It’s a new year so that means it’s time to set a few goals for our finances this year. We are still fortunate to both be employed so our budget has been comfortable so far. As I read the multitude of articles about people suffering through financial hardships, I feel bad for each and every one of them. Each article reminds me to do all we can to be prepared for a job loss or other financial storm that may lie ahead.
With this in mind, we are setting a goal to increase our emergency fund by 50% this year. It’s not a terribly aggressive goal for us but I know we have some expenses in our future so I’m going to be conservative on this goal.
The second goal for the year will be to increase our 401K contributions. While I have been contributing the maximum to my 401K account in the past, I need to bump it up a bit so that it reaches the $16,500 limit for 2010 (I didn’t increase it from $15K in 2009). We also need to increase my wife’s contribution to get her closer to the maximum. If we are able to get her’s up to the maximum, that would be a full $33,000 towards our retirement accounts in 2010. My only concern with this is that we are putting a LOT of our funds in IRA sheltered accounts and I’m concerned that if I stop working prior to 59 1/2, I won’t have a good income stream outside of this.
That leads me to my third goal. I need to increase contributions to a standard brokerage account. I’d like to automate this but I’m concerned about keeping track of my basis for tax purposes. Does anyone have any advice on how to do this fairly easily?
Are you setting any financial goals for 2010?
Concerning your non-IRA basis question – if you keep your money in Vanguard (and many other MF firms) they will provide you with the necessary cost basis information when you sell.
Of course, this assumes that you wish to go with the average cost method. If you want to use FIFO or FILO, then you are own your own.
I do know that Quicken will allow you to track exact prices. Then when you sell via the FIFO or FILO method you would just write Vanguard a letter telling them how you wish to account for cost basis.
That should have read FIFO and LIFO, not FIFO and FILO – sorry about that.
Thanks Al,
I wasn’t aware of the average cost method. I thought my only option was using the FIFO. I’ll check in to that. For the most part, I’d like to just use a Schwab account to buy both individual stocks and index type funds. I’m guessing I’ll have to use the FIFO method in that case and that all the dividends etc will just add to the basis once I’ve booked the income in the year that I receive the actual dividend.
I believe there are new IRS regulations starting in 2011 that require brokerages to track cost basis and provide it on 1099s going forward so you may have that benefit at any brokerage soon.