July 15th deadline - Taxes and Roth IRA contributions due!

Well hey there! It’s been awhile, eh? (cue my inner Minnesotan!) The last two posts I penned were about tips for times of financial unease and working with young kids at home, both of which are still relevant. It’s crazy to think how many months this pandemic has already gone on, and how many more we may be in for. Either way, I hope you’re hanging in there!

Today’s post is all about some practical financial info that you may (or may not!) already know. When the pandemic started, the U.S. government extended the tax deadline to July 15th. My husband and I actually filed ours early (in late February) as we were headed out of town mid-March and wanted them to be done beforehand. It felt great to have them done earlier this year! When I used to do my own I always waited until the last minute and it was so.dang.stressfull!

That being said, this is the first year I am paying quarterly taxes for my business which is exciting (as it means I’m actually making enough money to have to pay estimated taxes - win!) I accidentally forgot to send in my March quarterly however, so I sent them both in at the end of June. If you’re a procrastinator like me - I get it! This is my friendly reminder to you however to just get those puppies done and filed before midnight Wednesday!

Also - on an equally as important note, July 15th is also the LAST DAY to contribute to your Roth IRA for 2019. If you have a Roth IRA already set up and you have extra money lying around in your savings that you feel comfortable parting with, consider maxing out that Roth.

And if you don’t have a Roth IRA, it’s not too late! You can setup one ASAP at a place like Fidelity or Vanguard and contribute for 2019.

Here’s a little more info on Roth IRAs:

Q: What is a Roth IRA?

A: A Roth IRA is an investment vehicle which allows you to put in money AFTER TAX. (Essentially you fund it from your checking or savings account.)

Q: Where can I setup a Roth?

A: You an set one up online at places like Fidelity, Vanguard, Betterment, Ally, and Charles Schwab, to name a few. OR you can also work with a local Broker-Dealer near you to set up a fund. You’ll likely save fees by setting up and managing your own Roth, but either way my best advice is to understand what fees you are paying when it comes to your account management!

Q: What can I invest in?

A: While the Roth is the vehicle you open, you still need to choose what you want to invest in within your Roth. Some options include stocks, bonds, mutual funds, ETFs (exchange traded funds), as well as money market funds. My favorite investments are Index Funds, which are funds that track the market regardless of how the market is doing and have extremely low fees. The market almost always out performs actively managed funds (which are more expensive) - another huge win!

Q: How much money can I put in?

A: The limit for 2019 is $6k (or $7k if you’re 50 and over). If you make over $193,000 as a married filing jointly couple or $122,000 as a single person, however, you will be in the phase out stage. The easiest way to know how much you can put in if you’re over the income limit is to work with an accountant to determine what your Modified Adjusted Gross Income is.

Q: Can I take my money out anytime?

A: Yes - but there are stipulations. You can certainly cash out of your investments anytime, but you may have to pay a penalty (as well as taxes on gains!) if done so before 5 years of account opening. You can always take out just your contributions anytime penalty free (just not the earnings!) After 5 years of account opening you can take out gains tax and penalty-free for a few instances such as for a disability or a first time home buyer purchase. If you’ve had it open for less than 5 years there are instances when you can take out the money penalty-free, but still have to pay the taxes on earnings. Confused? I get it. Here’s a great guide to help HERE.

Alright ya’ll - that’s it for now! Hope this helps you a) get motivated and b) take action!

Until next time…cheers to your abundance!

Katie Oelker
Financial Coach and Writer

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Using a No Spend Challenge to Save Money

Oh hey there!

Hard to believe it’s already mid-August - eek! Summer sure is flying.

Last month in my membership, the Kick Down Debt Club, I started a challenge to spend less and save more in order to keep our budgets on track through month end. It was so much fun (in a finance nerdy kind of way!)

Do you have a tendency to overspend or just need a way to jump start some savings? If so, I highly suggest adopting a No Spend Challenge of your own!

I also recorded a podcast outlining how to do this (which you can check out HERE!) but here's the written guidelines of how to conduct your own No Spend Challenge:

Step 1) Determine how long your challenge will run. I suggest 5-7 days max so you don’t get unmotivated as the time goes on, and also love using this type of challenge either at the beginning of the month to kick it off on the right foot, or at the end of the month to end on a strong note!

Step 2) Set a target for how many days you want to have be “no spend” days. “No spend” means days that are not including already planned for and necessary spending such as grocery trips, gas, bills etc.) I wouldn’t try to do the entire 5 or 7 days (depending on how long you decided to run the challenge for), but aim for a few no spend days out of that stretch.

Step 3) Get some accountability. Enlist your partner to join you in the challenge, tell a friend or coworker about it, or join us in the Kick Down Debt Club!

Step 4) Use a "Can Wait" list and write down all the things you are tempted to buy during this time (or add them to your virtual shopping cart!) Studies show that if you can postpone a purchase 24-48 hours, it’s more likely that you will convince yourself out of purchasing it all together.

Step 5) Celebrate in a non-monetary way when completed! It’s OK if you didn’t meet all the no spend days that you were hoping to. The point is to make you more mindful of your spending and create better habits moving forward. Indulge in a long bath, bake some cookies, or treat yourself in some other way that doesn’t cost money.

Step 6) Plan your next No Spend Challenge! Again, I love using these at the beginning or end of month. The next challenge we are doing is a No Spend Food challenge (aka limiting how much we get takeout/dine out!) If you’re interested in joining for the next one, check out the Club HERE!

Will you adopt your own No Spend Challenge? If so, leave a comment below and let me know! I love hearing from you.

Until next time…

Cheers to your abundance!

Katie O.

We hit the $100k investment mark!

Oh hey there!

Today I wanted to pen you a more personal post. One that outlines (and celebrates!) a recent milestone in our family….hitting the $100k investment mark!

Now for some of you this may be a ways off, and for some of you this may seem like nothing compared to what you have invested. Either way, it’s an accomplishment for us and one that I want to talk about. Personal finance is all about making it personal. Personally I don’t care where our neighbors, family members, friends, bosses, coworkers or other individuals are at. I care about where we are at and how far we’ve come (plus where we are going!) I hope you can adopt this mindset too.

Over the course of the past 10 years (mainly the past 5 however!) my hubby and I have invested a total of $100k into our different investment accounts. While that is an impressive accomplishment for us, I can tell you that it has not been all smooth sailing up until now.

When I decided to leave teaching to become a financial planner, our wallets took a hit. Not only were we missing out on stable income, I also left some stellar state benefits (including free healthcare!) My husband and I adjusted but also encountered higher than normal medical fees due to surgery and eventually, the birth of our first daughter. At this time we really cooled it on our investing. Heck - we were just trying to stay afloat from paycheck to paycheck! We also racked up a bit of medical and credit card debt and in my younger more foolish years, I sold out of some investments to pay that off.

Now while I definitely DO NOT typically recommend selling out of investments due to paying a fee and missing out on what that invested money would grow to, it felt like the right choice at the time to get us out of debt. Do I regret that choice? Not necessarily, but it definitely wasn’t one of my smartest financial moves.

That being said, we are now consumer debt free, and have very little car and student loan debt left (as well as a mortgage). If we wanted we could wipe out all debt with our savings, but I like balancing both savings and paying off the rest of our debt as the interest rates are quite low on what is left.

So how did we save $100k? Here is the backstory:

1) When I was 23 I opened a Roth IRA through Fidelity and started maxing it out ($5500/year at the time). I used part of what was saved when I turned 27 to purchase our first home. Although I no longer max it out due to needing more cash flow with me not working/working part time on my biz, we still invest in it each month automatically and plan to use some of the money penalty free to pay for our daughter’s education in the future.

2) My hubby opened his 401k through work as soon as possible, and starting saving into it up to the match to begin with. Since then we’ve increased the percentage that is taken out of his paycheck. I tell people to always put enough to qualify for the match - free money is free money! Although I don’t love that higher fees associated with 401ks/403bs they can work quite well as it’s money that never touches your hands and thus, has to be invested. ;)

3) When I started teaching, I put 10% into my 403b through my employer. When I left, I rolled it into an Individual Retirement Account (IRA) at Fidelity.

4) While working at Thrivent, my hubby opened a Roth IRA and started contributing to it.

5) When I started working as a Financial Planner, I opened up and contributed to the retirement plans offered (both 403b and then 401k). These were what I cashed out when I we paid off debt.

6) My husband’s company has a great Employee Stock Option Plan (ESOP) that we take advantage of. We can buy the company’s stock at a discount which is a great deal! In September, we plan to increase this percentage.

So that’s basically it! It’s been a combo of employer sponsored plans (such as 401k and 403b) and individual plans (IRAs and Roth IRAs)

As I mentioned we’ve definitely had some hiccups along the way, but I’m proud of us for bouncing back and recommitting to our investing goals. Even if we aren’t investing as much as we’d like to, it’s still something!

The reason I wrote this post was to encourage you to start investing or to continue investing (if you’ve already started!) We tend to get bogged down in the details of where or how to start. If you’re unsure what to do first, check to see if your employer offers a plan and if they offer a match. Then take advantage of that!

I’ll be posting more investment related blog articles in the future, so if there’s a particular topic you want to see or question you have you want me to answer, leave me a comment and let me know!

And as always, thanks for reading! I appreciate you letting me guide you on your financial freedom journey.

Until next time…

Cheers to your abundance!

-Katie