I haven’t talked about finances in a while, mostly because we’ve just been kind of doing what we do.
But sometimes just doing the normal stuff is really interesting. I set up a sinking fund (savings you know you’re going to have to spend in the future – like a car repair sinking fund, etc.) for a car payment. $400/mo. in a Smarty Pig (I heart you Smarty Pig!) account toward a $10,000 emergency fund or a car. Whichever comes first.
Did you know…if you save $400/mo. you will have saved $10k in right about two years?
Not much time at all, really.
Also, when you consider that our current car cost under $3k out the door with tax/title/license and all that stuff you will probably see that I’m cheating. It’s not really a car fund at all. I’m trying to create a 3-month emergency fund. I may go for a 6-month emergency fund. I haven’t decided.
Plus we’re about to get a sizable tax refund and I’m trying to decide which savings account to put that in as well.
Add to that the totally separate savings account I put my blogging money into that serves as a Christmas fund and you can see I’m saving in three different places with three different goals.
That goal that’s falling to the frikkin’ wayside is the debt payoff. Because now that I have money I’m afraid to do anything but hoard it. I mean, it’s better than hoarding cats, for sure, but it’s still not the smart way to run a family’s finances. I’m one step away from the woman who hides all her money under the mattress. Yes, I’ve considered it. I’d sleep good, I tell you, goooood. But it’s in banks instead. One for the emergency fund, one for the savings that might be the car fund but might also become the Google stock fund. (Does anyone else smell the Birkshire Hathaway potential there?)
But when I sat down with Ran the other day and was all, “Oh hey babe, how much money do we have to have in the bank before you’re comfortable putting some away in an IRA?” His immediate response, “10k”
So I ask him – because I’m a bad wife and I like to torture him – but Dave Ramsey only says to have $1k and then pay down all your debt. Are we going to go against Dave Ramsey’s advice?
My poor husband immediately gets his thinkin’ look and his worried look all at the same time. He thought I was going to insist we take everything but $1k out of the savings accounts and pay down debt.
He really looked like he was going to vomit for a hot minute.
I’m a really, really bad wife sometimes.
Because Dave or no Dave, I also need a $10k savings account (totally liquid, no stocks or mutual funds) to sleep well at night and be okay with paying down debt.
Now if I could just figure out the IRA stuff I’d be set. I have one but want to open another one through Sharebuilder. Put some Google into that bad boy as well as some high quality growth stock mutual funds. It’s time to ride the next wave until Jim Cramer starts tripping out again and then moving it all into bonds before we lose %75 during the NEXT huge recession.
Rocking an IRA properly involves a sense of timing. A finesse I’m not sure I have, but think I could learn.
How do you pay down debt and put money into your IRA? Do you Roth or do you have a regular IRA?
We Roth IRA, we 401k (love the matching!!!), we pay down debt, and we do savings (only $200 a month for now though). IRA and 401k both come out of the paycheck directly, so we don’t even notice them, which is nice. Debt payment is a regular part of our budget, and savings is an auto transfer every pay day.
We started w/ a $2000 baby emergency fund, paid off all credit card and automobile debt, then built a six months worth of expenses e-fund. (During this time, we put a small amount into my 403(b) (through work) – just enough to get a small match.) Now that we are debt free, except for the mortgage, we are putting more into the 403(b) and two Roths, one for me and one for my wife.
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