Andy Hough

Finally I Have a 401k

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Earlier this there was a lot of press covering the 401k millionaires.  The long bull market combined with steady savings in theirs 401ks resulted in the largest number of 401k millionaires.  A 401k can be a great way to build wealth, but many people – including me until this month – don’t have access to a 401k.  A lot of smaller employers don’t offer them and many larger employers make you wait a few months or a year before you can contribute.

My employer has offered a 401k since I started working there. However, as a seasonal employee I wasn’t eligible to contribute. After switching to a 10-month seasonal position last year I finally amassed the 1000 hours in a year needed to qualify for the 401k. Even though I qualified last September I wasn’t eligible to enroll until the beginning of the year. And then for some reason I had to wait 30 days to actually set up the account. It wasn’t until last Friday that I finally had a contribution come out of my paycheck. It would have been great if I could have contributed last year as soon as I met the hourly requirement. Although, I maxed out my IRA and also contributed to an HSA and Solo 401k I wasn’t able to reduce my AGI as much as I wanted. That resulted in a larger amount of taxes owed than I planned on and having to repay $750 of the advanced premium tax credit I received.

Now that I have a 401k I will be doing my best to max it out. Since I’m 50 I can contribute $24,000. Being over 50 also allows me to contribute up to 100% of my paycheck. Those under 50 are limited to contributing 75%. I had 50% held out for my first contribution. Since I’ve been working so much overtime my paycheck was just a couple hundred dollars less than normal. For the next paycheck I have increased the contribution rate to 76%. After that paycheck I’ll see if I need to adjust the contribution rate up or down. My health insurance and taxes do have to be paid out of my check so I’m not sure what would happen if I increased the contribution rate to 100%. Maybe I have to pay my employer on payday? There are three paychecks in March so I might experiment with having one at 100 and then I’ll know how it works.

After tax season is over and I no longer have overtime I will have to move my contribution rate back down. I think a 50% rate will be sustainable, but we will see.

I wish I would have had access to a 401k when I was younger. I actually did have a 401k at one casino I worked at, but I moved and quit about a month after I started contributing. There may have been other companies that had them and I didn’t know since it wasn’t something I was overly concerned with back then. I switched jobs a lot so I probably wouldn’t have been eligible at most places anyway. There is nothing I can do about that now. I’ll just contribute as much as I currently can.

January Income – $2893.67

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Here is a breakdown of my income for January.

Interest $1.86
Amazon FBA $112.33
Cash Back $17.02
Online $0
Credit Card Bonus $25
Credit Card Other $200
Job $2537.46
Total $2893.67

 

January’s income was pretty good even though I didn’t make much from my non-job sources of income.

January was the start of the tax season allowing me to have overtime hours available the second half of the month. Only my second paycheck had overtime hours so the full impact of the overtime hours isn’t reflected in my income yet. My February paychecks will each include about 30 to 35 hours overtime so the job income should go up a bit this month. The other sources of income will remain small since I”m spending all of my time on the job. Even though February is a shorter month, this month’s income should easily surpass January income.

January Expenses – $3377.77

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Here is a breakdown of my expenses for January.

Household $18.93
Rent $435
Entertainment $62.45
Transportation $46.21
Food $178.50
Travel $0
Phone $25.74
Health $2610.94
Total $3377.77

 

My January expenses were very high. This was due to having to pay an over $2500 medical bill. Otherwise I easily would have made my monthly goal of $1000.  I have another medical bill of $165 this month and hopefully there won’t be anymore for a while after that.

My monthly food expense was too high once again.  I was going to keep my eating out expenses to a budgeted amount, but abandoned that plan once I hit my budgeted amount early in the month. This month I will once again be targeting my food expenses and I expect to have success this time.

Other than that my expenses this month should be about the same as last month.

 

Working and Comments are Fixed

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This year I am working a slightly different position at my tax job. Although I’m doing a lot of the same things I was doing in previous years I also have a bit of a supervisory role. The new position didn’t come with a raise, but it did come with unlimited overtime during tax season. I’m currently scheduled for 10 hour days M-F and 7 hours on Saturday. I can usually take off an hour or so early on one weekday. There are other days that I end up working over 10 hours. It ends up with me working about 60 hours a week. For me, working 60 hours a week isn’t much worse than working 40 hours a week. Either way I am not going to feel like doing anything except relaxing after work. The plus side of the 60 hours a week is that I get paid 20 hours overtime for the week. Friday will be my first paycheck with the 60 hour weeks so I’m looking forward to seeing how much that will be.

Since I’m working so much I don’t feel like spending much time blogging after work. Not that I was doing a lot of blogging before.  I’ll keep the usual monthly income and expense posts coming and try to get more other posts published the next couple of months.

I also wanted to let people know that if they had problems commenting on the blog in the past couple of months they should be able to comment now. The comment spam plugin I was using seemed to block everybody. It only took me a couple of months of no comments to figure that out. I’ve gotten a few comments since removing the plugin so comments seem to be working correctly now.

2017 Annual Expenses – $13,697.14

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penniesMy expenses in 2017 were almost $3000 less than in 2016. My expenses for 2017 were $13,697.14 compared to $16,431.20 in 2016.  My total expenses in 2015 were $16,999.41 and in 2014 they were $15,775.65. That makes 2017 my lowest spending year of the last few years even though 2017 was my highest earning year. My income the previous years was roughly 33% to 50% less than it was in 2017.

My total expenses for 2017 only includes $505 that I paid towards my student loan although I paid about $15,000 total towards my student loan during the year. Paying so much towards my student loan helped reduce my spending since it left me with less money to spend elsewhere.  Since I wasn’t required to make any of these extra student loan payments I’ve decided to leave out the extra payments since they distort what my spending looks like.

My biggest expense for the year was $5490 for rent. This amount will be even less this year as I’m only paying $435 a month for rent now. That is about as good of a deal as you can get in Kansas City.

My second biggest expense for the year was $1957.56 for food.  $1322 of that was for dining out, which I consider to be way too high. The dining out total was slightly inflated due to eating on vacation, but even considering that I think the food spending was way too high. I plan to significantly reduce food spending this year.

Two other big expenses were medical expenses of $1527.06 and household expenses of $1090.57. The medical expenses will be way up this year as I have an over $2000 medical bill due. Plus my health insurance premiums are higher. That will be slightly offset by lower household expenses this year. The 2017 total included $300 for lifetime internet and larger than normal expenses due to buying some furniture and other stuff when I moved into my new apartment. I don’t anticipate any big household expenses this year so this expense should be a few hundred dollars less this year.

My car expense was $1254.40 which is probably about what it will be again this year. The total included $570.45 for gas with the rest of the expense being for repairs, insurance, license, registration, and tax.

The rest of my expenses were $314.13 for my cell phone, $500.65 for movies and entertainment, and $1057.22 for travel. The cell phone expense should be about the same this year.  The movies and entertainment might be slightly lower now that I have Moviepass to save money on movie tickets.

The 2017 travel total included round trip airfare for two from Kansas City to Paris. It also included over two weeks of hotel, hostel, or Airbnb nights in Europe. That included the Park Hyatt Vendome in Paris which would have been about $800 a night if we had been paying cash. I also had a short four night trip to Vegas. The use of credit card points, discounted gift cards, coupons, and travel deals allowed me to get an excellent amount of value for the amount of money I spent on travel. I’m not sure how much I’ll spend on travel this year. It will depend on where I decide to go and what kind of deals I can find.

My guess is that my expenses will go up this year. Last year was a pretty lucky year that mostly didn’t have any expensive surprises. I’m sure there will be some surprises this year, but hopefully they won’t be too expensive and I can keep my spending in the same range it has been the last few years.