Ouch...

[Moostache]

My employer updated our 401K plan this year to allow after tax contributions up to the maximum of 53K/59K per year depending on catch-up contribution availability.

I promptly changed my contribution level to 50% and this paycheck was the first one where no amount of that contribution qualifies as a pre-tax event.  I now get a whopping $629 every two weeks to live on until next year.  It just might be a tight 12 weeks :)

Thank goodness I have my living expenses under control....

[Kaspian]

Just want to say--that's pretty badass!!  Good on ya and good luck, man!!  :)  (Why does writing "good luck" online always sound sarcastic when it's not meant to be?)

[pdxvandal]

Nice! I started a job a few months ago (previous job no 401k) and have been contributing 49% to a 457b to reach the 18k maximum for 2015. I'm also contributing 15% to a 401a. So my every-two-week paychecks are about $450. Doesn't buy a whole lot but I don't need much.

Like you, I'm glad I have my expenses in check.

[Altons Bobs]

Ouch ouch ouch!!  That's $314.50/week only, how do you live on that?! 

[tallen]

Great job!!! I was maxing my 401k up until a few weeks ago but the $408 weekly left over wasn't letting me save much towards buying a rental property, so I decided to reduce it to 10% and put the extra take home into savings to buy the rental in a few months. It was a hard decision to make.

[powersuitrecall]

This should be a "throw down the gauntlet" thread.  Nice little challenge you've set up for yourself!  Awesome and badass!

[RWD]

Ouch ouch ouch!!  That's $314.50/week only, how do you live on that?!

~$16k/year is enough for one person (I'm not sure if Moostache is married) and can even be done for two people.

That said, Moostache has plenty of reserves so income is not a constraining figure here.

[Moostache]

Ouch ouch ouch!!  That's $314.50/week only, how do you live on that?!

The short answer is that I have no debt so most of my expenses are pretty minimal.  I can break that down in a more detailed fashion later when I'm not at work if you are really interested.

On some levels it seems like I am trying to approach ERE levels of living but I am not however i am trying to remain fairly frugal now so that it should never be a concern when I do retire.

Somehow on my current budget I still manage to  have some expenses that I am certain would make a few people roll their eyes at me :)

[Moostache]

Busted... :)

But yes I  am doing just fine. The actual income figure  is closer to 26K per year because the first half of the year is consumed with pretax contributions - which almost but not quite doubles my paycheck.

I also get a quarterly bonus which I calculated into the 26K figure.

The challenge this year is mainly due to the fact that all this was implemented short notice middle of the year so I didn't have time to 'budget' for the smaller paychecks towards the end.  Next year its a smooth ride all year.

Ouch ouch ouch!!  That's $314.50/week only, how do you live on that?!

That said, Moostache has plenty of reserves so income is not a constraining figure here.

[Bajadoc]

You are smart and doing exactly the right thing. Stick with it for a few years and you will be very happy.

[Altons Bobs]

Ouch ouch ouch!!  That's $314.50/week only, how do you live on that?!

~$16k/year is enough for one person (I'm not sure if Moostache is married) and can even be done for two people.

That said, Moostache has plenty of reserves so income is not a constraining figure here.

$15k is already my property tax, and yard service is another $5k.  So that's why it's an ouch to me, maybe not to Moostache.

[RecoveringCarClown]

$20k for property tax and yard work? Holy Shit!  Give some details on this, I can't even imagine how you can get this high outside of a Beverly Hills mansion.

[pbkmaine]

When we were working, DH and I lived in New Jersey in a completely nondescript 3-bedroom split level on 1/4 of an acre and paid $12,000 in property taxes in 2012. It was a very good but not great town with a very good but not great school district, about an hour's commute from Manhattan. Which is why we no longer live in NJ.

[KittyCat]

~$16k/year is enough for one person (I'm not sure if Moostache is married) and can even be done for two people.

That said, Moostache has plenty of reserves so income is not a constraining figure here.

I think it depends on where you live. For me, slightly more than $111 weekly is enough for me to live off- $100 for rent, $10 for gas, $1 for food (the family I stay with provides dinner, so I am fortunate).

To OP: You can do it!

[Gone Fishing]

Nice.

I plan on ramping up to the company allowed max of 75% in Jan in an attempt to get my 401(k) fully funded before I retire which will put me in a similar position.  I should be fine, but may need to dip into reserves for a dollar or two.

[Moostache]

1) wow... I would definitely consider 15k property tax a lot.  I live in a house which is approaching the 100 year mark.  It would be considered small by many tastes but it is 3 bedrooms and one bath with a full basement,  which I consider a lot of house for just me.

My property taxes are only about $1K per year.

2) Currently I give myself about 1K per month for a budget, which does include setting aside money for property taxes and insurances.  Obviously that leaves me some room still to blow the budget though the plan is obviously not to.

While I didn't plan to on this change in saving strategy it really isn't much different from how much I was already doing.  Before it was 18k to retirement, 1k/ month into investment, and I still had built up 13k more in my savings account over the year so far and that probably would have had almost 9k more by the end of the year when I probably would have decided to flush that over into the investment minus a full Roth contribution.

It just feels different to have it. All sent away before it hits my hands.

[Chranstronaut]

Nice, I just did this and got my first check too!  I'm in at 50% until the end of December after changing jobs and trying to make up for the 6 month waiting period.  I'm raking in $928 haha!

Did your HR department contact you?  Mine called me to make sure I was REALLY SURE what I was doing.

[JLee]

My employer updated our 401K plan this year to allow after tax contributions up to the maximum of 53K/59K per year depending on catch-up contribution availability.

I promptly changed my contribution level to 50% and this paycheck was the first one where no amount of that contribution qualifies as a pre-tax event.  I now get a whopping $629 every two weeks to live on until next year.  It just might be a tight 12 weeks :)

Thank goodness I have my living expenses under control....

Hahaha..yeah, mine's not quite that low but at 40% of gross income (I started late so I'm in catch-up mode), it hurts!

[Moostache]

Not a peep from anyone on it.

Prior to this year and for half of this one we were capped at a contribution of 18K along with a match of 3K, even though they have always allowed up to 50% of your salary to be taken out.  They just stopped once you hit 18K.

In June they made a big deal out of increasing our contribution cap to 47K under 50 and 53K for 50 and above, along with allowing us to make in plan conversions of after tax dollars to Roth which is ideal since it can then grow as a roth fund its entire life.  I thought the cap was odd because including corporate match they were still restricting us to $3K below IRS limits.

This month they suddenly announced an increase of the match to $6K.  The first $3K followed the old rules of a limit of $750/quarter.  The second 3K has more complicated rules associated with it, annoying to some because they could have qualified if the thing had been announced earlier and explained...   Oh well, yay I get more free money :)

I did think it was funny that suddenly they started only giving examples of people contributing at the 6% of salary rate with the increase of company match. Perhaps some concern about potential overwhelming participation? :)

Nice, I just did this and got my first check too!  I'm in at 50% until the end of December after changing jobs and trying to make up for the 6 month waiting period.  I'm raking in $928 haha!

Did your HR department contact you?  Mine called me to make sure I was REALLY SURE what I was doing.

[RyanAtTanagra]

I'm confused, why would you contribute to a 401k post-tax?  Surely you'd have much better investment options in a taxable investment account elsewhere.  Even if you have the best 401k plan in the world you're still making it more difficult to get to that money come FIRE (having to do a 72t or roth ladder).

[RWD]

I'm confused, why would you contribute to a 401k post-tax?  Surely you'd have much better investment options in a taxable investment account elsewhere.  Even if you have the best 401k plan in the world you're still making it more difficult to get to that money come FIRE (having to do a 72t or roth ladder).

I believe a post-tax 401k can be rolled over directly into a Roth IRA. Doing it this way is advantageous because the limits are higher than for an IRA.

[Moostache]

I'm confused, why would you contribute to a 401k post-tax?  Surely you'd have much better investment options in a taxable investment account elsewhere.  Even if you have the best 401k plan in the world you're still making it more difficult to get to that money come FIRE (having to do a 72t or roth ladder).

Think tax efficiency.

I'm 50 years old and I do not currently plan to retire extremely early, perhaps going as late as 62.  As RWD pointed out earlier I already have plenty of funds available - 1 million in my investment account and about 550 currently in IRA/401K.  Obviously that leaves me the ability to tap funds outside of hitting retirement age.  All that money is going to keep growing though because I currently have no plans to touch it until I do hit retirement, which brings up the benefits of after tax contributions...

What I do not currently have is any tax sheltered funds to access during retirement.  Any social security I get along with funds I tap in the IRA/401K will impact capital gains taxes (and lets not think about RMDs at 70....).  I need something I can access that will let me control that income level somewhat.

Since I do not currently have any roth funds AND I am starting late in the game the most efficient way for me to build those funds up fast is through after tax contributions into my 401k since I can potentially dump 29K per year into that account - thats a LOT better than being limited to $5500/year.

[RyanAtTanagra]

Ahh ok, didn't realize you could roll over into a Roth 401k

[Jack]

Well, I was going to start a "share your badassity" thread, but I guess I'll just brag here:

I started a new job about 3 months ago, became eligible for an HSA at the beginning of July, and will become eligible for a 401K at the beginning of October. I've been allocating a bit less than half my net salary in order to max that HSA by my next paycheck, after which I'll be contributing 99% of it to the 401K in an attempt to come as close as I can to maxing that too by the end of the year. (I had been contributing to the 401k at my old job, but not a very high rate, so I think I still have around $12K to go.)

(Also, I won't actually have only 1% income. My wife has been working two jobs all summer so, despite the HSA contributions, we've saved up about $12K over that couple of months. Between that and her continuing paychecks we should be okay until Jan 1.)

[Altons Bobs]

$20k for property tax and yard work? Holy Shit!  Give some details on this, I can't even imagine how you can get this high outside of a Beverly Hills mansion.

You need to get out more!  ;-)  There's no state income tax here, that's probably why our property taxes are higher.  Most of our neighbors pay even more.  We probably have the cheapest and oldest cars in the neighborhood, and we're probably the only household with only one TV and our kid is probably the only one in our neighborhood without a cell phone.

[Kriegsspiel]

$20k for property tax and yard work? Holy Shit!  Give some details on this, I can't even imagine how you can get this high outside of a Beverly Hills mansion.

You need to get out more!  ;-)  There's no state income tax here, that's probably why our property taxes are higher.  Most of our neighbors pay even more.  We probably have the cheapest and oldest cars in the neighborhood, and we're probably the only household with only one TV and our kid is probably the only one in our neighborhood without a cell phone.

Seattle?

[Moostache]

Now that is master class compared to me.  Even if my employer allowed me to contribute that much I wouldn't be able to do it since I am also still trying to live off the remaining paycheck.

Congratulations!  That is awesome.

Well, I was going to start a "share your badassity" thread, but I guess I'll just brag here:

I started a new job about 3 months ago, became eligible for an HSA at the beginning of July, and will become eligible for a 401K at the beginning of October. I've been allocating a bit less than half my net salary in order to max that HSA by my next paycheck, after which I'll be contributing 99% of it to the 401K in an attempt to come as close as I can to maxing that too by the end of the year. (I had been contributing to the 401k at my old job, but not a very high rate, so I think I still have around $12K to go.)

(Also, I won't actually have only 1% income. My wife has been working two jobs all summer so, despite the HSA contributions, we've saved up about $12K over that couple of months. Between that and her continuing paychecks we should be okay until Jan 1.)

[BarkyardBQ]

Good job OP, and everyone else pushing to hit your limits.

We didn't know we were eligible for a 403 along with our 457 until April this year. We we've been trying to max out both. DW contributes to a 457, 403 and an HSA and comes home with a whopping $251 per month.