This summer Mr. Dove and I checked off several financial goals. Each time I did a little happy dance in private and felt bursting to share the good news with everyone I ran into that day. Except I didn’t, the share with everyone bit, because that’s a little weird, right? Most people don’t divulge that much of their finances with coworkers and friends. But then I remembered, oh yeah, I have a blog…where I intended to talk about personal finance. Duh. So why not celebrate with strangers on the internet who, if reading, apparently actually want to hear me babbling about emergency funds and retirement savings?
Here’s the list of summer accomplishments in order of which they happened:
1) Increase emergency (ER) fund from five to nine months.
Why? Well, I still remember that awful, I might throw up feeling I had a month before graduating law school when I still had no job lined up and was adding up the +$240,000 I had in student loans. It all worked out, but I never wanted to feel that way again. Which is why we had a five month ER fund while paying off my private student loans and Mr.Dove’s subsequent post-bacc loans. This is counter to some debt payment advice, like Dave Ramsey’s. However, for us, a healthier ER fund let us throw all our extra income at the debt without worrying about possibly “needing” it for something more emergent.
And now a nine month fund means if I lost my job, I’d have a year and half to find another one. Essentially, I’m a classic, cautious millennial who was luckily in college for the worst of the recession and recovery, but watched the struggles of others with wide eyes. Maybe it’s too conservative, but I needed our ER fund in order to be completely comfortable with later investing our money. I’m hoping it will let us avoid any future recession panic attacks and making mistakes like cashing out of our investments when prices drop.
2) Increase Mr. Dove’s retirement contribution from 10 to 15%
In June, Mr. Dove started a new job with an almost 25% pay increase, more vacation, and actual benefits. This made it easy to bump up his retirement contribution from 10 to 15% (and start putting the remaining extra pay towards other investments). We also switched to his new health insurance and slashed our premiums almost in half. All those articles I read about switching jobs being the easiest way to get a raise? Spot on.
After Mr. Dove hit his two year mark in February, we started talking about him looking for a new job. He had received decent yearly raises. But he was annoyed because he had asked for (and was promised) some higher level responsibilities, which never came through. I was also intrigued by theory of job hopping to get a larger raise. We periodically browsed Craigslist and Monster for a couple months. His new job is the only one he applied for. He didn’t even negotiate his new salary. We were both pretty shocked at how easy it was for him to get this kind of an income increase. Plus he’s now doing the kind of duties he had wanted. Win-win-win.
3) Max out my 401k
This month I also received a fairly large pay bump, which allowed me to up my retirement contribution from 10% to the amount that will max out my 401k (next year). Three years ago the thought of maxing out my 401k seemed crazy, if not impossible. I felt absolutely giddy when I logged onto my payroll site to change my contribution amount. I wish I could bottle that feeling!
4) Start investing in a brokerage account (non-tax advantaged vehicle)
I hemmed and hawed on whether we should also max out Mr. Dove’s 401k before investing in a non-tax advantaged account. In the end, we decided we wanted the flexibility to use this money before retirement. We don’t plan on buying a home for at least 7-10 years, and maybe not even then. But we want the flexibility to use this money for that purpose if our circumstances or minds change. So after some research, we discussed our risk tolerance, picked an investment strategy, chose a brokerage company, decided on the funds we wanted, and then started investing.
I have to say it feels amazing to finally be throwing our extra income in investments rather than towards student loans! We’re essentially applying the same strategy as paying off debt. Except instead making extra loan payments at the beginning of the month, we have an amount allotted directly from our paycheck to our brokerage account. That way we don’t get tempted into lifestyle creep. So far so good!
What your current financial goals? Which ones have you accomplished recently?