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Home > So in contrast to all that debt...

So in contrast to all that debt...

June 19th, 2007 at 07:11 pm

...what do we do to save?

Well, at the moment, our savings are pretty pitiful.

I have a savings account at ING direct that I've had for several years. When we got our tax refund this year, after we paid a few bills, paid for a few summer camps, and paid CASH for our spring break trip, I put the rest in the ING account. It earned good interest for several months, but then I had to pull almost all of it out for our city taxes ($2500) and a home repair ($420) and some living expenses.

In the past I've had automatic deposits from our checking account scheduled, but when money was tight I cancelled them. If we can ever get this withholding issue settled, I'd like to start them again.

Both of my kids also have accounts with ING each with a hundred or so dollars.

We also have a crappy money market account with our main bank. It pays next to nothing and it also costs $6 a month. The ONLY reason I keep it is because I like to transfer money out of my checking into there, so I kind of forget about it and am not tempted to spend it. If I need it transferred back, the transfer is instantaneous....if I transfer it to ING, it takes two days to make it back into my checking account. I wish there were a better alternative...hell, a mason jar under the bed would be better. I'm certainly not earning anywhere near $6 a month.

Huh. Maybe I WILL put aside cash in a mason jar and close that account. That would be like finding an extra $6 a month...

We also have three retirement accounts, two at T. Rowe Price and one with the American Bar Association. One of them is mine, leftover from a previous job. I haven't checked the balance lately - I think I'll go do that right now.

My retirement account has $9600 in it; DH's T. Rowe Price has $16,400. His is invested solely in a science and technology fund, so the balance goes up and down. At one time, around 1999, it had a balance of over 40K. Of course, most of that disappeared within a year or two of that. His ABA account has $41,599 in it. We have never made deposits into those T. Rowe Price accounts on our own; the money in it is solely from employer contributions and what they've earned. DH was required to make a yearly deposit into his ABA account when he worked at the other firm, but has not since he left. In other words, we are not actively saving for retirement at all. And DH is 51, so we really need to get a move on.

I'm glad I checked them - they're doing better than I thought.

Here's a question I hope someone can answer ...in the past when I've had opportunities to put money into our retirement funds, I've always hesitated, because I think I would feel absolutely sick if I looked at the statement and saw that it had LOST money. Is there some way to minimize this risk - transferring my money to a super-conservative fund? A CD maybe? I am such a dummy when it comes to investing, I have no idea what to do, but while I'm paralyzed with indecision, time is wasting!

3 Responses to “So in contrast to all that debt...”

  1. Debbi Says:

    Hi Kayla!
    I'm in NO position to start giving advice yet...
    but I was just wondering, have you put your income/expenses in an excel spreadsheet and actually calculated the difference between $$ in and $$ out monthly? Where do you stand if you do that?

    And - you said you didn't pay taxes/insurance into escrow - I know when I had a house, I forced a separate savings account I put weekly $$ into, because I couldn't possibly bear the thought of having to come up with that money at one time - or NOT being able to.

    I think most of your expenses you listed look right and reasonable - but I know for me - it's the expenses I don't list, the random money spending for wants, rather than needs, that gets the best of me!

  2. Ima saver Says:

    I have the bulk of our retirement money in Vanguard index 500 fund. It mimics the s&p 500. The science fund is way too risky. I would close that and put your money into an Index fund. Vanguard is very low cost. Our local bank pay 3.5% interest on any balance and 5.25 % on balances over $50,000, so I keep all of my cash there. Right now you should keep your cash in ING and close the account at the other bank. You are right, it is better to keep the money at home and not pay a fee.

  3. Linda Says:

    T Rowe Price has target retirement funds that adjust their risk based on the year you will retire (or the closest five-year period to when you turn 65). For example, you said your husband is 51, so they would likely recommend a Target 2020 fund for him. The earlier the target year, the LESS risker (and thus more conservative) the fund.

    I am 24, so my fund is a Target 2045 -- my fund would invest in a higher percentage of stocks (which are the riskiest investment) than bonds (which are the lowest risk investment), in combination with a few other things. In contrast, since the year 2020 is only 13 years away, the Target 2020 Fund would likely invest in a higher percentage of bonds than stocks. They make the fund more conservative as the time draws closer that you turn 65/retire and would withdraw from it.

    I would recommend talking to someone at T Rowe Price about a target fund. Also- it's worth noting that you don't HAVE to participate in the Target fund closest to the year you turn 65. If I wanted, I could invest in the Target 2020 fund, just as your husband could invest in the 2045 fund. But based upon when he's likely to retire, the higher risk of a later-dated fund (such as the Target 2045) really doesn't make sense.

    If you're really worried about risk, you could even invest in the Target 2015 fund, which would be even more conservative (even higher percentage of bonds than stocks) than the Target 2020 fund.

    Hope this helps! Smile

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