2012 End of the Year Round Up

This month I added $105.46 to my husband's Roth using our FIA Card services cc rewards.  This was not the only time I have used credit card rewards to help fill out our budget.  This year I have gotten a total of $255.46 from FIA towards retirement which is about 1% of our income.  1% may not seem like a lot but it can seriously add up.  And honestly, right now is the best time for us to be saving for retirement.  Not only do we benefit from compound interest, but our loans are at the lowest they ever will be at.  Right now all our student loans are deferred, so all we have is the mortgage at 4.75% and a personal loan of 3.49%.  Once my husband graduates he will have $17000 in graduate loans at 6.55% and $5500 in undergraduate loans at 5.75%, and then when I graduate I'll add on another $5450 of undergraduate loans at 5.75%.  Once we are paying those higher rate, it will be hard to throw all extra money into retirement, so any bit now, will help then.  Before I found out that I had gotten into graduate school, we were putting money aside for retirement.  Total with the FIA rewards and our own savings we put about 5% of my husband's salary in retirement.  Naturally, if my husband and I were not students we should be saving 16%-18% of our salaries, but I think for students even a few percentage of your annual salary is enough. 

We also have gotten $150 worth of cvs gift cards from discover. Normally it would be a lot less but I paid for my school fees with discover this year.  I love that my school takes discover without any additional fees.  These gift cards have helped us stretch our grocery budget, along with the grocery game, using iheartcvs.com.  I don't think we did as well here as we could have because: 1)we were lazy and 2)we were extremely busy.  Also, I was adjusting to eating differently because of being pregnant and shopping for that, so that could affected it as well.    We did get better at using coupons for only what we needed, but we splurged a little too much.  Next year I am going to work on improving our grocery budget and not going out to eat.  We still have about $75 from the cvs gift cards so that should help next years budget.  I am still trying to think of ideas to be more organized in regards to cvs.  I am pretty good at checking deals at tops, and staying on top of them.  I don't know why I am so bad with cvs.  If anyone has any ideas on how to get better organized, I'd love to hear them.  I am going to start planning meals better, and getting back to using the crockpot.  Does anyone have favorite crockpot meals?

While I was working, this year, we paid out of pocket for my classes, and put money aside for the baby.  However, we did not save up for the rest of my classes ($11,000 between the two semesters).  We have been using the money from our renters ($550/month), after expenses to pay for the classes but we are still short.  Therefore we had to dip into the student loans my husband took out a year ago and set aside, when we found out about graduate students losing the ability to get subsidized student loans.  This does cause a problem because my husband will have to start paying back the loans before I graduate.  This does mean that I am going to try to cut back even more next year.  Every cent I save, is a cent that can let aside to pay off these loans.  I think I am going to start giving myself one hour per day to work on being frugal, if that is couponing, doing a survey or writing a meal plan.  This will do two things, help me decrease costs and help me work on organization before the baby comes.  Readers, how do you keep organized?

My weekend plans include loading every item we have in the kitchen, into supercook.com.  We keep buying things that are good deals, but not using things up.  I am going to make myself make at least one recipe from supercook per week until the baby comes.  This will help me keep to my budget, and will help us discover new things to eat.  Part of why we are eating out, is because we are getting bored with what we have to eat at home.  How do you fight boredom with meals?  I'd love advice.

I also received $50 in amazon gift cards from swagbucks.  This was lower than years previous and I believe it to be because I do not have the swagbar on my ipad and have been using that most often.  How am I going to ramp up the amazon gift cards?  Well, this will be part of my one hour of frugality per day.  There are free swagbucks for listen to certain swagTV shows, often only a few minutes, which I can do while I do other frugal tasks.  This should help bump up the amazon gift cards a bit.

However, I did get a $10 home depot gift card from https://www.recyclebank.com/ this year as well as an extra $1 coupon I wanted, for an item we would have purchased anyway.  Given that I normally get about $60 from swagbucks, this does make up for the loss of the amazon gift cards.  I hope that next year I earn another $10 gift card from recyclebank, while still making $60 from swagbucks.  We will see if I can achieve it!   

I received no cvs gift cards from mypoints though.  I made enough to turn in for a $10 cvs gift card, but since we still have cvs gift cards from discover I chose not to redeem the points.  Normally, though, I make enough points for about $40 worth of gift cards.  I think this drop can be accounted for by the ipad use, and my crazy schedule.  My goal for next year will actually only be $25 worth of gift cards, because of the craziness.  It would be great if I am able to get more but I'll be happy with $25.

Overall I think I did less well this year than I wanted to, but that is one of the great things about being young.  I can take this year and learn from it and improve as I get older. 

Millionaire update- November

Time for another millionaire update.  Even without depositing anything into retirement this month. we have increased our assets by $31 thanks to the market.  We now have $13,513 set aside for retirement.  Since we have no money to deposit for awhile, I sat and thought about what we could do, in regards to our retirement.  We have decided to move my old 401k over to Vanguard.  That should lower some fees and may help the market increase our assets. 

But, just as we have been lucky lately, the market could do a down turn at any minute and lose money.  I am ok with that because we have over thirty years but I wonder how many parents have their children's 529's invested all in stocks when their children are close to starting college?  Or how many parent have their own investments all in stocks when they want to retire within 10 year? 

Becoming a millionaire is not just about putting money aside but also what you do with that money.  I might not have any money to put aside now, but I can always find something to help our fiscal situation if I try hard enough.  How about you, what can you do this month to improve your fiscal situation?

There is a "cash back" offer for amazon

I, like most students, love using amazon.  We mostly use swagbuck earned giftcards, but will use the amazon chase if we are spending more than we have earned from swagbucks.  However, today I have learned of two better ways to get "cash back" or similar when shopping on amazon this holiday season.

First, discover is allowing 5% cash back on all online shopping, including amazon, up to $1500, until December 31st.  That is a better deal that three points for every dollar you spend on amazon, that you can get from amazon chase.  It does require that you sign up, but there is no cost involved.  However, not everyone has a discover, is there another way to get money back while shopping at amazon?  For some items, yes.

Swagbucks is offering for a limited time 6 swagbucks for purchasing any jewelry, clothing, watches, handbags and purses, shoes and strange category called MYHABIT. It does not matter if you a credit card or a gift card, you can still get points back from swagbucks.  Go to this link to start.   http://www.swagbucks.com/shop?merchid=793

Happy shopping everyone!

College Student: No time or money, what to do?

When I go to most frugal blogs, many of the things they recommend to do take a lot of time.  It seems you can do things cheaply and spend a lot of time or throw money at a situation and spend very little time.  But as a student, we have no time and no money so what can you do?

Take advantage of the blogs of those who have already found the deals.  I live in Buffalo, NY so I check http://triciasfrugalfinds.com/ weekly to see if there are any deals I like at tops.  This saves me the time of checking the circular and online coupon sites.  Then, if I have time, I check http://www.iheartcvs.com/ as well for deals.  I used to check iheartwags.com and http://www.iheartriteaid.com/ but have decided that the time to organize all of that was not worth it and I had to cut it down to one store.  CVS is the best deal for me, because I get gift cards from discover and mypoints plus the EBs last longer than walgreens cash back system.

Also, give yourself a break.  Classes and lack of time because of class, ebb and flow.  Be the most frugal when you have extra time, and be less frugal when you have less time.  This week, because my exam was on Tuesday and lectures do not start up till next monday I will be doing a bunch of CVS runs as well as a Tops run (or two depending on the sales come Sunday).  Take advantage of rain checks when you can and ask for help when you need it.

It can take about three months to get into a habit so try to make a frugal goal per semester, and that can help you get good at one frugal trick, which can save you time.  Keep in mind what will give you the best bang for you buck (or time), because you have little of either.  Anyone have ideas for being frugal when also short on time?  Post in the comments if so...

Maximum Allowed Contributions for IRAs Have Increased!

For the first time in four years (since 2008) the maximum allowed contributions for IRAs have increased from $5000 to $5500. I know this may not help most students right now, but it will help in the future.  This increase is for both traditional and Roth IRAs.  The income levels have been increased as well. 

Limits for Traditional IRA in 2013

If you DO HAVE a retirement plan with your employer:

• Single or head of household: If your modified gross adjusted income (MAGI) is $59,000 (up from $58,000) or less, you can take a full deduction. If more than $59,000, but less than $69,000 (up from $68,000) – you get a partial deduction. If over $69,000, you cannot take a deduction.
• Married filing jointly or qualifying widow(er): If your MAGI is $95,000 (up from $92,000) or less, you can take a full deduction. If more than $95,000, but less than $115,000 (up from $112,000) – you get a partial deduction. If over $115,000, no deduction.
• Married filing separately: If your MAGI is less than $10,000, you can take a partial deduction. If $10,000 or more, no deduction.

If you DO NOT HAVE a retirement plan through an employer:

• Single, head of household, or qualifying widow(er): Any MAGI permits a full deduction.
• Married filing jointly or separately with a spouse who is not covered by a plan at work: Any MAGI permits a full deduction.
• Married filing jointly with a spouse who is covered by a plan at work: If your MAGI is $178,000 or less, you can take a full deduction. If more than $178,000 (up from $173,000), but less than $188,000 (up from $183,000), you can take a partial deduction. If $188,000 or more, no deduction at all.
• Married filing separately with a spouse who is covered by a plan at work: If your MAGI is less than $10,000, you can claim a partial deduction. If $10,000 or more, no deduction.

Limits for Roth IRA in 2013

The 2013 Roth IRA income phaseout limits are as follows:

• Married filing jointly or qualifying widow(er): If your MAGI is $178,000 (up from $173,000 in 2012), you can contribute up to the $5,500 max. If at least $178,000 up to $188,000 (both up $5,000 over 2012), your contribution limit is phased out. If $188,000 and above, you cannot contribute to a Roth IRA.
• Single, head of household, or married filing separately and you did not live with your spouse at any time during the year: If under $112,000 (up from $110,000 in 2012), you can contribute up to the $5,500 maximum. If at least $112,000 up to $127,000 (was $125,000 in 2012), your contribution limit is phased out. If $127,000 and up, you cannot contribute to a Roth IRA.
• Married filing separately and you lived with your spouse at any time during the year:If MAGI is between $0 and $10,000, your contribution limit will phase out. If $0, you can contribute up to the $5,500 maximum. If $10,000 and above, you cannot contribute to a Roth IRA.

If you want more information check out the IRS publication 590.

 There is no way I can put away $5500 for myself and my husband.  Frankly there is no way I could put away even $5500 total.  However, once I graduate this will start being very useful to me.  We plan to say 20% once we both graduate (we are older than most students) and this will allow us to stick with IRAs to do so until we earn $55,000.  And since often the prices of mutual funds is better in an IRA than a 401k or 403b, I am very happy.    Maybe in the next two years it will have gone up even more.

Millionaire Update-September 2012

I have been a bit lax in posting my month updates for our retirement saving, but I had to post this month.  As of October 8th, we have $13,482 in our retirement savings.  This is over half of our annual wage ($26,000)!!  Granted, if we retired now, we would need to pay for health insurance ($550/month) so it is not half of our annual retirement spending, but is a lovely start.  Sadly, other than credit card rewards from FIA Card Services, we will not be putting any money in until at earliest June of 2013 because I am back in school.  However, at least .2% of our income being saved ($50 credit we normally get annually from FIA card services), is better than nothing, so we will take it.  Hopefully the market helps us as well.  Is anyone else doing creative things so get more money saved for retirement?

Why I love credit cards

I have just gone back to school, in August and we will be having a baby in January both of which mean that cash is really tight, as is time. We stopping putting money away for retirement, plus cut a bunch of other expenses to pay for my class without any extra debt. However, I am disappointed that we cannot save anything for retirement given that I am 27 and my husband is 30. But funny enough, credit cards to the rescue. Working, lab work, prepping for school, and now school all together have made my life crazy (part of why I have not been posting much), so I have been cutting back on any non-required fiscal time. However, I had some free time today so I checked my fia card rewards and lo and behold I had 15,000 reward points which gives me $150 IF I deposit it in a retirement account. So, as of October 10th my husband's Roth IRA will be $150 richer. For us, $150 is .5% of my husband's wage. It is not a lot, or even enough, but it is a start and a great help when we otherwise would not be able to put anything in.

After that, I thought about checking my discover card as I was setting up the transfer to pay it. With paying for my classes this semester I was just over the $45 required to get the $50 cvs gift card so I grabbed that too. $200 richer in about 10 minutes, not bad, not bad at all.

Credit cards can be harmful if you use them badly, but as shown above, they can also be very helpful. Which are you going to chose?

Obamacare and you....

I do try to keep this blog anti-political because I am political enough in the real world but sometimes, politics affects personal economy. And the Supreme Court ruling that the Patient Protection and Affordable Care Act aka Obamacare is constitutional will affect all young people's personal economy.

If you are under 26, great for you, you will still be covered under your parent's insurance, no matter if you are in school or not, if you are single or married, anything. It is all age based now. However, what happens if your parents don't have health insurance or once you age out?

You must find insurance, either through your employer or on the open market. You will have an easier time finding insurance on the open market in 2014 because insurers cannot deny you based on medical conditions. But they can increase the bill way beyond what you can afford, what then? Well you have to find something or get fined. An adult who does not have health insurance by 2014 would be penalized $95 or 1 percent of income, whichever is greater, so long as the amount does not exceed the price tag of a basic health plan. But by 2016, the penalty increases to $695 for an uninsured adult, and up to $2,085 per household, or 2.5 percent of income, whichever is greater.

What if you really cannot afford it? Well it depends. Medicaid is being increased to cover people with 138% of the federal poverty level but that won't cover most people. I made more than that working part time in college. Otherwise, there are tax credits if you are above the 138% cut off but are still low income. But that be enough? For some people, absolutely not, especially if you lose your job. Personally I would still be saving enough in your EF to cover COBRA.

So what is my opinion? I like it but I was one of those who aged out of their parent's plan and was unable to get a private plan for any amount of money. I ended up COBRAing my mom's insurance for a total of $550 per month. Also, this means those who want to retire early but could not because of pre-existing conditions now (well in 2014) can. However, I am betting health insurance costs will go up so plan for a big jump in those costs in near future.

The Frugal Student Is Going Back To School

As of August of this year I will be a master's student in neuroscience. This means less income and more expenses but it also means that I am one more step closer to my goal. It looks like the first semester cost will be $5615.75 plus books. Because graduate students are no longer able to take out subsidized loans as of this year, last year we took out $8500 worth of subsidized loans under my husband's name. Those loans will pay this semester, and most of next semester but will be due sooner than if I was still able to take out my own subsidized loans. So you might ask, what are we doing to keep costs down?
First, the school accepts discover, not just cash or check to pay for tuition without any fees so tuition will be paid by discover, earn me a $56 credit on my discover credit card. We will be turn $45 of that into a cvs gift card to pay for the grocery game. Secondly, for any books I need, I will be buying used and if the best price is on amazon I will be using my swagbuck earned gift cards. Third, since I will be going back to school, my undergraduate loans are going to be deferred again. That will save me $30 per month. Fourth, all money normally being save will be going to our new expenses, that includes: emergency savings, future car savings, replacement savings for computers and other electronics and of course all money coming from our rental, which means no more retirement savings. That will bring in about $540 per month, any month we have a tenant. We really are going to have to buckle down to keep expense low and not to get much more debt. Fifth, we will be taking advantage of the federal taxes laws and taking the credit for the student fees/tuition. We have already run the numbers and will be increasing our exceptions on my husband's W-4 to get more money per paycheck, instead of waiting till April of 2013. I am not sure how much this will save us, I will report back after we update the W-4. Any other ideas for frugal savings? Post in the comments.

Millionaire Update-May 2012

In the last month we added $417 to our account but because of the stock market, gained less than $20. We now are at $12420. Right now is a very risky time to be in the stock market. I fully expect it to crash again if Greece does not repay its' debts. However, never in the history of the stock market, has the stock market not increased on an average of 10% over 30-40 years and that is the time line I am looking at. If nothing else, I am buying, and will continue to buy low. I will continue to receive dividends and that will increase the value of the stocks I hold. This shows that you should never put anymore you need within ten years into the stock market.

Great Combo Deal

I love going out to eat but it can great very expensive, especially if you like higher end restaurants, which I do. But sometimes there will just be a great deal that turns an expensive night out, into a relatively cheap one. The Melting Pot in Cheektowaga is having discounted cheese and chocolate for two if you sit at the bar on tuesday nights. By doing so you will save about $7 compared to the normal price. Ok deal, not a great one. But here comes living social to make it even better. $15 for $30 worth of food. https://www.livingsocial.com/deals/326354?ref=conf-jp&rpi=62811398 That saves you another $15. It goes from being a $50 meal for two at minimum to a $27 meal for two. Way better deal in my mind.

Fun in the Sun

It is finally warming up here in Buffalo and it has been great to open up the house and get out and about. We thought about having a picnic last weekend but got so crazy busy, we had to push it off. Why is it, that once things have warmed up, we have so much to do around the house? However, we will be having out picnic this weekend as a fun yet cheap treat. There are so many fun, cheap things to do during the summer that I cannot imagine wasting money this summer. But the sad thing is, when we moved here almost three years ago we have no ideas what cheap, fun things there were to do in this area. By keeping our eyes and ears open we have found so many things, like the Allan Town Art Festival and great hiking around the North Campus of UB. But there is an easier, and shorter way to find some of these events. Use the web! For example, I used swagbucks to search buffalo events and found out that one farmers market has already started. Maybe I will go wander over to Alden Village and see what produce is avaiable. http://www.aldenny.org/market.asp Also, I found that Buffalo State has a planetarium with events open to the public. Right now they are showing "Wonders of the Springtime Sky" and for students it is only $4 per person, unless you are a Buffalo State student, and it is free. http://www.fergusonplanetarium.net/PublicShows/PublicShows_WondersOfSpring.html What fun cheap stuff are you doing over the summer?

Asset Allocation and why it does not matter

A nice rule of thumb when deciding your asset allocation is to take your age and either subtract it from 100 or 120 to get the percentage of stocks you should be holding. The remaining should be in bonds. However, you are also suppose to be building an emergency fund, possibly buying a home, or a car and those take savings. Do you count that savings in your asset allocation? Well you should but if you did you would not be able to buy a house, car or maybe even have the emergency fund you need. So what should you do? I have a goal for my asset allocation but to me, that is not the end all be all. Keep in mind Warren Buffet used to get made fun of because he held on to more cash that was considered appropriate so he would have the money for deals. Buffet is one of the riches men in the world and one of the few that made it big via the stock market. Right now my biggest asset is my home and conventional wisdom says to buy more stocks and bonds to balance it out but I am looking for another good deal in real estate. If I find it, I am buying, allocation be damned. This is not to say that asset allocation does not matter. I try to keep my stocks and bonds balanced depending on my age but I am not going to pass up a deal or not save for an emergency because of it. I do look at what kind of stocks I have and try not to have too much of the more risk stock, like small caps or emerging markets but I do not worry about it too much. I look at my allocation once to twice a year, that is it. Worrying about it is silly. At this point all I do is shove everything in my target date fund, ever since I rolled my 401k over to an IRA. Once I have over $25,000 then I will diversify on my own but even then the only difference will be a large international exposure and a little less bonds. I am willing to take a lot of risk as long as I have an emergency fund therefore until I am in my 50s my bond exposure in my IRA will be low. I do plan to put three months of saving in I bonds as a secondary EF after my three months of cash but that is a far away goal. I still have to pay off the student debt first. Does anyone keep a strict asset allocation or does everyone agree that it is a goal not an absolute?

Update on the millionaire goal- April 2012

This last month has not been good for the stock market. Even though I added $400 this month, we have only gained $103 for a grand total of $12408. However, I have made some changes this month. I was unaware that the government extended the social security tax cut through the end of the year. That will save me at least $100, probably more. I have increased my automatic investments to $417 and as I work I will increase it. A hundred dollars over a year may not be a lot but when it comes to finance even a penny can count. I am still working towards my mini-goal of $25,000 and expect to get there within three years.

What kind of stock funds are out there?

First we have domestic (US funds) and international funds (everywhere else). I assume that other countries also have their own domestic funds. International funds can also be separated into area on the world or types of countries (emerging markets vs first world countries). We also have value and growth funds. Growth funds are easy to understand, they are stocks that we believe will grow well, normally do not have dividends but are more risky, whereas value funds are thought to be undervalued in price and that are likely to pay dividends. I prefer value funds but growth funds are needed in your asset allocation.

Stocks are also broken down by the capilztion of the company. Market capitalization is calculated by multiplying the number of a company's shares outstanding by its stock price per share. A large cap fund has stock wit over $5 billion capitalization, a medium cap has between 2billion and 10 billion. See some crossover there? A small cap fund definition varies depending on the brokerage company but normally is between $300 million and $2 billion. I find it harder to find international funds that separate into all the different caps (I often find large and small), and I have never found a emerging market fund that did so.

And last but definitely not least, you can buy real estate on the stock market using REITs. REITs can either be residential or commercial.

This is very complicated and can get confusing when people are starting off with it. Feel free to ask questions or clarifications, I'll be checking back. My next article will go into my preferred allocation, why I deviate from it and why that is ok.

Stocks vs Bonds

I was helping a classmate start up a Roth IRA last week and got asked a simple question, How do I make money in my Roth? And with that, I realized that many people do not learn growing up what a stock or bond is and that is part of the basic understanding you need to invest and make money for retirement. So let's get to it.
A stock is a percent of a company vs a bond is a loan to either a company or government. You can buy either or both but I do not recommend it. Most people do not have enough knowledge or money to investigate companies and buy enough so that if one false they do not lose everything. So we are back to, how do you make money in your Roth? Simple, stock and bond FUNDS.

Professionals buy types of companies and market them to the consumer and you buy into a portion of that fund. You pay the company a percentage of the money you have in the fund in exchange. The easiest fund is a target date fund. You tell the company when you want to retire, and then pick the fund closest to that date. The fund is designed with all different types of stock and bond funds to give you the best chance of retiring at that date. Target date funds are great for the newbie investor because you only need one fund to diversify which means you need less money to start off with. However, they do cost more than basic funds so once you get up to about $25,000 (my next mini-goal) you do have to learn about the other types of funds and how to allocate your money. Next article we will get into the different types of stock funds and later how "experts" say you should allocate your money and how I disagree.

Update on the millionaire goal- March 2012

We are doing so much better, both because of the stock market and because of getting new tenants. We now have $12,305 set aside for retirement. I am almost half way to my mini-goal of $25,000. It looks like it will take about three years to get there but maybe the stock market will be kind and we will get there sooner. Given that as of February I thought it would take us another four years, I am pretty happy. I did end up adding the money I was undecided about to the Roth IRA instead of paying down my student loans so that helped as well. I'm in the process of rolling over my 401k to my traditional IRA and trying to decide if I should keep it at Fidelity or move it on to Vanguard.

Roth IRA Movement, Why Everyone Needs A Roth

Today I join over 100 bloggers posting about the Roth IRA. Almost every person should have a Roth IRA yet many don't. Why? For most it is just lack of knowledge about how great Roth IRAs can be and all the options having one will give you.

The biggest reason to put your money into a Roth IRA is that, because you pay taxes on the money you put in, you do not pay taxes when you taxes when you take it out after you turn 59.5. This means that a Roth is the best place to put your money as a young person. Your income will go up as you age, as you get raises and promotions, therefore when you start out you are paying the least in taxes. You can open a Roth IRA at the same places as a traditional IRA, for example Vanguard, Fidelity, and T Rowe Price.

Another advantage of the Roth IRA is that after 5 years of opening the account, you can remove the money you have put in without a penalty. This can count as a secondary emergency fund or as a extra saving account for large purchases such as your first house. For your first house you can take up to $10,000 out a IRA, traditional or Roth for the down payment, but for a Roth you can take out the up to $10,000 of the interest/earning plus all the money you put in. It is a great way to not pay taxes on the interest on the money you are saving for retirement. Also, money in a IRA is not counted on your FASFA form, therefore it is a great way for a student to keep some of their hard earned money.

I did it that way, I put 10% away in my 401k when I worked as a student and saved another $7000 in an IRA for my first house. I was lucky though, we moved to a very cheap area for my fiance's graduated school and our duplex only cost $60550, so my IRA covered most of our $12,110 down payment.

If you choose to put money away in a Roth as a student, you can, if you have had the Roth for five year, take out the money after college at use it to pay down your subsidized student loans. The biggest drawback of a Roth IRA, is that you must have a Roth IRA open for five taxes years before you can remove the deposits without a penalty. Therefore, everyone who is legally allow to open a Roth should do so, even if all you put aside is $50 in a credit union Roth IRA. So who can put money in a Roth IRA? Well, if you are married filing jointly or qualifying widow(er) and your modified AGI is at least $173,000, you can each deposit $5000 ($6000 if you are 50 or older). The amount you can deposit get lower from $173,000 to $183,000. If you are single (like most on this blog), head of household, or married filing separately and you did not live with your spouse at any time in 2012 you can deposit $5000 if your modified AGI under $110,000. From $100,000 to $125,000 the amount you can deposit decreases.

A Roth IRA can be a great tool if you use it correctly but you need to make sure you will not remove the money you need for retirement from the Roth. A way to keep the retirement money separate from your secondary EF or first house savings is to open up a second Roth IRA at a credit union and just use that for the savings and have your Roth IRA at a investment company for retirement.

Check out the Roth IRA Movement at Good Financial Cents and see what others are saying about having a Roth.
http://www.goodfinancialcents.com/lets-start-a-movement/

Why do updates mean "lose options I like"?

Fidelity updated their webpage, great right? Nope. It used to be that you could set up automatic transfers to your IRAs and decide if you wanted your deposits from January to April 15th to be deposited under last years or this years tax year. So guess what you can't do now that Fidelity has a nice, new shiny page? Yep, you guessed it, you can't decide. You can make the choice if you are just doing one deposit or if you call in. So basically, if you want to spend extra time, Fidelity will let you have a choice but not if you just want things so nice and simple.

I think Fidelity has forgotten that people have other options. I am thinking of transferring our money to Vanguard now. I guess I'll check Vanguard's website and see if you can make the choice from there. Anyone have Vanguard and know? Normally I am a great supporter on Fidelity, they allow you to open a fund with $200/month with no additional fees versus T Rowe Price that allows it at $50/month but bills you a fee if you have less than $5000 or Vanguard which requires $3000 in each account, but I like having things automated and not wasting my time. Choices, choices.

Heathly Eating, Costs and Benefits

People may have notice that I have not kept up on my food budget updates and their is a reason for this. I am changing my eating habits and that has thrown my budget completely out of whack. I expected that we would have to spend more this year just because of inflation but adding in eating better we are now consistently spending about $65/week. Part the reason for that is food I do not eat. I am not used to eating healthy so some fresh veggies have gone to waste or the meal ended up not tasting good and I threw it out. However, I truly believe that once I get accustomed to cooking and eating well, our cost will go down. Making a change means I am not perfect at it, or even good at it.

This is true of any change, food, financial, anything. However, often we try to change and because we make mistakes we give up and that is the real mistake. Is being over my budget by $10/week going to kill my budget? Kinda, I won't be able to save the amount I need but is going over by $10/week for a small time going to kill my budget, probably not. In the end, being healthy will mean less medical expenses, it may even mean less food costs once I know what I am doing. I also think that over the summer our food bills will decrease even more, because we will be eating out of the garden and used to eating fresh fruits and veggies. Does anyone have cheap healthy meals that I can try? What ways have you kept your grocery bill low while still eating healthy?

How to fill out a W-4 and how that connects to paying your taxes in April

Right now people are talking about how much they are getting back in taxes or complaining how much they owe but honestly, you have total control over your refund or lack there of, if you do a little planning and fill out a simple form from your employer.  That form is called a W-4.  Normally filling out a W-4 is easy, you let them know if you are married or not, then add how many people you support.  If you have one job, it truly is that simple and easy.  The problems occur when there are multiple incomes (like spouses who each earn income) or someone working two jobs. Or you could have a problem if you take advantage of tax credits like the HOPE credit, EITC, child tax credit OR your parents still claim you as a dependent.  If your parents still claim you, you put 0 as the exemptions because you cannot claim yourself.  If you have additional credits, that requires math.  Figure out how much the credit is and if it is more than  $3650 times your highest tax bracket, claim an additional person.  If you and your spouse both work, each should claim themselves, or one person claims two and the other claims 0.

If you have a lot of income that is not from your regular job, like our rental make sure to set money aside for it.   You can get penalized if you do not pay enough over the year but as long as you did not owe over $1000 or did not owe the year before you should be fine.  Keep in mind, if you do get a large refund, most of the time that is just your own money returned to you.  It is not "free money" or money to blow.  It is part of your wage and should be counted as such when you make your budget.

Update on the millionaire goal- January 2012

For once the market has helped us along on our goal, instead of hindering us.  We now have $11,134 set aside for retirement.  Right now we are not putting money into retirement because of not having our duplex rented but hopefully that will change in March and we can get back to piling money in our Roth.  Still deciding how much, if any of the $225 (money set aside for taxes, see last post), I will be putting into the Roth.  Our next mini-goal still remains at $25,000 but unless the market really comes through, it will probably take another four years before we reach it.

Decisions to make:Debt vs Retirement

I've mentioned before that we use our rental income to save for retirement but since we have not had tenants since October there has been no retirement savings.  For the 2011 year we have put aside $3600 which is $300 short of our 15% goal.  However, we do also set aside $25/month of our rental income towards taxes.  This year we owe no taxes (actually according to the government we have a loss of $600 on the rental) and therefore we need to decide what to do with the $225 of tax money.  I originally thought to just put it in the Roth IRA because we are not making the retirement goal however, we do have a lot of student loan debt and paying extra on that would make me happy.  Granted most of it is deferred and not earning any interest but about $5450 is accruing interest at 5.75%.  I am still leaning towards just putting the money in the Roth IRA but I have till April 15th to decide.

Financial Advice

When I first started figuring out my finances I found the msn money boards which were great for beginners and support. The MSN board is now gone, however there is a private board that many from that group have moved to (http://notmsnmoney.proboards.com/index.cgi).  However, it is hard to find, if you do not already know it is there.  Also, many people really are not as interested as I am in personal finance.  I know my husband prefers me to figure out the financial picture and then give him options.  I looked into financial advisers but they are either fee only and cost about $500 to set up or just salesmen.  Neither really help beginners or young people.  I think it would be great to have someone who helps make you a budget, helps you set up a retirement account (leads people to the right ones, such as Vanguard, Fidelity and T Rowe Price), help people understand credit and basically set young people's financial affairs in order.  This would not be a long process, if there was a list of information for the person to collect before the meeting.  It could be done with a half hour phone call, an hour of prep work by the person and an hour meeting at the end.  Even if you expect the person to get paid $25/hour that would only be $62.50, no where near $500.  I wonder what it would take to set up a program for young people, maybe have it at colleges?  It seems like a program that would be great for college students either freshman year (if they are putting themselves through school on their own) or Senior year before they go off to the "real world".  Does anything else think this is a good idea? Do you think young people would go for it?

Saving for Retirement/Financial Independence as a Young Person

I read a great article (http://the-military-guide.com/2011/01/03/how-many-years-does-it-take-to-become-financially-independent-2/) which basically showed that as increase your savings you also decrease your expenses which means you end up needing even less time to become financial independent. As a concept, it is hard to argue but it brings up some ideas specifically for this generation. Though my DH and I are only saving 14%-15% of our net income towards retirement we are spending about 14-15% towards paying off debt and an additional 4% towards our next move and our EF.

So does that mean it will take 39 or 26 years (or some where in between) for us to be financial independent? Do we say it will take 39 years until we pay off the debt and then we can claim the 26 years? What about the fact that we will likely need health insurance? To COBRA my husband's health insurance it costs more than $500/month. Once my husband graduates some of his student loans will be 6.55%. I would like to pay those off quickly but the loans at 5.75% and 3.75%(both mine and his) and the mortgage (4.75%) I would keep until the end. I won't need to pay those every month until I die (just 10-30 years) so how do I decide how much I need to be financially independent?

These are tough questions and because of the amount of debt most people our age have, valid ones. I see many bloggers either ignoring retirement, for our age range, or geared towards 40-50 year age range and ignoring the debt load. Our generation needs to save for retirement and we need to start younger than most of our parents because we won't have pensions yet we start in hole because of both student loans and the need for higher education. So how do you start?

There is no way I am saving 80% of my income but I don't want to wait 30 years for financial independence. I started by saving 10% of my income and as time passed and we increased our income we increased our savings. We now save 14-15% into our Roths but I don't want to stop there. I want to get up to 20% but for me, I'll wait until we have paid off the 6.55% student loans. This could take another 8-10 years but I am fine inching towards financial independence while still living well. Twenty-eight from now I'll be able to be saving over 30% but by then I'll be 55. I want to be able to retire at 60. But even with just saving 15% I could retire by 66. Do you think I can retire at 60 with my plan? What would you do different? What are you doing to save/invest towards financial independence?

W-2s, 1099, 1098Ts and taxes...What does it all mean?

Any income you earn, you must give a portion to the government in taxes but how do you determine how much? By January 31th, your employer must send you a W-2 which includes how much you earned working for them, how much was taken out and sent to the federal government, the state government, social security and medicare. Then by February 15th any bank or brokerage firm must send you a 1099, which is any interest or capital gains you receive over the year. Be careful because some companies will only send out a 1099 if you make more than $10 but you still have to report the income to the IRS even if you do not receive a W-2 or 1099. So once you have your W-2 and 1099 (if any) what do you do?

If you go to the free file section on the irs website (http://www.irs.gov/efile/article/0,,id=118986,00.html), you can find companies that allow you to use their programs for free if you earn under $57,000. My favorite is turbo tax. It will walk you through your taxes and allows you to file online. You do have to pay for the state but you can print out your federal and use it to do your state taxes and avoid paying for anything.

Remember if you are a student, wait for your 1098-T Tuition Statement which says how much you spent in tuition and fees before you file. You can either get a tax deduction or tax credit for your tuition and fees. Turbo tax or most other tax programs will help you determine which will save you the most money but normally, the credit is best.

Feel free to leave any questions about taxes in the comments. I can answer tax questions for federal, California and New York taxes but I am not a CPA or EA.

Cheap Dating

As a college student or recent graduate often we do not have much money for fun yet who wants to stay home all weekend? There are many free and cheap fun activities if you know where and how to look for them. For example during the winter in buffalo there is a free ice skating rink (it cost $3 if you need to rent skates) which we discovered because the rink is near our credit union and we checked the prices out. Yes, sometimes the hours are not the best but it is still a fun afternoon event. Also, you can sign up for groupon (www.groupon.com/) or living social (subscribe.livingsocial.com/) to get discounted meals or events. Remember to sign up for upromise and get cash back if you buy anything from groupon. Also, check http://www.restaurant.com/ to see if any restaurants you like are on there. Then google restaurant.com/ and coupon code to get it for even cheaper.

Keep in mind, though, you don't have to go out for fun. Invite people over for a small party, a barbeque in the summer or a potluck in winter. It might cost a bit but not as much as going out the bar and others might like the idea and start having parties at their places. One of the best ways to meet people is through your friends. And cooking with a boyfriend or girlfriend can be fun as well. You can teach other how to make new meals and show off a bit at the same time.

Also, check out if your city or nearby cities has free concerts. I saw smashmouth in concert for free at the San Jose Concert in Park Series. It is a great way to hear new bands and maybe listen to some old favorites. Check with the universities in the area, they often have events that can be fun to go to as well. Some cost money, but often they are subsidized if you are a student. At the State University at Buffalo my husband and I saw the former prime minister of England, Tony Blair, speak for free as students of the university.

Does anyone have any other ideas for cheap dating or other frugal fun?

Update on the millionaire goal-2011

I now have $10,520 towards my millionaire goal, which is great since that mean I am back over my $10,000 minigoal and can start focusing on the $25,000 minigoal. However, I have no money to be putting into retirement because we do not have any tenants and have not since October 2011. This is the second time we have looked for tenants and I don't know why we are getting less interested perspectives tenants. I have changed the ad many time, updated the apartment and repost the ad often. Hopefully we will get a tenant soon and we can start putting money towards retirement again.