A s my wife and I go through the Dave Ramsey’s 7 Baby Steps. we’re finally completing step 3, building 3-6 months of expenses (although we decided to save closer to a year of expenses), and we’re now entering step 4 where you are to invest 15% into Roth IRAs and other pre-tax retirement accounts.
While I know some people have questioned the mathematical soundness of Dave’s plans, they have worked well for us, and we’re not exactly Dave Ramsey snobs. We know when to take his advice, and other times tailor his advice to fit our needs. For example, I think some of his assumptions when it comes to investing (12% returns?) won’t probably pan out, but his basic advice of investing 15-20% of your
income is sound.
Investing In A Roth IRA
The first step that we’ll be taking is to invest in a Roth IRA . Most people will suggest that you invest in a 401k first if the company you work for offers a match on your contributions. Why not – it’s an immediate 100% return! While my company offers a 401k, they are not offering any matching contributions to our account. Because of that we’ll be skipping the 401k for now, and moving over to the Roth IRA account that will give us tax free earnings. After we max out our Roth IRAs we’ll most likely be investing back into my 401k up until the maximum.
Where To Get An IRA Account?