The Bounce Back

Last night took an L, but tonight I bounce back

 I been broke as hell, cashed a check and bounced back

D town LAX, every week I bounce back

If you a real one, then you know how to bounce back”

               

  -Big Sean, Bounce Back


Big Sean couldn’t have said it better. We all take L’s. Whether it’s paying $250 to have a tooth pulled because at the time paying $16 a paycheck for dental insurance just didn’t seem worth it. Or losing money on that exciting new multi-marketing business opportunity which now seems eerily similar to a  pyramid scheme. Or blowing your savings on that new gadget that is now in a drawer because a newer better version just came out. Or spending hundreds of dollars a year on a gym membership that you were convinced you were going to use but haven’t been to in months. Yea, it stings but now what?

You may be beating yourself up over an L you’ve taken or are currently taking (How about paying $65 a month for massages and you can’t cancel for at least a year; yea, Massage Envy got me. SMH). But chill out! Like the movie Forrest Gump points out ‘Shit Happens’.

We all take L's...

Don’t fret over your past mistakes because you can’t change them but you can  learn from them and change how you approach your future. We can control our bounce back; simply by not letting our mistakes, missteps, or perceived ‘failures’ hinder us from reaching our financial goals. And instead:

  1. Figuring out the things we either are or aren’t doing that are hampering our financial journey;

  2. Learning what we could do to correct these actions; 

  3. Making the correction;

  4. And eventually see the fruits of our labor. 


I know you’re probably asking yourself, ‘But SDot, how do I do that? No, seriously, how?’. Well you’re not alone,  I’ve asked myself this question numerous times over the years.

I understand what it’s like to wrestle over how to contribute to retirement when you need the money you’re currently making now? (Or at least you feel like you do.) Or wondering how you’re going to save money and still be able to enjoy life? (I get it F.O.M.O is real; that’s the fear of missing out for those who don’t know.) Or evening feeling like it’s impossible to get out of debt and that you should just accept that this is your life now. (I’m begging you please don’t!)

There is a way out. And there is a way to do all these things without having to dramatically change your life. Enter, the Bounce Back; a segment to help show you how to do these things through experiences of people who have been where you are.

Every week I will share a story, either mine or friends or a colleague’s (with their permission of course) that will explore a financial misstep and what steps were taken to correct it. We will explore different financial aspects including debt, savings, investing, retirement, and even insurance to name a few. So, please stay tuned!
Now, let’s get to it...

I was leaving money on the table

At 22 fresh out of undergrad, I remember sitting through orientation; nervous but full of excitement that I had my first ‘grown-up’ job. And then came the tirade of forms, and if I’m being honest I had no idea what I was doing. Health insurance? I was pretty healthy so why not go with the cheapest plan. Life insurance? I didn’t plan on dying anytime soon (and yes, I actually thought this to myself) so again the bare minimum seemed it would suffice. Retirement? I had decades before I could retire so surely this something I could focus on later. Besides, they were going to take 1% of my pay anyway and put it towards retirement so that was good enough, right?

Wrong! 😩

What I failed to take into account that day and for the next 5 subsequent years is that my agency was offering to match my contribution up to 5%! Meaning if I contributed 5% they too would contribute 5% towards my retirement. But this also meant that if I contributed 1% they were only going to match that 1%. To put it simply, I was giving away free money for years!!!  It was like if someone offered me $1,000 and I was like, “Nah, I’m good.” I know, crazy right.


But to help clarify what I’m saying let’s break it down in numbers:


For the sake of simplicity and making this easy to understand we will assume that my gross pay or money I made before taxes and deductions are taken out was $1,000.

The means, if I contributed 1% of my gross pay ($1,000 x .01 = $10) I would have contributed $10 to my retirement and my agency would have matched that $10; ultimately putting $20 towards my retirement each pay period.        
 
Assuming I work on a bi-weekly pay schedule, in a years time this contribution would be made 26 times which translates into $520 a year ($20 x 26 = $520).


This doesn’t sound too bad but;


If I contributed 5 % of my gross pay ($1,000 x .05 = $50) I would have contributed $50 to my retirement and my agency would have matched that $50; ultimately putting $100 towards my retirement each pay period.


Still assuming I work on a bi-weekly pay schedule, in a years time this contribution would be made 26 times which translates into $2,600 a year ($100 x 26 = $2,600).


Yea, that’s a helluva difference! 😲

Something is always better than nothing!

I knew I had to make a change and fast! So, I started by contributing 5% and increasing my contributions as I earned more. How? I started to use each pay raise or cost of living increase as a milestone to up my contributions and it wasn’t hard or intrusive. My thought process was basically this; I was able to survive on my current pay so I didn’t need the money that I would receive from a pay increase therefore contributing some it to my future not only was viable but made sense.

So here’s my advice. Whether you're just starting out or have been working for a while, contribute to your retirement plan. If your employer offers matching make sure to at least contribute what they are matching. Don’t make the same mistake I did by giving up free money but if you did then you too can correct it just as I did.

Bottom line, contribute what you can, but do contribute because something even if it’s not a lot it’s still better than nothing.




Comments

  1. Totally agree! I remember my first job out of college, looking at all the forms and selections I had to make and having no idea what I was looking at. Being the cheapskate that I am, I ended up just going with the lowest priced plan for everything. But you should definitely know what your employers retirement match is (if they have one) and try your best to meet that match. Otherwise, you're throwing away free money!

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