My wife drives a 2000 Chrysler Town & Country minivan and I drive a 2001 Honda Accord. We also own a 1994 Ford F150 pickup truck. I’m seriously considering selling all three automobiles and buying two ‘newer’ vehicles. I really would like to own a ‘nicer’ full-size truck and my wife wants a ‘newer’ minivan or SUV. My original plan was to wait a few more years before we began looking for newer cars, but I’m reconsidering that plan. Why? I think that I can “break even” if I sell the three older autos and replace them with slightly newer models. I’ll pay a little less each year for car insurance because I’ll be insuring two automobiles instead of three. I’ll be paying a little more in car taxes (at the end of the year). I’m just in the very, very early “thinking about it” stage, but I am “thinking about it”. (By the way, my wife likes the Nissan Quest, Honda Odyssey, and a newer Town & Country. Me? I just want a truck that can hold all four of us in the cab… one of those king-cab deals? Sweet!)
Archive for June, 2007
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Can We Both Fully Fund Roth IRAs?
June 25th, 2007 
NCN I recently wrote a post about Roth IRA contribution limits. Reader Kara left the following comment:
I have a quick question that I can’t seem to find the answer to. Are the Roth IRA limits simply doubled for a married couple? My best guess is that each person individually opens a Roth IRA and they each have a $4000 annual contribution limit, but I haven’t explicitly read this anywhere.
I did a little research and I found this information over at Fool.com (a prominent investing website):
If you have earned income, then you may contribute to a Roth IRA regardless of your age, provided your modified AGI doesn’t exceed certain limits. If you’re a single filer, then you can make a full contribution to a Roth if your modified AGI is less than $99,000. You may make a partial contribution to a Roth when your modified AGI is between $99,000 and $114,000. But when your modified AGI reaches $114,000, you’re no longer eligible.
The phase-out range for a Roth IRA contribution for a married couple filing a joint return is $156,000 to $166,000. For a married person filing separately, the phase-out range is $0 to $10,000.
And the following information at the IRS website, Publication 590:
Generally, you can contribute to a Roth IRA if you have taxable compensation (defined later) and your modified AGI (defined later) is less than:
- $160,000 ($166,000 for 2007) for married filing jointly or qualifying widow(er),
- $10,000 for married filing separately and you lived with your spouse at any time during the year, and
- $110,000 ($114,000 for 2007) for single, head of household, or married filing separately and you did not live with your spouse at any time during the year.
Finally, here’s a quote from Fairmark.com about Spousal Contributions (for a spouse that does not have earned income):
If you’re married and you file a joint return, you can make a regular contribution to a Roth IRA even if you have little or no taxable compensation income. Solely for the purpose of determining how much you can contribute to an IRA, you’ll be treated as if you had taxable compensation income equal to:
- Your taxable compensation income (if any), plus
- Your spouse’s taxable compensation income (if any), minus
- Your spouse’s regular contributions to traditional IRAs and Roth IRAs.
For most people this rule works out very simply: if either spouse works for a living and earns at least double the IRA contribution limit, both spouses can contribute the maximum amount to an IRA.
Basically, if you file as ‘married filing jointly’ and your combined income is LESS than $166,000 (in 2007), you can BOTH fully fund Roth IRAs. (Please note: I am NOT a tax professional. Please, do your own research and consult a qualified financial professional before making ANY financial decisions.)
Also, the numbers listed above vary because the articles that I found were written at different times. For the most up-to-date information, please check the IRS website and Publication 590.
How Much Money Have I Made Using Upromise?
June 25th, 2007 NCN Upromise (a site sponsor) offers cash back for purchases that I make online, at grocery stores, and at various restaurants. The money can be used to fund a 529 plan for your child’s college education. (Secret tip: You can elect to have Upromise send a check directly to you, instead of putting the money into a 529 plan. Read this post to find out how! You can then do whatever you want with the money.) After signing up, you can register your credit cards (boo..), debit cards (yay…), and your grocery/drug store cards (those little things on your key chain). Your friends and family can register as well and you can get their rewards credited to your account! (You can divide contributions between your kids or other people’s kids.) For more details, and to receive a $2 sign-up bonus, click the Upromise graphic below. Also, I’ve included a screen-capture of our rewards, year-to-date.
Death Of A Cell Phone Update (Resurrection!)
June 24th, 2007 NCN I recently dropped my cell phone and destroyed its inside screen. After calling Verizon, I was left with the following options:
1. Purchase a new phone.
2. Purchase a used phone.
3. Ask around and see if a friend had an old phone that I could use.
4. Find my old phone and see if it still worked.
So, I researched Option 1 and quickly decided not to purchase a new, expensive cell phone. I checked several websites and eBay, looking for a used, replacement phone, but I must admit that I was a bit leery about the idea of buying a used cell phone. (After doing some research and talking to several people who have purchased used cell phones, I decided against Option 2. Many ‘used’ cell phones are actually ’stolen’ cell phones.) Before I had a chance to ask any friends if they still had their old phones, my daughter reminded me that she still had her ‘play phone’. Her ‘play phone’ was actually MY old cell phone. I had given it to her, sans battery, because she wanted to ‘be like Mommy and have a cell phone’. Honestly, I could never have imagined that the cell phone would still work properly. Why? Because, a month ago my little boy dropped the phone into a glass of coke and I had to wash it off in the sink! But, thankfully, I popped the battery from my new phone into my old phone, turned on the old phone, and it worked! I called Verizon and they switched the number from the new phone to my old phone and I’m back in business. I actually prefer my old phone and I’ve never used the mp3 functionality that is built into my new phone. (The activation of the old phone was free and my daughter now has a NEW phone!)
Lessons learned:
1. Hang on to your old cell phone!
2. My daughter has a better memory than I do!
No Creativity Needed (Just Linking To Some Great Reads!)
June 23rd, 2007 NCN Looking for something to read? Here’s a rundown of personal finance posts that “caught my eye” this past week:
Cap has written a great post about blogging (specifically, personal finance blogging).
Searchlight Crusade has written… well, a TON of great posts about buying and selling real estate. This blog is a must-read!
The American dollar traded in a car, worked a deal, wrote a post about it, and is riding in style.
David has gone on vacation and he’s not spending a ton of money.
Thinking about starting a website so that you can quit your real job, make piles of cash, and ‘take it easy’? Read this article by Goldguru first!
Trent writes about Emergency Funds. How much should you have in your emergency fund? My answer? 12 months worth of expenses.
JLP watched the movie “Maxed Out”. Read his thoughts, especially people and their ignorance about credit cards.
Blogging Away Debt answers a question about ‘why it took so long‘ to focus on debt reduction. Me? I just never realized how important it was to start EARLY!
Jim’s raising money for the Make A Wish Foundation. Donate, donate, donate, donate, donate!!!
Blunt Money talks about high school and the great ‘what if’.
Clever Dude wrote a post about paying off a loan early. Debt reduction ROCKS!
Flexo wrote an AMAZING post about opening a Roth IRA and a 401K. I’ve already linked to this post ONCE, but I’m linking to it AGAIN. Why? You need to read it!
Trying to get out of lease? Read this interview by FMF.
A few weeks ago, Nickel wrote a post about avoiding gift taxes. I liked the post, bookmarked it, and now I’m sharing it with you.
J.D. writes a post aimed at recent graduates. I wish I would have read this post 15 years ago!
Graceful Retirement is a brand new blog that I’ve enjoyed reading. Check it out.
Michael, with a post about cars, debt reduction, and Dave Ramsey. (Pay it off… pay it off… pay it off…)
Lazy Man bought a gadget… and made me green with envy!
Whew…
