Josh Bruce
Welcome to the rabbit-hole.

April 15th, 2021 paycheck

Created on:

Updated on:

Thinking things will be settling down as the new rhythm is established.

I’m looking into accounting more. I had an accountant who was wonderful, she said she was retiring and I should find someone else. I signed up with a different accountant who I felt didn’t communicate well with me. That’s when I decided I needed to get educated to do the accounting and taxes “well enough” on my own.

I’m using Wave for most of my bookkeeping. They have coaches for a one-time set up session that I’ll take advantage of. I’m looking to do consultation training sessions with H&R Block, also partnered with Wave. We’ll see how that goes.

COVID quarantine has messed up my clothe replacement cadence and I’m finding I need to replace in bulk whereas I normally stagger and spread; replacing one piece here and another piece there. One pair of jeans gets worn out, buy new pair...a while later another pair gets worn out. Now it's like all my jeans are worn out, most of my shirts, and none of my shoes. I don’t like buying jeans if I can’t try them on, especially since I’m getting smaller after switching my diet and starting to take the stairs more.

Financial institutions

Cash reserves going down.

Still waiting to hear back on moving my business accounts to a new institution.

Credit cards

Still have 6 cards. 2 business and 4 personal (2 I use regularly). None carry a balance.

Oddly enough, the story of money coming back to me continues.

I was refunded for a charge I put on one of the cards for business expenses (state documentation). Come to find out the documentation was already filed and the company I use to file all that for me refunded me the bill. Granted I had already cashed in the reward points when I put the credit into one of my checking accounts; I'm negative 361 points at the moment. However, I'll be using the cash from that refund to make the bulk of my credit card payment when I get my next paycheck.

After figuring how to pay back the reward points that were already cashed out; if that's even a thing. (I called and learned that all my reward points go into the same bucket regardless of card of origin, so, they don’t care it’s negative.)

Retirement accounts

This was my time to think about legacy. In short, I see three primary legacies human beings leave:

  1. genetic (have kids, very common),
  2. financial (leave money to someone or something), and
  3. intellectual (capture and spread ideas).

Most people will emphasize one of these while toning down the others. I’m opting out of the first and emphasizing the other two. Retirement is the beginning of a financial legacy, past-me to future-me.

This led me down the trust account rabbit hole.

You might be thinking, “But you don’t have kids.” And I hear you. That was the first question I had and found out you can list whoever you want as the beneficiary of a trust; even businesses and charities. You can also create multiple trusts.

For example, Benjamin Franklin opened two trusts. The beneficiaries of the trusts were the city of Boston and the city of Philadelphia. 1,000 USD over 200 years to see compounding in action. The ability to make withdrawals twice. Once after the first hundred years, leaving some in the trust, and the second withdrawal after another 100 years.

Once the trust account is (or accounts are) set up, you can list the trust as the beneficiary on all your other accounts, which consolidates the money and other assets into the trust, avoids probate court, and attempts to keep the matter private; whereas wills become part of the public record. Anyway, once the assets are moved to the trust, the trustee executes the terms established by the grantor of the trust.

That was the other interesting thing; trusts aren’t limited to money. You can have artwork in there. A record player. Almost anything.

I'm working on increasing my knowledge here and have a lot of ideas whirling around regarding a trust, a foundation, an association; therefore, we'll leave it at that.

With that said, I went ahead and decided to up my 401(k) contributions to 10 percent. I want to get in touch with my benefits department to see if there's a way to add a couple of index funds to the pool we can choose from, which would reduce my expense ratios. They won't let me do a dollar amount as a contribution, only a percentage. Given my living expenses are low, I could contribute the full 19,500 USD per year. I want to see if I can front-load that at the beginning of the year.

Let's take 2021 as an example. With my first check in January I want to start maximizing the Roth IRA contribution; leaving myself a bit of padding. Once I get all the tax forms and have a feel for my modified adjusted gross income, I want to top-off what I can in the Roth IRA; if there's anything left to contribute for 2020, I'll put it in the Traditional IRA.

With the IRA as topped off as it can be for 2020 and 2021, I want to maximize the 401(k), if it doesn't reduce my total employer contribution. I was talking with an agent for my 401(k) who mentioned that if I contributed everything at the beginning of the year, I might lose out on some of the employer match. I'm not sure how that works mathematically and will contact my benefits department. Regardless, it would be a lot easier for me to throw in the whole thing at the front of the year because I have my salary, bonuses that contribute to the 401(k), and the possibility of raises.

Assuming that contributing 19,500 USD always results in the same employer match, then at this point I will have my IRA and 401(k) topped off, which leaves me able to contribute to the taxable accounts and HSA throughout the year. (There is a tax question in here I'll explore, if it seems like an option.)

Taxable accounts

I'm modifying the M1 Finance experimentation as I learn more about how that tool works.

I'm doing the nested pie thing. Basically, I have a pie with one slice at 100 percent. It contains one equity. That pie becomes a slice in another pie representing the brands I'm using or appreciating for that quarter in the given year.

The M1 Finance portfolio is mainly for insurance deductibles per the Financial Order of Operations from The Money Guy Show. So, it's not "serious money" I'm depending on for retirement and it'd be nice if it at least maintained value against inflation and spit off decent dividends on occasion.

Medical expenses

Nothing new here.