Andy Hough

Maxed Out My 2013 IRA

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$25 BonusIt will actually be a few days until I have maxed out my IRA for the 2013 year since I have to wait for my deposit to clear. The money is on the way though so I’m counting the IRA as maxed out now. I also made the maximum IRA contributions for 2012 with the bulk of those contributions being made this year since you have until April 15th of the following year to make IRA contributions for the current year. This is the first time I’ve ever maxed out my IRA two years in a row. I’ve actually only made the maximum IRA contribution once before and that was when the maximum was only $2,000. The max contribution now is $5500 for taxpayers under 50. I wish I would have been maxing out my IRA in years past, but most years I didn’t have the income to do that. It is better late than never.

I actually have both a traditional IRA and a Roth IRA. Even though I have two IRAs the maximum contribution is still only $5500. I put the bulk of my contribution into the traditional IRA. My theory is that it is better to efile and take the tax break now than gamble on it still being around later.

Now that I have maxed out my IRA I am thinking about opening a solo 401k to put away even more money. Before I do that though I am going to build up my cash savings. I would like to have more of my savings held outside of retirement accounts so that I can access it quickly and without penalty if needed.

July Savings Rate – 10.46%

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July was not a great month for savings. My SWR slightly decreased to 58.13% from 59.41% the month before. It was an improvement, but I’m not seeing the big changes that I had earlier this year.  My expenses should be a little lower again this month which will help.  The biggest help will be the fact that I’m working a job that pays decent money which will allow me to save aggressively again.

My goal is to save 50% of my income each month and I didn’t come close to meeting that goal in July. I made $955.36 and managed to save $100. That amounted to a 10.46% savings rate. The main reason for the low savings rate was the low income.  I need to save a lot more than 50% of my income this month to keep my overall savings rate at over 50% for the year since there will likely be at least a couple more low earning months this year.

The 4% SWR translates into having 25x your annual expenses in savings or 300 months of expenses in savings. I have 20.40 months of living expenses saved now. That is just a tiny bit higher than the month before and still below the 24 months of savings I had earlier this year.  I expect to save a lot of money this month so the SWR and months of living expenses saved should improve quite a bit.

July Income – $955.36

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Here is a breakdown of my income for July.

Online Income

 $467.09
Interest

$1.77

Dividends

$19.06

Cash Back

$19.92

Class Action

$35

Job

$377.02

Mystery Shops

$35.50

Total

$955.36

My July income was a bit low, but it was about what I expected.  Unfortunately, my income was a little lower than my expenses.  It wasn’t too bad considering I only worked the last half of the month and I haven’t gotten paid by that job yet. Having several sources of income does help. I got another random class action suit check.  This one was from Sprint for an early termination fee suit.  I’m pretty sure I never paid them an early termination fee and I don’t recall joining the suit, but I’ll take the money.  My online income was down a bit.  Since I haven’t really been putting too much effort into my online endeavors lately, I can’t complain about what I am making.

My August income will be good since I will have two paychecks from my current job.  The other sources of income will probably not be dramatically different.

July Expenses – $1139.31

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Here is a breakdown of my expenses for July.

Household $245.89
Entertainment

$53.10

Transportation

 $376.17

Food

$176.01
Travel $113.85
Phone

$26.81
Health

$120.97
Electric

$26.51

Total

 $1139.31

My July expenses were a little higher than I prefer. I was hoping to get my expenses way under $1000 for the month which I didn’t come close to doing.  I did at least keep my expenses under my other goal of $1274 a month.

My transportation expense was way too high.  This was a result of driving from Harrisburg, PA to KC and getting my A/C fixed.  The gas from PA to KC probably should have been counted as a travel expense, but it was simpler to count it all as a transportation expense.

The travel expense of $113.85 isn’t too bad, especially considering I was gone for 9 days.  The total is somewhat deceiving though since some of the travel expenses were absorbed by the food and transportation categories.

Food was way too expensive.  I’m not going to worry about my overall food bill in August.  I’m just going to make a goal of keeping my dining out portion of the food bill under $50.  Since I count dining out with my girlfriend or friends as entertainment this goal shouldn’t be too difficult to meet. It will be a major adjustment to my usual spending though so I expect it to be somewhat of a challenge.

I hope to keep my August expenses a little lower.  That may not be possible since I will leave on another trip at the end of the month.  I’ve gotten a little lazy with my spending and plan to tighten up my spending this month. Even if my overall spending isn’t much lower, hopefully I will at least get more value for my spending.

2013 Goals – Halfway Point Review

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My two goals for 2013 are to save 50% of my income and to live on less than a minimum wage income of $1274 a month. I have shared on the blog if I met the goals for each particular month. Now that the year is more than halfway over, I want to see how I’m doing towards my goals overall.

For the first goal of saving 50% of my income I’m doing pretty good. Through the end of June I had made $18,360.73 and I had saved $9550. That comes to savings rate of about 52%. The rate won’t improve in July, but since I will make good money in August I should be able to save way over 50% of my income for that month and get the rate even higher. Unless I make almost nothing the last few months of the year or I have a financial emergency this goal should be easily met.

For the goal of living on less than a minimum wage income of $1274 a month I’m not doing too good. Through the end of June I had spent $8257.51, which comes out to $1367.25 a month. Car repairs are the main reason I’m not currently meeting this goal. I still think it is possible to achieve this goal. July spending should be slightly less than the target amount and I’m hoping for big improvements in the following months.

I will continue to update how I’m doing on my goals monthly and once the year is over I will share the results.