Friday, February 8, 2008

Small Steps for Many of Us

I know from what I've been reading in PF blogsphere that folks are all over the map with respect to where they are with their finances. I've read a couple blogs where folks are too concerned with reducing debt, sticking to a budget, etc to think or plan about investments. A couple new PF bloggers wonder if they will ever get to the point where they will have investments to worry about. Some PF bloggers blog daily about how the stock markets ups and downs affect their net worth on a monthly basis. They voice concerns over interest rate drops, etc, all very valid concerns.

I currently have a 401K that I rolled over to a Roth IRA. I have not contributed to this plan in a number of years, mainly because the past few years have been fiscal hell for me and any money went toward debt and other bills. It’s in my plan for 2008 to start to contribute to it again. I can set up an auto deposit to it and I probably will in the next few months.

When you are in a debt reduction plan, contributing to an IRA or 401K may be the last thing on your mind. If you are lucky enough to work for a company that offers a 401K, I'd suggest signing up for it and contributing what you can, even if it's the minimum amount. It's an auto debit from your paycheck and after a paycheck or two, you will hardly notice the difference in your income, trust me on this one. I used to read my statement each quarter and fiddle with my shares in the various funds, I loved seeing my money make money, I hated seeing my 401K lose money. That was a different point in my life.

I can't be too bothered at this point to worry if my ING on line account has lowered it's interest rate again. Quite frankly, at this point I'm just dammed thrilled with myself that I contribute to the account and am creating a savings account for myself. Perhaps in time I'll worry about falling interest rates, but right now I have other things on my mind.

My new fiscal life means I currently have the following:

1) My main checking account-I pay all my bills (less medical) from this account.
2) An HSA account-for my share of my medical that is not employee covered-I deposit a certain amount of cash each month to this account.
3) A second checking account- that is earmarked as the Emergency Fund. Each pay period, I have a direct deposit of $100 to this account. My goal for the end of 2008 is to have $2,000 in the account, I currently have $250. It is an interest bearing account with no service charge if I fall below a certain dollar amount.
4) An ING online account-$25 every pay period is deposited to this account and any extra money made from second jobs, pay per post (sooo little at this point in time), etc goes to the main account then is transferred to the ING Account. I'm earmarking this account as the car and vacation fund.

The HSA and the ING account were both opened just around the time I had my Trustees meeting. I needed to become more in (or take back) control of my finances. They had just been out of my control for so long.

Sure I'm more than a little envious of those folks who have nice portfolios, they have worked hard to get there. Some PF bloggers have been working on their portfolios for while, in time the rest of us will get there as well.

Small steps, baby steps, the journey begins with the first step...


I'm Grace. said...

I wonder if it's about age. At age 58, you'd think I'd be more panicked about the losses in my 401(k). It's not that I like to see the balances go down, but I've been through this before. In ways that a younger person who has only been saving for the last few years can never understand, I KNOW the money will come back. This downturn (or recession, which I rather think it is) is annoying, not fatal.

Dawn said...

Hey... it's ok that we are all at different points in the path! We all have different lessons to learn and timetables to accomplish. My hubby and I are probably behind on the investment curve... but, we have survived and thrived through many hardships this life has thrown at us. I say, don't compare yourself too others... You are doing awesome today, and contributing to a better tomorrow. We can't change the past... so say so long yesterday! Long story short ~ We all do the best that we can with the tools we have at the time! God Bless...

CindyS said...

You are on the right track. I have been hoarding money into my little emergency fund. I haven't made much headway in the last month or so as all of January was an emergency but I didn't take any out either.

Bouncing Back said...

Dawn-I agree with you 100%, we all have different paths in life and you are correct-I can't change the past, all I can do is look to the bigger and better future-

I'm Grace-I do think age has something to do with this, lots of PF bloggers are twentysomthings and just don't have the experiences we all have!