Automation & Account Review 2009

I started going through my accounts today to see if I am where I want myself to be. This is sort of a mini-sanity check to make sure things are not out of whack from my personal ideas and overall goals.

• Cash Savings – No set amount, the more the better. This is the default place my money goes at month’s end. I don’t do the “pay myself first” because I expect a hefty change to be leftover every month. Based on the budget it should be $1,460/month out of the aftertax $3,400. So far I seem to be meeting my monthly budget amount unless there is a timing issue with work reimbursements.
• Emergency Fund – Was $8,162 when I looked at it. But I want it to be at $10,000 so I’ll have more leeway if any disasters hit. As a result, I moved $2,000 from my cash savings to the emergency fund. It’s better to keep money inside the emergency fund because it is harder to touch it (takes 2 days for any transactions there, unlike the 0.2 seconds it takes for my checking/savings accounts).
• Foreign Currencies – I’m glad I started accumulating RMB and currently $6,600 is a decent amount. I hope to get more chances to add to this and increase it in 2010.
• Roth IRA – Good thing I checked because I found out that I haven’t contributed anything to this so far. Bad I know, especially since it is not a question of will but when taxes are gonna go up. As a result, I set up 5 automatic deposits of $1,000 each (starting this month) from my checking account into the Roth IRA. This will then max out the Roth IRA for 2009 before the deadline of April 15, 2010. Next year I will do biweekly contributions to the Roth IRA cause taking away $1,000 per month hurts more than $200 every two weeks.
• 401(k) – This thing is already on auto-pilot. I am contributing 15% of my gross salary into various indices along with the 5% kicked in by my employer. This should result in $15,000 per year. The only thing I need to do is rebalance this every single year.
• Credit Cards – No debt on this. Paid off every single month automatically through billpay.
• Student Loans – Have debt but will be paying just the required amount of $190 per month since I was able to snatch a bottom rate of 1.875%. Will not be paying it off early under any circumstances. This is also on auto-pilot to be paid every month.
• Mortgage Debt – The normal mortage payment and principle prepayment are on auto-pilot to be paid every month. In addition, the electricity and internet bills are also on auto-pilot. The only things not on auto-pilot are the semi-annual property tax payments and the monthly HOA dues. I’m not worried about the property taxes — those were just paid in whole a week ago. But I just realized I have not yet paid the December 2009 HOA, I need to send that out today. I wish I could pay the HOA online and schedule the payments monthly so that can also be on auto-pilot, but unfortunately my HOA is not yet that advanced and requires me to send it in every single month by snail mail.

There are few actions I have taken due to this review:

1. Beef up the emergency fund.
2. Set up automatic contributions to max out the Roth IRA for 2009.
3. Pay the December 2009 HOA dues.

Overall, the majority of my accounts are where I want them to be. The only things I need to keep in mind is to (1) continue to throw money into the cash savings account (this will end up being less for the next five months as I divert part of the money into my Roth IRA) and (2) pay the HOA dues every month (although I will be prepaying them for about 7 months when I do my TDY).

I think the most useful thing to help keep me in line of where I want to be is using automation to get everything done. Looking above, it can be seen that automation is part of my 401(k), credit cards, student loans, mortgage debt, and now even the Roth IRA. I try to automate as much as possible because then I don’t need to remember as much, while also increasing the level of efficiency. If there was more I could automate (please let HOA go online next year!) then I would gladly do it.

Related posts:

• Status Update (11/23/2009)
• November 2009 Budget Breakdown
• Budget as of June 2009
• August 2009 Budget Breakdown
• Current Status (6/21/2009)