As preparation for 2010, I’ve spent some time updating automated contributions to various retirement, education, and cash savings accounts.  Here’s the breakdown -

#### My Retirement Accounts -

403(b)Monthly amount = \$1375

A percentage of pre-tax income is deducted from each monthly paycheck.

Roth IRAMonthly amount = \$312.50

My goal is to make the maximum allowable contribution for 2010.  For my situation, that’s \$5000.

#### My Wife’s Retirement Accounts -

Roth IRAMonthly amount = \$312.50

My wifes’ goal is to make the maximum allowable contribution for 2010.  For her situation, that’s \$5000.  She also makes pre-tax contributions to her pension plan.

#### Education Savings Accounts -

ESA 1Monthly amount = \$125

The annual contribution limit for my oldest daughter is \$2000.

ESA 2Monthly amount = \$125

The annual contribution limit for my son is \$2000.

ESA 3Monthly amount = \$125

The annual contribution limit for my youngest daughter is \$2000.

#### Cash Savings Account -

Automobile Replacement – Monthly amount = \$500

At some point, we will need to replace one of our automobiles.

Future Home Purchase - Monthly amount = \$500

At some point, we hope to pay cash for a new home (or use available savings for healthy down-payment).

#### Summary -

The total of all monthly contributions, excluding my wife’s contributions to her pension, is \$3375, which represents a very substantial portion of our household income.  It’s important to note, some contributions, those to Roth IRA and Education Savings Accounts, are calculated for a 16-month contribution timetable, running January of 2010 until tax-filing deadline April 2011.

As we continue to live debt-free, my wife and I have come to realize just how important it is to save, save, save – and then save some more.  We set lofty goals for ourselves, including the contribution goals that you see above.

#### NCN

http://www.ncnblog.com

No Credit Needed is a personal finance blog about debt reduction, saving money, and simple living. Thank you for visiting the site and please consider subscribing to No Credit Needed by Email. Have a blessed day!

##### 8 thoughts on “Getting Ready For 2010”
1. NCN

SingleGuyMoney – I budget for them, each month, and put the money in a savings account. I also have a standard “emergency fund” from which I could pull money, should I need it sooner than regular budget would allow. What about you?

2. Boyan

Hello,

I see you’re contributing \$312.50 monthly to your Roth. However, \$5000/12 = \$416 per month.

What you may be doing (and what warrants further discussion), is making 2010 Roth contributions before April 15, 2011; thus giving yourself 16 months to get in \$5000. Indeed 16*\$312.50 = \$5000.

However, I’ve thought about this, and I’m not sure it’s the best idea. In your case, you’re depositing \$625 per Roth (half for 2010 and half for 2011) in the first four months of the year, and \$325.50 in the other eight. Thus, you’re systematically oversampling the market in the first four months, and biasing your dollar-cost-averaging towards Jan-April.

Is this intentional (part of your strategy) or a minor oversight?

Thanks!

3. Matt

What happens if you contribute monthly to a ROTH IRA but than find out during tax time of the next year that you made to much to contribute, what happens?

4. NCN

@Boyan I suppose you are correct. Keep in mind, I’m still making contributions to my 2009 IRAs, and will do so for the next 5 months. (Dec – April)

@Matt I’m 99% sure that I won’t make too much to make maximum contributions. If I WERE to get close, I’d just hold back on the contributions from say January to April…

@mbhunter It’s good to be back! I keep a 12 month emergency fund in my savings account…