Author Topic: Job change 401k and Insurance  (Read 1940 times)

rjbf65

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Job change 401k and Insurance
« on: May 17, 2015, 07:45:14 AM »
It's been a long time since I have posted but I do read the site and forums weekly.  Looking for some advice on what to do with my earnings the rest of this year and part of next.

Backstory

I recently was offered a job in the town I live in and I accepted.  Cutting my commute down from about 19 miles each way to 1 mile run ach way.  It's so awesome.  Also in a much better working environment.  I took about a 1k/yr pay cut to do so but that seemed very trivial to me considering the extra hour of time each day I have found myself with now due to the minimal commute.  So far, I'm extremely happy that I made the change. 

As with any job change, sometimes there are things that are not as good.  I'm now ineligible to contribute to my new employers 401k for 1 year.  Which will be May 2016.  Also, my new employer does not offer a HDHP. So now I'm unable to contribute to my HSA account like I was.  I was on pace to max out my 401k this year and was just starting to contribute to my HSA at a more aggressive rate.  Anyways, I have 60k left on a mortgage and I was considering trying to pay down as much as possible on that until I'm 401k eligible again.  If I now divert the 21k or so that I was planning on investing over to extra payments to the mortgage I think there is a chance that we could pay it off completely my next May.  We were able to pay extra as is even with the 401k contributions, also there is about 20k in the bank which I could use to kill off the mortgage if we were within striking distance.  The thought of a paid off house just sounds so awesome.  Any thoughts on this plan? My interest rate is very good at 3.375% so I know that mathematically it doesn't make the most sense to pay early. FYI.. We are still on pace to max out a couple of ROTH iras for this year and do not plan on changing that.  Thanks in advance for any insight!

Gin1984

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Re: Job change 401k and Insurance
« Reply #1 on: May 17, 2015, 08:02:48 AM »
Just because you cannot invest in tax advantaged accounts does not mean you cannot invest.  Also if you can't max out your 401k, you may want to reconsider investing in a Roth and invest in a traditional.  That said, you can store up money from Jan-April and still max out your 401k in 2016.  All that to say that paying off your house is fine, if you want to but investing really is the important thing.  Don't let your job determine if you invest.

forummm

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Re: Job change 401k and Insurance
« Reply #2 on: May 17, 2015, 09:26:18 AM »
You can invest in taxable accounts. We do that every payday with what's left after we max out retirement accounts.

You might make too much to have a deductible contribution to a traditional IRA, especially if you are no longer able to contribute to a 401k, so check on that before you decide about switching to a Roth.

It's probably too late now, but I would have maxed out the 401k for 2015 with your old job before your last day there. Live and learn.

rjbf65

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Re: Job change 401k and Insurance
« Reply #3 on: May 17, 2015, 10:09:08 AM »
Good points about investing in the taxable space.  This could be the perfect opportunity to finally open up my first Vanguard account and getting started there.  I failed to mention that my wife's employer does offer HDHP and she does have an HSA but has contributed a minimal amount.  That is something we can adjust and start maxing out.  The changes I have made in my personal finances since discovering this site have been great.   When I tell friends of mine that I am planning on maxing out my 401k they can't comprehend that it's actually possible to do.

forummm

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Re: Job change 401k and Insurance
« Reply #4 on: May 17, 2015, 10:36:14 AM »
Good points about investing in the taxable space.  This could be the perfect opportunity to finally open up my first Vanguard account and getting started there.  I failed to mention that my wife's employer does offer HDHP and she does have an HSA but has contributed a minimal amount.  That is something we can adjust and start maxing out.  The changes I have made in my personal finances since discovering this site have been great.   When I tell friends of mine that I am planning on maxing out my 401k they can't comprehend that it's actually possible to do.

I was talking with a coworker about maxing out. She just got a $12k raise, so she could easily just throw it all in her 401k. And she thought maxing out meant contributing 5% to get the 5% match. Saving more than a pittance is just a foreign concept to people. It's so crazy.

Even after being very frugal my whole life, I'm still finding ways to cut my spending here and there. Sounds like you're on the journey!

rjbf65

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Re: Job change 401k and Insurance
« Reply #5 on: May 17, 2015, 11:17:55 AM »
There is a lot that my wife and I can still improve on.  Still have dish tv. High cost cell phone plans.  I golf,  she likes to buy clothes.  But our cars are older, paid for and should still last a good while.  Our home is simple and efficient.  Live in a low cost of living area as well.  Can still do better but I feel we are doing well with our expenses overall.