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.
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.