Mortgage Re-fi and Catch-up Contributions

[dude]

Closing on a mortgage re-fi tonight that will drop current rate from 4.25% to 3.5%, and today filled out my Catch-Up Contribution election form for 2015 (will turn 50 in May) for the max $6,000 -- on top of the $18,000 deferral limit for the 401k.  With matching contributions, a cool $30,000 will be piling into my 401k each year until I retire in 5 years or so. With the additional savings from the mortgage re-fi, I'm anticipating net worth increasing pretty rapidly.  FIRE, here I come.

[Franklin]

Nice!  Congrats and early Happy Birthday.  Same situation here on the catch-up, but mortgage is already paid off.  Can you share which election forms need to be filled out?  Is that unique to the IRA and 401k custodians, or is it universal?  I'm a little bit in the dark as to who I need to notify and when.

[tracylayton]

What is the Catch-up contribution? I'm not familiar with this.

[dude]

tracyclayton -- the IRS allows individuals turning 50 to defer $6,000 of income in addition to the usual $18,000 limit. But you can begin making them in the year you turn 50.  So I turn 50 in May, but will begin making catch-up contributions in January.  In order to make them, you have to already contribute the $18K max to your 401k.

Franklin, I'm a Fed employee, so there is an election form we need to fill out to start catch-up contributions to the Fed version of the 401k (the TSP).  It is only good for one year, and needs to be renewed each successive year.  Not sure how it works for corporate 401k's, etc.

[prudence]

Congrats on some wise moves Dude. Always good to pay less interest on the mortgage. I refi-ed a couple years ago to a 15 year from a 30 and the impact monthly to net worth is very nice..

[dude]

Happy early bday and congrats on your financial planning. I too would like to retire by age 55(34yo now) and it's quite rewarding to see others do so on a normal type of income. (I'm not aware of your income but a generalization made from the forum info)

Well, craiglepaige, I won't let that misimpression hang out there -- I make a lot of money, or at least to me, it is.  I'm the higher earning half of a DINK household that is somewhere near the top 5% according to IRS info.  It wasn't always this way though.  I started out making (for a Top 15 law school grad) a modest $38K/year.  But I began saving into my 401k right away, and with each successive promotion/pay raise, I increased my contribution until I maxed it out a decade ago.  And my wife, after years of mostly stagnant wages, has gotten ahead in the last couple years. I won't call myself frugal, but I'm far more conscientious of spending then a lot of people I know who make my income, and I'm not into the consumerist culture.  I don't have things that my friends consider indispensible, like premium cable channels, DVR, PlayStation, season tickets for my favorite sports teams, the very latest smartphone, fancy cars, and the whole shitload of crap I see people regards as needs instead of wants.  I have taken the MMM thing to heart though, and significantly cut expenses on many things (and am much happier for it!).  But we spent a significant sum for housing (though only 1100 sq. ft), my wife and I travel a lot, I maintain several fitness memberships (regular gym, climbing gym, jiu jitssu) and we eat organic/grass-fed, etc (i.e., we spend way more money on food that we have to, or probably should).  So thanks for the kind words, but I don't think many on this forum would consider my household income "normal," and I definitely have lots of room for improvement!  But sure, I'll take credit for making sound decisions on a lot of the fundamental things, the most obvious being to not live beyond one's means (though even there, I stumbled in the early days).