2 thoughts on “Roth IRAs, savings accounts, and ETFs….what should we do?

  1. I know how much it sucks to be in debt and diverting something to a Roth. I had to start at $100 a month, too. We weren’t sure when we would be out of debt (I was on disability, he was on unemployment and rent/insurance took up 1/3 of our income), but we were 30 at that point. We had to start doing *something.*

    I don’t know if this will help, but I set up an automatic transfer from my bank of $25 a week. We have a weekly budget, so we didn’t usually miss the money. And the $100 didn’t interfere much with our budget.

    If you did something like that, you could avoid affecting your ability to put money other places.

    When it comes to savings — especially if you’re somewhat inclined to pay off loans — I would say keep it liquid. My guess is that returns aren’t great right now anyway, so why tie up your money?

    Then again, I’m easily spooked. So take my advice with a grain of salt.

  2. I’m not going to choose one of the plans here, but just a couple of notes:

    1) The Roth won’t give you a tax break — a traditional IRA would, but not a Roth

    2) If your loans are at 6-7% I would definitely ditch them before you worry about investing. First of all, everything I read suggests to me that there will be a flat or even down year or two in the markets; you’re not going to be missing out on 30% returns if you don’t invest now (that ship sailed a few years back, and I missed it too, sigh.) Second of all, the difference between 6-7% and what the markets return over time on average is relatively negligable; if you had loans at 2-3% maybe, but…. Third of all, you’ll get way more security out of paid-off loans than you will out of the market. You’ll be able to eliminate minimum payments as you go.

    3) I’d also put your $6000 on the loans if it were me; I understand why people want to have large amounts of cash even though they’re deeply in debt, but it was never a choice I wanted to make. I had an “emergency fund” that ranged between $0 and $75 the entire time I was paying off debt and I’m glad I did that.

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