Savvy Steward asked me about putting money into a Roth IRA. Currently I do not have one, and with my Debt-O-Meter as is, I am not sure where I’d squeeze out the extra cash to put money there. I backed off on maxing out my 401k contribution so I could have a little more money to throw monthly at credit card debt and put cash into my pocket.
I am seriously considering forgetting getting laser vision surgery next year. If I cut back medical FSA spending to only $1000 to cover new chi-chi glasses with all the fancy coatings, a flu shot, asthma/allergy meds, various other teeth stuff and other prescriptions, I would be able to bring home another $3k in cash to put into a Roth. As it is, I REALLY want to see without glasses and because I put my teeth before my eyes, I really was looking forward to finally having surgery done next year. (pun unintended, but it works here.)
If you total my 401k, Medical FSA, Traditional IRA and random cash savings, I save about 27% of my gross paycheck. Mind you, I can only do that because I have some side income coming in every month from blogging and this and that. If I had no other side stream of income, I’d go back to working at the yarn shop.
In calculating statistics, I figured out that I only need to bank away an extra $110 every check to round out to a 30% savings rate. How cool would that be?
But I HAVE to get out of debt first. I MUST.
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You can do both, get out of debt and save. I owe on my student loans but that do not stop me on saving. I get my money first and then my student loan corp get theirs. Everyone is happy! LOL
I’m of the philosophy you make the money for the Roth even if you have to cut your 401k a little more or need to borrow temporarily to fund it. I think for financially saavy people like yourself you don’t want to pass up the opportunity to but Roth dollars in because it’s not like you can play catchup later for the years you’ve missed. I’m biased because I passed it up one year when money was tight, and still kick myself…