2009 IRA Contribution Limits

January 13, 2009

I just published my goals for 2009. One of which is to max out my Roth IRA. The best way to achieve any goal is to plan. In doing my planning I had to look up the contribution rules and limits for 2009 to see if there were any changes from 2008’s contribution limits. The 2009 IRA contribution limits are as follows.

Traditional IRA Contribution Limits

The contribution limits did not change for 2009 as you can contribute up to $5,000. If you will be 50 years old by December 31, 2009 your contribution limit is $6,000. As a married couple, the contribution limits are effectively $10,000 and $12,000 as both you and your spouse are eligible for a traditional IRA.

Traditional IRA contributions have no income limitations, however, there are income limitations for deducting the value of the contribution.

Traditional IRA Deduction Limits

Deduction limits only apply if you are covered by an employer retirement plan. These deduction limits have not changed in 2009. If you’re unmarried, your contribution deductibility begins to phase out if your adjusted gross income (AGI) exceeds $53,000 and completely phases out at $63,000. If you’re married and both you and your spouse is covered by an employer retirement plan, your contribution deductibility begins to phase out if your joint AGI exceeds $85,000 and completely phases out at $105,000.

It gets slightly complicated if only one spouse is covered by an employer retirement plan. For the covered spouse, the contribution deductibility begins to phase out if your joint AGI exceeds $85,000 and completely phases out at $105,000. For the non-covered spouse, the contribution deductibility begins to phase out if your joint AGI exceeds $159,000 and completely phases out at $169,000.

Roth IRA Contribution Limits

The contribution limit for a Roth IRA also did not change and is $5,000. If you will be 50 years old by December 31, 2009 your contribution limit is $6,000. As a married couple, the contribution limits are effectively $10,000 and $12,000 as both you and your spouse are eligible for a traditional IRA.

As opposed to the traditional IRA, the Roth IRA has income limitations for contributions. The income limitations have changed for 2009 so take note. For unmarried individuals, the contribution limit begins to phase out with an AGI of $105,000 and completely phases out at $120,000. For married individuals, the contribution limit begins to phase out with a joint AGI of $166,000 and completely phases out at $176,000.

Conclusion

Even though 2008 is officially in the books, you can still contribute to a 2008 IRA up until the tax filing deadline of April 15. After 2009, the IRA contribution limits will be indexed to inflation, which will make IRAs very powerful investment vehicles.

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Personal Finance, Alternative Income And General Goals For 2009

January 12, 2009

I recently posted a round up of my 2008 financial goals. Due to poor planning I only accomplished one of my goals. The one goal I did accomplish (completing my condo down payment) was major. I did not lay out a plan prior to selecting my goals and therefore did not accomplish them satisfactorily. I have put a lot more thought into my goals for 2009 and feel confident that I can accomplish them with a lot of hard work. I’ve also decided to extend my goals beyond just personal finances for 2009, so without further ado…

Personal Finance Goals

  • Fully fund 2008 Individual 401k ($0/$10,427.33) – I have not funded any of my individual 401k for 2008, but I have until the tax filing deadline, April 15th, to fund the account. I currently have nearly $9,000 in cash and $6,100 in stock (Target and US Growth Mutual Fund) that I am willing to transfer into retirement accounts to tax sheltered. Originally, I was not planning on using these funds for this purpose as they are depressed and it’s not wise to sell funds when the value is low. I would be buying funds that are equally battered in my retirement accounts, so I would not be losing value.
  • Fully fund 2008 Roth IRA ($0/$5,000) – See above. I hope to be able to fully fund this retirement account as well before the tax filing deadline, however, the individual 401k is my first priority.
  • Fully fund 2009 Individual 401k ($0/$??????) – I will not know how much I can invest in this account for 2009 until I tabulate all of my 2009 self-employed income, which may come from tutoring or this website. I hope to put everything I make away as was the plan in 2008. I believe this is possible as I do not need this income for any of my monthly expenses.
  • Fully fund 2009 Roth IRA ($0/$5,000) – Even if I am unable to fund this account until after the tax filing deadline, I should still be able to fully fund it by the end of the year. I will have 8 months to fund this account, which translates into $625 a month. After generously estimating my monthly expenses I should have that amount to invest. When estimating income I didn’t include tutoring income and I did not assume an annual raise as this economy makes that uncertain at this point in time.

Alternative Income Goals

  • Turn blogging into a source of income – I’ve been blogging for over 5 months now. The knowledge I ‘ve gained since I started has been invaluable, and I hope that I have provided others with knowledge as well, but I would like to make some sort of income off of this blog to make my total income less dependant on one source. I don’t know how to make a quantitative goal, so I will be rather conservative in this goal by saying that I want to earn enough to pay for the expenses of running a blog (hopefully this includes a new laptop!).
  • Increase monthly page views and subscribers – I haven’t been blogging long enough to notice much of a trend in terms of my page views or subscribers. It’s very difficult to project quantitatively for this goal as well. My high month for page views was December with 2,119, but I would love to get over 10,000 a month. I currently have 17 subscribers. I think a goal of at least 100 subscribers would be attainable yet challenging. In order to accomplish this goal I will try to participate in more carnivals, host a carnival and try to associate more with other personal finance bloggers.
  • Replace tutoring income through a company with my own personal clients – I currently tutor as a contractor through a tutoring company. The company requires keeping the same hours all the way through the school year. Also, they pay about half of what I can expect to earn on an hourly basis if I find the clients on my own. I hope to earn more money and gain more flexibility with my work hours by tutoring on my own. The tutoring company is about 30 minutes from my condo, so I should be able to tutor kids closer to my condo. In order to accomplish this goal I have to quit the tutoring company after this school year and tap my contacts in the school system. I also want to start a website for my tutoring services and begin advertising at local grocery stores. I previously blogged about expanding my tutoring and outlined a good path for doing so.

General Goals

  • Travel to two cities I’ve never been to – I really want to start traveling more. Saving for my condo down payment prevented me from traveling last year. I wanted to include this as a goal because sometimes I try to be too frugal and save too much and forget to prioritize traveling like I want to. Ideally I would make it to Europe, but a Europe trip is probably a few years away. I will probably focus on US traveling by visiting buddies from college. If I can squeeze an package deal to Mexico towards the end of the year, that would be AWESOME!
  • Get in shape – As a competitive runner all the way through college, I never had to worry about staying in shape. Now that I don’t competitively run, it’s harder to stay in shape. I want to get back to running more, but I keep hurting myself before I get all the way back into shape. I want to try being in shape before I start running seriously again. To do this I have to lose 10 pounds, increase my flexibility, increase my leg strength and improve my balance. To accomplish these goals I will be trying to swim more regularly, bike when it gets warmer and lift and stretch regularly. To make this easier I will be trying to come up with a regular schedule in the next week or two. The ultimate goal would be to run a sub 16:00 5k by the end of the year, but that might be ambitious as it would require speed work, which is hard to do training alone.

Conclusion

I have put significant thought into these goals. I plan on updating my progress monthly and updating my goals page when goals are completed. I’m very motivated to accomplish all of these goals and think it is realistic, yet still challenging. If you have any advice feel free to leave it in the comments and good luck to all of you in accomplishing your 2009 goals.

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2008 Financial Goals, A Year End Review

January 9, 2009

As 2008 came to a close, I began to think about how I did in accomplishing my 2008 goals and how that would effect my 2009 goals. I only accomplished one of my goals, mostly because I didn’t really come up with an action plan to accomplish my goals. I will use 2008’s goal setting experience to better set and accomplish my goals for 2009.

Set up and fully fund a solo 401k ($0/$10,427.33)

I set up a Vanguard Individual 401k on December 26th, which was before the December 31st deadline. Since I beat the deadline, I will be able to fund my 401k until April 15th, the tax filing deadline. It was a pretty painful experience because I had to set up an Employer Identification Number (EIN) and send in proof by the deadline.

Every month I’ve been increasing the maximum value that I can invest for the 2008 tax year as I continued to make more money tutoring. This is the first month that I used a contribution calculator as I’m not able to invest 100% of what I earn, I have to take out certain self-employed taxes. The maximum contribution value is still not finalized, however, as I will modify my net income with the miles traveled for tutoring.

I have not invested anything in my account yet because I was waiting to finish paying off my furniture, TV and buy Christmas gifts. I have some cash left over and will begin investing, hopefully by the end of the month.

Fully fund my Roth IRA ($0/$5,000)

I have decided to fund my solo 401k before my Roth IRA for tax sheltering purposes. If I don’t put all of my self-employed income into a solo 401k, then I will have to pay taxes on both sides of the Medicare and Social Security.

I will most likely not be able to invest in my Roth IRA for the 2008 tax year. I’m not disappointed that I probably won’t be able to fully fund this account. I made the decision to prioritize my condo down payment for this year. It was an extraordinary effort to come up with 20% in such a short period of time.

Save for a 3-month emergency fund ($0/$7,762)

My 3-month emergency fund reflects monthly payments for my mortgage, property taxes, car payment, assessments, car insurance, cell phone, cable, internet, electric bill, gas and food.

For my 2009 goals I might re-prioritize and modify my emergency fund. I’m thinking about dropping my goal down to $1,000 as a true emergency fund. After reaching that goal and saving for my retirement funds, I will try to push it to a 3-month emergency fund, which is designed as insurance against losing my job.

Wrap-Up

Now that my 2008 goals are in the books, I will start finalizing my 2009 goals. Fortunately, I am still able to carry over some of my failed 2008 goals until the tax filing deadline. Overall, I’m very happy with my ability to come up with the down payment. I will put more time into my 2009 goals and try to outline a plan for my goals so that they are more realistic. I will also put out goals for my blogging and other personal issues such as my health and career.

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More Free Items From Walgreens

January 8, 2009

Walgreens - Home

Both CVS and Walgreens have various rebate and money saving programs. I have done most of my drug store deal shopping at CVS as I have found better deals. A few deals at Walgreens caught my eye this week, so I decided to a stab with my first serious attempt at having Walgreens pay me to take a few items off of their hands.

Walgreens is having a sale on Garnier Fructis shampoo, conditioner or styling products. I purchased a 13 oz. bottle of shampoo + conditioner, which was on sale for $2.99 from an original price of $3.99. The Walgreens EasySaver Catalog has a coupon for $2.00 off making the price $0.99. Finally, I used a $1.00 off manufacturers coupon from the inserts in the 01/04 Sunday paper. With the sale and two coupons, Walgreens gave me $0.01 to take a bottle of shampoo off their hands.

The second item I “purchased” was 25 tablets of Electrasol dishwasher detergent. This item is originally priced at $6.99, but was on sale for $3.49. I used a manufacturers coupon for $2.50 from the 01/04 Sunday paper, which brought the price down to $0.99. $0.99 was what I had to pay out of pocket. Another great part about this deal is that the box was supposed to have 20 tablets, but contained 25% more with 25 tablets!

There was an additional rebate deal through the EasySaver Catalog for $1.50 on the Electrasol tablets. If I choose to accept my rebate in the form of a Walgreens gift card they will tack an extra 10% onto the rebate value, for a total rebate of $1.65. In the near future, I will do a post on how to submit rebates online.

After tax I paid a total of $1.35 for a bottle of shampoo and 25 tablets of dishwasher detergent with the potential to get a gift card of $1.65. Ideally I will build up enough money on a Walgreens gift card to not spend anymore money out of pocket. I have to get more organized if I really want to take advantage of these CVS and Walgreens deals as the really good deals run out very quickly. I hope you keep following me on my journey towards extreme frugality at CVS and Walgreens.

Total out of pocket: $1.35

Total in rebates: $1.65 (I forgot to submit the rebate on my rolls of tape)

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End Of December and 2008 Financial Status

January 7, 2009

I had a nice relaxing holiday break, minus the wedding and new years party towards the end, and I hope you all did as well. I suppose now it’s time to get back to the grind of working, tutoring and blogging. In the near future, I will be posting my 2009 goals, which will include both financial and non-financial goals. For now, here’s my standard financial status summary for the end of December, which is also my end of 2008 summary.

december081

Cash

My available cash was the only asset to decrease for December. This is because my three months of 0% interest on my American Express ran out. This means I had to pay for my TV and three months of gas and food. Also, this month had my first mortgage payment. Combining these major payments with only two work pay days (January will consist of three) and not cashing my tutoring paycheck, and my cash assets decreased slightly.

Stock Market

December was the first month with an increase in my stock market assets since August. It is important to remember that I haven’t made any contributions to the stock market so far in 2008, so all of the monthly increases and decreases are due solely to stock prices. I will contribute towards 2008 retirement savings before the tax filing deadline, but that’s more for my upcoming goals post. In the end, it’s a good feeling to see my stock assets increase in value, however, I’m not confident they are going to continue rising.

Over the course of the year, I’ve lost between 29% of my stock assets, I feel very fortunate that I was not heavily invested in the stock market, but I plan on investing soon to take advantage of the coming uptick.

Liabilities

I made my standard car payment this month and my first mortgage payment. It’s rather depressing that only $214.63 of my mortgage payment went towards principal. This makes me really want to make an extra payment every month so that I can build equity more quickly.

Net Worth

My net worth increased ever so slightly in December as a result of an increase in the stock market, which is the exact opposite of the recent trend. I was able to decrease my liabilities by more than the decrease in assets to increase my net worth by 0.2%. Obviously, I’d like to see my net worth increase by more than 0.2% every month, but due to the extreme circumstances I will take what I can get.

Over the course of the year I was able to increase my net worth by 189%!!! I increased my net worth from $30,898.77 at the beginning of 2008 to $89,232.39 at the end of 2008. I’m very happy with my net worth increase, especially since it was all due to hard earned money and a buying real estate with built in value. In the future I am hoping my earnings will continue to boost my net worth, however, I would like to see stock market investments begin to take over as the catalyst for my net worth growth. Here’s to 2009!

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Earn Free Money For Searching The Internet Using Swagbucks

January 6, 2009

Anytime I can earn money for doing something I would normally do, I jump all over the opportunity. I try to take advantage of CVS and Walgreens to save money, I use Ebates, BigCrumbs, Mr. Rebates and Cashbaq to earn cash back on purchases, and I search out great deals using slickdeals. Now, I’ve stumbled upon swagbucks, which rewards users for using its search engine.

How it Works

Either you go to swagbucks.com or download a swagbucks toolbar for your browser, but you use swagbucks as your search engine rather than google (Swagbucks actually uses google and Ask.com search engines to develop results). Randomly you will be rewarded with “swagbucks”. The denominations are 1, 2, 3, 4 and 5. Additionally, there are larger denominations that are super rare, but I have received a 10 spot in swagbucks before.

There are all kinds of items or gift cards that you can exchange your swagbucks for. The featured prizes are currently a $10 Barnes and Noble gift card for 115 swagbucks, an XBOX 360 Premium for 4100 swagbucks and an Apple Iphone for 3800 swagbucks. I personally find the best deal to be a $5 Amazon gift card for 45 swagbucks.

Other Ways to Earn Swagbucks

There are a few other ways to earn swagbucks. You can make purchases at online retailers through swagbucks, refer friends or trade in old cell phones and mp3 players. Personally I would rather ebay my old technology and make purchases from cash back websites, but referring friends is a great way to pile on the swagbucks. You can earn up to 100 swagbucks for each friend you refer.

Sign Up

Follow this LINK. Enter your name, email address, password, country, state, zip code and year of birth. Click “Sign Me Up!” and start searching as you normally would. You’ll even get 3 free swagbucks when you sign up.

Conclusion

I’ve already earned 53 swagbucks, which is more than enough for a $5 Amazon gift card. It has taken me just over a month to earn that many swagbucks, but it’s for doing something that I already do. You can earn free money from swagbucks without any drawbacks. So far I’m a huge fan.

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Returning From Break And My Trip To CVS

January 5, 2009

I decided to take most of the past two weeks off of work, which translated into losing all sense of a schedule and slacking hardcore on this blog. As I return to my standard 5-day work week tomorrow I will be getting back to my standard blogging schedule as well. I hope that everybody had a wonderful and relaxing holidays. During the break I stopped by my CVS as my ECBs were about to expire.

I had 8.99 in ECBs from my last trip to CVS. I had been struggling to find enough deals to take full advantage of my one large ECB. On December 20-21 CVS had a bunch of free after ECB deals. I made the mistake of not jumping on this deal the first day it was offered. Apparently there are many other CVSers in my area. I was able to find some ZipFizz for $5.99 with 5.99 in ECBs and protein bars that were 3/$5.00 with 5.00 in ECBs.

In the end I spent $2.04 out of pocket and received 10.99 in ECBs. Overall, I was pretty happy with this trip to CVS as I was able to buy stuff that I have a use for and used my ECBs before they expired. If you forget to use your ECBs before they expire you don’t end up saving any money.

Total out of pocket: $7.45

Total ECBs: $10.99

Total value of items purchased: $36.85

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