Retirement Planning for Beginners

Setting money aside for my retirement has always been my number one financial priority. Before saving up for a house, before paying off my credit cards, before buying cute clothes, I have saved for retirement first. Why? Because I don’t like working.


In fact, I hate working so much that I have worked extra hard for many years to advance and get raises so that I can stop working sooner than the standard 62 years old. I’ve always been a eat-my-vegetables-first kind of girl to get it out of the way and get on to the good stuff. Retirement is the same way: get all the work done while I am young so that I can get to retirement as quickly as I can.

Also, I’m lazy. I need to get to no-forced-work before my laziness overtakes my effectiveness.


So here’s why and when to start savings for retirement:

Why save for retirement?

So that you can retire. Duh.


No, seriously, no one else is going to do it for you. You’ll probably get social security, but how much heavy lifting do you want that word “probably” to do for you? And in the likelihood that you do get social security in retirement, you might not like the amount. Today’s retirees receive an average of $1360 per month. Not bad. Also – not enough. Sorry, bud, but $1360 ain’t paying for your healthcare, your property taxes, house and car insurance, groceries, electricity, gas, and an occasional car trip. And if that is enough for you, then God bless.

When should you start savings for retirement?

Now. Right this very minute. I don’t care how old you are, do it now. I’m looking at you, 45-year-old; I’m looking at you, 20-year-old; and, yes, I’m even looking at you, 16-year-old.

The younger you start saving for retirement, the sooner you can stop working.

I’m not kidding. LOOK AT THIS chart.

compound interest


From David Ramsey:

compound interest3

compound interest2

I mean….


I look at it this way: a portion of every paycheck you earn does not belong to you. You are not entitled to all of it. You’re not. You are legally obligated to give a portion of your work rewards (money) to your community and country via taxes whether you like it or not. Why not look at your future self the same way? Dedicate a portion of your work performed now to your future self… as money you are not entitled to right now. This should be a lifelong attitude, and it should start with your very first job.

And for all the mommies & daddies out there: you know what’s more fun than crappy plastic toy birthday presents? A $500 per year contribution to your kiddo’s Roth IRA. If you did that for just 18 years, assuming a pessimistic 5% growth would give junior $136,681 when she is 62…all for just $9,000 of your money.


My next post will detail the basic types of retirement plans and how much you should save. But for now, if you haven’t already started saving, do it and do it now!

Love, jessie ♥

The Banality of Saving: 5 Ways to Stay Motivated

I am working toward paying off my mortgage.

After long consideration of the pros and cons of investing vs paying off my mortgage, or buying rental property vs paying it off, I made my decision 3 years ago and have been attacking that motherfucker diligently. If I stick to my plan, I’ll have it paid off 2 years from now exactly.

After 3 years, I can tell you definitively: it’s boring. Not much happens except that I send the same amount to the bank month after month after month.

Every month, I watch my principle go down, and my end date get closer. I get a little thrill, and then….nothing. Until the next month.

So I stick to the plan…and wait.

When I first got my finances in order, there was something exciting all the time. 

I made a budget, and then I mastered it. I made a debt repayment plan, and tweaked my budget to squeeze more and more and more. And then my debts were gone, and it felt great!

I calculated how to max out my 401k, and then I figured out how to do the same with my Roth IRA. Heck, even figuring out what a Roth IRA is took some research, and then I had to figure out where to open one and what to do with it once I put some money in it. It was fun!

I saved and bought a car in cash. I learned about and opened an HSA. I built my emergency fund – that was loads of fun, strategizing where to put it, how much I should have in it. I mapped out CD ladders, researched the highest interest savings accounts. 

All of this took years. Researching, brainstorming, strategizing, doing, succeeding.

But all of those things are now set and automated. I tweak periodically, but mostly, they just happen. There’s nothing to decide – I’ve already decided. 

So now I put send my check to the mortgage every month, and I sit and I wait.

I check my budget to see if I can squeeze any more out of it, and I confirm that I can’t (won’t). I recalculate my mortgage end date and confirm that my previous 3 years of calculations are correct. 

It’s so boooring.

Here’s how I motivate myself to stick with it:

  • 1. I read personal finance blogs and I comment on them. It helps to have a conversation with people about things I’ve learned and done. The most helpful and motivating blogs are ones that either describe the poster’s own journey and feelings and viewpoints. Reading what motivates others motivates me. It reminds me of the thrill of discovering that you can get out of debt, you can learn how to invest. 

  • 2. I learn. I continue to pick up stock investing books and read about real estate strategies. I experiment with investment methodologies in my Roth IRA. I research rental real estate prices and daydream about how I will go about it once I’ve paid off my mortgage.

  • 3. I find like-minded people to discuss finances with. Mostly my Dad. He’s interested in anything I have to say (poor Dad). 

  • 4. I give my dollars a name. When I am tempted to go off track and buy something superfluous, my only option is to dip into the dollars that are named Mortgage. It helps me to remember that that money is not available for anything other than its destiny: the mortgage. (Sounds funny, but it really helps!)
  • 5. I find other interests and hobbies. I need a distraction while the slow, slow process of paying off my mortgage slowly winds its way down. I garden, I go to meet ups, I play board games, I walk. It helps to engage my mind in an activity where I can see more immediate rewards than waiting around for another 2 years for something to happen. 

What do you do to stay motivated?

5 Reasons Why I Love EE Savings Bonds

Last week I wrote about why I hate EE Savings Bonds. I hate them because of how people use them – they use them wrong and I explain why here. Objectively, though, I love them. Here’s why:

1. They are totally tax-free when used for education. Kidding, I don’t give a shit about this. I don’t have kids, and I’m not gonna be that mothball-smelling aunt that gives the kid a $50 EE Savings Bond to “contribute to her education”. Fuck that, I’m buying Astronaut Barbie for my niece. If you have kids or are a killjoy, then read up on it here.

Bonus: if you do buy your kid EE Savings Bonds for her college fund, you can totally pay taxes on the interest annually before the bonds mature and/or are cashed in. Your 5 year old kid is probably in the 10% federal income tax bracket, so that’d be a cool way to pay super low taxes on the interest. *Note: there’s a no-backsies rule on this – once you decide to do this, you can’t change your mind. Alternatively, you can let your kid pay the taxes upon its maturity when he’s probably around 18 – fuck him, he needs to learn responsibility at some point, right?

The huge drawback of using EE Savings Bonds as college savings is that you really shouldn’t cash them in in less than 20 years unless in an emergency. So either start buying these when you’re thinking about getting pregnant, or make your kid wait until the bonds mature to face value. Otherwise, look at 529s instead.

2. They are totally state & local tax free. A-ha. Now we’re getting somewhere. While the interest earned on EE Savings Bonds are subject to federal income taxes (with some exceptions like education and disasters), states and local governments – ahem: NYC – cannot touch them. If you live in a high tax state or city *cough NYC cough*, this makes up for the relatively low interest you earn. Californians and New Yorkers, take notice. Floridians & Texans: fuck you with your perpetual sunshine and state tax-free incomes!

3. Guaranteed 3.6-ish% interest rate. Let’s face it: the interest rate on these bonds are shit. It’s 0.10%. That’s crap, you can make more just parking your money in an Ally Savings account. BUT if you hang onto the bond for at least 20 years, you double your money. It doesn’t matter what interest rate you get before then, once the bond hits 20 years old, the US Treasury guarantees to bring up the value of the bond to face value. That’s double. Doubling in 20 years is a 3.6% interest rate.

Tack on whatever you save from your state & local tax exemption (I’m looking at you, Hawaiians), and you’re looking at a pretty decent guaranteed return. That’s almost the same kind of return you get by paying off your mortgage early. Alaskans and Washingtonians: again, fuck you with your state tax-free incomes!

4. They’re tax-deferred. Hey, the whole reason you invest in your 401k is because the taxes are deferred, right? That’s worth something, otherwise you’d just invest in your taxable accounts all the time. But 401ks, and other tax-advantaged accounts like Roth IRAs, have annual limits. When you hit those limits (and my opinion is that you should), the next place to look for tax advantages in your investments can include EE Savings Bonds (and munis, but that’s a conversation for another time). 

Why is deferring your taxes a good thing? It’s because you will probably be in a lower income tax bracket in your retirement than you are when you’re working. Winner, you. Note that there is a $10k limit for buying EE Savings Bonds, although if you ask for your tax refund in the form of a Series I Bond, you can purchase an additional $5k.

5. #4 used to be the end of my list, but I ran across this interesting idea of parking your emergency fund in EE Savings Bonds.  My initial reaction was noooooooooo! because emergency funds should be liquid, easy to get to. After all, in an emergency, you need your cold, hard cash to get you out of a jam. But the more I thought about it, the more I like it.

True, you need liquid cash, but if you have built your emergency fund to the 6 months to a year of living expenses level, then at least part of it being in EE Savings Bonds could make sense. After all, hopefully you won’t have an emergency where you’ll need all of it, and if that’s the case, then you’d be hard pressed to find 3.6+% interest anywhere else.

And if you do have an emergency, well, then EE Savings Bonds are plenty liquid. As long as you’ve had them for over a year, just cash them in. You lose some interest, but, hey, it’s an emergency, right? 

This is where you get EE Savings Bonds.

Do you love EE Savings Bonds too? If so, why? And if not, then come commiserate on my EE Savings Bonds Hate post.

I Hate EE Savings Bonds

Most people hate EE Savings Bonds. Those people are right.

There are many finance blogs extolling the virtues of these things – they’re totally tax-free when used for college, perfect little baby birthday gifts, they’re guaranteed to double in 20 years (something like 3ish% interest) – but I hate them.

I hate them because most of those baby gift bonds are face value $50 or something stupid. Sorry, grandma, but $50 ain’t even buying a textbook.

I hate them because the only way EE Savings Bonds are useful is if you have a shit ton of them. Let’s face it – if grandma gave you a face value $10,000 bond as a baby gift…..and repeated that each year for 18 years, you’d have plenty of tax-free college funds.

But people don’t do that. They think the bonds are cute, and they feel good about “contributing to your education” instead of just giving you the fucking Lego set you wanted.

EE Savings Bonds are fabulous for the 1%. It’s an excellent way to stuff at least $10k a year into a pretty good tax savings vehicle at a guaranteed 3ish% (if holding onto them for 20 years). And, to be fair, if you’ve maxed out your 401k and your Roth IRA, it’s not a terrible idea to stash away a few grand a year for your retirement.

But again, people don’t use EE Savings Bonds that way. They’re too cute, they’re too low-denomination, they make people feel like they’re doing something good by buying a $50 one, when really what they need to do is stash away piles and piles of them. They let people off the hook.

What do you think? Love ’em or hate ’em?