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financial planning for 2016

June 28th, 2016 at 06:47 am

So a fun financial benefit with DH's job is that he gets free food. No more brown bagging it. He's actually a little sad. He's always brown bagged lunch since I've meet him and it's something we've done as part of our lifestyle. Now it'll be weird to not plan leftovers as lunches. Someone at the company a single guy told DH he saved $700/month eating breakfast, lunch, and dinner on the company's dime. I would estimate he'll save $20/month. I am curious if we'll see a difference in our grocery bill. I'm sure we'll start eating out again.

But on a serious note we've decided already to max out the 401k for the rest of the year. Typically companies allow you to contribute up to 50% of your salary so we decide to rachet it up to 50% of his salary and hit the maximum as fast as possible.

We are also planning on maxing out the 10% ESPP contribution as a general saving plan. With the 15% discount on stock purchase we tend to use the ESPP as a long term savings vehicle we hold in case of emergencies. We tend to sell it after 2 years of purchase because according to tax laws it becomes long term gains but the 15% discount is taxed as ordinary income.

Because of this I think we might be short monthly with the extreme 401k contribution. We decided that we'll use our savings to make up the difference. It'll smooth out next year with a normal income and I think we still might be able to manage since we live pretty frugally.

We also decided to tap our cash savings and contribute to our Roth IRAs $11k and Coverdell ESA $4k as soon as DH starts working. Typically we'd funnel it from our paychecks but this time with the market on sale it makes sense to contribute asap. Plus I am pretty sure we won't qualify for a Roth IRA after this year.

We are also calculating our taxes and potentially refiling 2015 taxes. We have DH's 401k from his old job and we are considering rolling it to his Roth IRA. We could move it to a Rollover IRA and recharacterize a certain amount up to the 25% tax bracket married ($150k). We might not have the chance again. DH quitting mid year and getting a job mid year means that we stretched out our tax basis over 2 years.

But we're not sure about the Rollover IRA. If we do the rollover IRA, DH told me that we couldn't do the backdoor Roth IRA in the future. He said if we did then we couldn't move the money from a non-deductible IRA to a Roth because it'd be pulled from a Rollover and non deductible IRA. So we have a lot to consider.

We have a lot to do in the next month organizing our finances. We also get real insurance and dental insurance and vision. DH hasn't gone since last august so he's been waiting.

I'm so excited. The budget nerd in me is screaming and waiting to get started. I can't wait! I can house hunt and run numbers and spreadsheets and projections. I write this because I am so weird and only people here would understand.

3 Responses to “financial planning for 2016”

  1. creditcardfree Says:

    Oh yes, we all understand the desire to play with the numbers! You have some great goals. So many 'normal' people would be looking how to spend all that new money. Smile

  2. ThriftoRama Says:

    Kudos to you for being so bold with the 401k. We've had a few spans in our marriage where we did that kind of thing, scrimped on the daily expenses to make it work. HEre we are 14 years later, still alive and with more money saved! It's totally worth it.

  3. livingalmostlarge Says:

    Thanks CCF it is weird.

    Thrift I agree that sometimes you gotta do what you gotta do. Half a year salary is still a good amount so it won't be too bad. We've always saved the maximum since DH started working.

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