The Miser’s 3 Things:
- Time to look back on those money resolutions you made at the start of the year. Where do you succeed? Where did you fall short?
- Decide whether 2018’s resolutions can carry over into the new year, and how you’ll make good on them.
- If you can, make a small increase to your 401(k) contribution. Identify ways to cut your budget or earn extra income.
Earlier this year, I made a handful of money resolutions, which you can read here.
Setting goals is great, but following through on them is another thing. So, it’s time to be accountable for all those resolutions set 12 months ago.
Resolution #1: Get your retirement account in shape
In January, I said I would contribute 1 percent more of my paycheck to my retirement account, getting me to 15 percent.
To get there, I’d been adding another 1 percent every year as I received raises at work. And, by summer, I followed through on 2018’s promise.
But, like any good infomercial, “Wait, there’s more!”
My retirement contributions actually increased twice in 2018. How’d that happen?
Well, I changed jobs this year. My new employer’s retirement contribution is higher than my previous company’s match. So, while I can’t take credit for this second increase, it sure was a nice bonus!
Looking ahead: For 2019, I’m keeping my 15 percent personal contribution but allocating it differently. I will maximize my Roth IRA at the $5,500 limit while still contributing enough to my 401(k) to get the full company match.
If you have Vanguard, it’s pretty simple to contribute the maximum. On the Vanguard website, you can schedule contributions to happen monthly (you choose the date each month) and Vanguard moves $458.33 into the Roth IRA from your checking or savings account each month, adding up to $5,500 for the year. Vanguard’s competitors probably have similar tools.
Just make sure to contribute enough to your 401(k) to get the full company match before starting to invest in a Roth IRA. That ensures you’re not throwing free money away.
One final note: If you can’t contribute 15 percent right away, don’t panic. Start small and increase your contributions with time.
Resolution #2: Make extra income
There are lots of personal finance blogs that champion the side hustle. This isn’t one of them.
Side hustles are jobs you do in addition to your full-time work. For example, The Miser once signed up to shovel snow at his apartment complex. Every time it snowed, I got up at 5 a.m. and muscled a snow blower around the sidewalks for two and a half hours before heading off to my “day job.” My reward: $12 an hour.
While it was a good workout, I found the relatively small income stream wasn’t worth the hassle.
Quite different from side hustles, passive income streams require little to no hassle. And that’s what I’ve focused on in the past year.
I use my cash-back credit card to make every possible purchase, earning anywhere from $10-30 a month. I shopped around for a certificate of deposit (CD), and have enjoyed the benefits now that interest rates have increased and banks are offering rates of 2.5 percent for a 12-month CD.
I’ve put my emergency fund into a high-yield savings account at an online bank, which now earns more than 2 percent (compared to my traditional bank’s rate, which had been earning a few pennies a year).
Will any of this make me rich? No. But for very little effort, many of us can reap a nice reward.
Looking ahead: For 2019, I will continue directing some extra cash to an online, high-yield savings account and adding money to my CD when it matures later this year. However, for savers looking for another interest rate hike to pad their balances, the Federal Reserve might be done with that.
Resolution #3: Make a budget, then cut it
Outcome: HALF SUCCESS
I’ve been under budget for the majority of months this year. Having previously cut cable, this year I cut my Playstation Vue subscription and am watching only over-the-air TV now. I only eat at restaurants/takeout once a week.
But one month, I went way over my monthly car maintenance budget when I had to do $1,000 in required car maintenance earlier this year. That grew by $900 when I replaced my tires after a nail irreparably damaged one of them. (Don’t drive over nails…if you can help it…which is just about impossible.)
Then there was my move to Minnesota late this year. While my new employer covered most of the moving costs, it still sent me over budget one month.
And then, there was the increased cost of renting an apartment in Minneapolis, my new city. Not something I could’ve predicted when I created my budget in January, so I reworked my original 2018 budget to show the $200 extra in rent.
Looking ahead: For 2019, I resolve to find as many inexpensive ways to explore my new home as possible. Not easy to do in a Minnesota winter, when the temperatures are daunting. But I’m trying!
Resolution #4: Protect your money
Outcome: COULD’VE BEEN BETTER
Like many people in the wake of the 2017 Equifax data breach, I signed up for the company’s free credit monitoring service and quickly forgot about it. I do know it’s monitoring my accounts because I’ve gotten a few emails notifying me of things like “a change of address has been detected” or that an apartment building where I had applied did a credit check.
But – even though it’s so easy – I didn’t take advantage of all three of my free credit reports through AnnualCreditReport.com. In fact, I only did this once. And for that, I can’t give myself a passing grade for protecting my money.
Looking ahead: I’m resolving to get these free reports! You get one apiece from Equifax, Experian and TransUnion every year. I’ll spread them out over the year by putting a note in my calendar to request one every four months.
Top photo: Pexels.com