"Secret skimping is out, like false bosoms." - Marjorie Hillis, Orchids on Your Budget, 1937.

Wednesday, March 26, 2008

Straight up, now, tell me...

I have a confession to make.

I have yet to open a Roth IRA.

For the past year, I've yammered on to anyone who would listen about my grand retirement plans, but I've neglected to actually do anything. Now, with the economy downturn, I'm in need of some sound advice (and a push).

I am willing to contribute all or part of the 2007 max before April 15th, but keeping the current state of the economy in mind, what is the best move I can make right now?

Other factors to consider:

  1. I saved 7 to 8 months worth of living expenses, the balance of which is sitting in a money market account, gaining only about the price of a movie ticket each month (because of plummeting interest rates).
  2. My student loans > my savings account balance. The loans are quietly accumulating interest at a rate of 4.75%.
My original plan involved straight up index funds. Now, my options are as follows: a) do nothing, b) divert 3k+ from my savings into a new Roth IRA, or c) divert all but 3 months of living expenses to my student loan balance. This would still leave me about 9k in the hole.


1 comment:

Anonymous said...

I do not have a Roth IRA either, but, no matter how much I want one, I don't have the funds to open one up yet. I've been reading up a lot on Roths lately and here's my two cents.
I wouldn't worry about the student loans since the interest rate is quite low and student loans are considered to be "good" debt (I'm so anxious to get rid of mine too!).
I would definitely open up the Roth. How much depends on how stable your job situation is and how long it will take you to replace your emergency money. Any kind of contribution is better than no contribution at all.
Best of luck!