Summary of 2018


2018 was an exciting year for me. I have learned a lot about personal finance, taxes, and investing, and have tried many new stuffs. It was the year of hard work and career growth.

Here is the summary of what was done in 2018, and whether they were good, bad or meh.

1. Paid back significant portion of mortgage - GOOD


I don’t like debt. When I got my current home, I decided to pay off it as soon as possible. My strategy was this.

1) max out retirement accounts first
2) then pay additional mortgage principal.
With this, I missed to the chance to ride the 2017-2018 stock rally with all of money (other than my retirement accounts) but it wasn’t too bad after all as stock market melted down at the end of 2018.
I am getting close to the debt free goal.

2. Maxed out retirement accounts (HSA, 401k) - GOOD

I am so glad that I was able to max out 401k ($55k) and HSA ($6.9k). It was a stunt to do this while paying mortgage, without hurting my life too much.

3. Roth 401k - MEH

I used to believe that I could delay my retirement forever and continue earning high income, so I could keep contributing money into Roth 401k.

In 2018, I had the valuable time to think about my realistic retirement plan and life, and wanted to live with lower income and expenses.
I realized that I should switch to tax-deferred traditional 401k because

1) my current marginal tax rate is high, and my rate post retirement is likely to be lower than that
2) I already maxed out after-tax 401k and converted it to Roth already, so I have enough Roth contribution.

Of course no one knows after few decades if Uncle Sam will decide to increase tax rates significantly like Scandinavian countries or consider Roth distribution as income. But I agree with Sam from that deferring taxes where possible is better decision.

4. My first Backdoor Roth IRA - GOOD

I was aware of this loophole for some time, but never tried before because my finance in the prior years was very tight. I finally have done it for the 2018 tax year.

5. Credit card optimization - BAD

I opened several credit cards to get maximize rewards or cash back for my spending. The end result was mixed.

I got a few thousand dollars of cash back or statement credits and enjoyed member benefits such as airport lounges or hotel room upgrades.

See the labels? It helps a lot.

See the labels? It helps a lot.

However, I underestimated the mental cost. Now I am using 8 credit cards for different spending, and sometimes it is difficult to remember which card I am supposed to use. I am not really good at this hustle as those enthusiasts who travel with bonus mileages. So I am going to simplify by closing a few accounts and be happy with little lower cash back rate.

6. Reduced mobile cost - GOOD

Saved $40 per month by switching from Verizon to Xfinity Mobile (caveat - only Comcast customers can subscribe).
Xfinity Mobile is using Verizon network, so I am not losing any quality or coverage.
Xfinity Mobile has no fee for each line (talk and text) while Verizon charges $20 for each. This would create a significant difference for a large family. Let’s say, there is a 4-person family who pay Verizon $80 / month just for the lines (and use Comcast for internet or cable). If they switch to Xfinity Mobile, the line costs $0.

7. Reduced auto insurance premium - GOOD

Saved $65 dollars for 6-month premium for my car.
This cost saving mostly came from dropping collision and comprehensive coverage. I figured that after 1 year, my car would be less worthy for this premium by simulating through Kelly Blue Book, and decided to just expedite it. I don’t drive much and have enough fund if my car is totaled.
However, I have increasing the bodily injury liability to the maximum (1mil/1mil). I don’t have other liability / umbrella insurance (yet) so this should give me better financial protection overall.

Here’s the summary of how I tuned my auto insurance policy.