Roth IRA
I remembered that I have around $300 stashed in some ING accounts… I’ve tried the separate sub-account for everything under the sun method, but it just was’t for me. Originally I decided to consolidate those funds into my Freedom Fund, but then I saw that I was this close to maxing out the Roth, and I just said screw it.
I put the $300 into the Roth IRA, added another $50 from my paycheck (in addition to the $750 automatically transfered to the Freedom Fund…things are getting reeeealy tight here), and maxed out the Roth.
2008 Roth, you are SO done.
This marks the THIRD year in a row that I’ve contributed the maximum to my IRA ($4,000 in ’06, $4,000 in ’07, $5,000 in ’08). This is the only retirement savings I’ll be putting in for this year, as I won’t have access to a 401(k) through work until next year ($5,000 is a little less than 10% of my gross), and I’ve decided to priortize cash savings over taxable stock investing.
<10% isn’t super, especially by pf blogger standards. But I calculated that from 2007 to 2008, I saved around 28% of my gross income toward retirement. I’ve also put away (more aggressively this year than last) for the Freedom Fund.
Overall, I think I’m on the right track.
Freedom Fund
So now, Freedom Fund = $13,000.
Which is enough for… almost 8 months of no-income living. By the end of August, I’ll have 9 months. I think when I get to a year’s worth ($20,000), I’ll celebrate.
It’s not as if I’m in danger of being out on the streets (Mom & Dad = ultimate safety net), but it just makes me feel better that I have money in the bank. It makes me feel like I have a PLAN of action. So that if anything happens with the job, I can take a deep breath, peek at my fairly ample fund, and re-group. I wouldn’t panic.
I’d also plan on getting a retail job at night to supplement my fund, but given this shaky economy, it’s probably best to not even count on retail jobs (although I have seen numerous help-wanted signs around my neighborhood…). Also, I assume I’d be drawing on unemployment benefits.
But ideally, the Freedom Fund money is earmarked for the very expensive grad school test-taking / school-visiting / application process, and any left over will function as a mini-cash cushion. (Because by the time I get into a school… the Freedom Fund will be shrunken down to size).
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Congratulations on maxing it out! You have done wonderful on saving this year (and previous years!)
Every young person starting out should have a pf blog and learn to save early. Well, at least the latter.
Congrats! I’m never able to max out my Roth IRA, so I think it’s fanstastic that you have and so early in the year!
Congrats!
I’m a bit upset, I thought 4K was the Roth max for 2007 and 5K was for 2008. I missed the chance to add 1K to my 2007 contribution!?
Hey awesome news! Good job! I didn’t realize you didn’t have access to a 401(k) in the past couple years, though, I just assumed you were maxing there too.
Congratulations! It’s always a good feeling!
Way to go!
When I got laid off a few months ago, I was very happy to know that I had a good number of months of expenses covered in my Emergency Fund. It made the job search easier, because I knew I wasn’t desperate, and could take my time talking to different companies and make a decision based on what was best for my career and not what would get me paid quickest and with the most money.
I’m planning to max out my Roth IRA this year as well, but I’m doing it in the “monthly” installment plan of contributing 1/12 of the max each month.
Congrats! I’m aiming only for 3K in my Roth, but someday I’ll be able to max mine out too. Thanks for the inspiration!
Wow that is awesome! I get so much inspiration for reaching my own financial goals from reading posts like yours.
wow. that is so great. i cant wait till i have 20 grand saved. i have about 5 now but 20 seems so far away. right now my rental unit is not rented so i have to foot that bill for maybe 2 months. uggghhhhhh. i need to sell it.
NA, you are correct. Max for 2007 was $4000. Well-Heeled was misremembering, I’m sure.
Definitely is $4k for 2007 and $5k for 2008.
…and WAY TO GO ON MAXING IT OUT–that’d make a tiring day for me as well! Keep up the great work! I enjoy reading your blog, I’m starting mine new on google’s blogger, I never really kept up but I plan on doing it now! Wish I could do it this early in the year but that’s not my goal, I just want to max it out by 4/15/2009!
Congratulations! Use $5k to pay for the Roth IRA 2009 contribution on 1/2/2009.
You guys are right! 2007 max is $4,000 for the Roth IRA. The post has been corrected.