Amex: $1,545.79 $0
Mastercard: $5,714.27 $3,760.59
Sallie Mae: $14,123.57 $11,472
Chase: $19,907.33
Sallie Mae: $24,754.52


December 1st Balances
Amex: $1,545.79 $0
Mastercard: $5,714.27 $3,646.73
Sallie Mae: $14,123.57 $11,451.11
Chase: $19,907.33 $19,723.04
Sallie Mae: $24,754.52

That's a total of $113.86 this month...
Now, I know that sounds like a teeny tiny number, and it is, but it's not exactly representative of what actually happened in November. There were 2 very large car expenses (taxes and maintenance for the new car) that I put on my credit card. I have the money to pay myself back, it just hasn't gone through yet. So when you see the totals for December, it will be drastically different.

I still worked hard, earned extra money and stuck to the spending challenge. I babysat, wrote resumes, did 2 freelance research projects, earned a small bonus at work, worked on Gradible.com, dog sat, and stuck to the spending challenge rules to make this possible. 

The hardest part about the challenge this month was: 
Having my friend Jessie and her fiance visit. Of course I LOVED seeing her and I don't regret spending a little extra money on hosting her. I did some extra grocery shopping to feed them and we went out to eat a bit. It wasn't a huge budget buster but it did go over. I knew she was coming with plenty of notice so I could have planned better.

What I learned from the challenge this month was:
If you need to get a book for book club and you're 168th on the hold list at the library, check out the large print version. I was only 6th in line and I already have the book. Yes, there's an extra 200 pages because the text is so big but I didn't have to buy the book!

I also learned that you have to do something with your 401K within 6 months of leaving a company. More on that in another post. 

Lastly, I learned that sticking to a budget your comfortable with is crucial, especially with big purchases. I could have justified buying a fancy 2013 car but I would have been car poor. Considering cars are never an investment, I'm so glad I found a better deal. If you're not finding a deal you're comfortable with, keep waiting. It will happen, you just have to wait and dig a little deeper.


The best part about the challenge this month was:
Budgeting for stuff I'm allowed to buy. Living in Minnesota, we got hit with some snow early in the month and it was time to buy winter boots. Rather than treating it like an unexpected expense and putting it on my credit card to "pay off later," I was prepared and didn't feel guilty about making the purchase. Better yet, I was smart and more thoughtful about what I bought. I usually buy Uggs, which are warm but not waterproof. Instead, I went with Sorel boots at the same cost. They are more sturdy, waterproof, and will last for many more years.


3 months down, 9 to go!