Tag Archives: 2008

Roth IRA: Just Maxed Out 2008, down $5000

Today, I put the last $300 into my Roth IRA for 2008. It feels rewarding to know that I’m saving for my future, yet the $5000 in losses to my Vanguard Portfolio due to current economic conditions isn’t exactly a fun “reward” to look at in my accounts.

Still, I’m investing with the hope… and faith… that the economy will recover again. I think it will, eventually, but it’s going to take a while. Had I followed my faith a year ago that the stock market was going to keep tanking, I would have possibly shorted some stocks and cold have been much better off now… but I don’t have time, or the heart, to deal with such “high risk” behavior. Instead, I put my money in the stock market, knowing it’s going to tank now, hoping it will rise in the future.

The question I have now is when do I invest in my Roth for 2009? Usually I put a large chunk of money in up front (money left over from taxes). By “usually” I mean over the last two years, since that’s how long the account has been open. I like to just get it out-of-sight, out-of-mind before I start thinking of myself as wealthy enough for luxuries. The stock market seems pretty bad right now, so I’m not too worried about adding another few thousand once I get my tax return back. Still, this all begs the question whether I should spread out my investments ($440 a month) or put a bunch in up front and finish up over the later half of the year (like I’ve been doing.) Dollar cost averaging is always the recommended way to go… but, eh, when the market is this down, maybe it doesn’t matter as much?

Also, as far as retirement savings go, I decided to do the HSA for my healthcare. In addition to my company putting $100 in the account per month, I’ll be putting $100 in. So that’ll be $2400/year for healthcare *or* retirement. I’m just worried my frugal save-for-retirement self will avoid doctors in order to save for my retirement, and I’ll end up killing myself slowly in the meantime. (Not that I ever go to doctors, even when I have full insurance, I’m too lazy and busy). In any case, the savings rate for the HSA is so sucky – 2.1 or something – and w/ the taxes in California taken out of that it isn’t a huge savings. But I’m going to look at it as a traditional IRA that’s being overtaxed by my bankrupt state. One that I can dip into if I need to go to the doctor for antibiotics every once in a while.

The HSA does have the option to invest with Ameritrade, so I’m probably going to look into setting that up soon. I won’t put all the money in stocks, but I’d like to diversify my retirement portfolio outside of Vanguard and I do want to get some Gold/Silver ETFs in it… since they don’t get taxed at the ridiculous collection tax rate if they’re in an IRA. Well, I don’t know how that works in an HSA… esp since it doesn’t get taxed federally but it does get taxed in CA. Hmm.

2008 Taxes, Part 1: Did my 50% of income strategy work?

In 2008, I tried a financial strategy meant to keep me both “in-the-know” and “out-of-the-know” at the same time. This simple strategy was to save 50% of my income for taxes in a high-interest savings account. As a self-employed person this was legal, as long as I paid 90% of my previous years’ tax along the way. Being as in 2007 I made less than $30k and my income shot up to $58k in 2008, this made a whole lot of sense.

The outcome of my 2008 plan seemed to have worked decently. I just tallied up my tax figures for the year, not counting any deductions I or Turbo Tax may take, and my total tax owed for 2008 is $22876. This includes my 25% tax bracket federally, $15.3% self employment tax, and $9.3% tax bracket in California (why is California one of the highest tax states to live in yet we’re also the deepest in debt???)

I saved $26,000 for taxes after paying $4315 in estimated taxes over the year (I still owe my Jan 15 estimated tax for federal, need to send that out, but I hear it’s not late as long as you get your return in by Feb 2.)

So, number crunching that means sans deductions, I still owe $18,562, leaving me with $7438.17. I’m sure with deductions it will be a little less then that and then with my various interest income from different accounts it will be a little more. I’m guessing I’ll end up with at least $7200 to save.

So the good news is I start 2009 off with $7,200, or thereabout, to spread about in my various accounts as a “cushion” for the year. Sweet. Still deciding on whether to get a tax accountant for my 2008 returns, though I figure even if I don’t take any deductions I’ll get

In 2009, my tax situation is an entirely different story. My income may go up a bit, but I’m now a full-time employee, so I can’t shelter as much money from taxes over the year… nor do I really want the headache. In my next post, I’ll describe how I’m planning to take a more active approach to budgeting in 2009.

Hello 2008!

2008, here we all come. I’m actually excited about the coming year. I feel like things are actually falling into place. I love my job (here’s to hoping I can keep it past the date my contract expires) and I’m finally directing a show on my own. I’m equally excited about both of these opportunities.

My health is getting better by the day. My new obsession are vitamin supplements. I spent most of New Years Eve at Longs Drugs as I studied the vitamin aisle. I spent too much on vitamins and other things. But to be honest all of these random pills of vitamin bliss make me feel better. And hopefully in the long run they will help my health, which will make my medical bills cheaper.

And… I worked out at home yesterday on my new stability ball and my arms and belly are in pain. Yeay! I love how being in pain is a good thing when you’re trying to get fit. My arms are just killing me. So much for “free” workouts, but stability balls cost about $20 and they basically provide you with all you’d need for a workout. I ended up buying some weights, resistance bands and the ball, so I’ll have no excuse to avoid working out in the coming year.

I hope, by 2009, I will have a flat stomach and a lot less fat on my thighs. I guess that’s a New Years resolution. But I’m seriously going to keep it.

I vow to start focusing on actually saving my money, and not spending it on needless things. I’m going to be on time (10 minutes early) to everything, unless its like a party that I should be late to. I will be a good girlfriend… no more mood swings and being afraid of a long term relationship and trying to push my bf away. No more alcohol (besides the occasional glass of red wine with dinner). No more giant desserts. Focusing on the now, not tomorrow, or the next day. Making friends and keeping friends. Not hitting on my friends. ;P

It’s going to be a good year. A great year. And I’m ready for it.