1/18/2011
Chris
As a follow up to my prior post on Roth IRAs, I changed my mind and decided to put my Roth IRA with Vanguard also. I made my initial lump sum contribution for last year and will be making recurring every other week contributions for 2011, to dollar cost average in as the market fluctuates. I decided that I wouldn't have as much $ as I wanted in the account short term to actively trade individual stocks without incurring higher fees and also did not want the confusion of actively trading multiple accounts at the moment.
Instead of the Vanguard 2045 Target Date Fund(VTIVX) that I set my wife up with for her Roth IRA, I decided to choose the Vanguard Extended Market Index Fund (VEXMX). I did not choose the 2045 Target Date Fund because I wanted to remove the exposure to bonds. The Extended Market Index fund also has a very good long term track record, with an average 10.6% since the index fund was started on 12/21/1987. Both are excellent choices, but the Extended Market fund is slightly more aggressive than the 2045 target date fund, we'll see who wins at the end of the year.
I also bumped both of our 401k accounts up to a 15% contribution level. It will probably be a noticeable hit to our take home pay in the short term, basically doubling what we were contributing to our 401ks, but since that also drops our taxable income it hopefully won't be too painful. That now takes care of Baby Step 4 from the Dave Ramsey Plan, which I mentioned in my first blog post. Woot! Steps 1-4 are now complete.
- Baby Step 1 - Start a $1,000 Emergency Fund
- Baby Step 2 - Payoff all debt using the debt snowball
- Baby Step 3 - Place 3 to 6 months of expenses in your emergency fund
- Baby Step 4 - Invest 15% of household income into Roth-IRA's and pre-tax retirement
- Baby Step 5 - College funding for children
- Baby Step 6 - Payoff your house early
- Baby Step 7 - Build wealth and give
Anyone out there follow a similar path and get to step 7 yet? Would love to hear the types of things you decided to do as part of this final step in the process.
Posted in:
Personal Finance
2 comments :
Some small things we've done is continue to donate to Goodwill, we adopted a child for christmas and got her presents. This weekend we went to Sam's club and bought the big bags of dog and cat food, and litter. We brought it to our animal shelter and plan to bring old towels.
We're also prob. going to start a CD for my future car fund soon.
that's all we got for now, but I'd like to hear others ideas...... come on our lurkers and post comments
Over the holidays we contributed to one of Marla's co-workers that was taking a single mom and her children out shopping for Xmas. We also contributed to our local Humane Society to help kitties and doggies in our area.
As a side note, I wanted to provide an incentive for us to do more cardio. So I said that for every mile we do, we keep track and set aside $2.50 for ourselves per mile. We decided to change that and have it be $3 a mile, with 1/2 going to a charity of your own choice. In reality, I probably won't spend my half of the money and would instead donate the whole thing. And it does help motivate you to do more exercise as well!
Also, I like Dave Ramsey's idea that I heard on holiday Podcasts where you tip your server $20 or even $50. We always tip 20% or more anyway, but that sounds like a lot of fun. I'd like to leave the tip and walk away and see the reaction from a distance.
On a bigger scale, I think it would be fun to contribute towards a small college scholarship type thing for someone at Oswego. Something similar to one that I won back then by submitting an essay and you get like $250 or $500 or something...
Keep the ideas coming, the more things you hear of, the more others get motivated to give as well!
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