Hardcore Savings: 2015 Results & 2016 Goals

Aiming for Our Targets

Aiming for Our Targets

Merry Christmas and Happy New Year to all of my trillions of readers out there!  With 2015 almost gone and 2016 right around the corner, it’s time to 1.) see how we did last year and 2.) establish some goals for the upcoming year.

2015 Results 

A year ago I wrote that our goal was to save $106,250 in 2015.  Currently, we have contributed $104,250 to our various accounts, and we are just a little short of hitting our goal.  I’ll need to check with my CPA to make sure that I earned enough to top off my IRA with the final $2,100.  (Fortunately, I’ll have until April 15th of 2016 to contribute to my IRA if necessary.)  Here is what we did in 2015:

2015 Savings Totals
Retirement AccountsSelf Spouse Total
Traditional IRAs$4,400$5,500$9,900
Total Retirement$52,400$41,500$93,900
Other AccountsFamilySonTotal
Mutual Fund$1,000$0$1,000
Coverdell ESA$0$2,000$2,000
Total Savings for 2015 = $104,150

Wow, I can’t believe that we were able to cram so much money into our accounts this year.  As a working-class guy with simple tastes, six-figures of savings is a lot of moola to me.  How did we pull this off?  Our secret…yeap, you guessed it:  hardcore savings!  By living a frugal lifestyle based on my top-secret tax efficiency model (if you can’t keep a secret, don’t click that link) we’re able to live comfortably, minimize taxes, and save the majority of our salaries.

2016 Goals

We plan on starting 2016 in full front-loading attack mode.  On January 1st we plan on sending $2,000 to our son’s education savings account at Vanguard.  During the first week of January, we also plan on making a 2016 contribution of $5,062 to our health savings account at Elements Financial Federal Credit Union.  We’re not maxing out our 2016 HSA contributions because we only plan on having a high deductible healthcare plan until October 1st of 2016.  (In other words, we’re getting ready to FIRE at the end of the current school year!)

In preparation for our departure from work, we plan on maxing out our 457 accounts while cramming the remains of our paycheck into our 403b accounts.  Since my wife will turn 50 in 2016, she’ll be able make catch-up contributions to her 457.  By hammering our 457 and 403b accounts we’ll be able save 100% of our after-tax wages from January to August of 2016.  It’s amazing what a 100% savings rate does for your bottom line!  Here’s what we plan on accomplishing financially in 2016:

2016 Savings Goals
Retirement AccountsSelf Spouse Total
Traditional IRAs$0$0$0
Total Retirement$36,800$35,200$72,000
Other AccountsFamilySonTotal
Mutual Fund$1,200$0$1,200
Coverdell ESA$0$2,000$2,000
Savings Goals for 2016 = $80,862

Even though 2016 will be an abbreviated work year for us, we plan on making the best of it by using our 100% hardcore-savings approach.  In addition to our retirement account contributions, we plan on adding $100 a month to our mutual fund and $25 a month to our son’s UTMA account; both accounts are at Vanguard.  Finally, we’ll keep adding $25 a month to our son’s 529 plan.  All in all, we should manage to save about $80,000 in 2016.

Saving money in 2016 will be great, but we are really excited about the endless possibilities that await us.  While our plans at this point are tentative, we do plan on moving to Florida and taking an extended trip to Mexico in 2016.  More to come and stay tuned…


    • Florida’s beaches, tropical weather, and lack of state income tax are all calling us. Not sure what area we’ll end up in, but all indications point to the Sunshine state. Once you’re here, we’ll meet up for a beach outing. Why should all the Mustachians have all the fun? See you at the beach, Ed

  1. You’re killin’ it! Way to go! I’m excited for your family (and maybe a little jealous, it’s cold here).
    I don’t mean to sound like a broken record, but is that post on hacking a college degree on its way anytime soon? ☺ Pretty please?

  2. This is awesome. As a fellow educator you really inspire me. I am opening my 457 this year and once this last debt is paid off I am going to do my own income cramming. Woo hoo.

    • Jason, it’s great to know someone out there likes what we’re doing. My hope is that our example will show others that teachers can attain financial independence. I love the idea of maxing out your 457 because that account can be accessed before 59.5 without penalty (as long as you separate service). Our 457 account serves as 1). an emergency fund, 2.) a freedom account (ie, EFF-U money), and 3.) a tax-deferred holding pen for future rollovers to our Vanguard IRA’s. Anytime we leave a job, we know we can strategically draw from our 457 account as needed. Good luck hammering your 457 account this year. Thanks for reading my articles. Ed

  3. Tim

    Does this calculatoin consider other write-offs? This is the first year my wife and I are home owners, though not sure that is relevant for this exercise.

    • Tim, my calculations consist of what we saved during 2015 and what we plan on saving in 2016. We do use retirement plans that allow us to reduce our taxable income: 457, 403b, IRA and HSA plans. We did not figure our mortgage or any other real estate investments into our savings plan for the years mentioned. Thanks for reading…Ed

      • Tim

        Sorry – first time reader and was reading a lot of your posts and put my question on the wrong thread. Meant to ask under “free money.” Will add it over there – keep up the great work and I’ll learn how to comment. 🙂

  4. AndyG

    Hey Ed,

    Just re-listened to the podcast you did with MadFientist last year, great stuff. Came over to check out your retirement accounts and try to understand what you’re doing. I thought a person is allowed a single employer sponsored account like a 401K, 403b etc.. Then you can do a personal tax advantaged account (which I see you’re doing, that maxes at $5K-6K depending on age). How is it you have two employer sponsored accounts each? Is this something special with the 457 account? I have 800 other questions but this is at the top of the list in the moment. Thanks a ton!

    • AndyG, strangely enough teachers have the equivalent of two “401k-like” retirement plans: 403b and 457. The 403b is very much like a 401k plan in that most withdrawals before age 59.5 are subject to a 10% penalty. The 457 plan is similar to the 403b, BUT it does not have the pre-59.5 penalty. In my case, I am able to access 457 money without penalty when I leave a job. In addition to those two plans, my wife and I also fund our IRA accounts at Vanguard.

      My wife turns 50 this year, so in 2016 we’ll both be eligible to make catch-up contributions to all three plans. In other words, I can save $24,000 in my 457 account, $24,000 in my 403b account, and $6,500 in my IRA…for a total of $54,500. If my wife does the same, her contributions double our total retirement savings to $109,000. There is nothing too fancy about this; it just good ole hardcore savings. Thanks for visiting my blog and good luck working your plan, Ed

  5. Josh

    I just found your blog from the MMM forum, and as a fellow educator just getting started this excites me! I have a question, though. I like how your plan sounds. I’m a new educator, though. My wife and I have $65k in student loan debt and another $8k in a car loan. How can we make your system work for us and also payoff our debt?

  6. Paul

    I’m curious on your choice about Coverdall over 529. I have a 2 year old and am looking to start a college savings plan. I have at least a basic understanding of the difference. In my case, I live in Illinois and could deduct 529 contributions from my state taxes. It seems like you prefer the Coverdall since you contribute the full amount. Is it just because that is where you started?

    • Hello Paul,
      I went with a Coverdall ESA because I wanted access to Vanguard products. Unfortunately, Vanguard no longer allows for new Coverdall ESA accounts. It’s true that my contributions are not tax-deductible, but the funds grow tax-deferred. I also do a small GA 529 plan whose contributions are tax-deductible…only $300 a year. GA’s 529 plan is through TIAA-CREF, so it’s pretty cost-efficient. However, my son’s Coverdall money at Vanguard is in super low-cost Admiral share index funds. If I stood to save a ton of money using the 529 plan, I might consider changing up my contributions, but I’m currently very happy with our Vanguard acccount. Thanks for reading, Ed

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