Stephanie has been sharing her personal finances, observations, and real talk about money on Poorer Than You for 10 years now. Poorer Than You is a personal finance blog for college students and mainly focusing on Millennials or Generation Y. This site offers no “get rich quick” schemes, but the goal here is to put you in a better financial position.
My personal finance story was recently profiled in the article “Financial Struggles During College Taught Stephanie About Saving” in Debt.com’s Very Personal Finance series. I really enjoyed being interviewed by Brian Bienkowski for this piece. He was very interested in what happened early on in my money journey, so it was a trip down memory lane for me.
If you’re just joining us here at Poorer Than You from the Debt.com profile, welcome! You’ve had a pretty good introduction to the beginning of my story from the article. Now, here’s some more in-depth posts for you to sink your teeth into:
Your tax forms are rolling in! Including one for the health insurance premiums from your Affordable Care Act marketplace plan: the 1095-A form. You look it over. Names and social security numbers for you and your dependents look good (hopefully). The amount you paid in premiums is correct. But – what’s this? Your 1095-A Column B is zero all the way down? It can’t be right that the Second Lowest Cost Silver Plan premium costs $0! The form is wrong! What now?
My 1095-A (well, Part III of it anyway) with all zeros in Column B
Please note: I’m not a tax expert and this should not be taken as tax advice. I’m just a lovely lady on the internet, a citizen like you, who also had an Obamacare health insurance plan last year, and who also received a 1095-A where my column B was all zeros. This post is for educational purposes only, showing you what I learned and what I did to deal with this issue. If you are concerned about your tax situation, please consult with a real tax professional.
What Is Part III Column B of the 1095-A For, Anyway?
Part III Column B should show the cost of the “second lowest cost Silver plan” (SLCSP) premium. In other words, the not-quite-least-expensive Silver Plan that you could have signed up for. This number is used to calculate the health insurance premium tax credit (“Obamacare subsidy”) that you could receive, based on your income.
Tip: Even if your total income was too much for the premium tax credit, you may qualify for it anyway, because certain actions (such as contributing to a 401(k) or other employer retirement account, or contributing to a Health Savings Account) lower your income for the purposes of the tax credit calculation. Run your numbers through tax software to check – but you’ll need to make sure you have the right numbers on your 1095-A Column B, first!
The way that the subsidy is calculated is super confusing, but you don’t need to know the exact specifics. What matters is: if your income (minus those 401(k) and HSA contributions) is low enough, the subsidy consists of the difference between the second-lowest cost Silver plan premiums and a certain percentage of your income. So the cost of the second lowest cost Silver plan is absolutely necessary for the calculation.
What It Means to Have All Zeros in Column B
The instructions on the back of your form 1095-A are less than helpful:
See the instructions for Form 8962, Part II, on how to use the information in this column or how to complete Form 8962 if there is no information entered. If the policy was terminated by your insurance company due to nonpayment of premiums for one or more months, then a -0- will appear in this column for the months, regardless of whether advance credit payments were made for these months.
Well it says to see the instructions on Form 8962, Part II if there is no information entered, but it also says that zeros will appear in this column if you didn’t pay your premiums. If you’re like me and paid all your premiums in full and on time, this is confounding. And enraging.
When there is no amount in columns B and C of the Form 1095-A this means that you did not receive any advance payments of the premium tax credit (APTC). This generally occurs when the Marketplace determines you are ineligible for the premium tax credit at enrollment because your income was outside of the eligibility range or if you declined to receive APTC instead preferring to claim the credit on your return.
Ah, there it is. Personally, I wasn’t sure whether I’d qualify for the subsidies. I declined to receive them as discounts on my insurance premium (APTC), just in case. But the Health Insurance Marketplace decided to not include the information needed on my 1095-A because… reasons? Alrighty.
How to Get the Correct Numbers for Column B
To even see if you could possibly get the tax credit, you need the right information for Column B. Most tax software won’t let you enter all zeros for Column B anyway. Thankfully, it’s rather easy. No need to file a request for a “corrected” form or fill out any complicated paperwork (thank goodness).
Forget about “Form 8962, Part II” from the 1095-A instructions, and instead hop on over to this helpful page of Healthcare.gov (why they don’t just say this in those instructions, I’ll never know): Healthcare.gov Health Coverage Tax Tool
Here you’ll find a tool to “Figure out your premium tax credit: Get your ‘second lowest cost Silver plan’ (SLCSP) amount. You’ll use it to fill out IRS form 8962, Premium Tax Credit.” YES! Okay. Awesome.
To use the tool, you’ll just need some very basic information:
Answer questions about who in your household qualifies for a premium tax credit and information on each person, including date of birth, location(s) they lived in for the year, and months of marketplace coverage.
It took me about 2 minutes to fill in the information and get the real numbers for my Column B. And you can scroll to the bottom to print, email, or save a PDF of your numbers. I highly recommend you do at least one of those, and keep a copy of it with your 1095-A.
Finally! The real numbers that should have shown up in my 1095-A Column B!
What Difference Does It Make On Your Taxes?
If the second lowest cost Silver plan premiums really were $0.00 (ha!) or the $0.01 that H&R Block’s forums suggest you use instead, then you would get no subsidy at all, even if you qualified for one. It’s better to use the real numbers, because you could be in for a big fat tax break!
Using TurboTax, you can do your entire tax return online without giving any payment information. Which makes it great for seeing how much of a difference the tax credit can make:
My TurboTax screen right before entering in the 1095-A information. TurboTax has imported the 1095-A at this point, but not done any calculations with it. Note my federal refund at this point is a whopping $10.
TurboTax was able to import my 1095-A from the PDF I got from my Healthcare.gov account. But when it did, Column B ended up a little wonky:
Where did it get $458.97 from? That number didn’t appear anywhere on my form. But even with that (incorrect) number, my refund estimate jumped up to $2315!
To TurboTax’s credit, their Help section refers you to the Healthcare.gov Health Coverage Tax Tool. I keyed in my correct numbers, and submitted the information to see what my tax credit would be:
$5,702 tax credit! Woohoo! (And I got an additional bump in federal and state, but that’s because the premiums are tied to my businessing.)
So what difference does it make? Potentially thousands of dollars of difference. I don’t know about you, but there are a lot of things I can do with that extra $5,702. Like, funding an entire IRA for the year with money left over. Or taking another Disney World vacation. Or 23 year-long-subscriptions to the Oreo of the Month subscription box (er… for 23 friends. yes. for friends.). (In reality, it’s already earmarked for the IRA.)
But come on, there could be Oreo-inspired hats, games or mugs in there!
Winner Winner Chicken Dinner?
Not everyone who got all zeros on their 1095-A Column B is entitled to a $5,702 tax credit. No siree! This is just an example. Your income has to be high enough to qualify for a Marketplace plan (versus Medicaid in some states). But your income also has to be low enough to qualify for the subsidy, after deductions like 401(k)s and HSAs. And the amount of the tax credit will depend on the premiums you paid, and the SLCSP for your situation.
Still, the Healthcare.gov Health Coverage Tax Tool takes less than 2 minutes, and tax software like TurboTax can do all the calculations for you in just a few minutes. So the whole process to check takes what, 5 minutes? That’s like earning $68,424 per hour in my example. And if you don’t qualify? You only wasted 5 minutes and you have the peace of mind of having accurate information.
If you got a 1095-A where Column B is all zeros, don’t panic.
But do get the right numbers, because it could mean big money.
We rang in the new year with a bang and some sniffles… not from sadness or joy but from, you know, cold viruses. And that really set the tone for the whole month: all three of our family members spent some amount of time being sick this January. So I really wasn’t expecting much out of this month when I ran the numbers, because we had to take a lot of time off and couldn’t really hustle for extra cash this month. So how’d it end up going? Let’s see those numbers…
Change: +$5,609 or +7.33%
January Net Worth TOTAL: $82,109
Well hello! I certainly was not expecting that. But, I feel like I can’t take credit for much of it. Or really, any of it.
Retirement – It Wasn’t Me!
Does anyone else remember that Shaggy song? Oh, the early 2000s… I saw Shaggy preform at a Summer Jam concert back then, and he told an adorable story about a little kid that loved his song but wanted to know what “banging on the bathroom floor” meant… awkward… but Shaggy just told the kid he meant “banging on the bathroom door, you know, knocking!”
I had no hand in the increase of my retirement accounts this month. At least, not directly. Obviously I put the money in there in the first place and chose the investments, but I made no contributions this month, and yet, the accounts are up more than $3,000 overall. Simply because the market has been on a huge tear this month.
I’m super not expecting this party to continue, but if it did keep up like this all year, my retirement accounts would earn $38,328 over the course of a year which is like a real person’s salary. Hey! My retirement accounts have a grownup job!
Credit Card (“Refinanced” Student Loan) PAID OFF!
Well I guess I can take credit for this one! My credit card balance is now zero again. Three years ago, my husband saved up to buy an expensive couch. Then instead of spending the savings on the couch, we got 36 month 0% interest financing and threw the saved up money at one of my student loans. This effectively “refinanced” that student loan onto a 0% credit card with no fees for doing so.
For most of those three years, I paid only the minimum payment on the credit card because, hey, no interest! A few months ago I started adding just enough to the payment to pay the card off 1 month early (thus avoiding any accidental or “gotcha!” interest charges) and now… here we are! This month, the final payment was sent, before the promo rate expires next month.
What will I do with the extra $95 per month that’s not going to that credit card anymore? To the retirement accounts, of course! An extra $1,140 every year will definitely help with my goal of maxing out all of our retirement accounts (HSA, 2 Traditional IRAs, and a Solo 401(k) for my side hustle income).
And the couch? It’s doing great three years in. We’ve rearranged it (it’s a Lego-like LoveSac Sactional that can be configured in pretty much any way you can think of) in a backwards L-shape so that there’s a low soft corner to help our toddler learn to toddle. Absolutely no regrets on buying an expensive piece of furniture, since it has so well adapted right along with our drastically-changing lives.
A picture I stole from a LoveSac store’s website of a configuration that’s sort of like our couch right now. (I’m sure they won’t mind the free advertising.) I’d take a picture of my own couch but, you know, toddler living room. It’s more toys than furniture now…
“Other” Debts – Tax Burden Further Reduced
Ah, the nebulous “Other” category under Debts in my net worth. This is where I track my tax burden for my side hustles (minus any estimated payments I’ve already sent). And this month, it went down, a lot. Receiving a lot of tax paperwork for this year in the mail allowed me to better calculate the actual 2017 burden rather than my rough estimate, and as usual, I had been overestimating.
Not that overestimating your tax burden is a bad thing. The upside is that I had a lot of cash on hand to pay a tax burden, and now I can put that cash back into my business. For more businessing. Like attending FinCon this year – the financial media conference. I’ve always wanted to go, but last year the blog made more money (y’all seemed to love my Amazon Fresh review and like a bazillion people took advantage of the free Dash Wand) so I pulled the trigger on getting a ticket. Plus, FinCon is in sunny Orlando and falls on my birthday sooooo… birthday trip to Florida for me! For businessing, of course.
$100,000 Net Worth: Not there yet! (So no gifs.) To get there by the end of 2018, I calculated that I need a little under $2,000 in net worth growth each month. So this month, I made over 2.5 months of progress! Now, recalculating it, I need $1,626 of growth each month to get there by the end of the year. Let’s do it!
Tools in the toolbox for getting there by the end of the year:
Maxing out contributions to my Health Savings Account ($6,900)
Maxing out contributions to my Traditional IRA ($5,500)
Maxing out contributions to my Solo 401(k) ($18,500+, depending on how much money my side hustles make)
That would be more than enough to hit the goal, but if I have any extra once the IRA is maxed out (since the HSA will be coming out of my paycheck this year, and I can only contribute to the Solo 401(k) as side hustle money comes in), I guess I’ll… throw it at my student loan principal? Huh. That’s a new one for me.
This is the year! If I can max out all of my tax advantaged retirement-type accounts, then I’ll start paying extra to my student loans. The problem: I’ve already been sending “extra” money to my student loans with MOHELA (my student loan servicer) each month, and they weren’t applying that “extra” payment to the loan principal! Wait, what?
What I Want MOHELA To Do With Extra Money I Send Them
It seems so simple: when I make a payment to my student loans, the money normally goes toward the “amount due,” which consists of some amount of interest (the “fee” I have to pay for borrowing the money) and some amount of loan principal (the amount I borrowed in the first place that I’m paying back).
If I send any more money than the “amount due,” then it’s extra. There’s no interest on the account because I’ve already paid that for the month, so all the extra that I send should pay off the principal, right? This would reduce the total that I owe, meaning that less interest would be charged, and my loan would get paid off faster.
But nope, by default, that’s not what happens when you send an extra payment to MOHELA (or pretty much any other student loan servicer).
What MOHELA Was Doing With My Extra Money Instead
So if that money wasn’t reducing my principal… what was it doing? It was doing something that they call “Paying Ahead.”
Paying Ahead means that your current payment has been satisfied and you have paid at least a portion of your future bill.
Each time you satisfy a bill due, we will automatically advance your next payment due date and your billing statement will indicate a payment is not required for that bill.
– MOHELA’s website, Payment Information – How Payments Are Applied
Instead of straight-up reducing my principal, the default for extra payments is to reduce or eliminate next month’s bill. So the next month after I send an extra payment, I get the bill (electronically, of course – what am I, some sort of savage that gets paper bills?), and it says all the normal stuff, except the Total Due is “$0.00.” So I could just not make my payment the next month and be super duper okay, because the bill is already paid? Huzzah! … right?
MOHELA’s website is quick to point out that yes, this should be a “huzzah!” yes yes definitely! (Which is exactly when you should be at your most skeptical.) They say:
Paying your account ahead of schedule offers many benefits such as:
Decreasing your total interest cost
Paying your loan off sooner
No prepayment penalties
And technically, they are right. (And the “No prepayment penalties” bit is super important – make sure that your student loan servicer has a similar policy before you send any extra payments!) But wait a second… the whole “Paying Ahead” thing doesn’t lead to me getting no bill the next month, it just leads to me getting a paid off ($0 due) bill every month, with accrued interest! So I won’t realize any benefit from this until:
A. I have to miss a payment for some reason, in which case I can just turn off my autopay but not get hit with any late fees or have to deal with putting my loans into deferment or forbearance (two fancy terms for “you don’t have to pay these loans right now but you will have to later”). The benefit wouldn’t be reduced interest, it would just be the ability to not make a payment for one month (or however many months I’ve “paid ahead”).
B. OR, at the very end of my loan, I won’t have to pay the last payment, because I already paid it!
Scenario B is what MOHELA is referring to with all that “decreasing your total interest cost” and “paying off your loan sooner” – any payments “ahead” that I make mean payments I don’t have to pay at the end of my loan. But hold up, here’s a thing: payments at the end of a loan have hardly any interest at all!
Oh of course MOHELA is over the moon to have me pay ahead and then not pay my final payment… they get a whopping $1 of interest on that final payment!
Why not always default to having extra payments “pay ahead?” Well, if you’re the student loan servicer, this is a pretty sweet deal – it only costs you a dollar! But you’re not the student loan servicer – you’re the student loan payer and this is a bad deal for you. And me. So I went through the steps to get them to cut that out.
How to Get MOHELA to Let Me Pay the Principal on My Student Loan, Instead of Paying Ahead
Option #1 – One-Time Payment Instructions
Just sending in one extra payment that you’d like MOHELA to apply to your loan principal? This could be quite easy for you… if you don’t have a consolidated loan. (Which I do, so this option isn’t available to me… whomp whomp.) You can just follow the instructions on MOHELA’s Payment Information Page (under “Submitting Special Payment Instructions” > “One-Time Payment Instructions”) to target your payment to a specific loan.
But if you do have a consolidation loan, you won’t be able to do the Web instructions – you’ll be stuck with only the Phone or Mail options. And if you’re going to mail in a payment with instructions, why not mail in instructions for all future payments? Because you can totally do that:
Option #2 – Standing Instructions for All Future Payments [With a Free Letter Template!]
To tell MOHELA how you’d like them to handle all future extra payments, you need to mail them a later with specific instructions about how you want those payments applied. You need to include the loan type, especially if you want to target one specific loan versus another. For example, I have both a subsidized and an unsubsidized student loan with MOHELA, and I’d like to target the unsubsidized loan. Because that’s the one that still racks up interest even if I go back to school or put my loan into deferment for some other reason. Let’s get rid of that loan first, shall we?
Please note that MOHELA’s online instructions say your letter should include the “amount and disbursement date,” but that doesn’t seem to actually be necessary.
Copy the letter template to your own Google account, then replace all the [ALL CAPS] stuff with your information. I’ve left MOHELA’s address off of there just in case they move or change the address, but included a link to where you can easily find their current address. You can find your account number, the loan number, and the name of your loan by logging into your MOHELA account.
Then print it out, sign it (very important – your signature is required!), and mail it in to MOHELA. You’ll get a response in a few weeks (by secure online message if you’ve signed up for paperless communication – otherwise, it might come in the mail), confirming that they’ve received and processed your instructions:
Will this letter template work for student loan servicers other than MOHELA? Probably! If you send in written instructions like this, they pretty much have to follow them (or at least respond and tell you why they can’t). I don’t have student loans with anyone other than MOHELA to test this, though. You can feel free to be a guinea pig and try it out. Just Google “[name of your student loan servicer] apply payment to principal” to get the information you need, such as the address for where to send the letter.
Now What Happens?
The next time I send in an extra payment to my student loan, MOHELA should apply the entirety of my “overpayment” to the loan principal on my unsubsidized loan, rather than advancing my due date up by another month. I will see this with my very next automatic payment, because I already (accidentally) “paid ahead” by one month, so I have a $0 bill for the current month. This has been the case for years because of that one accidental double payment – each subsequent automatic payment was always applied to the next month.
But now, no longer! The next automatic payment should be considered an “extra payment” and handled precisely according to the letter that I sent in – applied to the principal on my unsubsidized loan, of course.
And what if the day comes when my unsubsidized loan is paid off thanks to all this “applying the extra payments to the principal” stuff? Well, we’ll see what MOHELA (or whoever has bought my loan out by that point…) does then. My guess? They’ll default back to “paying ahead” on my remaining loan, and I’ll need to send in another letter to get them to apply payments to the principal of that loan. Good thing I’ve got a template for that!
If you’ve got student loans with MOHELA, feel free to use the letter template and report back on your success. If your loans are with someone else, leave a comment below about the process for getting your servicer to apply payments to the principal – other people will benefit from the knowledge you share!
Welcome to the start of 2018! I’ve chosen to kick off this new year with a wicked head cold… apparently. I had a nice holiday visit with my family back in Western New York, and while they all picked up some sort of stomach bug, the baby and I completely escaped whatever that was, only to pick up a major case of the sniffles just as we were leaving town, instead. So don’t mind all of my coughing – I’m not contagious through the internet! (Probably.)
But it is time to cough up these numbers!
Change: +$11,288 or +17.31%
December Net Worth TOTAL: $76,500
Holy Moley – Best Month Ever!
That’s right – SUCK IT, FEBRUARY 2014! There’s a new Best Month Ever in town! (Though that Feb will probably always hold the title for biggest percentage change, as 136.33% in a single month is super hard to beat when your numbers get higher, and also, it will forever be the month when I crossed into a positive net worth, soooooooo… maybe you still a’ight, February 2014.)
So, I made it rain this month… BUT HOW?!?
Liz Lemon style, of course
Back in February, I stated my intention to wean us off the cash hoard that we’d been, well, hoarding. We started to offload some cash into actual investments, but that actually slowed down a bit when I discovered some savings accounts paying 5% interest. (That’s not a typo – 5%, not 0.5% or 0.05%, but legit 5%.) It’s a bit too much to get into in this update, but Financial Panther has a really thorough guide to getting 5% using savings accounts linked to prepaid debit cards. I started with the NetSpend card, which has a low maximum for the 5% (only $1,000), but offers a $20 referral bonus when you open it, and makes a good starter card to figure out if this is something you ultimately want to try to do with your savings.
Still, even at 5%, I didn’t want to be straight up hoarding too much cash. So we grabbed up everything that wasn’t tied down to an immediate need and loaded it up into my new Solo 401(k) instead. Cash labeled “Emergency Fund?” Put that into the Solo 401(k)! (My post from February explains why I felt that having cash savings for things like travel and having a specific emergency fund was superfluous for us.) Cash for an upcoming life insurance premium payment? That stays. But cash for the next apartment when our lease still has 6 months left in it? GET IN THE SOLO 401(K), YOU! For now, at least. I’m okay with replenishing the cash for things (except that nebulous “emergency fund”) in the new year, but I really wanted to max out the employee portion of the Solo 401(k) for 2017.
Hello Solo 401(k)!
And max that sucker out, I did! With a combination of all the cash “stealing” from other goals, some overtime for the busy holiday season at my day job, and just plain prioritizing the Solo 401(k) above all else for the month, I completely filled up to the amount allowed for the employee contribution portion of the account (based on how much self-employment money I made in 2017).
Technically, I still have a tiny amount of “headroom” on the employer portion of the Solo 401(k) (as I’m self-employed, I can contribute both as employee and employer), but it’s such a small amount that it really doesn’t matter. Also, I have up until the tax filing deadline to make employer contributions, so if I want to take advantage of that tiny bit of contribution space later, I can.
There was a bit of growth in my existing retirement accounts, as well. But really, most of this month’s jump in the retirement accounts were actual contributions, and that feels pretty amazing.
Jump in Car Value?
This always makes me giggle when this happens. It’s nothing I did – just that Kelley Blue Book is reporting a higher value for my ol’ Camry than it was last month. Guess cars with more than 100,000 miles on them are more popular this month – woo!
“Other Debts” [Taxes] Way Down
For a long time now, I’ve tracked my tax obligation for self-employment under “Other Debts” in my net worth calculations. This has mostly been to offset the asset (cash) that I keep on hand to pay my taxes once a year, instead of having a huge drop during the month of tax time, year after year.
The nice thing about putting a bunch of money into a Traditional Solo 401(k)? I will owe less in taxes. So not only did my net worth go up because I stashed a bunch of cash this month – it also went up more because this tax “debt” went down. I recalculated it with all the Solo 401(k) contributions, and BOOM – my burden feels $2,533 lighter.
Well, we blew right past a few milestones with this update:
$100,000 in straight up assets – NAILED IT! Even if you don’t count my car (which I know, some people wouldn’t), GOT THERE!
$70,635 net worth – NAILED IT! This number represents $100,000 in net worth growth since I started this blog back in January 2007. That’s right, boys and girls – you’ve now seen $100,000 grow right before your very eyeballs!
$100,000 net worth – not there yet. But getting closer. A heck of a lot closer with this jump. Last month, I predicted early 2019 for this. But now I’m wondering if we might not get there in 2018, or even in the first half of it…? It would only take a little more than $1000/month in growth to get there before the end of 2018. You’d think I can manage that.
But honestly, this month was just so good, it feels a little strange to be looking at the next milestone instead of just basking in the glory of it. Yes, this occasion calls for… West Wing gifs!
The fourth quarter of every year has been a crazy time for me since… oh… ever? Since 2009 when I first got a job in online retail, certainly. This year is shaping up to be a little less insane, but still busy-busy and keeping me on my toes. One nice thing about being on the retail side of things during the holidays? I hardly ever spend anything on Black Friday. I’m always working, instead of shopping! Gotta make that money. Speaking of that money…
Change: +$5,490 or +9.19%
October Net Worth TOTAL: $65,212
Is this… my best month ever? Nope, unfortunately not. That title is still held by February 2014, when I was laid off. Being laid off is strangely lucrative, at least in the short term. I can’t say that it’s a great long-term plan, though. This month’s accomplishment feels a lot better, even if it was less in terms of dollars and cents.
So let’s break it, break it, break it down! (And yes, there will be more gifs. So many more. We hit the milestone, you guys!)
Retirement accounts, you da real MVP of this net worth update. Specifically, the Solo 401(k).
Yes, dear readers, I finally got my Solo 401(k) opened with E*TRADE. It took two phone calls to their Retirement Specialist (HALP) line, but what finally got the job done was using their online file upload. Which is, apparently, a thing they have. But not a thing they tell you about on the application. Possibly because you have to already be an E*TRADE customer in order to use it, which thankfully, I was. [Shout out to their Complete Savings Account, which I opened to get a bonus like 10 years ago!]
Once I submitted my paperwork electronically, the account was opened for me, no joke, the very next day. And I was able to make my first contribution immediately, especially since all of my banking info was already set up from the aforementioned Complete Savings Account. And someone on the internet once said I shouldn’t keep random fee-free savings accounts open with just $5 in them! HA! I sure showed that guy-or-gal-but-let’s-face-it-that-was-probably-a-dude!
And with that (with minutes left on the November clock, because that’s how I roll), I transferred in all the cash I’ve been sitting on since I started dragging my feet on this Solo 401(k) thing (*cough*August*cough*), driving my retirement balance up, and simultaneously driving my tax liability (which I track under “Other Liabilities”) down, because traditional 401(k) contributions lower that tax burden, folks.
So needless to say, I hit my goal this month – a whole two months early!
As a refresher, the goal was a total net worth of $61,099 by January 2018. That number comes from adding $100,000 to my lowest-ever net worth number of -$38,901 in September 2009. So in just a little over 8 years, I’ve made $100,000 in progress.
They say the first $100,000 is the hardest, so… hard part over! Phew. All done. Smooth sailing from here on out, right? Right…?
Hey, can we break out the West Wing gif now?
That’s right, what’s next?
$100,000 in straight up assets. This one isn’t far off – less than $1600 away. Hardly counts as a milestone, but we can give it a gif next month or so when we hit it, all the same.
$70,635 net worth. Also not too far off, and sort of arbitrary – this represents $100,000 in progress since the start of this blog in January 2007. Yes, I backtracked for 2 years (student loooooans, my friends). But anyway, not a huge milestone, but possibly gif-able.
$100,000 net worth. Oooo now that’s a nice round number. If I could maintain this year’s rate of growth (which doesn’t seem remotely possible, but hey, you never know), I’d hit it sometime in early 2019. Supremely gif-able.
So let’s go all ahead full (that’s a thing people say, right? I got it from Titanic so it must be a real thing, because that movie is super legit), and charge at these milestones like… oh, right, the Titanic going all ahead full towards an iceberg is maybe not the metaphor I want here. You know what? Patton, why don’t you play us out here, cause this goose is cooked.
Hope you’re not in a sugar coma from all the Halloween candy, because I’ve got a bunch of numbers to throw at ya! We can only find out if this month was a trick or a treat, if we come out of the shadows (and maybe do the Time Warp again…)
Change: +$1,383 or +2.37%
October Net Worth TOTAL: $59,722
Before we do a deep dive into the numbers here… can we celebrate something else? For just a moment?
THIS IS THE 500TH POST ON POORER THAN YOU!
I know, Egon. I’m as shocked as you are! (And yes, I totally had this action figure when I was a kid. Of course I did.)
That’s all. Here’s to another 500! (Maybe it won’t take 11 years this time.)
Let’s rip the band-aid right off this one: no, I didn’t finish opening up my Solo 401(k) this month. That’s three solid months of not accomplishing the thing.
In my defense… progress was made this month! Remember how last month I pointed out that before I can open a Solo 401(k), I really ought to open up a SEP-IRA? Well, I did that! And it was easy-peasy, actually. I simply opened one up with Vanguard, and because I already have my regular IRAs with them (they already have most of my info), it took maybe 2 minutes. Tops.
I threw $140 into the SEP-IRA and bought a single share of VTI, the Vanguard Total Stock Market Index ETF. Now, I can ignore it until someday when for some reason, putting money into a SEP-IRA makes more sense than a Solo 401(k). Not sure when that would ever be, but now I have the option. And I luuuuuuurve having options. Especially when it costs literally nothing, like this!
I also made quite a bit of progress on the Solo 401(k) paperwork, thankyouverymuch. I filled out as much of it as I could on my own, but was left scratching my head on good portions of it. I’ll need to call E*Trade’s customer service line to fill in the gaps in my understanding. Which will require, you know, using a phone. Blaaaaaaargh.
I’ve long listed my Lending Club investment under “Other” in my assets column. In it’s heyday (like, June of last year), I had a whole $443 invested in that account.
I know, right?
Well, I’ve decided to divest, aka get the hell out there. I know I only had a small amount in there, so true diversification was pretty much impossible, but I wasn’t getting great returns due to hella lots of defaults. People just straight up taking my money and not repaying it. We call that welching back where I come from. (Which is, I guess, small town drama club that did Guys & Dolls in 11th grade.)
Maybe if I’d had more money in the account to spread around, the story would have been different. But instead of putting more money into it, I decided to start getting out. Not by selling or anything as effort intensive as that – just by withdrawing cash whenever I remember to, instead of reinvesting in new loans.
Where’s that cash going now, hookers and blow? Pssh. No. How much hookers and blow can you even buy with like $350? Also, what are the units that hookers and blow are measured in, anyway? Yes, obviously I know what I’m talking about right now. I’m just asking to make sure you know.
I’m not specifically putting the former Lending Club money anywhere (which is maybe a mistake), but rather just rolling it into my Savings Snowball, which means it pretty much gets throw at retirement after the “minimums” on all my short and medium-term goals are fulfilled. Or, at least, it would if I actually opened up that Solo 401(k). But it’s sitting with the other cash that’s waiting to go into the 401(k), so… it’s sorta like I did the right thing with it. I did not purchase any grams of hookers or furlongs of blow with it, at least!
Obamacare Open Enrollment
This isn’t strictly a net worth or October thing, but it’s pretty much taking over all of my brainspace, so I might as well mention it. Open enrollment started today, and holy hell wtf.
Our choices are not looking good for 2018. Our current plan is ending, so we’ll have to hop on a new plan, and there are only two insurers left on the Marketplace for our area. Neither of those insurers has our family doctor in their network. All of the plans are significantly more expensive than our current plan. Only one plan is HSA (Health Savings Account)-compatible, and it’s a plan that’s nearly double the cost of our current plan.
I’ve tried looking for private plans, but every website I’ve checked just shows me those same Obamacare plans. It could be that this is it. These are our options. [In before someone says the words “Christian Health Share” or “Health Sharing Ministry” – nope, no, not going there. Just drop that one and leave it where it is, cause that’s not on the table.]
So… I don’t know what we’ll do. There’s a lot of tricky math, and it’s made even more tricksy because of our variable income. I’m still trying to wrap my brainmeats around all of it. Before the day is through, there will be spreadsheets. Spreadsheets of terrible options where we pay more and lose our doctor. >_<
Let’s just tuck this terribleness away for the moment, and talk about more pleasant things…
$59,722 out of $61,099 by January 2018 – omg almost there. $459/month needed to get there now. CAN WE DO IT?
I went looking for “Bob the Builder” gifs and it gave me Titus Andromedon. That’s fine with me.
I had one job to do this last month: open a Solo 401(k) for my retirement savings from self-employment and freelance income. Okay, really, I had like four jobs to do: mommy stuff, my job-job, my freelance job, and opening a Solo 401(k). But those first three were pretty much a given. A collective given? What’s the plural of a given – givens? A murder of givens?
The following post is mostly about the reasons I did or did not accomplish my “one job” this month. But there are gifs and I use funny words, so stick around, because it’s about to get all retirementy up in here:
Change: +$3,689 or +6.75%
September Net Worth TOTAL: $58,339
Cash & Retirement
Despite my best efforts to hold less cash, it’s up again this month. Why? Because I still haven’t started that Solo 401(k) yet.
Oh, I know. What’s up with that? Wasn’t I supposed to do that this month? Wasn’t I supposed to do that last month?
You’re not wrong. But I started the paperwork late in the month, and boy howdy is a Solo 401(k) a lot of paperwork. 19 pages of glorious IRS gibberish and they just expect any yahoo with a sole proprietorship (aka. one-dude-or-dudette business) to figure this stuff out? This isn’t even my first rodeo with this stuff – I spent all that time studying to get my FINRA Series 65 license*, which covered a lot of this exact 401(k) gobbledygook, and this form is still intimidating to me.
Intimidating, but not impossible. One phone call to E*TRADE (where I’ve decided to open my Solo 401(k)) and I should be able to get through the parts I’m not sure on with their help. Of course, we all know how much I love making phone calls.
And Also, SEP-IRAs Are a Thing
I found out that once you open a Solo 401(k), you can’t easily open a SEP-IRA (because of the way most SEP-IRAs are set up). But you can easily open a Solo 401(k) if you already have a SEP-IRA, no problemo. So if I ever want to contribute to a SEP-IRA, I should open one before I open the Solo 401(k). It seems like a SEP-IRA would only be better than a Solo 401(k) for my situation if my business made a whole lot of money, and if I added employees later on. Not sure if that will ever happen, but opening a SEP-IRA is simple enough that I might just do it just in case, because I’m experiencing some FOMO.
(Yes, my version of “fear of missing out” is that I might miss out on the opportunity to open a different kind of self-employment retirement account. My life is exciting.)
If you read all the above (or skimmed it) and said a lot of “I don’t even know what a Solo 401(k) or a SEP-IRA are!” – don’t worry. Unless you have a side hustle or small business or get paid as a 1099-MISC contractor… in which case, welcome to my boat! These are retirement accounts and they’ll basically save me a boatload on taxes, including possibly reducing my income enough to qualify for tasty tax credits or Obamacare subsidies (which contributing to a regular IRA would not do for me). So if you are in this boat with me, you too should probably be looking into either a Solo 401(k) or a SEP-IRA, or something similar. The Oblivious Investor has a great, simple breakdown of the self-employment retirement accounts.
So Will You Ever Open a Solo 401(k), Stephonee?
Yes. I’ll get there. Hopefully before the end of this month (October). But definitely before December 31st, because that’s the real deadline. I don’t have to make my entire year’s contribution before then (I have until the April 15th tax deadline to do that), but I do have to open the account before the end of the calendar year for it to count. So, I’ll get there. I’m just one SEP-IRA and a 19 page form away!
Okay, moving on!
So, the increase in “Retirement” on my balance sheet was, once again, not from me making any actual contributions this month, but just from market growth. I hate that. My contributions are waiting in cash for this whole Solo 401(k) quagmire to be resolved. Bah!
$58,339 out of $61,099 by January 2018 – only $2,760 to go! That’s $690 needed per month to get there. SO CLOSE NOW. LOOKING VERY REAL.
*I should point out I do not currently have the FINRA Series 65 license any more, so I’m not claiming to be licensed right now, that was from a previous employer and now I’m a rogue blogger again. Let no one claim that I claimed to be carrying a license right now.
I like the end of August. It means the oppressive heat of summer is about to go BUH-BYE, which is great for a delicate northern-born flower like myself (I’m basically like a Stark IRL. Winter is coming and all that.). It’s also my wedding anniversary, which is a lovely celebration of my love, and generally means there’s a steak dinner for me. And it means my birthday is right around the corner, which means CAKE IS COMING. Which is what my house words would actually be, of course.
So do the net worth numbers for the end of August live up to the general awesomeness that is the conclusion of this month? Let’s have a little look-see:
Change: +$2,701 (+5.20%)
August Net Worth TOTAL: $54,650
Cash is up this month, and that’s just darned surprising. When last we spoke, I mentioned that July’s vacation would not be fully felt until this month, since it fell in the last pay period of July and we didn’t actually get our paychecks for that time until, well, August. So despite taking a week off almost completely unpaid (other than the freelance writing I did from the beach because I am a BEAST), cash is up up up.
As best I can tell, that’s because my freelance writing has been hovering at just-below-maximum every week continuously. We are starting to get into my client’s busy season, which is good news for my bottom line. (But bad news for me writing other things. Like blog posts. Like for this blog. Oops. So that’s why it’s been nothing but net worth reports for a while. Sorry about that.)
Up by $158, but that’s just the market. Last month, my gains were all market gains as well, because we were focusing on my husband’s retirement accounts for the time being. But in August, we decided to make the switch to my retirement accounts, so that we can focus on a Solo 401(k) for my business (freelance writing and this here blog, not that this blog is a real money-maker or anything, but I do get a little kickback if you buy anything on Amazon through my link, for example).
So if we’re focusing on my Solo 401(k) now, why was there no contribution in August? *cough* Because I didn’t get around to setting it up. *cough*
OKAY, yes, I know. Putting off financial tasks is soooooo not like me. But I’ve been all frazzle-dazzled for the past year because of this whole “baby” thing. So I’m just not as on the ball as I might have been in years past. It’s alright though – with the exception of the time I lose not being invested in the market, there isn’t much of a downside, as long as I open the Solo 401(k) before December 31st, I can still contribute for 2017.
I’m not sure if there’s a critical mass of readers that would be interested in the details of a Solo 401(k) (which is a retirement account for a self-employed person, btw). But if the details of how I decided on a Solo 401(k) (vs. other options such as a SIMPLE IRA or SEP IRA or whatever else might be out there), and where I’m opening it interest you, shout out in the comments of this post. If enough people are interested, I’ll write a post.
But yes, so, I haven’t opened the Solo 401(k) yet, so our retirement contributions for this month are just sitting in my husband’s saving account. Which means they’re not even in this net worth update at all. So this could have been an even more impressive net worth update, if I had gotten my ducks in a row earlier in the month. Alas, I did not, so September will get to be the cool kid, instead. Ah, well.
The “Other” category includes my business’ tax liability, so really, pay that no mind. I’m hoping to pretty much wipe it out (other than the self-employment tax portion) by contributing as much as possible to a Solo 401(k). But until I confirm how much I actually owe (when I do my taxes), I keep a high estimate of the taxes on the books.
$54,650, out of $61,099 by January 2018 – only $6,449 to go! That’s $1289.80 needed per month to get there. Looking more doable every month!
How do you think I should celebrate when I get there? Reminder: this number, $61,099, represents $100,000 in progress from my all-time net worth low back in September of 2009. They say the first $100,000 is the hardest! So how does one celebrate their first $100,000? Hmm… (Obviously I’m looking to you guys for a bunch of fun, fabulous, frugal ideas. Go go Gadget Crowdsourcing Celebration Ideas!)
We’re into the real heat of summer now! I’ve pretty much sequestered myself entirely inside the air-conditioned apartment until that big burning orb in the sky goes away. Except, I did spend a week hanging out at -gasp!- the beach, which is basically a first for me. I don’t think I’d ever been to the beach more than 2 days in a row before in my entire life.
How did taking a week off to frolic in the ocean waves affect my money? Let’s have a look at this month’s numbers!
Change: +$1,363 or +2.69%
July Net Worth TOTAL: $51,949
Okay, so, first? I want to talk about that Retirement number. Went up by $989 – nice, right? But wait… I didn’t contribute to retirement this month! Not a red cent. We’re in a lull right now for my retirement contributions, focusing on my funding my husband’s accounts instead. So that nearly-$1000 was all gains, baby!
Except… I can’t actually get excited about that. Well, not too excited anyway. I’m in my “wealth accumulation” years, which is a fancy way of saying “I’m buying right now, not selling.” And when you’re buying something, you want the price to go down, not up! So those on paper gains may be exciting to look at, but I’m actually hoping that number will go down some, so I can buy “on sale.” Just a thought.
Cash is up this month, despite the fact that we took a week of vacation (unpaid time off). We kept our spending for the trip pretty light – the shared cost of a beach house with my parents, siblings, and their broods; we bought a round of groceries and beer for the whole group; we stopped at a McDonald’s for lunch on the way back and used a gift card (which we got from our coworkers last year as a “Congrats on the baby!” gift), and that was it for vacation expenses (well, plus a few sundries such as sunscreen, inflatable pool for the baby, adorable baby sun hat, etc.).
The real cost of the trip is in lost wages, since my husband and I both lack any paid time off benefits. That cost won’t be reflected anywhere until next month, since it affected the last paycheck of the month and we haven’t had that come through yet. But we had enough saved up in our “Time Off” savings account (our self-funded “paid time off” savings) and our “Travel” savings account to cover the lost hours. Also, I worked through the trip, which ended up being more than a little interesting when the internet at the beach house was out due to a fried modem from a lightning storm. O_O
But I survived the multi-day lack of internet and still managed to get my work done. Working on vacation isn’t exactly ideal, but if you’ve got to work, you can’t really beat doing so while sitting in a porch swing, enjoying cool ocean breezes!
The baby thought sand was awesome and waves were scary, in case you were wondering. Also, we stuffed ourselves on donuts.
Don’t ask me why I cut them like this.
Vacation was the “big news” this month, but again, we won’t see the full effects of it until next month.
$51,949 out of $61,099 by January 2018, $1,525 per month to go! That seems very doable, considering the $1,363 gain during what was a “down” month (no retirement contributions and travel spending). Of course, that just makes me want to run to the finish line on this – quick, where can I get a spare $9,000 right now?