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Subject:  The Power of Paying Yourself First Date:  2/8/2004  1:45 PM
Author:  babyfrog Number:  39026 of 80238

Between my wife and myself, we expect to see more more money put away in our combined retirement plans this year than I earned in my first year working full time, back from mid-1997 to mid-1998. This includes all expected net contributions on our behalfs to our retirement accounts, such as IRA contributions, 401(k) contributions, employer ESOP/Profit Sharing contributions, and net additional preferred dividend contributions (a unique feature of our employer's retirement plan). Our combined vested retirement account balances as of right now exceeds one year of our combined salaries, and it works out to about 3.5 years of our living expenses. Seeing how far we've come financially in such a short period of time is really remarkable, and it is a testament to the power of Paying Yourself First.

I know what we earn, and while we make a decent living, neither one of us is considered a highly compensated employee, and neither one of us has ever maxed out social security taxes. All of the progress we've made has come from making the decision to pay ourselves first. As soon as I started working, I bought company stock through its SIP (shareholder investment plan, the company's DRiP), not for the appreciation, but to keep the money out of sight and automatically invested, so that when I became elegible for the 401(k), I could shift the cash to that investment vehicle, instead. Once I became elegible for the 401(k), I shifted my contributions to the 401(k), and got to feel the extra bang-for-your-buck that comes from making pre-tax contributions. My wife, on the other hand, before we were married, had originally adopted a lifestyle that was closer to her means and