*I am not a certified financial planner or expert in anyway. These are my opinions based on my research and you should always get the opinion of a financial expert. I certainly do.
It's easy to say, "increase your savings." I mean, we see that suggestion about everywhere we turn. But what are some actionable steps you can take to do that? In this post, I let loose the most practical steps I have taken, which have increased my savings by thousands of dollars this year alone. These won't apply to just the Cyber Security folks my blog is geared toward. They will work for just about anyone. Feel free to share!
Get All 401(k)/IRA Match
The number one thing you should be doing to increase your savings is to make sure you contribute enough to your 401k that you are getting the full match from your employer. This amount ranges from three percent on up. But either way, this is free money that virtually doubles your investments by just merely investing a small fraction of your income.
Your tough choice will be to choose between a Roth or Traditional investment vehicle. The community's collective wisdom seems to be that if you are in a low tax bracket, go Roth, and if you are in a high tax bracket, go traditional. The reason is that if you are in a high tax bracket, you can lower your taxable income and possibly creep into a lower bracket with the traditional 401k. You are choosing to pay taxes later and, hopefully, at a lower rate. Those who are already in a lower tax brack are typically better off paying taxes now. The money can be withdrawn later without paying taxes with the Roth accounts.
Some of you may be asking why I consider these accounts savings. Good question. Until a few months ago, I was adamant about putting the bare minimum to get a full 401k match. For me, this made sense because I am projecting to be FI (Financially Independent) in the next couple of years. If all my money was locked up in retirement accounts, I was afraid I wouldn't be able to get to it. However, since then, I have discovered research on this topic. Apparently, there are ways to get to the money earlier. Thus making 401ks and IRA’s not only one of the best long-term investment options but a great mid-term option as well. In a future blog, I will talk about tax-efficient possibilities to get to your retirement accounts before reaching 59 ½ + years old.
Long story short, if 401k/IRA matching is an option at work, take advantage of it. If you have knocked out your major debt, put more in. The accounts currently max out at $19,500.
Get Rid of Debt
Yea, I know it is the same drum many people beat like Dave Ramsey. But you know they are right. Four years ago, I had about ten thousand in credit card debt, a three-hundred and thirty thousand dollar house, a thirty-thousand dollar car, a few thousand in other debt, a couple thousand in savings, and about ten thousand in my retirement.
Yea, my financial situation was a minor massacre. High debt and little savings (Others out there in even dire circumstances but this still works).
The interest was killing me, and I bet it is killing you too! Cutaway at the debt as much as possible. I preferred hitting the highest interest rate first and work my way down. Dave Ramsey likes the Debt Snowball, which works up from the smallest amount of debt to the largest. Do whatever method suits you and that you will stick with.
One of the ideas I came across is that if the interest rate on your particular debt is more than four percent, you need to get rid of it. This is because it's much more challenging to argue that investing that same amount of money is the better option. Paying down debt is a guaranteed win while investing is not so much.
Long story short is once I got rid of the high-interest rate debt and moved into a much smaller house, I could get my savings rate up. I now sit between 40% and 60% of my income going to investments/savings. That most certainly wouldn’t have been possible four years ago.
Say Goodbye to Your Cellphone Bill
Yea, this was a new one for me this year. At one time, I used Verizon and paid something like $80 a month for 4 gigs of data and calling. What a rip off!
One day, I was doing my reading of Mr.Moneymustache and saw a great post on mobile phones. It was a game-changer and led me to question my former beliefs that a big provider was the only way to go. Turns out the Cell Phone Critic, Christian Smith, had done a bunch of research and put some great alternatives to the big guys. Big networks like AT&T, Verizon, etc. have all these towers up and don’t use all the bandwidth. To efficiently use their investments into a massive infrastructure, they sell leftover access to these other guys.
Don’t let those words fool you. It’s not shitty that crappy. I have been getting almost the same exact connectivity levels as my friends who pay full price. Even deep into the mountains where service is questionable at times.
After 3 months of testing, I am happy to report that I am completely satisfied with my switch from Verizon to Mint Mobile. My phone bill is now about $21 a month. There are cheaper plans down to $15, but I chose to go with 8 gigs. Mint says that the data is actually unlimited; however, the speeds are throttled once you go over. Not sure how throttled they get but choose your own adventure. You could go with unlimited data for $30 a month, which would probably still cut your phone bill by more than half.
The great thing about Mint, I don’t know about the other services, is that you can use your same phone. Mint just sent me a new SIM card to put in my phone and gave me instructions on switching my phone number over to them. Yep, I got to keep my number.
For those of you not keeping track, that is a savings of about $720 a year.
Get a Crockpot and Use It
This is a goodie even for your male bachelors out there. Crockpot meals are so freaking easy. You just put the ingredients as described into a pot, turn it on low, and let it sit for 4 to 6 hours. Easy. What’s great is that these meals usually last me a whole week. Yes, I realize that most people don’t want to eat the same thing all week long. No worries, I have a tip for that.
To get started, download Pinterest, and start looking for Crockpot meals. I save recipes I am interested in cooking in one group and recipes that have turned out great in another. Before I go shopping, I look through what sounds good for the next couple of weeks and make a list of ingredients I need, and boom, I am ready to go.
Here is the tip I mentioned earlier. If you cook more food than you care to eat that week, just freeze it. Most recipes will keep in the freezer. Think of them as homemade frozen meals.
By using the crockpot method (and switching to a discount grocery store like Aldi or Lidl), I have cut my grocery expenses to one-third of what they were. Insane. So, for me, this will end up saving several thousand dollars a year. It may save you more if this leads to you eating out less.
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