What is your Savings Program?

[brewer12345]

Every time I run over a squirrel, I hang it up to dry in the shed and then salt it. I figure that some day I will have enough salted away to feed the family without working for the county.

 

[Goonie]

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?

I've maxed my Roth every year mostly by DCA'ing monthly, plus throwing in small lumps here and there whenever spare change was available. I just dumped in another $2800 yesterday, and will top off the full $5k with a few more DCA deposits.

I'm sad because this is the last year for funding my Roth.....because of ER.
I'm glad because this is the last year for funding my Roth....because of ER.

 

[SecondCor521]

I have 20% of my paycheck diverted to my 401(k), and the balance is deposited into my checking account.

As cash accumulates in my checking account above and beyond expenses, it gets moved to high-yield savings (currently IndyMac Bank and AmTrust Direct) -- basically my emergency fund.

As soon as possible each year I fund to the max in the following order:

1. Roth IRA
2. 529 plan
3. ESA for oldest child
4. ESA for middle child
5. ESA for youngest child.

I do lump sums just because it's easier and has historically beat monthly DCA by a smidge.

2Cor521

 

[FIREd]

My wife contributes 13% of each paycheck to her 401K automatically. I contribute automatically $333 to my IRA every month. My wife and I get paid every two weeks.
In addition, $1450 is transferred once a month automatically to the money market fund in our taxable account at VG. The day following the transfer, and using a spreadsheet I created in Excel to determine the proper amounts, I manually exchange the new contribution from the money market fund to a variety of mutual funds. The funds that have performed most poorly in the past month receive more money, those that have performed best receive less so that I can bring my asset allocation back to where I want it to be.
Money left in the bank at the end of the month is used to top off the EF if needed or else it is added to the taxable account.
That's what our savings program looks like.

 

[ChrisC]

During college planning phase for children:

Automated: US Savings Bonds & 529 Plan; Utility Company Drip; CSRS; 401k; TSP; SEP-IRA.

After college planning phase:

Automated: CSRS; TSP; 401k; SEP-IRA; Money Market Fund.

 

[MooreBonds]

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.

WARNING*****WASTE ALERT****

Achiever51 - while that is an amazingly laudable act, please be aware that some of your bonds ARE NO LONGER EARNING INTEREST! Your moolah is sitting in the bond, and not only is it not growing, YOU ARE LOOSING MONEY DUE TO INFLATION!

That, and some of your bonds are earning only 3%-4% interest.
Check out their current yields here:
Individual - Savings Bond Earnings Reports
You'd be better off using your current marginal tax bracket to cash some in that aren't earning interest anymore and throwing them into a MM account or CD.

 

[Achiever51]

WARNING*****WASTE ALERT****

Achiever51 - while that is an amazingly laudable act, please be aware that some of your bonds ARE NO LONGER EARNING INTEREST! Your moolah is sitting in the bond, and not only is it not growing, YOU ARE LOOSING MONEY DUE TO INFLATION!

That, and some of your bonds are earning only 3%-4% interest.
Check out their current yields here:
Individual - Savings Bond Earnings Reports
You'd be better off using your current marginal tax bracket to cash some in that aren't earning interest anymore and throwing them into a MM account or CD.

Thanks for the alert. I do have all the bonds still earning interest in my portfolio, but I should have said that as opportunities presented themselves, I have "traded" in the ones approaching maturity/or those earning lower interest rates for other higher interest paying investments.

 

[citrine]

Automated: 25% into my 401K; $200 into savings.
Also contribute $4K into my Roth IRA.
Excess money is put into my mutual funds during the year.

 

[thefed]

200 extra monthly to mortgage AUTO
80 weekly to 5.4% amtrust savings AUTO
40 weekly to ING "gonna buy me a nice truck one day fund" AUTO
165 bi-weekly ROTH IRA AUTO
70 weekly SIMPLE IRA Trying to make AUTO,


all the $$ goes into checking. i keep a steady balance of $3k...give or take $1k. If I get up to 5k or so, I skim some off the top and send it to mm earning 5.5%

i DONT balance my checkbook the 'normal' way. i do it in my head, and review it regularly online. as long as I have $3k in there, i wont bounce any checks (i actually havent written a paper check in some time!) or auto-pymts for a month or so

 

[Savant]

I set up three bank accounts. One for payroll to come in. One for expenses to go out. One for investments. On pay day, I transfer an amount of money to the expense account, and a (much larger) amount to the investment account.

The money in the expense account is barely enough to meet my expenses.

 

[Bigritchie]

My program:

#1 THOU SHALT NOT be a idiot consumer.

#2 THOU SHALT NOT have a spouse or children who are idiot consumers.

#3 THOU SHALT Save/Invest every Penny that thou dost not spend on bills

 

[martyb]

Automatically every two weeks into my TSP account up to the max. Since I'll be 50 in January, my max will go from $!5,500 to $20,500 and somewhere, somehow I'll find the $$ to put in there. Actually, I think I read that the maxes for 401 type accounts were increasing another $500 for 2008, so I guess that'll be $21K.

 

[W2R]

Automatically every two weeks into my TSP account up to the max. Since I'll be 50 in January, my max will go from $!5,500 to $20,500 and somewhere, somehow I'll find the $$ to put in there. Actually, I think I read that the maxes for 401 type accounts were increasing another $500 for 2008, so I guess that'll be $21K.

Here's what I read about that on the TSP website this morning:

"The elective deferral limit for 2008 is $15,500. The limit for 2007 was also $15,500. "

"The limit on catch-up contributions for 2008 is $5,000. It remains the same as the 2007 limit. "

TSP: Current Info, Data; 2007-10-24

I am surprised and not too happy about that, but it is what it is.

 

[ziggy29]

I am surprised and not too happy about that, but it is what it is.

Well, sure. As we all know, inflation is well under control...

 

[jIMOh]

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?

401k every paycheck for me (currently 11%, increasing 1% every June).
401k every paycheck for wife (6%, getting whole match)
Roth for me $625/month
Roth for wife $250/month
Creating CDs for EF with excess IRA contributions (meaning when $625 maxes $4k per year for me, rest goes into a CD in post tax account).

 

[ziggy29]

It looks like my "program" is going to change next year. We probably won't be maxing out my 401K next year because we're becoming HSA eligible through Megacorp's new benefits program next year. Since HSA contributions are not only pre-tax, but also taken out before SS and Medicare taxes when taken through payroll deductions, it makes sense to contribute fully to an HSA next year before adding to non-matched 401K contributions which are subject to SS and Medicare taxes. This is similar to how other payroll deductions for health care (insurance premiums, dental and vision) are treated in a qualified cafeteria benefits plan.

That's a loophole I expect to see closed in the future (perhaps as early as 2009 or 2010), but for now, I'll take it. If we have enough left over to max out the 401K even after maxing out the HSA and two Roth IRAs, great. If not, we're still better off not taking that 7.65% hit on some of the money.

 

[dusk_to_dawn]

Automatic 403b for me and 401k for dw each pay period. Manual full contribution to roth ira for me and dw at first of year. Skim off excess from checking account to vanguard or high interest savings. It's worked pretty good so far.

 

[Maurice]

Hmmm... not sure if I qualify as a young dreamer but I'll post here anyway.

My pay is bonus driven. My bonus comes in February and represents the majority of my income. I live on my base salary and invest the majority of the bonus, which is also when I do my rebalancing. I say 'the majority' because some is paid in stock with a small vesting period, and I usually make a largeish mortgage payment out of it as well.

I also fully fund my 401k for the year out of my bonus (well, the bonus plus the first couple of checks between Jan 1 and bonus time).

The only other time I invest new money is Jan 1 - we write checks for both T-IRAs at the earliest possible moment. I do this out of my checking account, not my bonus.

So all of my savings occurs between January 1 and the end of February.

 

[Meadbh]

Earlier in my career (when I really was a Young Dreamer) I used DCA to pay into my RRSP. That was when all my earnings were salaried. Nowadays my salary accounts for only 1/3 of my total; 2/3 is corporate earnings. My RRSP maximum is less so I pay into it once a year in April, when I know what my upper limit is for that tax year. I always fully subscribe.

Corporate earnings are taxed at a lower rate but will be subject to additional taxes when I withdraw them as dividends after RE. I live on my salary and save all surplus corporate earnings. I have three accounts: checking, high interest savings, and investment account. Each month, $5K flows automatically from checking to investment. Expenses are paid from checking. When the balance in checking is high, I transfer it to high interest savings or to investment, depending on how I'm feeling about market trends. During the recent market correction I was glad to have that cash buffer.

I accumulated a chunk of after tax savings earlier in life and an inheritance substantially boosted that to the extent that I could probably live cheaply on an SWR of 4%. Currently if I manage to save anything from my salary after tax, I regard it nice to have for discretionary items (new car, etc) but not part of my automated RE savings program.

Current wisdom suggests that I draw on the after tax portfolio early in RE to enable maximum compounding of the taxable assets for later use.

 

[Ronstar]

Not sure if we are young dreamers, but my wife and I each have auto deposits to 401k's. We live off base salaries with my income from corp profits invested quarterly.

 

[accountingsucks]

For my work plan, I automatically contribute 7% with 5% employer match. In Canada we can contribute 18% of our salary to our Registered Pension Plan (like 401K). Normally my year end bonus is about 6% of salary and I instruct my employer to also deposit that into my RRSP so it is tax free. As far as my non RRSP, I do not automatically have my investments made. Normally around the 15th of each month I invest in whatever appears attractive at the time. If nothing does, then I just stick it in some index or low fee mutual funds. I aim to save 55%+ of my gross salary as my home is paid off.

 

[EarlyRetiree1978]

Max out 401K (15.5K). Also put additional amount aside each month in taxable (cant do Roth due to Income constraints)

 

[jnojr]

With every paycheck, I use direct deposit to:

1) contribute the employer match max to my 401(k)

2) contribute 1/26th of the yearly max to my Roth IRA

3) deposit a certain amount to a mutual fund money market

The result is that I wind up living well below my means. I just have to live on what's left, period.

 

[growing_older]

I set everything I can on automatic. 401k is automatically deducted from paycheck. Rest is direct deposited into checking. Amount is stable and predictable, so two days later the autopay from the bank pays the bills and transfers a set amount into savings. There's a bit left over in case I want some walking around cash or to cover irregular expenses. I check every so often and see if it looks like the cushion in the checking account has grown or shrunk. If it's bigger, I'll sweep some into savings. If it smaller, I'll tighten belt or adjust autopay for a month or so. With everything on automatic I can ignore as long as I want (months even) or check and adjust as often as I like.

 

[ziggy29]

Wow. Between the HSA, 401K and Roth IRA, and including the employer match on the 401K, we'll be able to deposit $35,300 next year (if we can afford it) into those respective accounts. There should be no dearth of options to "save" next year, and it's looking like it will be a good year to load up...