A few weeks ago when I started this blog I had right at $4k in cc debt. I am currently at $2600 and if all go as planned I will down to $2150 tomorrow. I transferred the remaining cc debt at 7.99% to my 0% cc so I could have 1 monthly payment. The balance transfer fee was $15, which wasn't too bad. I am trying to continue to simplify my life as much as possible. Even though I have made great progress, I still have a ways to go with a car loan and student loan. I also feel like I am behind on retirement. I have less than $5k saved and I am almost 30yo. In January, I plan to start putting $200 a month into my company 401k. The only problem is my company doesn't match. I don't qualify for a Roth IRA because me and my husband file separate because my student loans are on a income sensitive repayment right now. I plan to tackle my student loans aggressively once my car is paid off.
Do you think I would be better off with a Roth Traditional IRA?
Update!!
October 20th, 2011 at 11:57 pm
October 21st, 2011 at 04:32 pm 1319214729
Well first, I'm not sure i understand why you say you don't qualify for a Roth IRA just becus you file your taxes separately.
But aside from that, I think a Roth is definitely the way to go these days. You're paying your taxes now, up front, versus a traditional IRA where your taxes are deferred each year but then you pay when you withdraw. Every day when I listen to the business and economic news, it seems clear that our taxes will only be going UP in the future, so if you can pay now and not have to worry about higher tax rates in the future, I think you're better off. If you feel unsure about which way tax rates are going in the future, you could always hedge your bets by having both traditional and Roth IRA money, but personally, I don't see taxes coming down anytime soon. I know that the original thought behind traditional IRAs was that if you think your tax bracket will be lower in retirement than during your working years, it could make sense, but you're young, and I think in 30 or 35 years, rising tax rates will negate any possible benefit you'd get from being in a lower tax bracket in retirement.
October 21st, 2011 at 04:34 pm 1319214850
November 25th, 2011 at 07:43 pm 1322250192