It’s your favorite day of the year! The day you can breathe a sigh of relief because you’ve filed your taxes on time. And if you’re like me and was planning to max out your Roth IRA by today, you have another cause for celebration. I am happy to report that I did achieve my last minute goal, but not exactly the way I had hoped. Rather than beat myself up about the way I did it, I’ve chosen to take the more productive route of using that information to improve next year’s results.
Last month, I talked about how I didn’t start a retirement account until I was twenty nine years of age. This used to be something I stressed about a lot, but thankfully, I have now accepted my mistake and am happily moving forward. I realized that since opening a Roth IRA in 2013, I hadn’t been regularly contributing enough to meet the fund’s $5500 cap by April 15th without a serious contribution in the final months.
The task on the list was planning ahead for next year. In order to find myself in a better situation next April, I made my Wells Fargo Way 2 Save account automatically contribute to the retirement account once a month. That new system will be in place starting on the 30th of this month. But it will only amount to a small figure compared to the monthly sum needed to max out a Roth IRA. My second goal is to contribute the remaining balance necessary every month. Ouch. Third, I plan to try to meet the $5500 goal by December this year (and every subsequent year), rather than April 15th.
Yet none of these things are what got me to my goal last month. I worked a few one day jobs and those paychecks in full (after tithing) went towards the account. But what really did it was a loan from myself–in other words, we borrowed from our savings account to max out the Roth IRA. Ouch again. In my mind, there are only a few situations in which this sort of practice is justifiable and this is one of them. We are very tight with withdrawing from this account because we want to be home owners some day! But the amount of money a retirement fund will earn over time versus our stupid online savings is incomparable, so this was absolutely worth it. And because I was recently hired on a job that lasts through the end of May, I can fully pay back what we borrowed very quickly. Notice I’m using words like “borrow” and “loan” to describe pulling from savings? We are putting the money back. As soon as we possibly can. That’s a good goal to keep in mind if you find yourself in a similar situation.
Because I know you’re on top of things and have already done your taxes, you can sit back and enjoy the rest of your day. That’s what a quality frugal life is all about, after all. Planning ahead and enjoying the fruits of your labor. What financial flubs do you have from 2013 that can be remedied with goals in 2014?