How we use our Employment Benefits to Maximize Every Dollar

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There is more to your job than just your salary. Most people receive some kind of benefit at work. Whether they are non monetary like a flexible schedule or more tangible like an employee discount, we get more from our employers than our paychecks. Here are four valuable benefits that we use (or have used in the past).

401K Match: For 5 years, I worked at a company that offered a 100% match for retirement contribution up to 6% of your salary. From the first day I started working, I made sure to contribute at least the 6% that would get me the 100% company match. Anything less would seem like I am leaving free money behind. I left that firm over 4 years ago and no longer receive a match at my new place of employment. However, my husband does receive a similar benefit (100% match up to 5% of his salary) and we make sure to take advantage of it. So now, when he contributes 10% of his salary, his account is actually receiving a deposit of 15%.

Graduate School: I often discuss my journey to becoming debt free and instrumental in all of that is the elimination of my student loan debt due to the high interest rate. I graduated 2 years ago in May from a program that cost $75K. However my loans were less than $50K thanks to the tuition assistance I received when I first started the MBA program. I did switch jobs in the middle of graduate school, which contributed to the balance of my loan, however, I am $28k closer to completing my payments as a result of being able to benefit from the tuition program early on in my studies.

Cellphone Discount: We have a family plan with 3 lines for smart phones that gives all the users unlimited data and text. If that sounds pricey, it’s because it is. However, my carrier offers an 18% discount to employees of my organization. Every 2-3 years, I recertify my employment by providing a either a scanned copy of my badge, a pay stub or some other form that would indicate I still work there.

BJ’s Wholesale Club: A BJ’s membership costs $50 a year for 2 people. Given the savings opportunities that buying in bulk offers, not to mention the low gas prices, that is already a fantastic deal. However, my husband’s job offers a discount where the membership costs less and is for a longer period of time: $40 for 16 months. Per month, the discounted price is nearly 1/2 the regular advertised price.

How are you maximizing your employee benefits?

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Your 7-Day Guide to Financial Discipline

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While you can’t strike it rich in 7 days, you certainly can organize your life enough in 7 easy steps (1 per day) to improve your financial management skills.

Monday: Maximize your retirement contributions, either to the maximum amount you can afford or to the IRS limit. If you have not yet started contributing, do at least the minimum that will get you a company match.

Tuesday: Create a budget. Budgeting is the building block of financial freedom. Start based on the new amount you will have left over in your paycheck after you’ve changed your retirement contributions.

Wednesday: From your budget, you will of course categorize a portion of your income as savings. Set up an automatic transfer that will happen around the same time every month. Saving in autopilot mode is the least painful way to set money aside because you don’t have to think about it.

Thursday: Set calendar alerts of all your upcoming bills. Nothing is more damaging to your finances like late or missed payments. They negatively affect your credit score reducing your chances of getting the most favorable rates and you face the potential of late fees that will chip away at money that you need to hold on to. Having your alerts pop up a day or 2 in advance if you’re paying electronically or a week in advance if you’re paying by check, will make sure you stay on top of everything you owe.

Friday: Clip coupons and know your cash back opportunities. I am not a fan of processed foods so I cannot always escape a high grocery bill. However, even fruits, vegetables and certain grains go on sale, particularly if they are in season. Familiarize yourself with the circulars throughout the week and clip some coupons. It will help you stay organized and maximize your savings.

Saturday: Set some goals for the upcoming week. Having specific goals gives us something to strive for and motivates us to improve on our previous efforts. Whether you want to start small by saying you will make coffee at home every day for the upcoming week to save money, or you decide on something more long term like paying off your credit card debt, setting goals will keep you motivated.

Sunday: Meal prep for the week. The markup on prepared foods is brutal. If you eat out regularly, you will hate yourself when you see how much it costs you monthly or even annually. The easiest way to avoid temptation so you can resist the convenience of prepared foods is through advance preparation. While you may either run out of food or get sick of eating the same thing, bringing lunch 3-4 days a week will still yield a better outcome than buying lunch 5 days in a row.

Path to a Million: 2017 Q2

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I have a lot to be excited about! Slowly but surely, my net worth is going up…up…UP! I’ve done nothing but CRUSH debt so far this year and an trickle of additional sources of income has helped increase our savings while I fought tooth and nail to keep our household expenses down. I’ll let the numbers speak for themselves… Discipline pays off. Watching the assets increase and watching the total debt decrease at an even faster rate is what keeps me motivated.

The goal is for the student line item to be gone by December 31, 2017. Think I can do it?

NW

 

Student Loan Update – April 2017

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When I graduated in May of 2017, I chose not to think about my student loans. It was a hot humid day but people traveled from different states to come see me complete another milestone. I was juggling full time work and a part time MBA program right when my husband was settling into a new job. I had a lot to be thankful for and a number of people were proud of me. The Department of Education was going to grant me 10 years starting in December 2015 to agonize over student loans but I was never going to get another graduation day.

I picked up my diploma after the ceremony and I sat in the front seat of my husband’s car running my fingers on it back and forth as my parents sat in the back. I was pretty impressed with myself. Not in a gloating kind of way but more so in a “I actually did it…” Almost as if I couldn’t believe it.

The next day, things went back to normal and I decided that the honeymoon period with the diploma was over. Real world responsibilities required me to know what my balance was and what my monthly payments were projected to be. It was nothing that I could not afford but it was painful. Over $350 a month a and $40k+ balance. I could get a whole new car with that! I devised an aggressive pay down plan as follows:

  1. Start paying immediately rather than waiting for the grace period
  2. Apply all raises to the monthly payment and all bonuses to the balance
  3. Apply all tax refunds if any to the balance

3 simple steps. The toughest part was the discipline of not eating out as much as we would have liked and not splurging at the mall. However, 23 months later, that plan has worked so well that I am dancing for joy.

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In case you are having trouble reading the small font, this says:

Current balance $11,641.17 & Due date 7/18/2020

While there are no guarantees, these numbers indicate that I am likely on track to finish paying the debt off by the end of the year if all goes as planned. That will be 8 years ahead of schedule. This is more than I could ever hope to achieve. When I said I was determined to pay and save myself an astronomical amount of money in interest, I was not joking.

I am grateful for the discipline I have that allows me to focus on long term independence goals rather than instant gratification. I’m also thankful that I have a supportive husband who understands my goals and can see my vision for our family. Some people would have valued the high life over a debt free life and it could have been a source of friction. Instead, he trusts my judgement and is happy delaying a little bit of gratification in favor of peace of mind.

Dear DOE, thank you but no thank you. I will decline your offer to take a 3-year hiatus from my obligation. You’re going to collect these payments and you’re going to like it. But better yet, you will set me free.

 

The Lesson from For-Profit Colleges

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In case you’ve been in Antarctica with limited cell service, you’ve heard of the disgraceful collapse Corinthian “college”, the corporation that has been mascarading as a higher education institution for several decades, preying on low-income, usually minority, individuals promising them a way out of dead-end jobs, while having inadequate accreditation and saddling them with absurd amounts of debt.

The reason why that organization was so successful at tricking and trapping students is because we have all these proven studies that show college graduates earn way more than those with high school diplomas over a lifetime. This company used that information to lure students and convince them that paying for useless training was an investment in their future, even when they knew that their own job placement and salary statistics were overstated/misleading.

While we know that college graduates do earn more on average, that doesn’t change the fact that a degree is not a universal guarantee of high earnings. Other factors are crucial in determining your earning potential, such as your grades, your major, the industry you choose, the reputation of your Alma Mater, your professional network/contacts, the overall strength of both the economy at the national and local level. Matriculation is only one of the necessary steps.

But this is for those who want to go to school. What about those who don’t want to go to school? Those for whom traditional schooling isn’t possible either because of their limited capabilities or their lack of interest in lengthy papers, class presentations, and final exams? Should we as a society simply accept that they won’t be high earners? Even if we settle for that, it doesn’t mean they would. That unwilllngness to settle for minimal wages due to lack of formal training, combined with our complacency at creating non-traditional educational paths to help them develop useful skills contributes to turning these poor students into prey.

Our society doesn’t respect or value non-traditional schools. We don’t place any value on trade schools or alternative secondary education as we should. Not long ago I found out that my cousin may not be on track to graduate on time and may have changed majors for the third time in 3 years. He also made some comments that a discerning ear would understand that he is suggesting he’s not interested in traditional schooling. As someone with a graduate degree, I know that few people will make it far in life if they limit themselves only to a high school education. That is after all why I sacrificed my time and invested thousands into going back to school even with a full-time job on my plate. However, I would not dare ask him to explore alternative options as I know this would upset my family greatly and, while it sounds extreme, might even ostracize me.

While my cousin doesn’t attend a for-profit school, if he does not graduate, I do not see how the results will be much different. He will still be saddled with debt from 3 years worth of tuition attending a school to appease his family, while having no worthwhile degree to improve his earning potential. If anything, this might even put him in a less favorable position. These questionable schools have a track record on preying on students and they subsequently lost their accreditation and have been filing for bankruptcy left and right since 2015. Unlike them, he attends an accredited school with acceptable retention and graduation rates. He will not get the same sympathy victims of Corinthian Colleges got. He will not be able to sue, he will not get his loans pardoned and he will not be given the benefit of the doubt.

So what could he have done? Not going the traditional path would not necessarily doom him to predatory for profit schools. He could have done full-time sales, started in real estate, became a contractor, etc. Although these have the potential of being good paying jobs for those who are dedicated, they don’t have the “prestige” of saying you have a bachelor’s degree. They don’t put you on a path of becoming a physician or attorney. And to those who still insist on valuing people based on 1950’s standards, they will impose restrictions on their children that drive them to make life ruining decisions.

Path to a Million: 2016 Q4 – Results

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In this post I talk about why I wanted to make my net worth public. Here are the actual numbers and below I’ll discuss what they all represent. Since this is the first time I am posting this, I will give some background information below. Going forward, I will only be posting the statement of net worth and referring to this post for the details.

 

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On the asset side

Liquid assets represent cash and investments that can be easily accessed in the event of an emergency.

Personal property includes things that have been appraised but aren’t real property and aren’t easily accessible. That includes jewelry, furniture, etc.

Real estate is pretty self-explanatory.

 

On the Liability side

Both the HELOC and the Consumer loans seem like “too good to be true” deals, however they are state and federal subsidized loans for energy efficient improvements on our primary residence. The HELOC is for the solar panels and the consumer loan is for energy efficient central AC.

The student loans are what they are. But if you want to know how determined I am to pay them off, I graduated with over $45,000 in 2015, and I’ve paid down over $10,000 in principal payments this year alone. So I don’t anticipate it will be weighing around my neck much longer.

2 of the 3 mortgage loans are on rental properties which are cash flowing well and do not require us to pay anything out of pocket.

I do not have, nor have I ever had credit card debt.

Net Worth

Pretty self-explanatory as well. It’s the difference between what I have and what I owe. While most of my NW is tied up in real estate, a significant portion of the real estate is income generating. By no means am I living in a $1 MM house. My goal is to increase my net worth by $75,000 by this time next year. While a good portion of that gain will be through eliminating my student loans, I think there will be several other income generating, savings and investment opportunities in the new year. Paying off the student loans alone will make a significant difference. Those $300 that are currently being eaten away by the loans, can be funneled to other projects and create a snow ball effect both in savings and in investments.

Nothing happens by luck. It takes faith, hard work and discipline. I am making a plan preparing for a prosperous 2017. I look forward to checking in for the first quarter.

 

It takes Luck to be Successful

Don’t mind me; I’m just practicing my click-bait titles…

It is often said that if hard work was the only way to success, day laborers, farmers, etc. would all be millionaires. Hard work is a key to success. No one (except maybe lottery winners) has ever achieved anything in life by sitting around the house doing nothing. Whether it’s Harriet Tubman freeing slaves, Mark Zuckerberg founding Facebook or Obama becoming president, you won’t hear about high achievers sitting on the couch with a lot of free time on their hands.

On the other hand, we shouldn’t be insinuating that anyone who didn’t find great professional or financial success failed to do so because they lacked discipline. Many of those people lacked opportunity, money and some were lazy and poor planners, but some lacked good fortune.

I say luck because many of my peers who came from similar backgrounds as myself are doing very well while others, who didn’t work any less hard are doing terribly or did so terribly that even after being back on their feet are playing catch up.

I want to tell the tales of 3 of my peers, all of whom graduated college within a year of  each other and a year of the Great Recession, eliminating the disparity that graduating during prosperous times would create.

All 3 are women of color, giving them the same likelihood of facing sex and race discrimination in academia and the workforce.

All 3 were traditional students with parental support (albeit to various degrees), no teen pregnancies, criminal past, etc.

While they remain anecdotes, I wanted to provide that small glimpse of their backgrounds to demonstrate that some of the major things that tend to create inequalities were not factors or were the same for all women.

I’ll start with the one that graduated in 2007. That was pre-recession but her lack of meaningful experience limited her opportunity to find full-time employment in time before Sallie Mae came calling. She was a little stubborn about getting internships in her field because they paid less than the temp-jobs she got that were completely unrelated to her major. She eventually found a job a year later after she began managing her salary expectations a little better. She built her savings and got her own apartment. She was no longer living on whatever allowance her parents could spare but she wasn’t living a life of prosperity either. For example, she couldn’t afford a car in any state (new or used) because the added cost of fuel and insurance was too much for her tight budget to bear. Some days she didn’t run the heat to keep utility costs manageable.

A year later, Peer #2 graduates. All is well.  At least for a few months until the market crashes and Lehman goes out of business on a humid august day. It’s pandemonium and lay offs start rolling in. She got to keep her job but it was only a matter of time before she too was offered a severance  package. She takes it, finds a job in retail and applies to graduate school, but she falls behind on her bills. Shortly there after, she lands another, better paying job which offers to pay for her to finish her degree. She says goodbye to retail for good as she graduates, gets promoted and gets married. Her now-husband who also has a good paying job brings in solid additional income that allows them to move to a really nice part of town and she keeps thriving. 8 years after undergrad, she has a happy family life, has a successful career and is financially stable.

Peer #3 is also a 2008 graduate. She’s an outgoing creative woman with a heart of gold. She’s generous to a fault. She’s active and participates in any and all activities that could enrich her undergraduate experience. She had lofty aspirations so she travels internationally and tries to get internships at various prominent organizations. Unfortunately her field of study is narrow and doors are closing fast. Her field is in demand but only for the most seasoned workers. There’s no desire to invest scarce resources into building inexperienced people. She bounces from paid internship to paid internship until things get so bad that she ends up working at the mall, focusing on just making a living since building her resume has done little for her career prospects. As a result of her basic costs (which are relatively low given that she still lives at home), she is unable to make her student loan payments which go into default and double in size after capitalized interest and late fees. 8 years after graduation, she is still making minimum wage and owes more on her student loans than she borrowed.

Next time you see someone struggling, don’t assume that they’ve done everything wrong. It could very well be that the necessary opportunities for success didn’t present themselves.