2015 Savings Goals: February

Dis is how we do it!

This is how we do it!

2015 Savings Goals: February
Retirement AccountsSelf Spouse Total
Traditional IRAs$0$0$0
Total Retirement$4,000$4,000$8,000
Other AccountsFamilySonTotal
Mutual Fund
Coverdell ESA$0$1,750$1,750
Grand Total for February: $11,615
Grand Total for 2015: $20,400

The last day of February is always one of my favorite days of the year.   Since 2004, my wife and I have front-loaded our retirement accounts with our January and February paychecks.  By paying ourselves first to the extreme, we have been able to accelerate our wealth building.  This year we’re both hammering our 457 accounts to the tune of $4,000 a month.  So far this year, we have contributed $16,000 into our 457 accounts…that sure puts a spring into my step!

Since we were rolling in the dough last month, we also decided to knock out some of our 2015 financial goals.  Here is what we did:

Coverdell ESA

  • We sent $1,750 to our son’s Coverdell ESA at Vanguard to max out the 2015 contributions.  His ESA now has over $31,000 invested in the following funds:  VTSAX and VTIAX.


  • We dropped $180 into our son’s UTMA account at Vanguard where we’re automatically investing $10 a month ($120 a year) in the LifeStrategy Growth fund (VASGX).  This means our 2015 UTMA goal of $300 is on track.

Mutual Fund

  • We finally opened a taxable mutual fund account at Vanguard!  We invested $1,000 in the Target Retirement 2060 fund (VTTSX).  We chose this fund primarily because of its low minimum investment ($1,000) and low fees (.18%).  We also like the fact that this fund uses index funds and automatically provides us with an idiot-proof, diversified asset allocation.

Financially, our year is off to a great start thanks to the PYFX* method.  Like I’ve said before, there’s no magic to this…it’s just good ole hardcore savings.

Is anyone else out there front-loading their way to financial freedom?

* Pay Yourself First to the Extreme


  1. David G

    Hello there

    I’m new at all this and really amazed that there has been this whole world out there (FIRE) that I knew nothing about. I read this article, and I read the transcript of your podcast with Mad Fientist, and I have to say that most of all of that went right over my head. All of these tax shelter plans beyond the 401k? Wow! Is there a good source to go to to learn these things, or do you do it by sheer force of will? I went to 72.com and couldn’t make heads nor tails of it.

    Right now my strategy consists solely of 401k and getting all of my company’s matching, which is vested immediately. All the rest of this sounds great, too, but where to start?

    • Ed Mills

      Thanks for the comment David. First, let me say that you are in good company when it comes to not understanding the complexities of a 72t maneuver. The website http://www.72t.net has some useful calculators and info, but 72t distributions must be done with great care due to their potential for retroactive penalties. That said, you shouldn’t waste too much time on the 72t now. Truth be told, I think the Mad Fientist’s Roth IRA ladder is a better idea.

      As for the various accounts, let me try to summarize briefly. A 401k, 403b, and 457 are all retirement plans offered by employers. These three plans allow for tax-deductible contributions of up to 18,000 a year; taxes on contributions and earnings are not due until the money is distributed in retirement. Normal retirement age is usually 59.5. Usually, 401k plans are offered in the private sector (corporations and businesses), while 403b and 457 plans are in the public sector (government, public education, and charities). My school district offers us the opportunity to use both a 403b and a 457 plan.

      That is great news for me because it allows me to save $36,000 a year tax-free ($18,000 * 2)!. Plus, I am over 50 years old, so I can add another $6,000 in each account in the form of catch-up contributions. That means every year I can sock away $48,000 a year in my 403b and 457 accounts (18 + 18 +6 +6= 48). My wife, who isn’t 50 yet, can only contribute $36,000 in her accounts. All in all, she and I are shooting for 403b and 457 contributions totaling $84,000 in 2015.

      Apart from our retirement plans at work, we also have access to some other tax-favored accounts: individual retirement accounts (IRAs), an educational savings account (ESA), and a health savings account (HSA). Every year my wife and I fund our traditional (not Roth) IRA accounts at Vanguard. In 2015 we’ll add $12,000 to them ($6.5k for me and $5.5k for her). We also put $2,000 a year into our son’s ESA at Vanguard. Finally, we have an HSA at Elements Financial; we’ll put $6,650 in our HSA in 2015.

      I know that is a lot of information, but we are primarily using those five accounts: 457, 403b, IRA, HSA, and ESA. I need to make a blog post explaining the why and the how of our accounts. Currently, we’re moving, so give me some time to work on that. To learn more about 403b and 457 accounts, check out http://www.403bwise.com

      • David G

        Aha, that’s much clearer, thanks! I work for a private sector company, so I only have access to 401k, if I understand you.

        My wife is self employed, so I think we could contribute to her 403b if I’m not mistaken.

        We are both 50, so that gives us the 6k added benefit if we can give that much. My job gives me a 6% matching if I contribute at least 8%, and that’s fully vested immediately. Too bad the only one who can give my wife a matching contribution is me!

        Once we get to the point that we can fully fund those in a year, I guess it would be time to look into the IRA retirement account through Vanguard, as I see MMM, GoCurry, Mad Fientist and you all use them for your accounts.

        We are suckers that are in some serious debt right now, but bailing out furiously and hope to cross the zero line in two years. I’ll keep putting in 8% to get my free 6% matching, as you can’t get a 75% immediate return anywhere else, right?

        The rest of it is getting the snowball rolling and undoing years of foolish spending. We are starting out later than you and your wife did, but it’s still doable and we aren’t giving up. Thanks for replying so soon!

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