Time to share how I’m doing on the savings side of personal finance, specifically my retirement accounts. I last shared an update back in January based on the account balances that I had at the end of December. With my student loans finally being paid off, saving has now become my personal finance priority. Taking advantage of retirement accounts and the tax savings that they have to offer is an important part in meeting those savings goals. I’m hoping that by trying to max these accounts out it will bring me closer to my goal of financial independence. This snapshot should hopefully give a better picture of that!
I’m going to go slightly off topic today for this post, but there is still some relevance here as your job is obviously an important part of personal finance. Your income is basically what you build you entire budget around! Now I may not be actively searching for jobs, but that doesn’t mean that I don’t like to take a look at the market and see what exactly is out there. If there is something that really piques my interest I do try and apply because I think it’s important to stay fresh on your interviewing skills and you never know what exactly might come from it. But there is one thing that usually makes me pause before applying or sometimes may persuade me not to apply at all: Taleo. As soon as I see that an employer is using Taleo software I know that I’m most likely in for a frustrating and repetitive experience.
April continues the theme of low spending in 2016 for me, and now we’re even four months into the year. The strange part is that I haven’t really gone out of my way to avoid spending money, I’ve just had a lot of opportunity for free entertainment (other than the cost of gas) and not to many expensive activities. I except that trend to reverse somewhat in May as I know that I’ll be going to the eye doctor later this month and as the weather gets nicer that also provides more opportunities. I do think this has been a major contributor to paying off my loans in April when I had originally project a May or June payoff date. The extra hundred dollars (or more) each month was then funneled towards increasing my student loan payments instead.
Have you ever heard someone talking about how if they were to get a pay raise it would bump them into a higher tax bracket? This might then be followed by a rant about taxes and a speech discussing how the raise will cause them to actually earn less money because of paying more taxes. I used be someone who believed these stories but it always left me with a puzzling question: “What is the incentive to make more money then?” I always thought that you had to get a huge raise above the tax bracket so that you could finally ‘break even’ because of the extra taxes being paid. The simple answer to this is that only the additional income above that tax bracket is taxed at a higher rate and the income you were already earning will still be taxed at the same rate as before.
I have finally paid my student loans off completely, and it feels amazing! I logged in and the balance was at zero after my last payment. Zero. ZERO!!! I remember the nervous breakdown I had after paying my loans for a few month. How am I ever going to be able to afford moving out? Am I really going to be paying these student loans off into my 30s or even longer? That is when I finally got the courage to look at the actual numbers and realized that I could pay off my loans in less than 10 years. It wasn’t easy and I made a lot of sacrifices and got a ton of help along the way. And now here I am today, my loans completely paid off in a little under 3 and a half years.