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What is your Savings Program?
Old 10-17-2007, 07:37 AM   #1
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What is your Savings Program?

I was listening to Howard Stern yesterday, and he was talking about his 'savings program' when he was younger. The program was simple: With every paycheck, he would purchase a Bond. Its a lesson he said he learned from his father early in life. I didnt get those lessons from my parents and am playing catchup much later.

At any rate, I realized that I dont really have a formalized program like that. My TSP and Roth are automated with every paycheck, but I dont have a program for aftertax investments. Right now its just paying down on debt.

So Im curious what program people use? Is it set up automatically or do you have to manually do the transfer? Any recommendations or advice on areas to look into or avoid?
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Old 10-17-2007, 07:54 AM   #2
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Automated to 401k and to Vanguard...
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Old 10-17-2007, 08:10 AM   #3
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Quote:
Originally Posted by ChemEng View Post
I was listening to Howard Stern yesterday, and he was talking about his 'savings program' when he was younger. The program was simple: With every paycheck, he would purchase a Bond. Its a lesson he said he learned from his father early in life. I didnt get those lessons from my parents and am playing catchup much later.

At any rate, I realized that I dont really have a formalized program like that. My TSP and Roth are automated with every paycheck, but I dont have a program for aftertax investments. Right now its just paying down on debt.

So Im curious what program people use? Is it set up automatically or do you have to manually do the transfer? Any recommendations or advice on areas to look into or avoid?
My TSP is automated with every paycheck, and I pay my Roth manually as soon as it is allowed, each year.

As for the rest of it - - since I do not share my bank accounts with anyone, it is easy. When checking gets over a certain amount, I skim the excess off into savings and to me, that means I CANNOT touch it, barring serious emergencies.

When my savings account gets over a certain amount, then I need to put the excess somewhere more financially advantageous.

It's all in the mindset. I actually enjoy being able to invest, and the day that I can put the year's maximum + over-50 into my Roth, or put money into some other investment, I have a big smile on my face. That's because each $ that I invest puts me that much closer to ER.
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Old 10-17-2007, 08:30 AM   #4
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Automatic payroll deduction to deferred compensation

(like a 401k for goverment, known as 403b).
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Old 10-17-2007, 08:44 AM   #5
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Automatic 401k for both me and the wife- to maximum allowed by law.

You don't miss what you never see.

I then try to salt away extra every few months.
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Old 10-17-2007, 09:24 AM   #6
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Auto to 401K + Vanguard index funds
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Old 10-17-2007, 09:32 AM   #7
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Same as others here have stated: automated direct deposits to company 401k plus Vanguard for Roth IRAs & taxable index fund.

Never let those dollars come near our checking accounts, which is where we pay monthly bills (including mortgage & school loan payments) and enjoy spending whatever is left over.
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Old 10-17-2007, 09:33 AM   #8
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I pay my Roth manually as soon as it is allowed, each year.
Follow on question: Do you invest the yearly max into your Roth as soon as its allowed? Or the yearly max divided by the number of paychecks?

Im currently doing the latter, but have considered the former. I decided against it ultimately, but would like to know your thoughts if you choose differently.
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Old 10-17-2007, 09:36 AM   #9
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Quote:
Originally Posted by novaman View Post
You don't miss what you never see.

I then try to salt away extra every few months.
Before ER my paycheck was direct deposited, and now my pension is direct deposited. From there, I have automatic transfers made to investment and savings accounts. By having auto transfers set up, I don't miss what I don't see. And like novaman, I shove extra $$ away as often as I can!

A guy that retired a few years before me used to do the "Howard Stern Savings Plan". Every payday the first thing he did was buy a savings bond. He did that faithfully for almost 40 years.
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Old 10-17-2007, 09:45 AM   #10
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I contribute to our Roths same as 401k and taxable savings.....per paycheck. I think I would do it differently, however, if my income wasn't steady throughout the year.
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Old 10-17-2007, 10:43 AM   #11
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Hi,

My TSP is automatic from my paycheck (set to max out at last pay period).

Once a month, I have an automatic transfer from my checking account to my Schwab (taxable account). Every payday, I have a set amount automatically transferred from my checking to my savings account.

When my savings accounts gets big enough (about twice a year), I transfer some of that money as well to Schwab, manually.

Everything is pretty much - "pay me first". It mostly gets moved around before I can touch it.
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Old 10-17-2007, 10:53 AM   #12
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Max out 401ks for DW and I.

After that, I transfer a certain amount (right now, $1500/month) to a Vanguard money market account. Then I set up automatic exchanges at VG from the MM account to whatever investment account is underweight at the time. Let the system run for a few months, then readjust the auto exchange. IRA's are also funded with this $1500/month auto transfer to VG. They just take the place of additions to taxable investments. Investments occur bi-monthly on the 10th and the 25th, unless I need to bank some money to make a $3000 minimum purchase to open a new fund at VG.

My HSA account I fund with one-time money (bonuses, credit card deals, etc). I may have to divert some of the $1500/month to fully fund the HSA before Dec 31.

I don't budget, rather I can tell when we are spending too much when my local bank account balance starts getting smaller and smaller each month.

I'd have to say that my method is very easy to follow and removes the stress and uncertainty from saving/investing. I can always taper back the monthly amount if it becomes too much or crimps my family's wants/needs. I may do just that to buy a new car or pay for a vacation.
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Old 10-17-2007, 10:56 AM   #13
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Gawd, I cannot believe I have ANYTHING in common with Howard Stern, but it appears I do: beginning at the age of 16 in my very first job, I bought a US Savings Bond every month for the next 39 years until I retired last December. In the beginning it was a $50 bond but as I made more $$, I bought larger denominations. Haven't redeemed any of the nearly 500 bonds I've accumulated, some are drawing 6%, and while I probably could have made more over time in another investment, for me it was a painless way to save.

In addition, beginning with that first job, I saved 15% of my net income -- paying myself first -- and maxed out 401(K) from time I was first eligible. It became such a habit I didn't miss it from my income.
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Old 10-17-2007, 11:01 AM   #14
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I'd like to add that the auto savings is just like paying another bill. When I sit down with my checkbook at the end of the month and add an entry for the mortgage payment due on the 1st, I also put in the VG investment that will automatically be transferred on the 1st also. I don't view it as savings as much as just another bill like the mortgage, or gas bill or elec, or water, or student loans.
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Old 10-17-2007, 01:05 PM   #15
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Taxable investments not automated - similar to Want2retire, I just manually move chunks to my savings as they accumulate. Then when savings reaches a certain amount, I move it to a brokerage account and invest it per my asset allocation. I do track expenses so that I can see (after the fact) if I'm spending too much, but mostly it's done by feel. I start to get antsy if I haven't invested as much as I want - for motivation, I can always stare at my FIRE spreadsheet.
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Old 10-17-2007, 01:15 PM   #16
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Automating our invesments rules. Having it gone before the paycheck gets to me is having it out of sight, out of mind.

Every paycheck helps fund next year's Roth. Equal installment to hit the 10k for '08. Same year after year.
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Old 10-17-2007, 01:35 PM   #17
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Automated from each paycheck:
401k/403b
online savings acct (home/car/emergency fund)
dependent FSA

Automated monthly transfers from checking:
529
roths (max)

We don't contribute the max to 401k/403b, as that alone would be 40% of our gross income, and wouldn't leave enough (after roth/529/taxes) to pay all the bills. We do contribute more than enough to get the full match.

On the one hand, one of my goals is to contribute the max to 401k after college is funded. On the other hand, we hope to be semiRE by then!
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Old 10-17-2007, 01:52 PM   #18
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I automatically take out just a high enough percentage to max out my 401K plan some time in December. I also get paid twice a month, on the 15th and last days of the month. I have automated monthly transfers set up on our Roths -- $333 on the 1st to my Roth, $333 on the 16th to my wife's. (This reminds me. I have to make a note to increase that to $416 starting in January.)

After that, if we have more in checking at the end of the month than we need, I either put the excess into savings (if I need to rebuild the emergency fund) or into a taxable investment account (if I don't).
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Old 10-17-2007, 02:22 PM   #19
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I do automatic to 401k to reach the max. Then I just push money into savings as I can, with no schedule. If savings is looking fat, I push money to my brokerage account.

Earlier this year I moved a large portion of my savings to mutual funds, so I've spent several months trying to rebuild that. It will take me at least another 6 months to get it back where I want it.

I find the idea of automatic withdrawals a bit weird. Unlike the rest of you guys, it makes me feel like I'm not in control of my money. So I like to manually move my money around for the most part.
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Old 10-17-2007, 04:41 PM   #20
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I am done with savings and am now in distribution mode, but when I was savings it was, as many have already stated, automatic max 401k contributions, automatic max employer stock plan contributions. a budget that we stuck to, the remainder in the checking account would go into savings when the balance go big enough to move.
When I got to the point where we consistently had a surplus in the checking account, we started automatically moving a set amount into a saving account, which when that got big enough went into money market accounts or cds. When that account gets substantial enough to do something with, we added to our investment asset allocation.
Fast forward 30 years and we are FIREd!
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