2017 Frugal Resolutions

Another year has flown by and now it is time to make frugal resolutions for 2017. What are your goals, pay down debt, massive accumulate savings, generate passive income or perhaps even retire (early) this year? OK, so perhaps my main frugal habit this year is minimize my taxes (legitimately – the way the government wants you to do) so as to maximize my savings rate. How am I going to go about this, well I will:

• Use my retirement savings at work to the fullest, where being a Professor I have two major pre-tax savings accounts, a 403b and also a 457 plan. I am planning on putting 3K a month before taxes into these accounts, ending up with a 36K contribution, reaching the limit allowed for 2017.

• Add 11,000 total to the IRAs of my wife and I, where we can add 5,500 each.

• This one is a bit of cheat, but I have a bunch of contributions that add to lowering my adjusted low income, which include pension contribution, health insurance, dental insurance and contributing to my Flexible Health Spending account.

I’ll post at the end of 2017 to let you know how I do, how much the savings accumulated and in early 2018 once I have figured out my tax bill for the year. With mortgage interest payments and a child tax credit, hopefully I can make my taxes stay within the 10 and 15% tax bands only, and have an effective tax rate at 5% or less, and at least 47K in the pre-tax accounts, all while earning a six-figure salary. Wish me luck, and good luck to you for your frugal plans for 2017!