This morning I had $13,XXX

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closetoreality
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This morning I had $13,XXX

Post by closetoreality »

So I had 13,XXX in a high interest savings account when I woke up. Debt at the time was $2,190.00 to CC and II had no retirement savings at all up to this point. I also have 753.00 in my Checking that I use as my holding tank for bills about to go out, so that is null to all this as it is accounted for....but it is there.

The past 3 hours I have:

- Paid off the CC
- Opened a Roth IRA and funded $3000.00 to VTSMX
- Proceeded to keep 10K in my high yield savings for an EF and transferred the remaining 362.00 to another high yield savings under the same bank (this will become my general savings? or is that a horrible vehicle to park my savings moving forward?)

* I'm currently living below my means and able to usually save 15% of my monthly income. Until now I have always just stashed that in my high yield savings. Now that I have an EF of 10K, a ROTH IRA with 3K, and General Savings of 362.00, and a now paid off CC.....was I nuts to do all this? Was I better off holding my 14K and not being so aggressive with this?
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Abe
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Re: This morning I had $13,XXX

Post by Abe »

Sounds to me like you did everything right. You paid off your debt, have an emergency fund, invested in a total market index fund and committed to saving 15%. Don't know your age or other details, but sounds like you are on the right track. If you haven't already, you probably need to think about an asset allocation you would be comfortable with. You are not nuts. You did the right thing. Congratulations.
Last edited by Abe on Mon Nov 23, 2015 9:40 am, edited 1 time in total.
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David Jay
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Re: This morning I had $14000

Post by David Jay »

How old are you?

If you are 25 then you're getting on track. Only a few of us are far-sighted enough to begin saving for retirement in our early 20s.

If you are 60, you have an problem...
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Phineas J. Whoopee
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Re: This morning I had $13,XXX

Post by Phineas J. Whoopee »

You can fix the title by clicking the edit button, the little pencil-like thingy at the upper right of your post.

Let's see what you've done:

1) Reduced a liability, which may well be high-interest, therefore freeing up new monthly cash flow you can save or invest;

2) Moved $3000 to a Roth IRA. You can withdraw contributions at any time, without penalty, so it didn't hurt your liquidity, although it would be best to preserve Roth value if one can;

3) Retained the checking balance for upcoming spending needs you already know about;

4) Committed $10,000 for emergencies. You should choose to tap that before the Roth IRA should a need arise; and

5) Set aside $362, which will help you with future goals, preferably by helping you avoid taking on credit card debt again.

You've reduced your liquidity by the $2190 you paid the credit card company, but will enjoy the reward of more free cash flow.

Looks to me like a good morning's work! Well done. :thumbsup

PJW
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closetoreality
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Re: This morning I had $14000

Post by closetoreality »

David Jay wrote:How old are you?

If you are 25 then you're getting on track. Only a few of us are far-sighted enough to begin saving for retirement in our early 20s.

If you are 60, you have an problem...
Close, I'm 26. Glad I made the right decision, I was a little scared taking the initiative as it is always nice just seeing that lump sum sitting in one simple savings account (however I realize it's not efficient and is strictly a psychological phenominon seeing it parked there).

Moving forward, I recently got myself living on prior months income which has been nice and I now have a buffer in my checking because of this. So with that said, where is a good place to park my 15% monthly savings moving forward? Notice how I opened a second high yield savings account and transferred that 362.00, is that a bad vehicle?

Part of me feels like I should max out my Roth IRA for the year (2.5K left to invest). Once that is done, would it be wise to start stashing that 15% savings into a taxable or should I stick with that second savings account I opened and accumulate that up?
Last edited by closetoreality on Mon Nov 23, 2015 9:48 am, edited 2 times in total.
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Taylor Larimore
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Re: This morning I had $13,XXX

Post by Taylor Larimore »

closetoreality:

You have made major steps towards meeting your retirement and other goals.

1. Getting rid of credit card debt!

2. Beginning tax-free investing in a Roth IRA. Be sure to make the maximum 2015 investment ($5,500) before April 15th. Roth's make good emergency funds.

3. Living below your means.

You undoubtedly will get suggestions for improvement, but you have accomplished the biggies.

Congratulations and best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
EnjoyIt
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Re: This morning I had $13,XXX

Post by EnjoyIt »

Great job today. You are on your way to a terrific future.

To answer your question regarding where to put that 15%
My advice is to max out your Roth if you are in a low tax bracket. This is especially true if you believe over the years you will end up in a much higher tax bracket.

May I ask, does your job offer any tax retirement options? Do they offer a match. If the answer is yes to both of those questions than I highly recommend you place money there to maximize the match prior to funding the Roth. That is free money. If you are in a mid to higher tax bracket, and your company offers a retirement plan to fund that prior to a Roth as well. One reason not to place money into your work's plan is if it has horrible fund options with very high fees.

If you company does not offer a retirement plan then all extra savings can go in a taxable account.

As you can see, without more information it is tough to answer your questions.

Update your post above and let us know:
What tax bracket your in,
How much cash is 15% of your income
What is your employers retirement plan, and if that plan offers a match.

Hope this helps.
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grettman
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Re: This morning I had $13,XXX

Post by grettman »

Phineas J. Whoopee wrote: 2) Moved $3000 to a Roth IRA. You can withdraw contributions at any time, without penalty, so it didn't hurt your liquidity, although it would be best to preserve Roth value if one can;
You can't do this penalty free unless you pay attention to the 5 yr rule.
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closetoreality
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Re: This morning I had $13,XXX

Post by closetoreality »

EnjoyIt wrote:
Update your post above and let us know:
What tax bracket your in,
How much cash is 15% of your income
What is your employers retirement plan, and if that plan offers a match.

Hope this helps.
A.) I'm in a 15% bracket working on the side part time self employed and on my own as far as retirement accounts. In addition to that Im also a student who recieves a tax free living stipend from the Department of Veteran Affairs.

B.)15% of my inflow (I say inflow as it's not all from self employment, but rather from my living stipend too) averages out to $700.00 however that can fluctuate a bit from month to month as I'm a sub-contractor working self employed and some months are heavier than others. Some months I'm able to save $1,000 while others $700.00. However despite the slight volatility in workflow this gig has proven very convenient while I'm in school and I work independently which is nice.

C.) N/A as I'm self employed.
Last edited by closetoreality on Mon Nov 23, 2015 10:19 am, edited 4 times in total.
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closetoreality
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Re: This morning I had $13,XXX

Post by closetoreality »

grettman wrote:
Phineas J. Whoopee wrote: 2) Moved $3000 to a Roth IRA. You can withdraw contributions at any time, without penalty, so it didn't hurt your liquidity, although it would be best to preserve Roth value if one can;
You can't do this penalty free unless you pay attention to the 5 yr rule.
I believe you are able to pull out your contributions at any time. The 5 year rule is referring to pulling out gains?
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Phineas J. Whoopee
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Re: This morning I had $13,XXX

Post by Phineas J. Whoopee »

OP is correct. There is no five-year rule for pulling out the dollar amount of contributions (not including rollovers or conversions) you've made. It's an important feature Congress designed to reduce public reluctance to commit to such accounts.
PJW
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Re: This morning I had $13,XXX

Post by grettman »

Thanks! I stand corrected on the 5 Year Rule!

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knpstr
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Re: This morning I had $13,XXX

Post by knpstr »

closetoreality wrote:So I had 13,XXX in a high interest savings account when I woke up. Debt at the time was $2,190.00 to CC and II had no retirement savings at all up to this point. I also have 753.00 in my Checking that I use as my holding tank for bills about to go out, so that is null to all this as it is accounted for....but it is there.

The past 3 hours I have:

- Paid off the CC
- Opened a Roth IRA and funded $3000.00 to VTSMX
- Proceeded to keep 10K in my high yield savings for an EF and transferred the remaining 362.00 to another high yield savings under the same bank (this will become my general savings? or is that a horrible vehicle to park my savings moving forward?)

* I'm currently living below my means and able to usually save 15% of my monthly income. Until now I have always just stashed that in my high yield savings. Now that I have an EF of 10K, a ROTH IRA with 3K, and General Savings of 362.00, and a now paid off CC.....was I nuts to do all this? Was I better off holding my 14K and not being so aggressive with this?
You were not nuts, you had a stroke of genius and capitalized on it!
Keep up the good work! :beer
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EnjoyIt
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Re: This morning I had $13,XXX

Post by EnjoyIt »

closetoreality wrote: A.) I'm in a 15% bracket working on the side part time self employed and on my own as far as retirement accounts. In addition to that Im also a student who recieves a tax free living stipend from the Department of Veteran Affairs.

B.)15% of my inflow (I say inflow as it's not all from self employment, but rather from my living stipend too) averages out to $700.00 however that can fluctuate a bit from month to month as I'm a sub-contractor working self employed and some months are heavier than others. Some months I'm able to save $1,000 while others $700.00. However despite the slight volatility in workflow this gig has proven very convenient while I'm in school and I work independently which is nice.

C.) N/A as I'm self employed.
Maxing out the Roth IRA is a great idea while you are in the 15% tax bracket.

As for the extra money you have two options:
Since you are self employed you can open a solo 401K and invest the rest there. I wonder if you are able to even open up a roth 401k for yourself and make the contributions after tax. I assume once you are out of school you will be making more income and in a higher tax bracket. At that point investing in tax deferred will probably be a much better option.

Your other choice is to keep things simple and invest in a taxable account.
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FelixTheCat
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Re: This morning I had $13,XXX

Post by FelixTheCat »

You did the right thing. Keep the momentum going.
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closetoreality
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Re: This morning I had $13,XXX

Post by closetoreality »

EnjoyIt wrote:
Your other choice is to keep things simple and invest in a taxable account.
What is everyone doing for those "want" purchases that arise such as a new TV/PC/Couch etc. ?

If I put everything in a taxable from here on out I will never have an available flexibility of spending outside my monthly budget unless I was to pull from my Roth, which I would rather not do obviously.

Is it feasible to build up a savings for this stuff versus opening a taxable in addition to my Roth IRA?
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LAlearning
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Re: This morning I had $13,XXX

Post by LAlearning »

You do both little by little. The more wants you have, the less for investing there is. Everything is a trade off.
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EnjoyIt
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Re: This morning I had $13,XXX

Post by EnjoyIt »

closetoreality wrote:
EnjoyIt wrote:
Your other choice is to keep things simple and invest in a taxable account.
What is everyone doing for those "want" purchases that arise such as a new TV/PC/Couch etc. ?
All cash that is expected to be used for something in the near future (next couple of years) is best saved in a high yield savings account.

I keep all my cash for future wants at Ally online savings bank that pays 1% interest. I also keep my 6 months Emergency fund in there as well. It's not much but better than keeping it under my mattress. I keep some cash in my checking account to pay for monthly bills and expenses so that I do not overdraft. Everything above that gets sent into my Vanguard taxable account.
Last edited by EnjoyIt on Mon Nov 23, 2015 12:31 pm, edited 2 times in total.
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Toons
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Re: This morning I had $13,XXX

Post by Toons »

Bravo :happy
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Julieta
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Re: This morning I had $13,XXX

Post by Julieta »

If you want to get involved with Boglehead meetings, check the board for opportunities to meet with other folks in your area. In Minnesota there is a very active group, for example. A few times a year you can meet in person with others who have good experiences and listen to speakers and participate in small group discussions. I always learn so much attending meetings.
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Raymond
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Re: This morning I had $13,XXX

Post by Raymond »

OP,

If you're crazy, you're crazy like a fox!

Nicely done.

:sharebeer
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closetoreality
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Re: This morning I had $13,XXX

Post by closetoreality »

I appreciate all the words of encouragement.
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PoeticalDeportment
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Re: This morning I had $13,XXX

Post by PoeticalDeportment »

It was good to buy the minimum vtsmx ($3k).

Subsequent investments can be for smaller amounts though - this might be a good idea while you become acclimated to the normal volatility of a stock mutual fund (so you don't get depressed when it goes down in the short term). You might set up a recurring investment that will transfer the remaining $2500 to your vtsmx position by April 15th, 2016, or alternatively a balanced or target date fund.

You didn't specifically mention it, but are we safe to assume you bought the vtsmx in a roth IRA at Vanguard (to avoid unnecessary fees at other brokerages)?

Good start! You should read Bernstein's If You Can ebook while starting this journey.
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closetoreality
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Re: This morning I had $13,XXX

Post by closetoreality »

PoeticalDeportment wrote:It was good to buy the minimum vtsmx ($3k).

Subsequent investments can be for smaller amounts though - this might be a good idea while you become acclimated to the normal volatility of a stock mutual fund (so you don't get depressed when it goes down in the short term). You might set up a recurring investment that will transfer the remaining $2500 to your vtsmx position by April 15th, 2016, or alternatively a balanced or target date fund.

You didn't specifically mention it, but are we safe to assume you bought the vtsmx in a roth IRA at Vanguard (to avoid unnecessary fees at other brokerages)?

Good start! You should read Bernstein's If You Can ebook while starting this journey.
Yes a Vanguard Roth IRA.

I will check out that eBook! Thank you.
MrBachelor
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Re: This morning I had $13,XXX

Post by MrBachelor »

Phineas J. Whoopee wrote:OP is correct. There is no five-year rule for pulling out the dollar amount of contributions (not including rollovers or conversions) you've made. It's an important feature Congress designed to reduce public reluctance to commit to such accounts.
PJW
It is not quite that simple. The second rule for Roth IRA withdrawals is a test of the account itself. The account must be open for 5 years before any withdrawal is free of penalty.

If OP opened his first Roth IRA account this year he will be penalized on any withdrawal before Dec 31, 2019. Can't count on all of that money in an emergency.
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closetoreality
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Re: This morning I had $13,XXX

Post by closetoreality »

MrBachelor wrote:
Phineas J. Whoopee wrote:OP is correct. There is no five-year rule for pulling out the dollar amount of contributions (not including rollovers or conversions) you've made. It's an important feature Congress designed to reduce public reluctance to commit to such accounts.
PJW
It is not quite that simple. The second rule for Roth IRA withdrawals is a test of the account itself. The account must be open for 5 years before any withdrawal is free of penalty.

If OP opened his first Roth IRA account this year he will be penalized on any withdrawal before Dec 31, 2019. Can't count on all of that money in an emergency.
Actually it is that simple. You are able to withdraw your contributions at any time. I hope investment advice is not a frequent practice of yours.
Last edited by closetoreality on Mon Nov 23, 2015 8:28 pm, edited 1 time in total.
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Taylor Larimore
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"If You Can"

Post by Taylor Larimore »

I will check out that eBook! Thank you.
closetoreality:

You can read Dr. Bernstein's wonderful (short) e-book here (pdf):

IF YOU CAN

Best wishes
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
Topic Author
closetoreality
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Re: "If You Can"

Post by closetoreality »

Taylor Larimore wrote:
I will check out that eBook! Thank you.
closetoreality:

You can read Dr. Bernstein's wonderful (short) e-book here (pdf):

IF YOU CAN

Best wishes
Taylor
Thanks I actually immediately searched for it when you posted and was able to track it down. I'm going to dig in soon.
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M_to_the_G
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Re: This morning I had $13,XXX

Post by M_to_the_G »

You did good. I remember the first time I bought a Roth IRA, about five or six years ago. I actually agonized over it. I didn't want to commit the money, but then I did it. My only regret now is that I didn't do it the year before, for that year and the previous year! :mrgreen:
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Taylor Larimore
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Re: "If You Can"

Post by Taylor Larimore »

closetoreality wrote:
Taylor Larimore wrote:
I will check out that eBook! Thank you.
closetoreality:

You can read Dr. Bernstein's wonderful (short) e-book here (pdf):

IF YOU CAN

Best wishes
Taylor
Thanks I actually immediately searched for it when you posted and was able to track it down. I'm going to dig in soon.
closetoreality:

You will discover on page 1 that Dr. Bernstein recommends The Three Fund Portfolio. Use the S&P fund in your 401k as a substitute for Vanguard's Total Stock Market Index Fund.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
basspond
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Re: This morning I had $13,XXX

Post by basspond »

closetoreality wrote: What is everyone doing for those "want" purchases that arise such as a new TV/PC/Couch etc. ?

If I put everything in a taxable from here on out I will never have an available flexibility of spending outside my monthly budget unless I was to pull from my Roth, which I would rather not do obviously.

Is it feasible to build up a savings for this stuff versus opening a taxable in addition to my Roth IRA?
Just like investing, set up a monthly amount to be transferred into a savings account. When I was first starting out we only had 401k to invest in. Like investing, you need to have a balanced approach to after tax (Roth) and pre-tax (401k). When I was barely getting by it was nice to have a little more money in my pocket then the government's.
IPer
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Re: This morning I had $13,XXX

Post by IPer »

OP, sounds like you had a great run today! What will you do tomorrow?!
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closetoreality
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Re: This morning I had $13,XXX

Post by closetoreality »

Should I stick with just the Roth IRA right now or should I pursue opening something along the lines of an Individual 401k also?

If so do you recommend I opt for Individual Roth 401K or Pre-Tax Individual 401K.

Am I even allowed to have both Roth IRA & Individual 401K as a self employed individual with no employees?
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Re: This morning I had $13,XXX

Post by RyeWhiskey »

closetoreality wrote:Should I stick with just the Roth IRA right now or should I pursue opening something along the lines of an Individual 401k also?

If so do you recommend I opt for Individual Roth 401K or Pre-Tax Individual 401K.

Am I even allowed to have both Roth IRA & Individual 401K as a self employed individual with no employees?
Well done on getting your finances together. As a 29 year-old who found this forum some years ago, I can attest to the quality and profundity of advice here.

Be advised that I am not a legal/investment professional. The questions of Roth vs. 401k vs. Trad-IRA are many, but generally break down into an assessment of your current tax bracket vs. your expected future tax bracket. This said, as you are just beginning you'll be far better served by focusing on saving and ignoring the potential complexities of account types. First get to the maximum Roth contribution per year (~$5,500) and, once you're comfortable with this savings rate, then you can think about other accounts to increase your tax-shelter space. :beer
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Re: This morning I had $13,XXX

Post by sawhorse »

Great job! Especially with the credit card debt. Credit card debt is suffocating and only gets worse because the interest rates are so high. After a while as soon as you make a payment the interest accrues to negate your payment.

What is the rationale for opening a new account with $362 rather than putting it in your checking or keeping it with the emergency money? I'm concerned you'll incur account fees for low balance. Banks tack on new fees all the time, and you may not realize it until you've already been charged.

You've contributed $3000 to the Roth leaving you with up to $2500 to contribute for 2015 provided you make at least $5500.

I'd take $2500 from your emergency fund and put it in myRA. Like others have said, you can withdraw up to the original contribution amount from a Roth. This allows a Roth to double as a backup emergency fund. If you have a very risky allocation, as you currently do, your account might lose a lot of value in a short time, so you can't count on it for an emergency. With myRA you're guaranteed to never lose money, so in essence all you're doing is moving part of your emergency fund from the high yield savings account to the myRA account which by the way is currently yielding more than any savings account I'm aware of. You're not really dipping into your emergency fund.
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closetoreality
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Re: This morning I had $13,XXX

Post by closetoreality »

sawhorse wrote:Great job! Especially with the credit card debt. Credit card debt is suffocating and only gets worse because the interest rates are so high. After a while as soon as you make a payment the interest accrues to negate your payment.

What is the rationale for opening a new account with $362 rather than putting it in your checking or keeping it with the emergency money? I'm concerned you'll incur account fees for low balance. Banks tack on new fees all the time, and you may not realize it until you've already been charged.

You've contributed $3000 to the Roth leaving you with up to $2500 to contribute for 2015 provided you make at least $5500.

I'd take $2500 from your emergency fund and put it in myRA. Like others have said, you can withdraw up to the original contribution amount from a Roth. This allows a Roth to double as a backup emergency fund. If you have a very risky allocation, as you currently do, your account might lose a lot of value in a short time, so you can't count on it for an emergency. With myRA you're guaranteed to never lose money, so in essence all you're doing is moving part of your emergency fund from the high yield savings account to the myRA account which by the way is currently yielding more than any savings account I'm aware of. You're not really dipping into your emergency fund.
Hey Sawhorse,
My theory behind the $362.00 in its own savings account was to establish a separate account for savings goals. I just moved into an apartment and I have the basics right now, you could even say I'm lacking a few of the basics. With my portfolio setup as 10K in an EF, 3k in a ROTH, and that extra 362.00 as I start to a future goals account I figured I was being proper.

If I was to put that into my checking, it would theoretically become part of my monthly expenses pool that I keep in there. I literally only keep my income in there that is not going to savings or investments for the next month. As soon as I receive a work check I deposit it into that checking. Which has a one month buffer as I'm living off lasts months income.

Do you think I should be putting less interest into that future goals account and putting it all into my EF account? I just wonder about expenses I want to make that are beyond my monthly budget, which is what that little nest egg was that I had in mind to build up. Examples would be a new pot an pan set, a piece of furniture, dining room table. Things along those lines.

My thoughts on the Roth IRA is not to transfer from my EF right now but divert my entire 15% monthly savings into the Roth IRA until it reaches 5.5K. Right now I split that 15% between my savings account and Roth IRA. I would also appreciate your thoughts on that.

Another thought was once my Roth IRA is satisfied next year which I anticipate happening relatively quick, probably within 3-4 months. I was curious on what to open up in addition to my Roth IRA. Just divert all my savings after that to my high interest savings account or open another retirement account and continue to split that monthly 15% savings?

Thanks in advance and thank you everyone for the advice and feedback.

Also that 362.00 is now 523.00 in that account from some side work.
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packet
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Re: This morning I had $13,XXX

Post by packet »

Firstly, excellent work closetoreality!

I don't want to sidetrack this thread, but this detail is bugging me.
closetoreality wrote:
MrBachelor wrote:
Phineas J. Whoopee wrote:OP is correct. There is no five-year rule for pulling out the dollar amount of contributions (not including rollovers or conversions) you've made. It's an important feature Congress designed to reduce public reluctance to commit to such accounts.
PJW
It is not quite that simple. The second rule for Roth IRA withdrawals is a test of the account itself. The account must be open for 5 years before any withdrawal is free of penalty.

If OP opened his first Roth IRA account this year he will be penalized on any withdrawal before Dec 31, 2019. Can't count on all of that money in an emergency.
Actually it is that simple. You are able to withdraw your contributions at any time. I hope investment advice is not a frequent practice of yours.
Being a simpleton myself... I'm finding this not so simple... :)

Publication 590-b, year 2014 still has the 5 year caveat ...
Pub 590b wrote:What Are Qualified Distributions?
A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements.
It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and...
This is the way I've always thought it was... but this conversation is making me second guess myself...

:beerCheers,
packet
First round’s on me.
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closetoreality
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Re: This morning I had $13,XXX

Post by closetoreality »

packet wrote:Firstly, excellent work closetoreality!

I don't want to sidetrack this thread, but this detail is bugging me.
closetoreality wrote:
MrBachelor wrote:
Phineas J. Whoopee wrote:OP is correct. There is no five-year rule for pulling out the dollar amount of contributions (not including rollovers or conversions) you've made. It's an important feature Congress designed to reduce public reluctance to commit to such accounts.
PJW
It is not quite that simple. The second rule for Roth IRA withdrawals is a test of the account itself. The account must be open for 5 years before any withdrawal is free of penalty.

If OP opened his first Roth IRA account this year he will be penalized on any withdrawal before Dec 31, 2019. Can't count on all of that money in an emergency.
Actually it is that simple. You are able to withdraw your contributions at any time. I hope investment advice is not a frequent practice of yours.
Being a simpleton myself... I'm finding this not so simple... :)

Publication 590-b, year 2014 still has the 5 year caveat ...
Pub 590b wrote:What Are Qualified Distributions?
A qualified distribution is any payment or distribution from your Roth IRA that meets the following requirements.
It is made after the 5-year period beginning with the first taxable year for which a contribution was made to a Roth IRA set up for your benefit, and...
This is the way I've always thought it was... but this conversation is making me second guess myself...

:beerCheers,
packet

"The portion of distribution allocable to earnings may be subject to tax..."

Wouldn't that mean gains? not your personal contributions?
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packet
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Re: This morning I had $13,XXX

Post by packet »

closetoreality wrote:"The portion of distribution allocable to earnings may be subject to tax..."
Wouldn't that mean gains? not your personal contributions?
AH-HA!
You are correct (I think)... figure 2-1 helps us simpler folk... :)

You will be liable for taxes AND a 10% penalty ... on gains.

Thanks for the lesson!

:beerCheers,
packet
First round’s on me.
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closetoreality
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Re: This morning I had $13,XXX

Post by closetoreality »

So I'm able to save 33% of my income this month, and I'm having trouble deciding where to put it haha? Do I put the entire 33% into my ROTH. Do I split it between my ROTH and my savings? Is having a savings in addition to my EF pointless? (for household expenses furniture, leisure spending, etc)

It comes out to be $1,827.00 that is left over after all of Decembers expenses (I'm a month ahead with budget using prior months income).

Portfolio:

Checking: $1,653.50 (accounted for /part of next months expenses)
High Yield Savings (EF): $10,000.00
General Savings: $523.76 (spending fund/short term goals/future purchases that wouldn't qualify as an emergency)
ROTH IRA: $3,009.18

Car Loan: $15,104.12 @ 3.2%

With this in mind, I have $1,827.00 available to save, where would you put it?
Last edited by closetoreality on Wed Nov 25, 2015 6:36 pm, edited 1 time in total.
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Taylor Larimore
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An extra $1,827. What to do with it?

Post by Taylor Larimore »

closetoreality:

Try to save the maximum of $5,500 in your Roth before the April 15th deadline--otherwise you lose the ability to have it compound tax-free until retirement.

Happy Thanksgiving!
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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closetoreality
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Re: An extra $1,827. What to do with it?

Post by closetoreality »

Taylor Larimore wrote:closetoreality:

Try to save the maximum of $5,500 in your Roth before the April 15th deadline--otherwise you lose the ability to have it compound tax-free until retirement.

Happy Thanksgiving!
Taylor
Because I have until April, I figured I did not need to throw all my savings at it right now. I could spread out that remaining $2500 between now and April. Unless of course it would be smarter to throw it all into the Roth right now.
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Taylor Larimore
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Contribute now or later?

Post by Taylor Larimore »

Because I have until April, I figured I did not need to throw all my savings at it right now. I could spread out that remaining $2500 between now and April. Unless of course it would be smarter to throw it all into the Roth right now.
Closetoreality:

If you think you might need the money, I'd wait (even though you could take the contribution back out with some effort and delay). Otherwise, put it in the Roth and get it over with.

Best wishes.
Taylor
"Simplicity is the master key to financial success." -- Jack Bogle
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