The Right Way to Save?

I’ve recently reached my five-year mark with my employer – let’s call them Negundo (there’s good reason for that, I swear).  Why is this news worthy of a blog post?  Because at the five-year mark, my 401k match increases.

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We have a lot of amazing benefits, but none compares to our 401k.  Negundo will match 50% of my total contribution, up to the annual IRS maximum.  Yes, that means that if I put $16,500 annually into my plan – the maximum, until the catch-up years beyond age 50 – my employer will ice that cake with an additional $8,250.  How could we possibly not to max it out?

But “maxing it out” means contributing right around 30% of my gross income. Dave Ramsey would be proud.  The rest of my budget?  Pretty pissed.

Our finances changed pretty drastically when the Enginerd became re-employed.  While his quality of life has increased exponentially, his paycheck has decreased in much the same way.  The household budget certainly took a handful of hits, and we stretched our dollars as far as we were able.

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We sat down and discussed areas of our budget that we could cut.  One of the biggest losers in this battle has been our general savings.  Previously, we had been able to sock away about $1k per month.  This money would be re-distributed within our ING account among general savings, new car funds, vacation funds, etc.  I’ll talk more about our savings strategy in another post, but for now we’re down to $400 per month in general savings.  That vacation seems a lot further away now.

But the bright side?  Early retirement.  That’s what I’m hoping for anyhow.

Has a work incentive motivated you to change the way you budget?  How did you decide what survived the cuts?

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