Is Any Roth IRA Better Than No Roth IRA?

For me, I’d say “Yes”. Just having a Roth IRA got me started in the right direction by beginning to invest outside my 401K.

My Roth IRA was with an insurance company. You may be wondering why I had one there. In the past, sometimes I had a hard time motivating myself to do the right thing. Going through the process of opening one up seemed like a lot of work at the time. I didn’t take the initiative to do it myself. When my insurance agent called me and asked me to come in to go over new guidelines on my insurance, he also mentioned Roth IRAs to me.

I knew I should have one. So when he said he would take care of everything, I figured why not. It was easier than filling out the paperwork and managing it myself. I knew that this would result in higher fees, but since I had not set one up before, and I knew that it was something I needed to do, I went ahead and did it.

I don’t regret that I set it up. If my agent hadn’t talked me into it, I might not have done it for years. I do regret that I didn’t personally manage it. But back then I wouldn’t have known what to do, and I had other priorities in my life. Now I am much more educated on investing, and my priorities are in the right place.

Over the past year I’ve been reading and learning about how to properly invest and manage my money. Today, the transfer from the insurance company cleared and I’m in a position to manage my own Roth IRA.

If I had left it at the insurance company, it would have been alright, but the fees would have been higher than they needed to be, and that would have eaten into my savings.

But at least I would have had savings.

My goal for this week is to take some time and figure out what I’m going to invest it in. Because it’s long term, it needs to be in mutual funds or ETFs, but I want to make sure I have a healthy mix of funds (stocks and bonds, foreign and domestic). ~~By Saturday~~This upcoming week, I’ll report back what I decided to invest my Roth in and why.

Leaving XM Behind

XM’s outta here I’m proud of my husband. He made a choice that I didn’t think would be easy, and he made this choice easily.

This weekend we noticed a discrepancy in our unbilled credit card activity of almost $400. We hadn’t spent that amount so Eric called Citibank to have them look it up, fearing fraud. Turns out XM had automatically renewed the 3-year contract on Eric’s car for a whopping $389.31. It had been so long since we last renewed that we didn’t even think about it coming due. We decided to examine if it was worth keeping in our budget.

I wasn’t about to tell my husband he couldn’t have XM if he truly wanted it but I knew it would be a waste considering he only uses his car for short commutes. I know how much he enjoys listening to the news during his drive though. I expected him to have a tough time deciding if he would keep it. Turns out, it was an easy decision for him.

He simply felt it wasn’t worth it when he could listen to NPR during that time. I even tried to talk him out of cancelling to be sure he wasn’t sacrificing something he really wanted. But he had made up his mind. He called, cancelled, and got the refund.

I know many people might think of this decision as a no-brainer when you are trying to save money but I see it as a big change. He loves technology and gadget-y stuff like this. The fact that it was a simple decision for him to forgo this subscription is an achievement in itself.

He is doing more than just adapting to a more frugally minded lifestyle, he is adopting it.

When he went to work yesterday morning the XM service had been officially cut off. The now useless XM button in his car’s console serves as a reminder of the sacrifice he made toward our goals.

The XM subscription in my car still has a little while left on it before it runs out. I know I’ll follow suit when it comes time and I won’t think twice about it either. For some reason I still feel like I’ll miss it though. I wonder why. All the channels I like seem to have commercials on them now anyways. Why should I pay for radio with commercials?

Isn’t that already free?

Here We Are: A Penny Closer

My husband and I have never been the frugal type.

I never saved any of my earnings. I spent it on all sorts of gotta-have-it items that mean nothing to me now and really meant very little to me even then. I didn’t really think of savings unless it had to do with buying something expensive. The only future forward thinking I seemed to have involved figuring out how I was going to pay my cards that month.

After graduating from college I started my first salaried position. I wasn’t earning a fortune but it was more than I had ever earned before and I felt like I should be able to buy nicer things. My need to consume indiscriminately only seemed to gain steam as I entered adulthood.

I know my story is not unique. I’m sure many young adults don’t think about the future when it comes to spending money - that appears to come with the territory when we lack maturity and the feeling of mortality. The watchword at the time was instant gratification.

I had no idea how to really handle my money. The bills would mount up and I would face the fact that I couldn’t spend as much. I would cut back to pay the cards down but I still didn’t actually change. I just temporarily bought less stuff. And although the act of buying less stuff was an accomplishment, my fundamental attitude about money hadn’t changed. And thus the cycle continued: spending too much, having the credit card bill sky rocket, cutting back to pay it down, rinse, repeat.

My husband also wasn’t a saver although he had more restraint than I had throughout college and beyond. Even though he wasn’t budgeting or tracking how he spent his money he was still generally moving in a positive direction. He was doing some of the right things, like contributing to 401K, but he wasn’t monitoring his financial health or researching the best deals. He was just coasting along, enjoying the scenery.

When we fell in love our bad habits rubbed off on one another. Collectively, we had no idea how to budget and really didn’t have any desire to attempt to. We were quite content living outside our means and had no idea how much we were really spending. It wasn’t until we faced our first challenge as a married couple that we actually started to think about how we were living and our financial situation.

I suspect that I’m not alone. Maybe it takes a challenge, whether that is hitting a credit card limit, a new or changing relationship, or a specific desire that seems out of reach, to wake us up from this sort of auto-pilot spending pattern.

When we sat down and finally examined our bills we realized that there was no way we could reach our goal of moving into a new home the way we were spending. Technically, we couldn’t even afford to live in our current home, never mind a newer one! It was crushing. Things had to change. We had to change.

It certainly has been a journey so far. We have found that through making informed decisions and simply being aware of how we spend our money we have been able to make great strides in improving our quality of life and ability to save.

No, we aren’t completely debt free and no, we aren’t in that new home yet.
But after the changes we have made, we will be.

We still worry about money, but it is a different kind of worry now. We are empowered by being frugal and managing our finances instead of feeling, for lack of a better word, oblivious. The confidence we have gained in knowing we have a level of control over our money, rather than the other way around, is really invaluable.

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