Since I spent some time yesterday with open enrollment, I decided to do a little take-home pay modeling for 2022 this morning. Mostly because I don't feel like doing the stuff on my actual work to do list, lol.
Some up front things of note - I built out a projected 2022 budget a few weeks/months ago. I increased my AutoSave, I increased the amount to "the Mom Loan", I added a few additional sinking funds on a monthly basis, and I adjusted the extra funds I am sending to the NCA loan (paying additional $$ every pay check). This assumes no revolving credit card debt, but since I am def not going to be paying my big card off before the end of the year, I need to make some adjustments there. It will likely be at the cost of the extra payments to the NCA loan but TBD. I had also originally modeled in $$ every pay check to fund a Roth IRA, but since I'm pretty sure I am going to be income limited out of that, and I still have space to max my 401k, I decided to put it there instead.
The calculator I like to use is Paycheck City's....it gets pretty close, although never exact. I modeled a bunch of different steps:
First, change to my takehome pay accounting for the increase to current benefits along with fully funding FSA. This is a difference from current take home of about $40 less. That's ok, because the FSA will cover a $30 line item budgeted for in every pay period, so I am almost net neutral there.
Then, I calculated my take home pay once 401k loan 1 is paid off (which should be mid-January to end of January, exact timing TBD based on how quickly the tuition reimbursement from the fall semester is processed). This is a big jump....about $150 a check. Once that's paid off, I'll be increasing my 401k % to 15% of my salary. This takes me back to down to the same ballpark as what take home was prior to the loan being paid off, but is only a few thousand off from maxing 401k.
Next I modeled what things could look like after my COL increase (we generally get these in April/May, 2020/2021 notwithstanding, and traditionally, they are between 3-5%). I used 4%, and that was a surprisingly large jump, almost another $100 in take home.
Then (lol) I modeled what it could look like at the increased pay, 15% 401k contribution, and current 401k loan 2 paid off. This is slated to be paid off mid-June, again depending on how quickly tuition reimbursement is processed. Could be sooner depending on how stuff shakes out. At this point, take home should be around $200 higher than it currently is, but with no 401k loans, fully funding an FSA, and an increase in 401k contributions of 5%. That's kinda huge!
And then finally, I modeled what it would look like once I take the 401k loan I am planning for next year to pay for surgery...I don't really know what the interest rate would be (I am unable to model it directly with my 401k provider since I am not currently eligible for another loan), so I just used the interest rate from 401k loan 2, since it's the most recent. I chose a term of 4 years, but may shift that in either direction depending on where I'm at by then. This take home brought me down to about $160 less than my current take home is, but includes a lot more stuff, so I am feeling ok about that. There's enough flexibility in my budget to be able to accomodate this, plus since I am planning on refinancing my mortgage next year as well, that impacts some of the fixed outlays as well.
Overall I'm feeling really good about where things will stand for next year, financially. I'll finally be contributing 15% of my own money to retirement, will be on my way to debt free, and can accomodate all the things I want to do within my budget. If I get a promotion next year that puts me into the salary range I think it will....then I don't even need to adjust 401k up anymore, as that salary level at 15% maxes.