So my “Savings Hierarchy” goes something like this.
1. 401k
2. Cash Savings Account
3. Roth IRA
4. Individual stocks.
With the house and wedding soaking up an awful lot of my disposable incomes, saving account numbers 3 and 4 are not getting the attention that they deserve.
I have a Roth IRA with Vanguard and my contribution for 2009 is oh around $50 that I had in a different Vanguard account. Yes this is laughable and I should be doing more to fund that account. So my 2009 contributions were pretty dismal. The limit for Roth IRA’s is 5,000 a year, so I was only 4950 away! What is handy about Roth IRA’s in addition to their awesome tax benefits is that you can send payments in 2010, and apply them to 2009. So that way if I could send just under 10,000 and fully fund both years without penalty. Note: This has to be done before April 15th of the following year.
So this year I am going to take my tax return that I just received and apply it to my 2009 contributions. I highly recommend this strategy, and it essentially takes zero work. Unless you spend your tax return before you receive it, it is an easy way to fund your Roth IRA without even really budgeting. No I would be able to fund the entire 5,000 with one tax return, but it does allow for a lot more flexibility.
