Well hey there! It’s been awhile, eh? (cue my inner Minnesotan!) The last two posts I penned were about tips for times of financial unease and working with young kids at home, both of which are still relevant. It’s crazy to think how many months this pandemic has already gone on, and how many more we may be in for. Either way, I hope you’re hanging in there!
Today’s post is all about some practical financial info that you may (or may not!) already know. When the pandemic started, the U.S. government extended the tax deadline to July 15th. My husband and I actually filed ours early (in late February) as we were headed out of town mid-March and wanted them to be done beforehand. It felt great to have them done earlier this year! When I used to do my own I always waited until the last minute and it was so.dang.stressfull!
That being said, this is the first year I am paying quarterly taxes for my business which is exciting (as it means I’m actually making enough money to have to pay estimated taxes - win!) I accidentally forgot to send in my March quarterly however, so I sent them both in at the end of June. If you’re a procrastinator like me - I get it! This is my friendly reminder to you however to just get those puppies done and filed before midnight Wednesday!
Also - on an equally as important note, July 15th is also the LAST DAY to contribute to your Roth IRA for 2019. If you have a Roth IRA already set up and you have extra money lying around in your savings that you feel comfortable parting with, consider maxing out that Roth.
And if you don’t have a Roth IRA, it’s not too late! You can setup one ASAP at a place like Fidelity or Vanguard and contribute for 2019.
Here’s a little more info on Roth IRAs:
Q: What is a Roth IRA?
A: A Roth IRA is an investment vehicle which allows you to put in money AFTER TAX. (Essentially you fund it from your checking or savings account.)
Q: Where can I setup a Roth?
A: You an set one up online at places like Fidelity, Vanguard, Betterment, Ally, and Charles Schwab, to name a few. OR you can also work with a local Broker-Dealer near you to set up a fund. You’ll likely save fees by setting up and managing your own Roth, but either way my best advice is to understand what fees you are paying when it comes to your account management!
Q: What can I invest in?
A: While the Roth is the vehicle you open, you still need to choose what you want to invest in within your Roth. Some options include stocks, bonds, mutual funds, ETFs (exchange traded funds), as well as money market funds. My favorite investments are Index Funds, which are funds that track the market regardless of how the market is doing and have extremely low fees. The market almost always out performs actively managed funds (which are more expensive) - another huge win!
Q: How much money can I put in?
A: The limit for 2019 is $6k (or $7k if you’re 50 and over). If you make over $193,000 as a married filing jointly couple or $122,000 as a single person, however, you will be in the phase out stage. The easiest way to know how much you can put in if you’re over the income limit is to work with an accountant to determine what your Modified Adjusted Gross Income is.
Q: Can I take my money out anytime?
A: Yes - but there are stipulations. You can certainly cash out of your investments anytime, but you may have to pay a penalty (as well as taxes on gains!) if done so before 5 years of account opening. You can always take out just your contributions anytime penalty free (just not the earnings!) After 5 years of account opening you can take out gains tax and penalty-free for a few instances such as for a disability or a first time home buyer purchase. If you’ve had it open for less than 5 years there are instances when you can take out the money penalty-free, but still have to pay the taxes on earnings. Confused? I get it. Here’s a great guide to help HERE.
Alright ya’ll - that’s it for now! Hope this helps you a) get motivated and b) take action!
Until next time…cheers to your abundance!
Katie Oelker
Financial Coach and Writer