README
Personal Finance 
This is an outline of our personal finance plan. Feel free to fork it and make your own!
Debt
- Pay off highest interest loans first, keep loans with rates lower than inflation
- Auto pay credit cards
- Carry less than 1/3 of credit limit in credit card balance. Ask for credit limit increases if needed.
- Check credit score once a year. CreditKarma has a better interface and suggestions for improving credit score.
- Refinance for a lower interest rate on mortgages or large loans
Loans
- Ask mortgage lender for a half dozen pre-approval letters in 25k increments up to the max. Prevents seller from seeing your max purchase power.
- Consider 401k loans. Up to $50k, prime rate, and interest and principal are both paid back into the account
- Consider personal loans or personal line of credit for debt consolidation. Example "First Republic Personal Line of Credit" 2.25 - 3.5%, interest only first 2 years, then amortized for remainder of the loan. Total terms from 5 - 10 years.
- Consider using a "box spread" for borrow cash quickly without underwriting.
Liquidity
- 12 months of expenses in a high interest savings account
- Consider tax-exempt treasury funds like FDLXX if in a high tax state. The Finance Buff
- Budget out large purchases into monthly amounts to save. e.g. car, wedding, vacation
- "Liquidity access lines" to borrow against your portfolio
Equity compensation
Medical
- Health Savings Account (HSA). Maximize employer contributions.
- Do not invest until balance would exceed minimum to avoid fees
- Choose a plan that allows investment in index funds like Wells Fargo or Health Savings Administrators
- Continue to pay medical expenses out of pocket when possible to maximize tax deferred growth
- No penalties for non-medical withdrawals after 65. Can use as another retirement account.
Retirement
- Pay less taxes - guide to tax advantaged accounts
- Choose a Retirement Plan IRS overview of different plan types. Highlights the benefits of each.
- IRS Rollover Chart shows what retirement plans can be rolled over.
- Calculate whether Traditional or Roth contribution makes sense for your tax bracket. calculator. Typically, high income/high tax rate => traditional, low income/low tax rate => roth. Save on taxes now vs save on taxes later.
- Maximize contributions to tax advantaged accounts: 401k, IRA, HSA.
- Backdoor Roth IRA. Pay special attention to IRA aggregation rule and pro-rata distributions, and the consequences of 'step doctrine' for audits
- After-tax 401k contributions and rollovers
- Choose low cost index funds.
- Charitable giving. Contributions to eligible organizations can be itemized as a deduction. Donor Advised Funds (DAF) can deduct from high tax years and defer gifts until later.
- EarlyRetirementNow: Safe Withdrawal Rate series
Children
- 529 plan. For non-qualified expenses, principal can be withdrawn without penalty, but withdrawals will be proportional principal and earnings. source
- Vanguard 529
- $3,000 minimum
- Age based options. I'm using the "moderate" option: starts at 75/25 stock/bond allocation
- Dependent care FSA. IRS publication 503
Tools
- jch.app investment, networth, dividend tracking
- Review of spending with Personal Capital or Fidelity Full View. Categorize spending, note any large differences in monthly trends. Link all accounts.
- ProjectionLab retirement plans, draw down visualizer.
Brokerages
- Merril: Integrates well with Bank of America for retail banking, Preferred Rewards program good for credit cards, loan discounts. Money market funds don't pay interest by default
- Morgan Stanley: Felt harder to self service. Amex Platinum paired card.
- Fidelity: Great phone support, free wires, 2% cashback card.
- Vanguard: I like the simplicity of their website, and mobile app. I use it for our IRA, Roth IRAs, and 529.
Resources
- HENRY's Guides: Taxes, Loans, Car Buying
- r/financialindependence
- Personal Finance reddit commontopics - good guide for the order one should save in.
- Reddit guidelines for each age group
- Bogleheads: Lazy portfolios
- I Will Teach You to be Rich - short, friendly, casual introduction to debit, savings, and retirement
- Random Walk Down Wall Street
- Lifecycle investing using mild leverage for temporal diversification
- Mr. Money Mustache - personal finance and early retirement blog
Entertainment
- Money stuff regular column by ex-Goldman Sachs trader
- Planet Money podcast
- FI planning tool. Interesting to play with, but no longer using it.
Not recommended
- You Need a Budget - YNAB too much work, prefer to look back at spending than project forward
- Quora Personal Finance - stopped using this
ira
personal-finance
retirement
roth-ira
Similar repos
README
Personal Finance
This is an outline of our personal finance plan. Feel free to fork it and make your own!
Debt
- Pay off highest interest loans first, keep loans with rates lower than inflation
- Auto pay credit cards
- Carry less than 1/3 of credit limit in credit card balance. Ask for credit limit increases if needed.
- Check credit score once a year. CreditKarma has a better interface and suggestions for improving credit score.
- Refinance for a lower interest rate on mortgages or large loans
Loans
- Ask mortgage lender for a half dozen pre-approval letters in 25k increments up to the max. Prevents seller from seeing your max purchase power.
- Consider 401k loans. Up to $50k, prime rate, and interest and principal are both paid back into the account
- Consider personal loans or personal line of credit for debt consolidation. Example "First Republic Personal Line of Credit" 2.25 - 3.5%, interest only first 2 years, then amortized for remainder of the loan. Total terms from 5 - 10 years.
- Consider using a "box spread" for borrow cash quickly without underwriting.
Liquidity
- 12 months of expenses in a high interest savings account
- Consider tax-exempt treasury funds like FDLXX if in a high tax state. The Finance Buff
- Budget out large purchases into monthly amounts to save. e.g. car, wedding, vacation
- "Liquidity access lines" to borrow against your portfolio
Equity compensation
Medical
- Health Savings Account (HSA). Maximize employer contributions.
- Do not invest until balance would exceed minimum to avoid fees
- Choose a plan that allows investment in index funds like Wells Fargo or Health Savings Administrators
- Continue to pay medical expenses out of pocket when possible to maximize tax deferred growth
- No penalties for non-medical withdrawals after 65. Can use as another retirement account.
Retirement
- Pay less taxes - guide to tax advantaged accounts
- Choose a Retirement Plan IRS overview of different plan types. Highlights the benefits of each.
- IRS Rollover Chart shows what retirement plans can be rolled over.
- Calculate whether Traditional or Roth contribution makes sense for your tax bracket. calculator. Typically, high income/high tax rate => traditional, low income/low tax rate => roth. Save on taxes now vs save on taxes later.
- Maximize contributions to tax advantaged accounts: 401k, IRA, HSA.
- Backdoor Roth IRA. Pay special attention to IRA aggregation rule and pro-rata distributions, and the consequences of 'step doctrine' for audits
- After-tax 401k contributions and rollovers
- Choose low cost index funds.
- Charitable giving. Contributions to eligible organizations can be itemized as a deduction. Donor Advised Funds (DAF) can deduct from high tax years and defer gifts until later.
- EarlyRetirementNow: Safe Withdrawal Rate series
Children
- 529 plan. For non-qualified expenses, principal can be withdrawn without penalty, but withdrawals will be proportional principal and earnings. source
- Vanguard 529
- $3,000 minimum
- Age based options. I'm using the "moderate" option: starts at 75/25 stock/bond allocation
- Dependent care FSA. IRS publication 503
Tools
- jch.app investment, networth, dividend tracking
- Review of spending with Personal Capital or Fidelity Full View. Categorize spending, note any large differences in monthly trends. Link all accounts.
- ProjectionLab retirement plans, draw down visualizer.
Brokerages
- Merril: Integrates well with Bank of America for retail banking, Preferred Rewards program good for credit cards, loan discounts. Money market funds don't pay interest by default
- Morgan Stanley: Felt harder to self service. Amex Platinum paired card.
- Fidelity: Great phone support, free wires, 2% cashback card.
- Vanguard: I like the simplicity of their website, and mobile app. I use it for our IRA, Roth IRAs, and 529.
Resources
- HENRY's Guides: Taxes, Loans, Car Buying
- r/financialindependence
- Personal Finance reddit commontopics - good guide for the order one should save in.
- Reddit guidelines for each age group
- Bogleheads: Lazy portfolios
- I Will Teach You to be Rich - short, friendly, casual introduction to debit, savings, and retirement
- Random Walk Down Wall Street
- Lifecycle investing using mild leverage for temporal diversification
- Mr. Money Mustache - personal finance and early retirement blog
Entertainment
- Money stuff regular column by ex-Goldman Sachs trader
- Planet Money podcast
- FI planning tool. Interesting to play with, but no longer using it.
Not recommended
- You Need a Budget - YNAB too much work, prefer to look back at spending than project forward
- Quora Personal Finance - stopped using this
ira
personal-finance
retirement
roth-ira