401K I like you more then Presents

A bit a ago I wrote this article about the 401k and how we would use it.

I think it wasn’t super clear so let me paraphrase.

I talked about how I had an ah ha moment, that I didn’t have to wait until next year to max out my 401k, that I could do it now.  For this year!

Well at the end I said I would make the changes which I made.

Well Mr. Roamer then asked, I thought we were already maxing them out.

No sorry honey, like I mentioned in the previous post I had done the math for 12 months of contributions. Or I guess a rolling 12 months. But that’s not how taxes work so if we want to max it out for this year then we need to make some adjustments.

After, we calculated the new numbers. With those numbers we could guesstimate how much we were going to be bringing in for the following months. We couldn’t be sure since we didn’t know how much exactly would be taken out for taxes.

What was obvious was that since we only had a limited number of months it meant we had to set more aside all at once.

As things would have it December has turned out to be the month with the lowest take home  after the 401 K deduction.

1260.93 for her +1005.57 for him. We were only bringing in $2266.5.   Now this isn’t peanuts but as you can see this is very small amount of money.

If you break it down it works out to each of us earning a little over $7 per hour.

Extreme Goals call for Extreme Measures.

Fortunately since we have conquered our debt our monthly expenses have dropped substantially and are almost all covered by this. We keep a $500 cushion which will cover everything else.  And to top it all off I had much more success this month with side hustle. I was able to sell some baby clothes and made $60. Wohooo! Way better pay off then my yard sale experience.

So it really sounds like this is no big thing to us. WHY is it extreme at all?

Well I guess its extreme in context.

First off we are a family of 5 living in good old Southern California. That’s right SoCal and our so called cost of living.  We are saying that we will make it through a month just fine with funds that total $2826.5. Not only that I am saying that we will make it through the holidays just fine. December the month when most people increase spending will be the month we have the least amount to spend.

All because we want to meet a financial goal.

At the end of this month and end of year we will have accomplished another goal. We will have maxed out our 401ks*

Would you do that? I really want you to leave a comment and tell me what is the most extreme thing you’ve done to meet a goal?

How it’s safe for us

So I told you why its extreme, now I’m going to tell you why its a very calculated risk. Why really it’s even safe.

A long time ago we discovered and started practicing the, use last month’s funds for this months bills plan. Mr. Roamer gets paid once a month on the 15th and I get paid twice the 15th and the 30th. This means we also have a month cushion building as this month progresses. So in all truth it was November which was the lowest earning. However, that money just piled up until December rolled around and December is when we have to make it work.

Since we both make good pay it was a bit of a shock to see how little we brought in. I ran my numbers again just to be safe. I didn’t want to pull money out of our savings account. I’m looking forward to making it to the end of the month and seeing that we did fine and hopefully even save some.

* we will actually leave some dollars on the table due to everything being in percentages. I will lose out on $.71 and Mr will lose out on $46. If anybody out there can advise us I’m all for it. Can we over contribute and have them take out the exact 17500 or will we lose it because its over. This is what I’m concerned about and why we will lose some dollars to ensure we get what we can.

So working on this post prompted me to go see HR again to clarify. I mean I didn’t want to sacrifice $46.71 that could be funneled into my 401K. I was pleased to learn that the best thing to do when the amount you need to contribute is between percentages is to use the larger percentage. So over shoot.  Our HR personnel assured us that it would take out all the $$ that qualified and then everything else will show up on our paychecks. Well see how it all works out on pay day Dec 30.

So tell me what goals are you trying to reach? How extreme are you willing to go? Or as J money says how bad do you want it?