Smart Saving and Investing

My father-in-law passed away at the beginning of this year, one week after his 80th birthday. He always talked about hoping to make it to his 80th and reminded everyone that he wanted presents galore. He was a funny and informative guy. Worked a “normal” 8-5 job all his life, read the newspaper every day, had great friends and family, and a lot of fun. He was Italian. 100% Sicilian.

He was one of those folks you have in your life who tells the same jokes and stories over and over. Yet he had a wonderful way of telling them…again and again, that nobody complained too much about it because it seemed so genuine every time he told them and I think we all wanted to hear him tell them.

I ended up figuring out his financial affairs so my mother-in-law wouldn’t have to be bothered too much with it. He did all right when it came to his retirement funds. Made a few moves years ago to make sure they had something for retirement.

However, I think we were all kind thinking maybe they didn’t have too much. Well, come to find out my mother-in-law will be doing just fine for a long time. Their belief systems and how they grew up thinking about money certainly helped.

My father-in-law frequently complained about how much things cost and how taxes were too high. They did their weekly due diligence with coupons wherever they could get them and use them. He complained to me that one time he let his credit card reach $500.00 and he felt horrible about it. But, he always had his credit card paid off in one month or two.

He had a picture of him and his buddies when they were hanging out at a burger joint in the ’50s. The five of them seated around a diner table with big smiles, leather jackets and gangster hats. Without the smiles you’d think they were hit men. Frank used to remind us by pointing out each person in the picture when each of them died. “I’m the only one left”, he would say.

Well Frank, thanks for all the jokes, complaints, news of the day, and much much more. We love you.

written by Bill Stevens

After searching the web for a brief description of the advantages, disadvantages and rules of a Roth IRA, I thought I’d add mine to the mix:

Advantages

• You can contribute to your Roth IRA after age 70 1/2, unlike the age limitation of a traditional IRA.
• You can contribute up to $4,000.00 for 2007 if you’re under age 50 and up to $5,000.00 if your 50 or older.
• You can contribute to a Roth IRA even if you contribute to your employer’s retirement plan.
• You can withdraw what you’ve contributed to the Roth IRA tax-free but not what you’ve earned.
• You can withdraw tax-free for first time home buyers.
• Withdrawals are tax-free upon death or disability.
• There is no Required Minimum Distribution (or Minimum Distribution).

Disadvantages

• Withdrawals in excess of what you’ve contributed are fully taxable and ar also subject to a 10% penalty.
• Contributions are limited each year for each individual.

Rules

• You need earned income.
• Single folks can only make up to $95,000.00
• Couples can only make up to $150,000.00.

But for our purposes we don’t care about the disadvantages. We want the freedom of picking where we hold our Roth IRA - Charles Schwab, TD Ameritrade, etc. We also want the freedom of picking tons of investment vehicles, for example Mutual Funds, under our Roth IRA.Feel free to read the ever popular 107-page IRS Publication 590 here for the rules. Kind of drab reading but it’s all there.

Idea: Some people forgo an online savings account and use a Roth IRA as kind of a savings account. However, for our purposes here, we want to use the Roth IRA for retirement reasons. But, the Roth IRA as a savings account is totally acceptable.

written by Bill Stevens

For most “ham ‘n eggers” (average Joe) there’s more than one way to pay for the big tickets in life - moving, college, weddings, etc. But, there’s only one way to pay for your retirement and that’s by saving and investing as much as you can over a long period of time.

written by Bill Stevens