Financially Audacious Series: Kate at Goodnight Debt

Happy fall ya’ll! Hope you’re enjoying all the many splendors that the beginning of this season brings. I am thrilled to bring you another guest for the Financially Audacious Series: Kate from Goodnight Debt. You may notice that the questions match all of those from the first interview (featuring Meghan Jankovich here), but that’s because I am intrigued with everyone’s approaches on how they got started, and the ways they save for retirement. When you ask people the same questions on the topic of retirement, you’ll recognize everyone’s got their own great way of doing it! In fact, Kate is currently debating whether she should go full force and max out her 401(k) – NICE! Did I mention she also paid off $45K in student loans in just one year?! This girl is awesome. After you check out Kate’s interview here, make sure to head on over and check out her post “Should I max my 401k?” and all the other great posts she has to offer. As this Financially Audacious series progresses, I’ll be delving into even more financial topics beyond retirement with some seriously incredible individuals.


 

Let’s face it…saving for retirement isn’t necessarily inherent by nature, and we all have to start somewhere. What inspired you to start saving for retirement & when did you get started?

I’ve always been a saver. When I was a kid, I got more joy out of counting the contents of my piggybank than spending any of it. When I was 16, my dad and I talked about investing some of my savings. I put $3000 into a mutual fund and haven’t touched it since. This account is currently worth ~$8500. Watching the balance ride the waves of the financial crisis took away my anxiety about investing and let me invest with more confidence when I made my triumphant return to the market as an adult.

I started actively saving for retirement in 2013. I was consolidating savings accounts and one of the accounts had nearly exactly $5500 in it. I was dipping my toe into learning about Roth IRAs and the power of time when it came to investing. It felt like a sign that I needed to put the money into a Roth IRA. I’ve been maxing out my Roth IRA ever since.

Sometimes envisioning your goals for the future can put everything into perspective. What do you envision your future retirement to be like? What will be your typical day?

Tough question. I haven’t thought this far in detail.

I would love retirement to be a constant trip. I would love to slow travel the world. Pick a location, spend 1-3 months exploring and then move to the next location.

Oftentimes it’s challenging to maintain saving for a goal that’s in the future. How do you maintain the momentum to stick to it (tips, tricks, methods)?

  • If you are eligible, sign up for a 401k/403b immediately. You should sign up on the first day of your first job. There is no better time to start than now.

  • Increase your savings every year. Do this during your annual review. If you never see a larger paycheck, you can’t miss it. Many 401k systems allow you to automate your increases. Also, don’t overestimate how much pre-tax contributions will impact your paycheck. Increasing your 401k contribution by $50 pre-tax will not lower your paycheck by $50. Try increasing the percentage. See what that does. You can always lower it later.

  • Automate! Thankfully, 401k payroll contributions are automatic. However, IRA contributions can also be automated. If the contributions are automatic, you can’t forget!

  • Set Retirement Baby Steps. Most people can’t max out all their accounts with their first job. It takes time. Define your Baby Steps and follow them. The most common progression is 401k match> Max Roth IRA> Build up to Max 401k. Every year, try to save a little more.

  • For non-retirement goals, I use separate savings accounts. I have a separate savings account for Travel, Emergency, House Savings, and Car Replacement. It is easier for me to stick to my savings goals when they are separate. With this system, I can be conscious about how much is available for each goal and make progress accordingly.

What savings vehicles and/or services do you utilize to save for retirement?

I’m pretty basic. I have a Roth IRA through Vanguard and a 401k at work. I use a spreadsheet to track my progress every month.

Say someone hasn’t started saving for retirement yet, how do you suggest they start?

Vanguard Target Date Funds. Stop thinking about it, just do it. Target Date funds are available in a 401k, IRA or Roth IRA. You can worry about proper allocation, fees and sufficient contributions later. The biggest step is to start.

Also, trust the system. So long as you aren’t investing in anything crazy, investing works. Pick a strategy, execute the strategy and give yourself 3 years to surrender to the market. It’ll go up and it’ll go down, but give yourself 3 years before you change course. Selling because you are scared is the worst thing you could do.

Do you find people around you (friends, family, communities) are also into the idea of saving for retirement?

Most of my friends are too underwater with student loans or trying to earn a livable wage to worry about retirement today. When money comes up with them, I try to focus more on general tips to save to help them get ahead. Retirement saving conversations are on the back burner for now.

If they do have the money, I’ve found they have analysis paralysis. I’ve tried to help there when I can. For example: My best friend is debt free, makes good stable money and had a huge savings account balance. She has a 403(b) but hadn’t paid much attention to it. We had a date night last year, went through all her 403(b) options, increased her contribution and opened a Roth IRA. It was a very productive date night 🙂

If you wanted to talk and learn about saving for retirement, what are some of your favorite resources?

I don’t have a favorite resource. I’ve found that good financial management is overwhelming if approached all at once. It takes me 3 or 4 exposures to an idea for anything to sink in.

For someone starting out, I’d send them to Rockstar Finance. Saving for retirement is one piece of a big puzzle. A general exposure to personal finance and conscious money management will go a long way.

What’s your #1 go-to tip when it comes to saving for retirement?

Automate it. If you don’t have to remember to save for retirement, you are much more likely to do it.


Thank you so incredibly much, Kate for stopping by! Make sure to visit Goodnight Debt for her wisdom & all things revolving around ‘learning to deal with money like an adult.’ 

Until next week & Happy Halloween!

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9 thoughts on “Financially Audacious Series: Kate at Goodnight Debt

  1. Hi Alyssa and Kate! Love this series, and of course love Kate’s wise answers. On the progression from 401k match to Roth IRA to 401k match, I recently crunched our early retirement budget and realized that our future tax rate will be all kinds of low (like close to zero), whereas our current tax rate is all kinds of high (like basically all of our money — okay, not really), so I’m now way less keen on the whole Roth notion. I think Roth makes sense for people who plan to live like rock stars in retirement (or who just want a glorified savings account), but if you truly intend the money to be for actual retirement, I’d max that 401k first. Even if you aren’t currently in a high tax bracket, frugal retirees will certainly be in a lower one later on. Of course, if your goal is to have the money available to use for a home down payment or health care or other costs that occur before you turn 59 1/2, then go for it on the Roth.

    Liked by 1 person

    1. Such valid points! I can definitely see how your future tax rate would be very low which would greatly be a benefit, versus getting taxed now at a high rate through a Roth. It’s always great hearing about your preparation towards early retirement!

      Liked by 1 person

  2. This is a great! I’m a retirement nerd junkie! One thing I’d recommend is to use Personal Capital – it’s like Mint for Retirement. It’ll track the growth every day of your investments for you so you don’t have to update it in an Excel Spreadsheet. I used to calculate my net worth in Excel but Personal Capital automates that for me!

    Liked by 1 person

      1. I honestly haven’t used it that much besides tracking my net worth, but there are a lot of awesome features that I haven’t even touched yet!

        What features appeal to you? The one feature that was useful was that it showed me that my wife’s Roth IRA was in an expensive fund so we moved it to Betterment.

        Liked by 1 person

      2. I love how in depth it breaks down my retirement portfolios! How it notifies me when my holdings are up, or down. I haven’t utilized any of the features of recommended advice, but I’m a huge fan of Betterment so it sounds like that was a successful move for your wife’s IRA!

        Liked by 1 person

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