Since my side income seems to be growing more than I expected this year, I’ve decided to increase my 401(k) contributions to reduce taxable income. In February, I increased my income deferral rate from 4% — the minimum contribution necessary to maximize the company’s match rate — to 6%. I was already maxing out my $4,000 yearly contribution to my Roth IRA, so adding more to the 401(k) made sense. At some point, I increased the rate again to 8%.
Today, I doubled my contribution rate to 16%. I will try to keep it at this rate for the rest of the year.
$55 of my savings each paycheck goes to a savings account at ING Direct earmarked for “relocation.” This will hopefully provide me with enough cash for a down payment on a house at some point, but it’s only at $1,755 right now.
Updated June 16, 2011 and originally published August 25, 2006. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.