1 Mistake I Made in Light of the Market and 1 Thing I Did Right

Well, everyone has been posting a lot about the economy. How can you not with the wild fluctuations going on? In light of what's going on, there is one thing I did that I can identify as a mistake and one thing I did that I can identify as a good decision.

My Mistake
The mistake I made was in not distributing my 401K contributions evenly across the year. Had I done so, I could have taken advantage of dollar cost averaging. Instead, I maxed out my contributions mid-September, meaning that my account is not going to be taking advantage of these new lower prices. I knew that I was going to max out in September but I decided to do so anyway since I thought it would be nice to have extra money for Christmas and potential year end vacations. I also thought I might be switching jobs so it would be easier if I maxed out my 401K at one employer rather than trying to figure out the exact amount I would need to contribute in my new employer without going over the maximum contribution limit. Now it looks like I won't be switching jobs in the near future. Since I work in financial services consulting, it just feels too unstable to be looking for something new. I'm also well respected in my current job and I enjoy it for the most part.

My Good Decision
The good decision I made was in deciding to hold our home down payment funds in cash. I began saving in earnest for a home about 3 years ago. It was always my intention to buy a place in 2007 or 2008. After getting married 2 years ago, my husband and I were able to significantly increase our down payment fund. It's pretty disheartening to see so much of your money only early 3% when the rest of your money is earning 7% or 10%. But we stuck to traditional wisdom and kept that money in an ING Savings account. I never even opened a CD since I was never really sure when we would find a house that we liked and pull the trigger on the purchase. Now I am so glad that we didn't risk that money since we want to use it in the short term.

Long Term Financial Planning

This weekend my husband and I tried to do some long term financial planning. I have quite a bit of Excel knowledge gained from work, so I was busy working on a model, modeling our income growth over the next 30 years or so, taxes, and the effect of inflation. I also wanted to model our expenses, but we needed a lot more assumptions for that so I didn't get a chance to finish that. Based on my modeling and the assumptions I made (e.g. $15,500 annual tax deferred retirement contribution), we should be millionaires in our forties, assuming 6% growth in our investments. That's exciting, I hope it happens!

Salary Openness

I am used to seeing salary secrecy practiced by almost everyone I know, including myself. I only know the salaries of my husband, my immediate family members, and a few friends. I will sometimes talk about my salary in general terms with my friends, but I don't openly discuss it, nor do I bring it up. Somehow I became pretty successful in my career and I think I'm probably making more than most of my good friends, so of course, I don't want to bring it up. I'm probably making less than my former co-workers since a lot of them ended up in I-banking, but I have a much better lifestyle than they do.

The other day I was exposed to a refreshing dose of honesty and openness regarding my plane-mate's salary. We were just about to land when I started chatting with the woman next to me. She told me quite a bit about her life, where she worked, what she did, where she was going, etc. Then she mentioned to me that she gets paid $11/hour plus tips, which was a lot better than the $3.17/hour plus tips that she received when she was living in a different state. I was pretty shocked at her salary openness, but it was pretty refreshing to find someone who was so open with her life.

I don't think it benefits anyone (except our employers) to keep our salaries a secret, yet we do so.

Here's my I keep my exact salary a secret:
1. I'm afraid to be judged (either positively or negatively) based on my salary
2. I'm pretty sure that my employment agreement forbids it

For more salary info of people on the web, check out this post from Madame X.

I just think there's this social stigma attached with discussing money and salary; I can't get myself over that hump. To try to help myself along, but keeping it vague, I'm close to the six figure mark, but I won't pass it this year unless I change jobs.