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How I Invested Almost 100% Of My Paycheck In Retirement Accounts

Second paycheck of the new year in the books and I invested almost 100% of my paycheck into retirement accounts! This continues along with the strategy of front loading my investments at the beginning of the year. Being able to invest almost 100% of my paycheck into retirement accounts will allow me to max out my retirement accounts by the end of February. Let’s take a look at where my money went.
 
Breakdown of Second Paycheck
The total amount for my second paycheck of the year was $6,538. Of that, here is the breakdown
  • 401k: $3,269
  • VTSAX: $1,200
  • HSA: $1,000
  • Taxes: $717
  • Living Money: $352
What My Strategy Is
I have worked hard to document my strategy for this year. To read the full article of how and why I am planning to front load the year, you can click the link above. 
 
The goal remains to max out my retirement accounts by the end of next month. This will then dramatically increase my paycheck for the rest of the year and allow me to invest more aggressively.
 
Don’t Forget To Automate
One of the keys to my strategy is automation. What do I mean by automation? Here are two ways I automate my investments each month.
 
First, I set up automatic deposits for my 401k and HSA contributions. For me, I set this up through benefits with my employer. We have a landing page I can go to and can update the percentage of my check to contribute to each of these accounts. I do this for one reason and one reason only. When automating this way, I no longer see that money in my bank account. This money will go directly to my retirement accounts and I don’t have to do anything on my end.
 
Second, I set up automatic investments every week in my Vanguard account. This money is transferred on pay day as well so I end up temporarily seeing the money in my account. Again, the goal is to automate things so I have less things on my end that I need to do.
 
Executing this strategy allows me to live paycheck to paycheck in an effective manner. The less money I see in my bank account, the less money I will end up spending.
Key Takeaways: 
  • Front loading your retirement accounts is one of many strategies you can utilize for saving
  • Don’t forget to automate your investment strategy. The less you see in your bank account, the easier it will be. 
  • The cool thing about front loading is what my paychecks will look like after my retirement accounts are maxed out!

Don’t forget @TheYoungRetireeBy33’s 3 Core Principles:

1 – Your money should make money for you⠀⠀⠀⠀⠀⠀⠀⠀⠀
2 – Start early to realize the power of compound interest⠀⠀⠀⠀⠀⠀⠀⠀⠀
3 – Eliminate your largest expense by house hacking

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Paying The Minimum Balance On Your Credit Card Is Costing You Much More Than You Think

Ready for a crazy statistic from last year!? American’s paid more than $104 Billion in credit card interest in 2018.

That is right. $104B with a B. Americans are living in a world where financial literacy is necessary more than ever.

First, let’s define a clear principle everyone should live by. If you can’t pay your credit card in full every month, YOU SHOULDN’T HAVE ONE! Simple.

Have you ever read the fine print of a credit card application? Most of the time you will see something called an APR number. APR stands for Annual Percentage Rate. This is the interest you will pay if you carry a balance.

Here is where the credit card companies get you. The average credit card interest rate is 19.24% according to the basic google search I did. That is insane.

There is one trick the credit card companies use to get you to pay interest. It might not be what you think. Most credit card companies show you a seperate payment option for the minimum payment required. That is right, they could show the current balance and leave it at that; yet, they want to show you the minimum payment.

I believe they want to show you this number to make you feel like that is a great option. What they should be required to show (by law IMO) is the amount that will cost you in interest. That is right. Right next to the min required payment, they should show the cost to you in interest if done. Could you imagine if they were required to do that what that would do to people?

I am a firm believer if people would change their behavior if shown this data in a different way. People are emotional creatures and nobody wants to pay someone something they feel isn’t fair. It is criminal what credit card companies are doing to people. People don’t understand what is actually happening when they make the min payment. Like compound interest works for us in our favor for investing long term, the same thing can be said for credit card companies.

Know what you are signing up for before applying for credit cards. Know the difference between paying the min payment and paying your full balance. There are massive implications of not paying your credit card in full each month.

Key Takeaways

  1. Paying the minimum payment required on a credit card is not winning.
  2. Don’t sign up for a credit card if you can’t pay your balance in full.
  3. Credit card companies should be required to put a disclaimer explaining the actual cost of paying the minimum payments on your credit card.