Maxing out my Roth in 2017

I do pretty well with retirement savings. I get a 4% match from my employer, which helps a great deal, and I try to contribute to my Roth IRA as often as I can.  I am behind in retirement savings, however, because I got a late start, and my mint.com account reminds me of this painful fact every day. 

It makes the most financial sense to really double down on that savings immediately, so that I can get as much interest compounding as possible. I'm planning to increase the percentage I save through work, which will up my match, but my plan for 2017 is to also max out my Roth IRA contribution, which is something that I should be able to do for the first time--maybe ever.

The maximum amount you can contribute to a Roth IRA is $5500/year.  I'm starting this year out with an advantage in that I already have about $2300 in that account because I cashed out a life insurance policy and rolled it into last year's and this year's Roth.  So I just need to find an additional $3200 or about $350/month.  My plan is to divide that amount up into tiny dollar amounts and see how quickly I can snowball it.

My financial goal last year was to be more charitable.  I set up a monthly sustainer donation with NPR, ACLU, got a subscription to the New York Times (which I know isn't a charity, but good journalism is important) and I made donations to a few local theatres.  The amounts donated were small and relatively painless at the time, so I'm going to approach my Roth with the same mindset.

1. Schemes and found money. I have a few ways to earn a bit of extra money, and that had previously gone into my travel fund.  For now, I'm going to re-route all those revenue streams to my Roth until I hit $5500, then they'll go back into my travel fund.
2. Interest income.  I generate a little money every month in interest income on my savings accounts.  Normally I just leave it alone and let the account balance grow,  This year, I'm going to move it into my Roth.  I can't do this every month, since you're only allowed to make five withdrawals from savings per month, but I can move this money over quarterly.  My capital one savings accounts tell me exactly how much interest I've earned in the calendar year, and having that money in my Roth rather than regular savings will help it grow faster.
3. Returns/ Refunds/Rebates.  When I buy something and return it, that refund money is going to go into my Roth unless I absolutely need it.  I have a pair of shoes that I need to return, so that's $60 extra dollars right there. I've also been doing very well with ibotta lately, so all of that money will be funneled right into retirement.  Same thing for my quarterly Big Fat Check from Ebates, which is currently sitting at $34.99.
4. House Cleaning. I have a lot of things I no longer need. There's an older macbook pro power cable that isn't compatible with my current computer, a TV/DVD player that I haven't used in two years but that works perfectly well, etc.  I'm looking  at the things in my house with a critical eye, and listing anything that I don't use, but that someone else could use on craigslist.  I find craigslist generally annoying, but I have four listings that net me enough money the hassle of dealing with people should be worth my time. I also have a gift card that I got as a gift that I am selling on ebay.  I was stressing out trying to think of what to spend it on, when I realized that I don't want to buy anything and I'd be much happier with cash.  Maybe this is tacky, but I don't really care.

We're also approaching a more temperate time of year, so hopefully heating bills will finally go down, and that will free up a little bit of extra cash.  I'm like a magpie looking for that shiny money, and I think I'll be able to make my goal!

A More Zen Approach

I'm a pretty mellow person, at least, that's how I present myself to other people.  While I don't get caught up in a lot of time and energy consuming nonsense or personal drama, I do tend to get fixated on certain things--especially money things.  I've worked since I was 15, and I've worried about money since I was, I don't know, 8?  I think the first time I touched money I became acutely aware of the fact that all I could really do with it was spend it and then have none.

Since starting the job that I've now been at for about a year and a half, I've been lucky enough (after figuring out my budget) to sock away a decent amount of money--at least I've rebuilt my emergency fund from when I was unemployed.  I've also been able to pay a decent amount on my student loans and make a little bit of progress.  Certainly it's not as much progress as I'd like, but that's where my new zen approach comes in.

I've been obsessing--about money, work, everything to the point where it was really starting to make everything shitty.  I've had a lot of work drama in the last few months, none of it my fault, but despite my best efforts, I really let it get to me.  Add to that the regular stress of money, and the fact that money seemed like something more under my control, and I became quite unpleasant.

The problem is, even though you have a plan on paper, real life doesn't always work out exactly as you plan, and then that adds yet another layer of stress because failing to meet a goal is stressful.

So I've decided I'm all done with that.

I will no longer:

• Mentally take my work home with me, because they don't pay me enough to do that, and I'm not important enough to have that level of stress.
• Take responsibility for things that are not my responsibility.
• Try to pay as much as possible on my student loans and obsessively check my balance five times a day.  I'm paying a set amount each month, and no more.
• Say no to fun things because I need to max out my Roth IRA.
• Obsessively schedule workouts so I'm too tired to do anything but run and recover.

I will continue to:

• Pick up extra work shifts
• Use coupons occasionally
• Seek out free things
•  Put money into savings and IRA and watch my balances grow, but not freak out when it happens gradually
• Ride my bike to work, the store and the farmer's market

I will finally:

• Spend more time writing
• Hem that stupid dress that's been sitting on my desk for months
• Keep a neat and organized house
• Stop accumulating STUFF

It's actually pretty relaxing to just stop trying to control everything.  I wasn't being successful at it anyway, so really, just saying hands off is kind of nice.  I'm much happier when I'm not making myself miserable, which I really should have figured out a while ago.  It seems so simple.

I Don't Want That

I've mentioned my co-worker before and how her poor health serves as a cautionary tale about getting older and (possibly) making poor choices.  I really don't know too much about why she's so sick, but she takes 25 pills a day, and that's just not something I want in my future.  I don't want to seem like I'm picking on the woman, but we had a brief conversation a few days ago that terrified me to my very core.

The organization I work for recently switched dental insurance providers, so we were all waiting for new cards to arrive in the mail.  Mine came--with a horrible, laughable misspelling of my name and a misprint of my address.  I'm not even sure how it actually arrived at my house, or how long it took for the mail carrier to figure out it was supposed to come to me (they put a Z in my last name--there's no Z).  My co-worker was wondering aloud when we would get our cards, and I told her that mine had arrived about two weeks ago.

"I've been avoiding looking at the mail lately, I guess I'll have to take a look." She said.

Her husband has been in Intensive Care with a laundry list of problems since before Thanksgiving.  They had to bring him in am ambulance more than 60 miles at one point and I can't imagine what other expenses are piling up--even with the decent health insurance we have.  She's over 60, in poor health herself, in a constant state of worry about him and also money and I'm pretty sure that she has no savings and probably a paltry retirement fund.

That is my worst nightmare.

Whenever I try to talk myself out of putting money in my IRA, I think of her.
Whenever I think it might be more fun to buy something silly, I think of her.
I think of the fact that she probably wants to retire--in fact she had retired two years ago and then had to come back to work full time, and I just don't want that.

Saving for the future may not be the sexiest thing in the world, and plenty of people think 'oh, I'm too young to start worrying about that', but she's only 30 years older than me, and both she and her husband are falling apart--financially and healthwise.  I don't want that.

I want a real retirement and to be healthy enough to actually enjoy it.  Sure, things could change and my health could go south through no fault of my own, but to have the added stress of being broke on top of that?  Not interested.

Frugal Challenge: IRA Challenge

First, a wrap up of my last frugal challenge: The Gas Challenge.  I'm pleased to report that for the Month of March, I bought gas March 5th, and managed to stretch that tank to March 26th!  I actually bought gas again on the 22nd when I was down to 1/4 tank (I don't like running out of gas), but I didn't use up that 1/4 tank until the 26th.  Sadly, I didn't make it all the way to April 1 like I had hoped, but that was an awfully lofty goal in the first place.  I'm still pretty proud of myself.

Obviously, I'm going to continue to try to walk/bike as much as I can to avoid overspending on gas.  It's a lifestyle change!

Next up: The IRA Challenge.  I can make contributions to my 2011 Roth IRA until April 17th, which I've been doing all along.  With a Roth IRA, you can contribute up to $5000 per year, and no more.  I'd like to get to $5000, obviously, but I'm $1700 away from doing that.  I have two paychecks before that, so I can take what would have gone into regular savings and direct it to the IRA, but that's still nowhere near the $1700.

The way I see it, I have a few options:

1. Put off paying off my credit cards and put that money into the IRA.  I only owe something like $100 on one, and I usually pay ahead of time to avoid fees, but I do like having that 0 or negative balance...
2. Redirect all money that was going into my regular savings account into the IRA.
3. Find some way to make extra money--I'm already working extra hours and don't know what else I could really do, but it's always an option.
4. Move money from my existing savings accounts into the IRA.
5. Some combination of the above.
6. Something I' haven't thought of yet.

I have a pretty healthy balance in my regular savings account so I wouldn't be dead broke if I siphoned off a bit, but I really hate to do that and I'm still rebuilding from that stupid car repair.  Also, with making less money, I don't know how long it would take me to replenish my emergency savings.  It seems kind of stupid to have a robust retirement account that I can't touch if my emergency savings are decimated.

Any suggestions?  Anything I haven't thought of yet?  It's not the end of the world if I don't hit that $5000 mark, but it would feel pretty good too, especially since I just started this IRA and I'm about six years behind...

Cue the Hyper Organization

For the next two months I'm going to be filling in one day a week at my old job.  This is awesome because it gets me a little bit of extra cash, I really liked that job and I was sad to leave it, and this way I get to swan in like a guest star doing a short run on a popular sitcom (yeah, librarianship is just like being on tv).

Even though Heather Locklear was pretty much the star of Melrose Place
She was always billed as a special guest--which is what I am now.
Except I'm not a bitch.

This new shift is Thursday mornings, which means that now instead of working 1-9pm Thursdays, I'm working 8-12pm, then 1-9pm.  Plus, that 8am shift comes with a 20 minute commute.  It's all very doable, but in order to do it well, I need to be very organized.

Clothes--I need to make sure that I have my Thursday outfit ready to go Wednesday night.  Usually on Thursdays, I loll around in bed, then pick out something fabulous (in my head).  From now on, there's no time for that!  I need to have a work appropriate outfit laid out and ready to go.  Hopefully, the cat won't take a nap on whatever I pick out, but I'll have to be prepared for that as well.

That's why I have that lint roller

Food--There is no point working extra hours if I'm just going to blow all that money on food.  I'll need to pack a lunch and a dinner, which means I need to get back into the habit of making a largish meal on Sunday that will carry me through the week.  Also, I should probably pack my lunch Wednesday night--8am is awfully early.

Is there anything else I'm forgetting?

And my big plans for all this extra income:  SAVE.  

I haven't added anything to my savings account since December, and I've actually had to take out money to pay for that stupid car repair.  I hate dipping into savings!  I mean, I know that that's what it's for, but I just hate it.

Also, my goal for 2012 is to get my Roth IRA contributions to the maximum $5000.  I haven't even started my 2012 contributions yet because you can still add money to 2011 until April, which is what I've been doing.  So hitting $5000 between April and December will be a challenge, but I'm totally up for it!  I have my direct deposit for this job set up so the money goes directly into my different savings accounts and IRA, and I'm not even going to look at it as income.

We'll call this my rebuilding phase.

Wish me luck!

2012 a.k.a. The Year Everything Changes

Those loyal, longtime readers will (hopefully) realize that I am not often given to grand pronouncements like the one above, that's why, after officially signing the paperwork today, I get to say that I start 2012 with.....

A NEW, FULL-TIME JOB!!!

That's right, gentle reader.  At the tender age of 32, I have finally acquired my first full-time job.  Along with the professional satisfaction of advancing in my chosen career, this job also brings:

• A liveable wage 
• Health Insurance for the first time in nearly three years
• A retirement plan with employer matching
• A civilized schedule of 37.5 hours per week and TWO WHOLE DAYS OFF EVERY WEEK!!  What the hell am I going to do with all that downtime?  I need some hobbies...
• Dental insurance
• Vacation Days
• Sick pay
• No more commuting!!

New job, which will henceforth referred to as Perfect Library Job (PLJ) is two miles from my house.  It's actually my turnaround point when I run my four mile loop, so not only can I walk to work, I can also bike to work on my swanky new bike!

Bike is currently nameless, suggestions welcome

I bought my new-to-me bike yesterday from a very nice girl who is moving to Oregon, and who threw in two bike locks at no extra cost!  I found out very quickly, however, that while one never forgets how to ride a bike, one's skills do atrophy.  I haven't ridden a bike since high school, and I was a bit shaky, but with a few practice rides, I should be just fine.  I'm a little scared, but I'll persevere!

Fear not, those who were fearful, now that I have gainful employment I promise I won't go all Hollywood and forget my frugal roots.  Even though I'm making a little more money, and saving a TON on gas, I still have student loans to pay, and have no excuse to go nuts and become an extravagant person.  I now have the privilege of saving more, is how I'm looking at it.

Posting may be a bit spotty in the coming week since I'll have company, but I'll certainly be back with a year end post, and probably some other bits and bobs too--who knows!!  Frugality is everywhere!

Retirement

Should I really be thinking about retirement even though I've yet to actually get a full-time job? Yup. I finally realized that if I wait until someone actually gives me a full-time job to start saving for retirement, I may never actually be able to retire. Plus, when (if) I ever retire, I'd rather not spend my every day pinching pennies and hoping I die before the cash runs out.

I read The Money Book for the Young Fabulous and Broke by Suze Orman a couple years ago, and actually really enjoyed it. Most of her books kind of bug me because they're a bit obvious: "If you stop buying your daily latte, you'll save money!" but this one had some truly practical advice and I would recommend it to anyone of any age. I noticed that the audio book was on the shelf at work (library) the other day, and decided to give it a listen on my commute.

That's another tip (from me), listening to books about personal finance while driving makes me spend less. Think about it, when you leave the house to go to work or whatever, it's awfully easy to just pop by Target and pick up one (twelve) thing(s), if you're thinking about money issues and how you should be saving for retirement, it makes it easier to skip that trip and go back to Target with a list of practical items. Likewise, when I was listening to the Confessions of a Shopaholic series in the car, I spent like a maniac. Perhaps my readers have more self-control, but it's worth trying anyway.

Suze stresses the importance of starting saving for retirement early even though you feel like you have no money and can't possibly sock any away. The logic is, the longer your money sits and earns interest, the less you actually need to invest. For example: if you invest $300 per month from age 25 to 40, you will have invested $54,000 of your money, but your total investment will be worth $104,504... by the time you turn 70, that investment is worth $1.05 million even if you stop adding to the investment at age 40.  If you start investing at age 30, at the same rate, and keep investing for more than the 15 years previously mentioned, your investment is only worth $450, 089 even if you have the same interest rate (YF&B 180).  Man, that's depressing.

Of course before I decided to start saving for retirement, I read up a bit about the different types of retirement accounts.

401(k):  This is typically set up through your employer.  How the 401(k) works is that you select a plan and have the money that you contribute to the plan deducted from your paycheck.  Often your employer will also offer to match the amount of money you elect to invest.  Basically, that's free money so you should always take it.  The important thing to know is that 401(k) money is taken out pre-tax, so before you can spend it, you will have to pay taxes on it.  Never withdraw early from a 401(k) because you can either end up paying tax on the money that you take out more than once.

IRA: Stands for Individual Retirement Account--can also be called Traditional IRA, and that's exactly what this is.  It's an account that you start as an individual, and contribute to on your own.  This is also typically the account that you cal roll your 401(k) into if you leave one job for another.  The upside of the IRA is that you can contribute up to $4000 per year if you are an individual under age 50.  The downside of the Traditional IRA is that when you withdraw your money from the fund, you have to pay tax on it.

Roth IRA:  The Roth IRA is similar to the Traditional IRA except for one huge difference.  With a Roth, you pay taxes on the money before it's invested, so when you withdraw it 40 years later--it's kind of like free money.  You may invest up to $5000 per year in a Roth IRA (if you're below age 49), and you're eligible to withdraw that money at age 59 1/2.

I started a Roth IRA a little while ago, but to be honest, I'm still figuring out how it works--stay tuned!

February Goals

I've already kind of laid this out with my No buy month decision, but I do have financial goals for the month that are more than just not buying extras.

1. Keep refilling that savings account. Now that spring semester has started, my income is coming back to... well I guess I can't call it normal, since it fluctuates, but instead we'll call it... ummm, ok, let's just call it normal. My student loan payments are starting two months earlier that I thought--I always mix up March and May-- so I'd like to be almost to my savings goals when I have to start paying them back.
2. Call student loan people. I have a sinking feeling that the amount they'll want me to pay back each month will be about 60% of my income. I knew when I borrowed the money that I'd have to pay it back, I just thought I'd have a full time job by the time that happened! I know how much I can comfortably afford to give them, so I will see if I can negotiate something.
3. Retirement account. I have started a retirement account. I've been putting this off for years because I figured that someday I would have an employer who would match contributions to a 401k, or give me a pension or something. It's quickly becoming clear that that's not likely to happen anytime soon, and though I plan to live forever, I may not want to work forever. I'd rather not spend my old age like I spent my summer of underemployment i.e. not leaving the house and constantly freaking out about money. I opened a new ING account, labeled it Retirement, and put $10 in it. I then changed the direct deposit for job #2 so that I'll automatically contribute 3% every two weeks. It's not much (at all), but it's something. Once I have a little more saved, I'll open a Roth IRA.
4. Taxes. I'm not sure what to do about my taxes this year. This is only the second time in my tax paying life where I am not a student. The first time this happened, I did my own taxes instead of using an accountant. My accountant usually gets me a decent refund, but she also charges me $155.00; when I did it, my refund was very small, and I actually miscalculated the state part and underpaid then by $30. Not being particularly tax-savvy, I don't know if my smaller refund was a result of fewer tax credits now that I'm not a student, or just the result of me not knowing what the hell I'm doing. I know that I can get my taxes done for less than $155.00, but I don't know if I'm confident in my abilities to do it myself. Any suggestions?