I Lost over $2,000 in a Week and I’m Not Worried

Last Friday I logged into my employer’s human resources website to take a quick peek at my 401k balance.  I was just curious how much money I had in there.  I made a mental note of the balance, logged out, and went about my day.  Then this week happened and the economy and stock market decided to take a nose dive.  For the heck of it, I decided to log into the website again and check my balance.  It had gone down over $2,000 (which is a pretty nice percentage of the money that I have in it).  Whatever.

Why am I not concerned?  First of all, I’ve got many years until I am going to retire.  I’m not going to touch that money for at least 30 years, so why get all worked up about it now?  Secondly, the stock market is going to go up and down- it’s just how it goes.  If I was one of those people who panicked and sold all my stocks I’d be losing a lot more than $2,000.  I’d lose the opportunity to make that money back.

When the stock market does crazy things like it has over the past few weeks, people start freaking out and doing crazy things with their money.  They think they should sell before they lose even more money.  Look at it this way: now is the time to buy!  Stocks are on sale right now, and if you get a good deal, you have an opportunity to make a lot more money over time.

The other day I had a client come into my office that wanted to place a $75,000 wire transfer.  As part of our bank’s policy, I asked him what the transfer was for.  He informed me that he was buying gold.  I couldn’t believe he was going to buy $75,000 worth of gold, but who am I to tell him not to?

I’m glad that I realized that the money I “lost” isn’t something I should worry about.  There’s no way to get it back, and all I can do is move forward and keep being frugal and saving money.  What else can I do?

Are you concerned about the economy/stock market?  Do you worry about your money?

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401Ks and ROTH IRAs

My employer offers a 401k for retirement savings.  I contribute 6% of my salary, and they contribute 4% of my salary and give me dollar for dollar matching.  I’ve contributed 6% for years, and it’s a number we’ve been comfortable with.  However, I got to thinking the other day how Mr. Money’s employer doesn’t offer any type of retirement savings (they haven’t ever) and how we probably need to get cracking on saving for retirement with him.  We each have a Roth IRA that are in mutual funds, and my account has around $500 in it while his has maybe $2500 in it.  That is all we have saved for retirement minus my 401k, which I know has a decent balance, but not as much as I’d like for both of us, especially with Mr. Money being 34 years old.

This is what I’m thinking: I will take a set amount of his paycheck aside each month and transfer it to an ING account where it can stay until we’ve got enough to contribute to the Roth IRA.  The reason I don’t want to contribute each month directly to the IRA is because every time we make a contribution they charge us.  So it makes sense to go ahead and save up and just make one quarterly or biyearly contribution.

I’m going to have to figure out a dollar amount that works with our budget and go from there.  I guess I’ve always worried we won’t have enough money, but that stands for life in general, so as long as I do SOMETHING about retirement and we continue to save money, I should feel good about it.

I’ll continue to contribute to my 401k at work and may even up the percentage a little bit to try to bump that balance up.  I know I’ve talked about it before but never took action.  I think part of my problem is that I worry too much about everything in general and compare our finances to other people sometimes and those are both big mistakes.  I think if I stop doing that, I’ll be in a lot better shape!

I freak out a lot but I also have to realize that we still are pretty young and really just getting started. With Mr. Money a little older than me, it’s easy to think we should have more money saved at this age, we shouldn’t owe so much on our mortgage, he should have a better retirement account, etc.  The truth is we’ve done pretty well.  We paid off our consumer debt and student loans over the past few years with hard work and determination.  We work hard to live on his income, so we can have me stay at home with our baby when the time comes.

Retirement is a long way away, and we’ll do our best and take it from there.  That’s all we can do.

Do you worry about retirement?

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Should I do a Roth IRA Early Withdrawal?

Almost six years ago I opened a Roth IRA in a brokerage account.  I started the account with just $500, and I did it as more of a favor to the financial adviser that worked for the bank.  Needless to say, I haven’t made any contributions to it since I actively contribute to my 401k offered through my employer.  Every year there is a $15 annual fee, and each year the Roth IRA automatically sells some of my mutual funds to pay for that annual fee.  In addition to losing money with the annual fee for the brokerage account, the value has gone down due to the stock market fluctuations.

I’ve been contemplating closing out my Roth IRA.  It doesn’t make sense to have an account that costs me money each year that I’m not going to make contributions to.  I talked with my financial adviser and she agrees that we should just close it out.  It doesn’t make sense financially.  I’ll keep contributing to my 401k, and we’ll leave Mr. Money’s Roth IRA as it is (it’s also a brokerage account, but he’s got more money in it).  She did tell me that there is a penalty for closing out the Roth IRA early, but it’s really not a big deal.

Roth IRA Early Withdrawal Penalties

Since I am not over 59.5 years old, I will incur a penalty of 10% for closing out my Roth IRA early.  I believe that my Roth IRA account balance is around $300.  When I do my taxes, I’ll have to claim that and that’s when I will incur the 10% penalty.  $30 isn’t going to make or break me (in fact, if I left the Roth IRA as it is, that’s two years of annual fees!).  My thinking is that I would rather pay the 10% penalty and not worry about the annual fee or losing even more money.  The truth of it is, I probably shouldn’t have opened the Roth IRA in the first place!

Saving for Retirement

I’ll continue to save for retirement through my employer’s 401k plan.  I contribute 6% of my annual pay each pay period, and that seems like it’s a pretty good amount for us at the moment.  We also throw a chunk of money into a regular savings account each month, and that money could be reallocated in the future towards retirement if we so desire.  I like the flexibility of having the money in the savings account versus having it in a retirement account.  Who knows if we’ll decide we never want to retire and we want to use the money without penalty?

After talking with my financial adviser, it seems like it’s the right thing to do an early withdrawal on my Roth IRA.  Even though I’ll incur that 10% penalty, I’m still better off than leaving that small amount of money in the brokerage account to be eaten away by losses and fees.  It just doesn’t make any sense to me.

Do you think I am doing the right thing with a Roth IRA early withdrawal?

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