Figuring out what to do with my money.
I know, this seems weird, right? I have freedom now! I can do so many things with my money. And that, is the problem. I'm not used to actually SAVING money. Before, I had a specific goal for all my extra money. Pay off debt.
And now?
Well, there's still my student loan. Which will be cut in half by next June (Thanks, California!) and has a relatively low interest rate (2.25%)
I opened a ROTH IRA recently. But the interest rate is a dismal 1.75% for a five year commitment. Blech. I can also have my credit union invest this more aggressively for a possible higher return. BUT, if I want to take the money out in five years to buy a house I may not want to be too aggressive right now. I don't really know what the future holds, so it's hard to make a plan on that right now.
I can put it in the flexible Roth account, which has an interest rate of .40%. Then I can choose to either invest aggressively or get a certificate at a later date. The money is not as locked in, but is still in a Roth.
OR (and this is what I'm doing, I think), I can leave the money I would invest in my Summer Saver which has a 3% interest rate until December. Then I'll invest another $4,500 (to make my Roth cap for 2011) in one of the Roth options mentioned above. Then I'll just save all my money in my Summer Saver until it dumps out next August and use it to invest and pay down my loan, while still getting to capitalize on the higher interest rate. This money also becomes part of my 3-6 month emergency fund once it's out of the Summer Saver.
But GEEZ. This is a pain. I'm not used to paying attention to interest rates. Frankly, I've never had enough money to see a big return on interest. But, if I can save $10,000 in my Summer Saver in a year, then the 3% interest rate might actually be worth focusing on.
It's not as satisfying of a goal as paying down down debt. And frankly, I'd like to have different accounts and invest in my Roth each month, but with interest rates so low, it doesn't make sense to do it that way. So I am having to put aside my
Does anyone else find saving/investing less satisfying than paying down debt?
Yes...I'm way more motivated to pay off debt than to save. I think you should splurge on something fun before you go on with your plan.
ReplyDeleteJana
Yes I agree. I'm with Jana and I'm MUCH more motivated to pay off debt!
ReplyDeleteCongrats on paying off your debt!! :) Paying off debt is definitely satisfying, but I MUCH prefer to save for a rainy day! Interest fees or not, at least the money is now staying in YOUR pocket! :)
ReplyDeleteSend it to the student loan, have it paid off by the time the balance is cut in half!!
ReplyDeleteHS
I've got a ways to go before my debt is paid off, and I agree that making those payments every pay period is satisfying, but I honestly cannot wait until the day I get to keep the money! I can't think of anything more satisfying. Congrats on eliminating your debt and moving forward with new financial goals!
ReplyDeleteI TOTALLY agree! Paying off debt is so satisfying, whereas saving is kinda eh. I need to change my attitude pronto, though, because saving is about to become my #1 priority when my car is paid off (on Friday!).
ReplyDeleteI'm confused about your Roth IRA account. Are you only investing it in fixed returns like bonds? Currently much of my Roth account is invested in stocks (mostly indexes). Of course in this case my return isn't guaranteed and rather fluctuates with the stock market, but it should have a long time to sit there and grow still.
ReplyDeleteAre you somehow limited in what you can invest in with your Roth, or just going for a very conservative approach?
Also if your looking for a good and fairly safe investment maybe take a look at Treasury Bonds. Specifically the I-Bond series. It's a little complicated but the basic premise of it is that the return is based on inflation and is set twice a year. Currently they're earning 4.6% for the current 1/2 year.
ReplyDelete3% is actually really good right now (which is a sad story). you should do that.
ReplyDeleteFor me I got a thrill when we were paying off debt because it was, in essence, "sticking it to the man." Every tiny ounce of progress really made a difference and it fueled my fire...
ReplyDeleteNow its a bit different... Its a given that my Roth IRA always got maxed out because I treated it like a bill (this year is a bit different because of the wedding and enlarging the EF but here's to crossing our fingers that we make it.)... but after that I've been finding it difficult to be motivated.
We try and set a little goal each month to accomplish while we work on the Roth to keep us focused. for September we are setting aside all the money we need to get an xbox as our last debt repayment promise... but we are focusing on health as well and we will be paying for a doctors bill and getting SCB to the dentist...
As for your MONEY, i'd put it in the 3% thing and then roll that into a ROTH before the cut off for 2011 in March.
the gubment is fudging us all over with artificially low interest rates. They don't even come close to matching inflation, so if you save money its value will slowly erode. The gubment wants us to be spenders right now.
ReplyDeleteI feel really bad for the retired folk. The ones that live off fixed income interest payments. They are fukced.