We base our estimated quarterly taxes on what we paid in total on the previous year’s tax return. That means that we paid the IRS a total of what we owed for 2013 in 2014. Since we made much less in 2014, that then means that our tax return is going to be substantial in a month or two. Substantial like somewhere between $7000-$9000.
Since we are 99% certain of this, and I also thought oil and gas stocks were at a solid low point last month, I stole $5500 from our emergency fund to throw into my hubby’s Roth IRA for 2015. We invested it heavily in a couple of oil and gas companies. We’ve made $225 so far on our stock purchases, but the hope is they continue to rise for at least the next year or two.
The trick to stealing from one of your personal income investments to grow another seems to be following your own terms for payback. For example, I made myself a promise when I was using the $5500 from our emergency fund that I would pay it back with our tax refund. No ifs, ands, or buts about it.
The first $5500 from our tax refund will go directly to our emergency fund again. The remaining tax refund will be combined with the little savings we have so far for my Roth IRA, and we’ll hopefully polish off that one too. Then we can use our savings for our other goals for the remaining 8 months of the year.
Our Main Retirement Plans
Our two Roth IRA’s are my main retirement savings vehicles right now. I am a fanatic about fully funding both of them every year. It’s “only” $11,000 total a year. If we continue to max them out for the next 28 years and make an average of a 6% return on them per year, they will add up to about $1.4 million by the time we start making tax-free withdrawals.
I rather not work until I’m 60, so we have other plans too. We invest in a regular stock account through Scottrade in an effort to build up cash reserves that will hopefully bridge the time between when we actually retire and when we start touching our Roth IRA’s and my old 401k. We also have a paid off rental home that will hopefully keep bringing in monthly income and can be sold down the retirement road for another cash boost if necessary.
We’ve been looking into other options too like another rental property, a SEP IRA, and even new-to-us options like a Gold IRA, 2nd mortgage lending, and maybe even peer lending if it is allowed in Texas.
Focusing on the Now
Right this second, our minds are more on increasing our current income than what to invest in overall. I refuse to not fully fund our Roth IRA, but I like the idea of saving up our other extra cash for a while. Then we can decide what to do with it. In the meantime, having more cash on hand when you are self-employed is always a good thing for sleeping better at night.
What are your retirement plans? How are they coming along?