Wednesday, July 28, 2021

My 3 Bucket Approach to Retirement Savings

When I first transitioned from the banking industry into teaching, I was flat broke.  Generally speaking, I don't like to use that term because its connotation creates an emotional and psychological momentum in the wrong direction.  That being said, I had a mountain to climb if I ever intended on reaching financial independence.  My idea of financial independence at the time was to have secured my retirement so that I could focus my time and attention on living my day-to-day life in whatever manner I saw fit.  It wasn't until much later that I discovered that there was a term for this concept, which is CoastFI. Despite, not knowing what to call it, nor having the income to achieve it, I had it set in my mind to achieve by the time I turned 45.

That's the amazing thing about having faith and a certain amount of surrender.  At the time I had made such bold declaration as to simply decide that by the age of 45 I would have already secured my retirement, there were no facts about my life that would support such a claim.  I was making less than $30k per year.  I had credit card debt, student loan debt, and had just bought a home.  While none of my debts were very large in and of themselves, my income didn't support making much of a dent in them either.  I was contributing to my employer-sponsored 401k plan; just enough to get the match.  I believe that would have been about 4% at the time.  I was doing okay given my situation; although, no one would look at that exact moment of my reality and agree with the declaration that I would secure my retirement by the age of 45.  At the time, I had not learned about the Universal Law of Belief, but seemed to intuitively embody the understanding that "You can have whatsoever you want so long as you can give up the belief that you can't have it."  Having that sort of unshakable faith is powerful when as a result we allow ourselves to be open to possibilities.  I surrendered a certain amount of my path to the Universe, and as a result, began to notice a myriad of opportunities presenting themselves to me.  I remembered feeling a pull back to NY (I was living in Portland, OR at the time).  As I allowed myself to consider the possibilities, I found myself thinking back to the time when I lived in the city and worked at one particular middle school as a substitute teacher and taught a theatre elective.  Remembering how much joy that brought me, I went down a bit of a rabbit hole and discovered that there were programs in the city that would help me to obtain my teaching license without incurring more debt.  So, I returned to the city (with my partner shortly to follow).  It's amazing how the acts of faith and surrender lead to inspired action and ultimately results.

The first couple of years were rough in many ways.  It took some time before we recovered from the financial ramifications of turning our Portland home into a rental, moving across the country, and successfully transitioning my partner into her new career (also in education).  On the surface, I still didn't look like someone who would have a secure retirement by age 45, but inspired action kept flowing.  In those first two years, we eliminated my private student loans and all credit card debt.  That's when I learned about the TDA (tax-deferred annuity) offered for additional retirement savings through my employer.  At that time things were tight, but I felt moved to begin contributing something to this pre-tax retirement account.  So, I started off by contributing 5% of my income to it.  Now, in my opinion, 5% isn't really enough, but it was a great place to start.  First off, we didn't really have the income available to do more.  But even if we did, it would have felt entirely too alarming to suddenly be missing 15-20% of my paycheck!  Quite frankly, I noticed that 5% and if felt like a lot!  But over time, more and more money started to become available in our budget: no more private student loan payment; no more credit card payment; my partner got her Master's degree and the resulting pay raise; our employer stopped deducting our paychecks for our contributions toward our Master's degrees, and we got periodic, regular pay raises. All of these things added up; and with each of these events, we took the opportunity to increase our retirement contributions by anywhere from 1-3%.  It's funny that 1-3% can add up so much time, and yet it looks like such a small change to your paycheck.  Psychologically, it's a great little trick when trying to beef up your retirement savings.  It doesn't feel like much of a difference, but over time it really adds up.  In fact, over time, I've increased my contributions to more than 20% of my income, and not really felt any pinch at all.  It's especially easy when I know that a raise is coming.  If I know that I'm getting a 3% raise on a certain date, I increase my retirement contributions by 1-3% and set it to start on the raise effective date.  I never know the difference, but my retirement account sure does.

A few years into my teaching career, I was sitting with a group of teachers at a table grading a standardized test.  A veteran teacher from another school was saying something about some "retirement accounts through the city."  My ears perked.  According to this teacher, since we were technically also employees of the city, we could use the retirement savings accounts that the city had to offer!  Why wasn't anyone telling us about this!  

I started to do my research and realized that the city had way more options!  While the union set us up with the TDA as a retirement savings option, the city gave us access to a 401k and a 457, both of which have Roth options!  I immediately requested my plan materials and opened the Roth 401k.  The IRS has set an annual contribution limit for what I can put into my TDA and 401k.  In 2021 it's $19,500 which could be contributed to the TDA, 401k, or a combination thereof.  The TDA only operates using pre-tax dollars which gives me a tax benefit in the current tax year, but a Roth uses after-tax dollars.  So, when I contribute to my Roth 401k, I don't receive any tax benefit right now.  I pay taxes on that money.  Then it grows tax-free and when I take the money out in retirement, I won't have to worry about paying taxes on that money because I already did so (and that includes its growth)!  That's a great opportunity!  Now, I know that many people like to try to figure out if their tax bracket will be lower in retirement, and if that feels good to you, go for it! As for me, I can't imagine a version of me that is on a fixed income being excited about paying taxes on all of that retirement money.  I feel really great about taking care of Uncle Same now and minimizing the amount I owe him in the future.

Frankly, I wished that I had learned about the 401k and 457 through the city much sooner, but was very excited about the opportunity.  The way I see it, I was given multiple "buckets" within which to save for my retirement.  Once I hit my maximum allowed in the first bucket (any combination of TDA, Roth 401k, and Traditional 401k), I can move on to the 457 account!  A 457 is very similar to a 401k in how it behaves.  It's just less common for people to have access to a 457 because those are generally only used for those working for some sort of government entity.  Since that does apply to me, I can take advantage of a separate savings "bucket."  This is because the IRS will allow a separate maximum contribution of $19,500 into a 457 (FYI, the annual limits on 457s and 401ks change periodically, so you should double-check them annually to see if they go up from one tax year to another).  So, once I've maxed out on my first "bucket" (TDA/401k), I can start putting money into a 457 in that same calendar year and still be within my limits!  Also, the 457 though my employer has a Roth option!  Are you getting excited yet?!  I know that I sure am!  

Now that's a lot of money to be contributing to retirement, and it could take some time before you're able to allot that much of your income in that direction, but don't you kind of want to try?  Dare to be different, right?  Besides, the sooner we can secure our future retirement, the sooner we can refocus our attention to other things in life, right?

For those that are still with me, and wonder what else they can do, there's a third "bucket" that I haven't even mentioned yet, and that's an IRA.  IRAs are individual retirement accounts and are separate from your employer-sponsored plans.  Although you have to have earned income to contribute to them, you can open them on your own at any discount brokerage and can contribute up to $6000 to one annually (2021 limit).  I prefer to use a Roth for my IRA as well because of the tax-free growth; however, it's important to make sure you fall within the income restrictions (otherwise you need to look into doing what's called a "backdoor Roth").  For the 2021 tax year, it's a MAGI (Modified Adjusted Gross Income) of $140,000 for single filers and $208,000 for married people filing jointly.  Of course, if you are married and file separately, that income restriction is way lower.  We're talking a MAGI of $10,000.  So, watch out for that!  Anyway, regardless of the restrictions, it's a really great deal, one I'm definitely taking advantage of myself!

For people getting closer to retirement, there are a number of ways to catch up, too.  People in the 50+ age category can have what's called a catch-up contribution, which allows them to contribute an extra $1000 to an IRA and an extra $6500 to a 401k. If you have a 457, you can also have an extra $6500 contributed there.  In fact, the 457 has a strange little catch-up provision referred to as a "double limit" for people that have entire years where they were eligible but not contributing to one.  They can actually contribute double the annual contribution limit in one calendar year in order to make up for lost time so-to-speak.  You can only take advantage of that in the last few years prior to retiring though.  So, if that applies to you, it would be a great idea to contact your plan administrator and maybe your tax professional to investigate further.

When I think back to where I was when I first resolved to have secured my retirement by age 45, it's amazing to think of how far I've come.  It started with the power of belief and flowed into the land of inspired action where a little knowledge and some smart money moves are allowing me to take advantage of the power of compounding interest... and yes, I'm on track to meet my goal.  In fact, I will reach CoastFI before I ever reach 45... Life is good. 

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    Tuesday, July 20, 2021

    The More You Know

    How often do you feel inspired about your money?  Truly inspired?  Have you ever felt that way?  I suppose that I'm one of the lucky few that generally do feel inspired about my money and planning the next series of financial moves in my life. Now what's funny is that I just finished having a conversation with the real estate professional that is helping my partner and me through a real estate transaction.  At this juncture in the process, I feel anything but inspired.  Real estate transactions in NYC have their own set of steps that can be very different from the ones in more traditional markets, and we happen to be at a point in the process that involves a lot of moving parts.  There are so many different moving parts at this particular stage that it leaves me feeling a little nervous.  When I stop to think about what makes me feel that way, it often boils down to the unknown.  When I either don't understand something or don't entirely know what to expect, I experience those lower emotions which are much closer to overwhelm than they are to inspiration.  Now to be clear, our real estate professional is fabulous.  She clarifies things frequently, and in the process, I am able to climb the emotional scale to a significantly better place. The contrast I'm experiencing when measuring my typical experience of feeling inspired about my money against the up-and-down feelings at varying stages of this homebuying process has lead me to a realization.  It's much easier to feel inspired about things you understand.  

    I only really experience these lower emotions when there are a lot of things going on, and a number of them feel a little unclear to me.  If I feel as though I understand and my steps are extremely clear, it's much easier for me to feel inspired even if there are a lot of things going on at once. Financial nervousness doesn't come up for me often honestly. I believe this is because I've spent so many years educating myself on as many financial tools, concepts, and strategies as possible. So, there aren't many times I find myself in a position where I don't already know how something works.

    So, this leads me to a question.  Are there any areas within your financial life where you often experience lower emotions? Now ask yourself, "Do I feel like I really, genuinely understand those particular areas of my financial life?"  It's okay to admit to ourselves when there are things we do not understand.  In fact, that might be the first step to moving up the emotional scale and securing our financial future.  When we begin to know what we don't know, we can take the steps appropriate to get really clear so as to move forward in the direction of that which we truly want.

    This past week, I conducted two free workshops called "Supersize Your Retirement."  My workshop is geared toward teachers that work in the city.  My goal is to provide some education around the various retirement savings opportunities that are available to us.  This came to me because years ago I learned that in addition to a tax-deferred annuity (which I knew about), we had access to 401ks and 457s (both Roth and Traditional) through the city.  There really wasn't anything that I had seen advertising that fact.  So, I myself hadn't even been taking advantage of these opportunities.  Once I learned that they existed, I got really excited.  I could get really excited because I actually understood the magnitude of what that meant for me and my future.  I understood that the word "Roth" was a really big deal because it meant that I could save a lot of money on future taxes.  I understood that a 457 was a huge opportunity because I knew that it would give me the opportunity to save even more in a tax advantage account.  Are you seeing the theme here?  I knew these things...

    What about the thousands of teachers that hadn't even heard about these opportunities?  Inspired Action is one of the most critical components of my process with Law of Attraction and personal finance, but how can you get inspired about things that you don't know anything about?  I made it a bit of a mission of mine to educate as many of the teachers as would listen to me about these opportunities and created a workshop that at least gives a decent overview of what these things even are and some of the attributes of these financial products.  I genuinely want other people to experience the same level of inspiration where personal finance is concerned that I experience more often than not.  Evaluating my own recent experience with overwhelm and uncertainty has reinforced a couple of things for me.  First, we absolutely must take the opportunity to educate ourselves about how some of these things work because the more we know, the more we have to get inspired about.  The more we understand, the less room for overwhelm to set in.  Secondly, I have realized the value of surrounding yourself with professionals that have a bit more knowledge than you do in certain areas.  Our real estate team is composed of people that all know a bit more than us, and spend the time teaching us and breaking things down so that we are able to make the best choices for ourselves.  Every time I have low feelings and reach out to one of them for a clarifying conversation, I walk away feeling better and able to take inspired action in the direction of that which I want.  When I think about how much I appreciate these professionals filling that role for my partner and me within the context of this transaction we're working on, I also think about how much I enjoy being that person for others.  Watching my coaching clients grown in their understanding of personal finance and coming to a place of inspired action is one of the most rewarding experiences for me.  I really enjoy being a part of that journey.

    If you are one of the many people out there that experiences low feelings when a certain part of your financial life comes into focus, consider asking yourself if you need to learn more?  Are you having low feelings because you don't understand how something works?  Maybe you don't understand what to do?  If this sounds like you, there are a number of things you can do to help this flow in a better feeling direction for yourself:  Look for free workshops like the one that I just offered. A lot of people in the personal finance space offer different kinds of workshops and talks.  If you take a workshop with someone and resonate with them, see if they write articles on a blog or elsewhere that you can access to continue your education.  If they offer coaching or classes, and you're ready to take a deeper dive, maybe you should consider it.  It'll probably be worth the time and money if it helps you to secure your own financial future. If you literally don't know where to go for talks on financial topics, some smaller banks and credit unions offer workshops for their clientele (and many are free).  You can also find tons of personal finance writers in magazines and on social media.  You're bound to find someone you gel with. There's no one size fits all answer to building your knowledge and confidence, but there are opportunities out there, and very likely you will be able to find some that fit with your learning styles and preferences.  The more you know, the more you have to get inspired about, which will ultimately lead to a higher rate of success.

    Thursday, July 15, 2021

    The 3 Stages of Manifesting

    As my Law of Attraction practice becomes more publically known, people shyly emerge with their curiosities. One thing people frequently want to know about is the art of manifesting.  According to Merrian-Webster, one definition of the word manifest is "easily understood or recognized by the mind."  The definition itself surprises me, as it takes into consideration the role of the mind and its perception in the process of transforming our desires into reality.

    The word "manifesting" gets a bad wrap; the perception is that it's only for the super woo-woo, but the fact of the matter is that we're all manifesting all of the time.  Unfortunately, many of us are just doing it in the least efficient way possible.  The reason for this is because most of us are in Stage 1 of manifesting with no realization that there's an easier way.

    Stage 1: Efforting

    Before becoming aware of how our thoughts, feelings, and faith play a role in manifesting things into our experience, most of us find ourselves in the stage of efforting.  In our culture, we hear phrases like "hard work" pays off and "the early bird gets the worm." Now, mantras such as these instill positive values such as being proactive and taking pride in a job well done, both of which are wonderful qualities.  Where the drawback lies, is that it sets us up to believe that our literal effort is the key factor in our success.  It fails to account for the roles played by our mindset, emotions, and faith (among other societal factors, which I'm not getting into right now or I will find myself traveling quite a ways down another path). 

    In Stage 1, people go about manifesting things into their lives by striving, giving huge amounts of effort, by grinding away.   When I think about this stage, I think about myself a few years back.  I had three side gigs that involved working for other people.  I'm incredibly thankful for the abundance it brought to me and that the opportunities were there when I wanted them.  However, all three of those side hustles felt very much like "grinding" to me.  To me, grinding doesn't feel like flow.  Flow feels peaceful; it feels like ease.  Grinding feels like walking uphill both ways in a blizzard.  It just feels hard.  I found myself constantly drained; constantly exhausted.  However, I was manifesting what I wanted.  I paid off all of my credit card debt, my private student loan, and cash-flowed two trips to Europe. I just couldn't help but wonder if there was a way to manifest my desires that felt more energizing to me...

    Stage 2: Using the Mind

    At a certain juncture in the Law of Attraction journey, people often come to the realization that it is possible for us to manifest that which we desire without feeling like there is so much grinding away to get it.  A person in Stage 2 focuses on the feelings associated with the experience they'd like to obtain.  This focus accomplishes two things that are key.  First, focusing on actually feeling the way they'd feel if they already had the experience they'd like to obtain places them in vibrational alignment with that experience which makes it easier to attract.  Secondly, being in vibrational alignment with the experience we'd like to attract is more likely to become the breeding grounds for Inspired Action.  When we align to that which we want emotionally and allow ourselves to be open to possibilities, we often find that there are steps unfolding right in front of our very eyes that we legitimately want to take.  These moments of clarity lead to Inspired Action.  Inspired Action feels like flow as opposed to grinding.  These steps feel energizing rather than energy-draining.

    Stage 2 involves actively playing with the mind in that it requires monitoring of thoughts because our thoughts trigger our emotions.  If we are trying to feel as though we already have a certain level of abundance in our experience, we must be thinking thoughts that trigger those feelings.  If we allow ourselves to think things that are contradictory to the feelings we are trying to have, we risk manifesting in the wrong direction or hindering our own progress.  

    Negative Thoughts:  Often these come in the form of limiting beliefs and scarcity mindset.  By allowing ourselves to think thoughts like "I can't," we are aligning to the vibration of lack, and trigger the emotions that pair with lack. Inspired Action has no place here, and we risk manifesting in the wrong direction.  This might sound like "I can't get that promotion."  This triggers low feelings and no inspired action. In fact, these thoughts and feelings might trigger you to respond in the opposite way.  You might not feel inspired to even apply for the job.  If you applied for the job, you might not present yourself in a way that shows that you are the person for that job because you don't even see it.  You likely won't be able to act the part, and will likely experience the results accordingly.

    Neutral Thoughts:  Neutral thoughts are a beautiful thing when you are trying to rise up from some lower emotions.  Sometimes, it feels like too much of a stretch to go from "I can't" to "I can," and you literally need somewhere in between.  Neutral thoughts trigger neutral emotions.  Neutral emotions have little to no attraction power.  So, why would I bring them up?  Because they won't start you down the path of manifesting in the wrong direction.  It's like you're trying to cross a path with a huge puddle of water in it.  You can't get to the opposite side in one jump.  So, you jump to a dry patch in the middle first; then you make a second jump to make it to your desired destination.  While you were in the middle, you weren't quite where you wanted to be yet, but you managed to keep your feet dry and regroup.  What do neutral thoughts sound like?  It might sound like "It doesn't really matter if..." or "It's okay either way."  

    Positive Thoughts:  Often positive thoughts can trigger us to feel like we already have the experience that we want.  When we allow ourselves to think things like "I can.." or "I do have..." we are aligning to the vibration of the thing we desire. Emotionally we feel like we're pretty much already there.  I remember auditioning for a production of Joseph and the Amazing Technicolor Dreamcoat.  I knew I'd be cast in the production before I ever walked in the door of the audition.  I literally already felt like the part was mine.  So, when I walked into the room, I felt amazing. Singing my song was basically just a technicality as far as I was concerned.  I had to fill out a little questionnaire to turn in with my headshot and resume, and I got inspired.  On that paper I distinctly remember writing "I've done this show three times before and if you decide to go an entirely different direction with this production, making it a one-woman show, I'm your gal!"  Okay, I've never done something so strange going into an audition before, but I felt somehow inspired and wasn't really married to the result. So, I did it.  I walk into the room, turned in my papers, and sang my song.  The director noticed what I wrote on my paper and started laughing!  This started up a bit of a conversation between us and before I left, he said that I should call back on Tuesday in order to find out if this would be my "number 4."  Well, it was. I was cast in that production, and he proceeded to call me "Number 4" the entire run of the show.  Now, I share this little anecdote with you not to provide audition advice, but rather to demonstrate how positive thoughts lead to positive emotions and inspired actions, which in turn lead to positive outcomes.  There's also a little side lesson here about surrendering the outcome, which relates heavily to stage 3.

    Stage 3: Surrender and Allow

    Stage 2 feels significantly easier than Stage 1 in that it's entirely less exhausting.  The fact that Stage 2 is heavily reliant on the mind creates some difficulty of its own in that the mind very much wants to fall into old patterns of thought, and is susceptible to picking up resistance, and reinforcing limiting beliefs and scarcity mindset.  Stage two might be best thought of as a bridge to Step 3, where the art of surrender and allowing replace the need to constantly keep your thoughts and feelings in check.  Stage 3 comes with the most ease, but is extremely difficult for those starting out!

    A person in Stage 3 isn't especially concerning themselves with their thoughts and emotions.  That is not to say that they aren't aware of them, they very much are! But they aren't focused on them because their process has moved beyond the restraints of the mind and into the realm of true faith.  That sounds big, doesn't it?  True faith...  It's the most peaceful way to live, but not necessarily easy to get there...  So, how does someone in Stage 3 manifest that which they desire into their experience?  The process might be described in three steps.

    Step 1:  Surrender

    This step might also be called offering.  In this moment, you recognize your desire for something.  You automatically have positive thoughts and feelings, but you don't particularly need to focus on them.  They're just there.  You take whatever the thing is that you want, and you surrender (offer) it.  In the act of surrender, you also release yourself of the obligation to worry about it, leaving space for yourself to continue to feel good about it, and also leaving space for inspiration.

    Step 2:  Let Go

    Once you've surrendered (or offered) the thing you want, the next step is to let go of the outcome or one particular course of action. Sometimes in life, we spend a lot of energy trying to force a certain outcome or course of action, and in the process, we lower our own vibration and close ourselves off to inspiration.  Do you know what happens when you simply let go?  You become more open.  You open up a space for inspiration to come in.  Sometimes, you will have a knowing and the correct actions to take will simply come to you, not through effort, but through a gentle knowing.  That knowing comes most easily when you're not trying to force a particular outcome.

    Step 3:  Allow

    You've offered up your desire for something, and let go of the outcome.  Now is the part where you get out of the way.  Sounds crazy, right?  Well, there is a lot to the art of allowing, but one element is that you get out of the way and remain open.  What are you remaining open to?  Inspiration, possible actions, the thing itself to flow to you.  We also need to allow our own intuition to lead us in the correct direction.  We have an amazing internal guidance system that will steer the ship if we let it.  Back in Stage 2, there was a lot of need to actively work to keep the mind from getting in the way, but that is much less the case here, as that has become much more automatic.  In Stage 3, allowing is synonymous with openness.  In this final step, we simply remain open to possibility and let things flow.

    In reality, Stage 3 is a fairly difficult place to get to, and even harder to remain in.  I suspect Eckhart Tolle resides in Stage 3, but I haven't had the opportunity to ask him.  Just knowing that Stage 2 is a bridge to Stage 3 gives me faith that we all have the ability to make it there if we simply allow it.

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