Financial Independence

  1. 401 (k) up to employer match
  2. HSA
  3. IRA
  4. Max the rest of 401 (k)
  5. After Tax Accounts

401 (k) up to employer match

If your company offers a contribution by matching a certain amount or percentage that you put into your 401 (k) you want to make sure you are obtaining all of those extra funds.  (Note:  What your employer contributes does not count towards your max contribution for the year)

HSA – Health Savings Account

Max your Health Savings Account (if available) 2015 Max Contribution for Individual $3,350 and Family $6,650

An HSA is triple tax advantage, meaning:

  1. You are not taxed on the money you put in
  2. Earnings you make in the account are not taxed
  3. When you take money out for qualified expenses, you are not taxed.

If you take money out of this account for non-qualified expenses you are taxed at 10% which is much less than the average person’s typical tax rate

Fund your HSA by Payroll Deductions to avoid paying FICA taxes (Social Security and Medicare) which will save you 7.65% (Assuming you are an individual contributing the full amount this would save you just over $256 for 2015)

Links to Learn More

Learn from my mistakes

Year 1 (2014) didn’t contribute anything extra to my HSA

Year 2 (2015) contributed $1800 from my bank account, paying $137.70 more than I had to because that is the amount I paid in FICA taxes that would not have been taxed if I would have funded my HSA by payroll deduction

Mistakes I am currently making (2015), paying medical expenses with my HSA instead of paying out of pocket

IRA – Independent Retirement Account

As long as you have employment compensation you can contribute to an IRA.  For 2015 if you have your own job (employment compensation) and are age 49 and under then you can contribute $5,500 to your own IRA.  If you have employment compensation and are age 50 or older you can contribute $6,500 to your IRA in 2015.

Note:  If you are married and only one of you is employed, you cannot put money into the non-working spouse’s IRA.  (Each person has their own IRA, unlike a HSA which you can have one account for the family.)

What you need to know about Roth vs Traditional IRAs

Traditional IRAs are tax deferred (you are taxed when you take the money out), the funds you use to fund your traditional IRA will be completely deducted from your taxes if your AGI is below $61,000 for single or $98,000 for married filling joint returns (see phase out amounts).

Roth IRAs are taxed now, and you do not pay any taxes when you take the money out (see phase out amounts to see if you qualify).

Links to Learn More

Learn from my mistakes journey

Year 1 (2014) We almost missed contributing to our IRAs, but luckily we were able to contribute to our IRAs for 2014 in 2015 before we filed our taxes.

Note:  You can also enter the amount you are planning to contribute to the prior year’s IRA contribution and file your taxes before you actually put your money in.  April 15th is the last day to put money into your IRA for the previous year.  I would still recommend front loading (putting all your money in at the beginning of the year) your IRA if you are able.

Year 1 (2014) IRAs were 100% Roth because we took the advice of a Financial guy who works for Fidelity that came to our work and he basically said, “If you are young [and going to be working for a long time] just go with Roth, if you are close to retirement then it makes more sense to go with traditional.”

Year 2 (2015) I contributed $3,000 to my Roth IRA before I understood the quickest route to Financial Independence and more importantly this article Traditional IRA vs Roth IRA by the Mad Fientist.  The remaining $2,500 I will be opening up a Traditional IRA at Vanguard and investing in VTSAX.  I will also be guiding my husband to open a Traditional IRA at Vanguard for him to contribute his $5,500 into VTSAX for 2015.  Please note, the reason I am contributing to traditional now is because I plan on converting my traditional IRA to a Roth IRA when I am in a lower tax bracket, this is often referred to as a Roth Conversion Ladder.

Max the rest of 401 (k)

The Max contribution for 401 (k), 403 (b) and most 457 plans for 2015 is $18,000 for those of you who are age 49 and under.  If you are age 50 and older you can contribute an additional $6,000 for 2015.

After Tax Accounts

You pay taxes on these funds before you put them into the account and you pay taxes on the gains (any amount higher than the initial amount you put in).  You can take out funds from these accounts at any age without penalty.

How much you will be taxed on the gains depends on how long you held the investment for.

Short-term capital gains are investments held for a year or less before being sold and are taxed at your normal tax rate.

Long-term capital gains are investments held for more than one year taxed at a lower rate.  Currently the tax rate is 0% for the 10%–15% brackets, 15% for the 25%–35% brackets, and 20% for the 39.6% bracket.

Figuring things out…

I really like my job, so it is really difficult to find myself wanting to spend my time elsewhere.  Now if you do not like your job, change it, find something you would enjoy and figure out how to make it work. 4/14/16 9:15 AM – SAS

Alternatively you can find a high paying job and just suck it up and enjoy yourself later in life while you save now.  Or,  You do things you enjoy in your free-time and enjoy your life now, but work longer. (9:17 AM)

It is really all a matter of priorities.

-SAS (9:18 AM)

Post whatever you want here and it will be approved!

Hey YOU!

My time is very precious and valuable, so if anyone (including yourself) writes a comment to this article, it will be approved.  All self promotions going forward that are on other pages will probably be marked as spam.  But, for the sake of the crazy internet, I will try to keep  this as my “featured article” while I am still getting my site going.

Thank you,

and post away,


Aspirations for this site

Hello Dear Blog,

After having a baby roughly 2 months ago I am amazed at how much my priorities are shifting and I see the person that I want to be, but I so easily fall into old habits that are undesirable.  If you can image I am insanely busy, working a full time job, figuring out how to be a good mother, wife, and daughter, and trying to keep my own sanity.  My mom is down from Minnesota and broke her foot within a week of getting here.  The intent was for her to make life easier by being a granny nanny, (which believe me she is awesome at) but I was not expecting her to break her foot and the struggles of so many changes all at once which have been making me a better person.  It makes me happy to make my family happy.  I have realized that when I go out of my way to make their life easier, they will do the same for me in return.

As I sit here writing I can here my husband playing the piano beautifully  from the floor below me.  He saw me getting frustrated after being pulled so many different directions and told me to go take a break.  So I came up here to simply say that I have been recording ideas for future articles when I will finally have the time.

I am hoping to take FMLA (up to 12 weeks unpaid leave) and go make a King sized quilt in Walnut Grove, MN.  That is were all of my major quilting has been done.  I believe the last quilt I made was completed when I was 13 years old, so I figure if I don’t take the time soon (to just relax out in the country and enjoy the quality time with my Grandmother, Mother, and Son), I may never get the chance.

My Mother suggested getting everything done except the binding and then going out there to do that, but that would mean missing out on the journey of the quilt-making.  I want to just spend the time out there, as long as it takes, to make and complete the quilt.  I don’t want to rush, or think about the city life, work, or all my other responsibilities, I just want to take the time to enjoy some precious moments with my family while I can.  My Husband will be fine staying back in Texas because I will be leaving him with our puppies and of course the internet which connects him to all of his friends (and my family if I might add).

I am thinking the best way to ask my Grandma if she would be willing to have me, my mom, and my newborn stay with her as we work on a three generation quilt is by snail mail.  I could easily pick up the phone and ask, but I want my life to be about quality, not quantity and getting instant results, after all the good things in life are worth waiting for.