Turns out that I tried to save so much money last year that I’m down to my last $3,000 at the start of this new year!
Always Broke
Oh sure, I have money saved, but it’s in my regular brokerage account, my Roth IRA, and my 401k Plan. Turns out that I bumped up my contribution to my 401k so high that even though I have an extra $15,000 a year from paying off my house previously, that money got absorbed in investments. While this is great, it also means that my liquidity is restricted somewhat. So much so that I’m going to have to pay my yearly car insurance with money from cash sitting in my regular brokerage account.
Or course I don’t regret my financial tightness, but does make for some worrying about bouncing checks. I think this coming year, instead of putting all my tax money in investments, I’ll instead try to build up my cash balance in my checking account to $15,000 (vs the regular $10,000 amount). This should make for a less stressful Christmas time.
Just in case you are curious as to what I did, I’ve listed the financial decisions below:
- Increased my 401k contribution (and I will probably increase it again this year too).
- Contributed 10% of my salary into my employer’s ESSP. (I made a cool 15% in my Employee Stock Purchase Plan, no regrets here).
- Purchased a decent amount of dividend stocks (I will continue this path in 2012, but not as much).
- Increased my contribution amount to my HSA (I’m not sure if I will increase it next year, I’m happy with the balance as is).
- Paid off my credit cards so that I didn’t carry a balance. (This always hurts around the holidays).
- Stuck with my car instead of buying a newer one. (I wanted to, but I couldn’t bring myself to sell any of my stocks, or take out a loan for new used car).
So for my family, it’s an other year of living Tax Refund to Tax Refund once again. Hopefully this year I’ll be able to have a large enough buffer that I won’t notice it!
Here is to a big 2012 year!
MR
Hopefully you can find a bit more freedom in 2012. It is always a fine balance between investing and saving hey. You want to get good interest on your money but you also need some liquid on hand. When is enough enough? There is no one answer. We have to each figure that out for ourselves. We are still learning what we need too.
Very true. I’ll probably right it close again for 2012… I have so many plans but not enough money to implement them all…
Liquidity is very important and at least you didn’t have to put it on a credit card. $15k is a pretty good cushion. Do you have it at ING or some other interest bearing checking account?
Yes, it’s got to be something that bears interest… I would be very unhappy if I didn’t earn interest or a dividend on the money I would save.
I enjoy feeling the fear of liquidity, but are you really down to your last $3,000 Don? That’s really tight imo no?
Last $3,000 in my checking account. I still have plenty of money in my regular brokerage account, but I hate to spend money from there!
Without that mortgage payment, I think you’ll be liquid in no time.
I’ve been fighting this battle for a while, but I always find that I’m short at the end of the year… somehow…
A 50% bump in savings is a lot. Could be leaving earning power on the table with increase.
Yep, I agree. That’s why it’s so hard to keep that excess in my checking account. It’s always a battle for me…
It still sounds like you have some options, so that is good.
I love it MR! I keep myself cash poor also, because as soon as I have too much I do stupid things lol.
Everything goes to debt repayment, investments or future downpayment.