Tuesday, March 27, 2012

Putting the “Cent” in “The Centsible Runner”

As I was running today, I got to thinking about how I call his stupid blog “The Centsible Runner” but I don’t ever talk about “Centsible” things.  I am interested in personal finance and how to best save money (I love me some numbers!).  I read several publications and blogs about the topic and I use that information to help me save and invest money.  I need to put the “Cent” in the “The Centsible Runner”…. so here I go (yep, this shows you how much of a nerd I am)…..

Jeff and I like to keep our investing and saving pretty simple; we have a Short Term Plan and a Long Term Plan

Short Term Plan- Our Short Term Plan consists of savings accounts and money market accounts to use for 1) our Emergency Fund and 2) short term savings goals. 

When we got married we set up a joint account where we pay our bills from and excess money went to our savings account.  We started to save more and noticed that we weren’t getting much interest on our savings account money, so we shopped around and found a money market savings account through Capital One.  Because we had a credit card through Capital One that earned travel rewards, we decided to open a rewards money market account where we earned interest AND rewards that linked to our Credit Card rewards account.  Pretty cool, we were getting rewarded in two ways for saving!

At first we were just saving to build an emergency fund.  We looked at our monthly expenses and determined a goal emergency fund amount; so if we both lost our jobs tomorrow, we would have enough cash on hand to get us by for 6 months.  In fact, one of us was out of work for part of last year…. but we were able to cut back on expenses and didn’t dip into our emergency fund, but it sure was nice to know it was there.

Now we are continuing to save for short term goals such as; 1) down payment on a house, 2) cash for a car (we will only get a used car from here on, check out THIS ARTICLE), and 3) a future child fund.   When we are ready to quit moving and know we will be somewhere for AT LEAST 5 years, we want to buy a house.  We want to have 20% to use for our down payment.  We also both have cars with close to or over 100,000 miles on them, so we want to have enough saved that if one breaks down we can buy a used car with cash.  Lastly, sometime in the future we want to expand our family but want to both be able to keep working.  Childcare is EXPENSIVE, so we are also saving to be able to put our future kid in daycare without having to make financial sacrifices. 

Long Term Plan- Our Long Term Plan consists of 1) 401K accounts, 2) IRA accounts, and 3) Roth IRA accounts to use for Retirement.  We started early to retire early and comfortably!

We both have 401K accounts through our companies and put at least the percentage that our companies match.  Even in the bad past couple of years we still have a very good amount in our 401K accounts.  We also have IRA accounts that we used to roll over 401Ks from previous jobs (we both have switched companies in the past few years). 

And finally we both have Roth IRA’s that we contribute the maximum amount to each year.  I think that Roth IRA’s are one of the most important tools to your long term savings plan in your 20’s and 30’s (or as long as you are able based on your salary); check THIS ARTICLE out to learn about Roth IRAs, its one of the best explanations of a Roth IRA that I have seen.  I also just learned from THIS ARTICLE that a first time homeowner (or you have not owned a home in 2 years) can withdraw up to $10,000 from a Roth IRA before retirement, without the 10% penalty, for a down payment on a house.  Score one for Jeff and me when we decide to buy a house :)

And I can’t forget to mention our most important savings plan…. feeding loose change to the Piggy…..

IMG_1608 Don’t hate on the Piggy Bank, this little guy gave us spare change to gamble away in Vegas.  By the way, playing blackjack is NOT a good savings plan.


JRL said...

I'm going to break that piggy bank before I go to Vegas next

CentsibleRunner said...

No need to break the piggy when the key is taped to his belly!

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