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About Me:

Amy

I created this blog because I like reading other military spouse's blogs. Part of being a military spouse is having the uncertainty of not knowing where you will have to live next or for how long. It often means moving around every few years and dealing with the deployment of a loved one. Financial advice isn't one size fits all and often financial advisors tailor their advice to the non-military folks out there, saying to buy a house right away and talking about 401k's instead of TSP's.

About 5 years ago (very soon after my husband and I got married) I saw David's Bach's book, "Automatic Millionaire" and it truly changed my life and how I thought about money. We started out with pretty much nothing when we got married. I had $1,000 in credit card debt, and my husband had $1,000 saved from a recent re-enlistent bonus.

We have since managed to save for a downpayment on a home, open and contribute automatically to 2 retirement accounts, and get rid of all our credit card debt once and for all. At the time this blog was first written I was very excited to write that we had "increased our networth from $0 to $18,000!" Now that number has gone up a bit.

Retirement.
We save 15% of his pre-tax income in the Thrift Savings Plan, which is the government's version of a 401k retirement account, only with no matching funds. We also try to max out our Roth IRA every year (some times it doesn't quite happen but close enough).

Saving.
We used to save 25%, or $1,000, per month of his take home pay but still had credit debt and as you'll see in some of the old blog entries we struggled with that for a while. We've notched down savings a bit, but still save regularly and have an emergency cushion that we're comfortable with.

Home.
After moving back in with my parents we saved like crazy and managed to save $33,000 for a downpayment on a our first home! We financed the rest with a 15 year mortgage since we had recently begun listening to Dave Ramsey and liked a lot of his ideas. We pay an extra $300 a month towards principle which means that if everything goes as planned the house will pay off in 10 years instead of 15!

Cars.
Part of the reason that we can save so much is that we have no car payments. I'm no finance expert, but I firmly believe that people spend too much on new cars when they should be saving instead.

Our goals now are to pay off the house and save for when my husband gets out of the army, whenever that may happen...

Roth IRA

March 12th, 2007 at 11:02 pm

For the past couple of months I've been thinking about opening up a Roth IRA. I'm trying to decide by April 15th because the tax laws say that you have until then to have your contributions count as last year's.

So we have $4,000 sitting in checking (in part due to Uncle Sam - thanks for the refund!) and don't know what to do. It's tempting just to put it into savings with the rest of the money we've saved, but I don't know if that's the wisest thing to do. Also we do have credit card debt in the same amount, interestingly enough, so maybe we should pay that off now. But because of the miracle of compund interest I am tempted to start the Roth IRA as soon as possible. What do you guys think?...

Posted in Retirement | 8 Comments »

8 Responses to “Roth IRA”

nika Says:
March 13th, 2007 at 12:54 am 1173747243
1173747243

Open the Roth. Anything that gives tax advantages is like guaranteed money. And you only have a limited amount you can contribute. Take advantage of it.
Broken Arrow Says:
March 13th, 2007 at 12:12 pm 1173787979
1173787979

Dooo it! You know you want to. DOOO IT!

(So long as you already have an emergency fund. )
monkeymama Says:
March 13th, 2007 at 02:34 pm 1173796496
1173796496

You can put the money in a ROTH - in a cash account or c.d. The nice thing about ROTHs are that you can take out the principal (amount you put in) tax and penalty-free.

I no way advocate taking money out of you account. BUT if you are on the fence of adding it to savings or putting it in a ROTH, just know that it is not completely untouchable or penalized if an emergency comes up and you need it. But if nothing comes up, you don't lose your tax advantage for 2006.

I really struggle with this because I want to build up much more in our savings, in case of dire emergency, but I think we are better off using the tax shelter, particularly since I know when my dh returns to work we will have more than than the IRA max to contribute. & I will really regret if I did not take advantage of shifting all I Could to retirement in the meantime. So though I doubt I Would ever touch my retirement, it helps me to be a little more aggressive on the retirement to know I could change my mind.
I am waiting to have 3-4 months in my cash emergency fund first though. So I will most likely not have ot ever touch the IRAs. I think it is a fine line to balance. But at that point all my money is going to ROTHs then.

Oh yeah - it doesn't have to be so all or nothing either. Put $2k in a ROTH and $2k in savings if you like - another idea. If you need a kick in the pants, retirement is pretty untouchable. If you get sued your cash could be gone, if you declare bankruptcy, if anything. But retirement is golden - untouchable. ANother reason I am more aggressive on my IRAs.
Ima saver Says:
March 13th, 2007 at 02:36 pm 1173796613
1173796613

Open the roth!!
Fern Says:
March 13th, 2007 at 04:41 pm 1173804103
1173804103

OK, well, what's the interest rate on the debt you have? I think we should know this before fully endorsing the Roth, important as that is.
debtfreeme Says:
March 13th, 2007 at 08:56 pm 1173819402
1173819402

if i would be able to be debt free by paying off the cc debt then that is what i would do. i would still open the roth but then fund it monthly with the amount i would have paid to the cc debt to max it out.
armyamy Says:
March 13th, 2007 at 09:54 pm 1173822858
1173822858

My credit card debt on the first card is $3,000 at 0% for 1 year, then 9.99% apr after that.

And the other card has $1,000 at 7.99%.

They're good aprs but sneaky in a way...I mean it's tempting to put off paying the balance because it doesn't seem like I'm paying much in interest, but either way it's money in the credit card companies pocket, and they're probably making more with me as their customer at 7.99% than say 15% apr...because if it was 15% apr I'd pay it off right away! Hmmm...
homebody Says:
March 14th, 2007 at 11:11 pm 1173913888
1173913888

Are you my daughter in disquise?? She is 19 and her husband is 20, a Marine. She lived with us while he was in Iraq and saved all his earnings and the housing allowance except paying off her wedding ring and paying his visa card every month that he used to buy phone cards.

I have been nagging them to start Roth's!! I'm calling them again right now!

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Army Amy's Amazing Personal Finance Blog (wow!

Saving money while my husband's in the Army and I work for peanuts.

Roth IRA

8 Responses to “Roth IRA”

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