This is an outline of our personal finance plan. I'm sharing this as a starting point for others to form their own plan, and also to gather feedback on what we can improve. If you have a suggestion, feel free to file an issue or email me at email@example.com.
- Pay off loans, except ones with very low interest. e.g. 0.9% car loan. Builds credit, less than inflation.
- Never keep a balance on credit cards, auto-pay everything in full
- Ask for a credit increase every year, don't over do it
- Carry less than 1/3 of credit limit in credit card balance
- Check credit score once a year. CreditKarma has a better interface and suggestions for improving credit score.
- Refinance for a lower interest rate on mortgages or large loans
- Consider 401k loans. Up to $50k, prime rate, and interest and principal are both paid back into the account
- 12 months of expenses in a high interest savings account
- Budget out large purchases into monthly amounts to save. e.g. car, wedding, vacation
- Health Savings Account (HSA). Maximize employer contributions.
- Do not invest until balance would exceed minimum to avoid fees
- Choose a plan that allows investment in index funds like Wells Fargo or Health Savings Administrators
- Continue to pay medical expenses out of pocket when possible to maximize tax deferred growth
- No penalties for non-medical withdrawals after 65. Can use as another retirement account.
- Pay less taxes - guide to tax advantaged accounts
- Choose a Retirement Plan IRS overview of different plan types. Highlights the benefits of each.
- IRS Rollover Chart shows what retirement plans can be rolled over.
- Calculate whether Traditional or Roth contribution makes sense for your tax bracket. calculator. Typically, high income/high tax rate => traditional, low income/low tax rate => roth. Save on taxes now vs save on taxes later.
- Maximize contributions to tax advantaged accounts: 401k, IRA, HSA.
- Backdoor Roth IRA. Pay special attention to IRA aggregation rule and pro-rata distributions, and the consequences of 'step doctrine' for audits
- After-tax 401k contributions and rollovers
- Choose low cost index funds.
- Charitable giving. Contributions to eligible organizations can be itemized as a deduction
- 529 plan
- Vanguard 529
- $3,000 minimum
- Age based options. I'm using the "moderate" option: starts at 75/25 stock/bond allocation
- Dependent care FSA. IRS publication 503
- Monthly review of spending with Mint. Categorize spending, note any large differences in monthly trends. Link all accounts.
- Vanguard brokerage account. Using this for our Roth IRA and IRA.
- Setup direct deposit and auto-pay for all accounts.
- FI planning tool. Interesting to play with, but no longer using it.
- Personal Finance reddit commontopics - good guide for the order one should save in.
- Reddit guidelines for each age group
- Bogleheads: Lazy portfolios. No longer using this, only have target retirement index funds.
- I Will Teach You to be Rich - short, friendly, casual introduction to debit, savings, and retirement
- Quora Personal Finance - stopped using this
- Random Walk Down Wall Street
- Mr. Money Mustache - personal finance and early retirement blog