Tag: Roth IRA
-
Don’t be a normal idiot, be a wealthy one; maintain a healthy emergency fund
The EF (Emergency Fund) is one of the foundations of personal finance. The EF allows you to sleep soundly at night knowing your lifestyle and loved ones are protected. Whether it be from job loss, or an unexpected illness, having the ability to pay 4-6 month of expenses with savings is a game changer. Because of this, you want the EF to be invested in something fairly liquid – meaning, you can withdraw the funds quickly in order to pay for the emergency expense. You also want to ensure the EF isn’t invested in too risky of funds, or the money may not be there when you need it.
-
Highway to Retirement. Do not miss this overpowered tax cheat code! Roth IRA
If you are only going to read one of the articles here at The Wealthy Idiots (ha, not possible!), this is the one you must read! You’ve probably heard people mention a Roth IRA and that’s because it’s the gold standard of retirement tools. The Roth IRA is the whole shebang. It is easy to open, simple to operate, diverse, and has super low fees (which we’ll talk about more in future articles). Oh yeah, and depending on how you structure your financial planning, the Roth IRA could account for a “bucket” of income in retirement… a bucket of TAX FREE INCOME! Let’s jump into the specifics!
-
You’re paying way too much in taxes; Spend more time working for yourself
Taxes are a topic that very few people understand. I constantly hear the terms credit, deduction, and write-off, all intermingled in an incoherent way that is certain to signal a lack of tax code understanding. I can’t tell you how many times a married friend or co-worker has said, “man, this mortgage interest is really helping me on my taxes”, not understanding that they would need to deduct approximately $25k in said interest in order to change their tax situation (barring other large deductions). Fear not, I’m going to give you a 5-minute crash course on taxes, not by using fancy terms, or by quoting tax code, but by laying it out in numbers instead! With that said, I do need to give a few definitions to get you started.