Comments on: Reader Mail: Why Do I Max Out My 401(k) So Fast?

By: J. Money

J. Money — Thu, 03 Jun 2010 00:59:38 +0000

Rock it bro – gonna be SO well off down the road!

By: Darren

Darren — Wed, 02 Jun 2010 19:33:25 +0000

Nice! I max out my 401k ASAP for similar reasons. I’m not a full-time employee, so I feel like I have less job security.

And I don’t get a match, do spreading out the contributions doesn’t matter anyway

By: J. Money

J. Money — Wed, 05 May 2010 16:30:07 +0000

YES! Great point. Learning to live on less is one of the best things you can do – esp as you get promotions and raises and bonuses and whatever else extra $ down the road. The problem most people have is upping their lifestyle anytime they get more money – it’s crazy. Unless you don’t care about your financial future ;) I know plenty of people that would rather enjoy life now than later (which is fine if that’s what they want) but you just have to be aware of the pros and cons to everything. The more money you have, the more options you have – and that usually trumps splurges.

By: K

Tue, 04 May 2010 22:38:39 +0000

I did this, too, maxing out as fast as I could, until I started at my current employer–they limit your per-paycheck contribution so you can’t quite achieve this goal, although I can still max out by around September. One of my reasons that you didn’t really mention is that it teaches me to live with less. When I get my first big paycheck after the deduction stops, I let myself spend the per-paycheck deduction amount on one thing–whatever I wanted most but couldn’t afford through the beginning of the year. Then I go right back to saving the same amount, but now into one of my other savings accounts. I started this when I finally got a job that paid me twice what I had previously been making–I figured I wasn’t used to having the money yet so it wouldn’t hurt me not to see it, which turned out to be true. Even if you’re not in a position to try it now, it’s a good idea to have in your back pocket if things turn around for you.

By: J. Money

J. Money — Fri, 23 Apr 2010 21:30:57 +0000

Well it was a great question, sir :) I’d probably be wondering myself if I weren’t me!

By: Christian

Christian — Thu, 22 Apr 2010 17:43:18 +0000

My question made it to the blog! Awesome! Thanks for explaining things. Of course like most people, Im jealous, but hell I’d consider doing the same thing if I were in your shoes. My agency matched our 403(b) contributions up to 4% I think, but they could only afford to do it for a year. I work for a non-profit and when budgets got slashed by our funders that was the first thing to go. It was nice while it lasted…

By: StackingCash

StackingCash — Thu, 22 Apr 2010 08:17:12 +0000

I cannot stand it when people throw out the words compound interest. It implies an exponential rate of growth without any chance of loss. Only those terrible 1 to 3 percent savings and CD’s can truly give you compound interest, which amounts to diddly squat, unless you had a few million. When it comes to other types of investing, like stocks and mutual funds, a rate of return should be used. Those rate of returns should be then used carefully because those are not guaranteed either. Don’t be suckered into bad investments claiming compound interest and big rate of returns…like I did…grumble…

By: Meghan

Meghan — Thu, 22 Apr 2010 00:48:00 +0000

Thanks for explaining this. I was wondering the same thing.

I decided last week to put money toward one “major” savings goal at at time instead of to multiple ones throughout the year. It gives me a sense of accomplishment faster than when I spread it all out.

I can’t wait to open up a 401(k) in November when I am eligible with my employer. I’ll be opening up my Roth before that though. Both exciting events. =)

By: Shelley

Shelley — Wed, 21 Apr 2010 22:32:27 +0000

At my job, you can max out the $16.5K in the 1st quarter and they will continue to match 6% for the remainder of the year (they don’t do it on a paycheck/quarter basis). You only lose out if you max out in the first quarter, get laid off in the second – you will only be matched for the 6% based on earnings in the first quarter.

Confusing, but it made sense when I wrote it. =o)

By: J. Money

J. Money — Wed, 21 Apr 2010 15:34:48 +0000

Yeah, that’s a great point. In fact, that reminded me that our company originally did NOT have 100% matching – we had something like matching up to 20% of each paycheck which effectively allowed senior folks to max out every year. The only problem being, like you mentioned, was that some people preferred to pump it out earlier in the year so when they had it set to 30 and 40% they’d only get partial matches. Eventually the boss just agreed to set it at 100% to make things easier since the only people it really affected were those smarty senior folks who actually took advantage of it….and me. Who is not senior, but also not stupid ;)