I’ve been meaning to rollover my former employer’s 401(k) account for a while now… 1.5 years after I left the job. On Thursday, I went to an event at called “Investing Better” where I hoped to learn more about strategies and literally invest better (it didn’t happen) but it did spark me to take action to consolidate my multiple accounts.
For transparency, with my old employer I have both a traditional 401(k) and the Roth 401(k). I decided to contribute to both plans because I figured it doesn’t hurt to put more money into retirement. My thought process was that I was in my lowest tax bracket of my life, so I can do Roth. I put money into traditional since that was the default option . I also opened up a separate Roth IRA a few months later, because why not? I was 22 and with so many years to grow…
Which Broker to Use?
Thanks to Nerd Wallet, who put together a great summary table here. They compared the brokers, what it’s best for, cost of making trades, and current promotions.
I am looking for something that is low-cost, so I am deciding between Fidelity and Vanguard thanks to Nerd Wallet.
Fidelity has this amazing promotion going on to match 1-10% IRA contributions for current year + next 2 years depending on how much is deposited. To much sadness, I did not qualify since “direct rollovers from a 401(k) are not eligible.”
Vanguard was my next choice and the broker I had in mind already but needed some extra reassurance. It also helps that my current employer switched to Vanguard so I already have funds here.
Rollover or Convert?
The next hurdle is figuring out if I wanted to convert my Traditional 401(k) portion as well. Note that this is a very personal choice!
I’ve been tracking my spending for 7+ years now and I am proud to share with you the latest Personal Finance Budget & Expense Sheet. 😀
In this sheet, you will need to input all numbers in purple, including salary, health, savings goal, living expenses, flexible expenses, etc. Includes TAX CALCULATIONS so your yearly net amount can be as accurate as possible (although it will never be quite there, so use this sheet as an awesome estimator).
Once again, disclaimers: this is an estimation tool and is in no way shape or form a replacement for your personal advisor or accountant / tax preparer.
(1) This sheet is not going to match your tax refund exactly, but it gives a good basis as to what it would be like
(2) This sheet includes tax calculations for NYC residents. If you reside elsewhere, you will have more money leftover than the last number in this sheet.
(3) This sheet also assumes you take the STANDARD deduction (6200), which… if your NYS tax paid is greater (row 38 + 44), you will be ITEMIZING. (Sheet is currently in the making).
I picked up “The Last Safe Investment” by Bryan Franklin, Michael Ellsberg from the library, thinking it would provide some insight into growing wealth. I stopped reading on page 118 (I had to return the book). It sums up to this: spend systematically so it can provide other value to your life and work on your tribe/network/community because that’s how you accumulate a different type of wealth.
Consuming vs investing
* John taking friends out to action movie, buys soda and popcorn
* Jane takes coworkers out to business-related movie that someone mentioned, buys water
* They are both not expecting anything back from their group and just want to have a good time
The book explains (exaggerates for the point) that Jane didn’t just spend on Entertainment, she also contributed to a bunch of things that John didn’t. I can’t say I agree with this completely but here is the impact (p 17):
— health. Water is good for everyone vs (John) sugar makes people bounce off walls
— relationships. Respect what others care about vs (John) don’t see how he didn’t invest in this too since his friends like action movies as well
— career. Contribution to get involved in matters related to work vs (John) doesn’t impact his career directly (unless you can count on his friends’ network for that future role, which I think is pretty likely too)
— purpose. Enjoy contributing time to each other because it makes their lives more purposeful vs (John) I can see this applying as well… what if their purpose was to contribute to the laughter in his life??
— provide value. Discussion after the movie so everyone is sharing their ideas vs (John) now everyone is more in-the-know about pop culture
Investing = Spend value on other contexts of your life, outside the original context
True Wealth Discipline
Spend systematically – make every expense count for something more
Increase your value to others – see how you can help others with your skills or knowledge, so they will think of you in future when you need something
Improve your happiness exchange rate (more below)
True Wealth Asset
Adviser Equity – contributing your knowledge to others
Tribe – your community and close friends
Savings – “the money you risk (in the form of investing in yourself… should be in service of something that will improve you, further your purpose, as well as increase your income” Intro, p. 41
Hi everyone! It’s been a while since my last post. Since 2015 has wrapped up, I wanted to share some ways you can either:
Evaluate your spending in 2015
Monitor your spending in 2016
I am a big user and supporter of Mint.com. They connect all your financial accounts (you need to log in with your credentials) so you can see ALMOST all your transactions in one place.
I suggest you export all your 2015 transactions and evaluate how you were spending to see where you can spend less (or just be shocked at how much you spend in a certain category). Since Mint currently does not offer transaction exports with Top Category (just subcategories), head over to my Mint support response thread here for the default list and how to pivot everything. From this I learned: I spend way too much on “Food & Dining > Restaurants” and “Misc > Family (my custom subcategory)”.
Most people are afraid to link up financial accounts for fear of being hacked. I’m not a technology security expert, but in the 7+ years I have been using Mint, there has been zero problems with security (that was made known publicly…). Mint pulls the transaction info from each of your accounts and does not display any login usernames or passwords.
I have connected all my possible financial accounts so I can view everything in one place. I know my “net asset” balance at any given point. If you don’t want people to accidentally see your financials, I suggest putting a passcode (4 digits) or enabling iPhone Touch ID.