Getting my Finances in Order – End of Year Edition

I understand why the rich have personal CFAs to help them manage their finances. Trying to do this properly and have a 24/7 full-time job is a bit chaotic… I can’t imagine making sense of this with kids to boot. For now I have a few free hours each week to make sure I’m keeping on budget, investing the right amount towards my retirement, and paying off bills so I don’t generate any nasty late fees or dings to my credit.

At the moment, the big question is when to pay for what. I’d like to hire a CFA to help me understand this, but think that any savings I see via the CFAs advice would be washed out and then some via the CFAs fee. If someone is super rich then whatever a CFA charges will not be more than their savings gained via the outside expertise, but when we’re taking tens or hundreds of dollars it’s unclear to me if there’s value in bringing in outside help. I really want to make myself an expert so I can make the best choices, but that, again, is not possible with a full-time job.

Right now the biggest question is December spending. I typically play my cards to save up a chunk of cash at the end of each calendar year so I can splurge, so to speak, on my 401k in the first months of the next year. I never have faith I can keep my job for the entirety of the year (the reality of startup life) nor do I have faith my next position will have access to a 401k. There are also various reasons why investing earlier in the year is better vs later, though a lot depends on the stock market performance (i.e. if stock market is sucking at end of previous year then odds are it will start to go up at some point so investing early is important, vs if stocks are performing well like they are now and a downward run seems more likely, so dollar cost averaging over the course of the year is the better way to go.) (*this is my theory and not validated in any shape or form.)

The other open question is how much to put towards my Roth IRA this year. I’m going to be on the line where my contributions are reduced, but I’m really not clear by how much because I’ve held so many different jobs this year – not to mention have dividends and stock sales coming from multiple accounts – and I haven’t done a good job in keeping track of my total earnings. This is where I’m confused as to whether I should just max out my Roth IRA and then deal with recharacterizing before Oct 15, 2015 (and likely have to hire a CFA for this) or just stay well under the limit and accept I’ll probably miss out on some future tax savings (though at my income level who knows if Roth IRAs really hold any value anyway.)

I’m also questioning what to do with my $600 doctor’s bill because I’m waiting for my COBRA to kick in (I sent in paperwork but apparently did it wrong so had to re-send it in.) The actual COBRA costs $800 for the two months so now I’m wondering if I should just pay the bill and have a lapse in coverage – need to do more research into how bad that actually is. I have insurance now through work, but I would be facing the lapse if I don’t legally backdate the COBRA with that $800 payment, which is only $200 or so more than what I owe anyway…

Meanwhile I owe my boyfriend a good $12,000 because he’s been paying my chunk of the rent over the last year. I only don’t feel bad about that because he has most of his money sitting in a checking account (talk about risk adverse) and I’m investing this loan and will pay him back slowly. Given how much it will cost us to buy a house every dollar matters and having thousands of dollars sitting in a bank. At least last year I convinced him to start a Roth IRA.

You know, these are all first world problems but they’re problems nonetheless. I’m going to create a new post to go live tomorrow on how I’m going to manage this mess of my December 2014 finances.

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One comment

  1. 1MansMoney says:

    Lots of moving pieces sure do make planning difficult. Regarding the Roth IRA, one option would be to simply save the max contribution in a bank accout each month and wait to fund the Roth IRA until you have a better idea of where you’ll end up relative to the income limits. Not optimal, but it would simplify one aspect of your financial life:)

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