Since closing on my condo in early October, I was hoping to be able to shift all of my savings towards socking away money into retirement funds and building up a 3-month emergency fund. Unfortunately, I did not think I would be spending this much money on my condo. I also have Christmas shopping to take care of in the near future. I have already paid off my bedroom set and my new TV will be paid off by the end of December. I also have my dining set and coffee table on a 0% credit card that will be paid off in 4 months and I have yet to pay for the light fixtures in my condo. All of these things will need to be paid before I can put money into my retirement funds. I am still optimistic that I will be able to contribute to my retirement funds for 2008 by the income tax deadline. A list of my goals and the most recent update of my financial goals can be found at my goals page.
Set up and fully fund a solo 401k ($0/$10,516)
I have yet to set up a solo 401k for my self-employed income. Of the available options for a solo 401k, I have decided to open a Vanguard Individual 401k. I have until December 31, 2008 to set up my solo 401k and still fund it for tax year 2008. I will be opening this account ASAP and have already downloaded the necessary forms.
My goal for the solo 401k was increased this month as I received more self-employed income, which increases my maximum contribution.
Fully fund my Roth IRA ($0/$5,000)
I am hoping to be able to fully fund my Roth IRA by the 2008 income tax due date. I have decided to fund my solo 401k before my Roth IRA for tax sheltering purposes. If I don’t put all of my self-employed income into a solo 401k, then I will have to pay taxes on both sides of the Medicare and Social Security.
Save for an 3-month emergency fund ($0/$7,762)
My 3-month emergency fund reflects monthly payments for my mortgage, property taxes, car payment, assessments, car insurance, cell phone, cable, internet, electric bill, gas and food.
As soon as I have my Christmas shopping completed, my condo obligations fulfilled and have opened my Vanguard Individual 401k, I will focus my savings efforts towards my retirement accounts. One important consideration when goal planning is the first time home buyer tax credit that I will receive when I file my income tax return.
- 2008 Financial Goals, A Year End Review
- Goals Update for End of August 2009
- Goals Update for End of May 2009
- Goals Update for End of April 2009
- A Rundown of Self Employed Retirement Options