Author Topic: Maxed out my Roth IRA  (Read 4005 times)

HydroJim

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Maxed out my Roth IRA
« on: December 04, 2015, 11:49:17 AM »
Last year, I was only able to contribute $3,000 to my Roth IRA. But this year, I maxed out my Roth IRA! I know it doesn't seem like much to the people around here but I'm pretty proud of myself. I come from a low income family and now my net worth is rising while my peers take on tons of debt for college. I couldn't exactly share these details with my friends who spend their money on starbucks and dining out so I came here to share my excitement.

Next steps:
  • By next summer I should be upgraded to admiral shares with Vanguard. Looking forward to the lower expense ratios!
  • I have an internship lined up for next summer and they match 100% on first 3% and 50% on next 2%. Immediate Vesting. I'm planning on contributing at least the employer match and also maxing out my Roth IRA again. Should work out to about $900 in the Roth 401k and $5500 in the Roth IRA. It sure is exciting to see my net worth grow. I can't wait to get a real engineering job after graduation.

CheapskateWife

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Re: Maxed out my Roth IRA
« Reply #1 on: December 04, 2015, 11:53:58 AM »
At 19 you have maxed out your ROTH IRA?

You sir, are a badass.  Now go facepunch all your friends at Starbucks. 

Davids

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Re: Maxed out my Roth IRA
« Reply #2 on: December 04, 2015, 12:07:34 PM »
At 19 that is very impressive. Congrats. You are well ahead of the curve.

FrugalFisherman10

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Re: Maxed out my Roth IRA
« Reply #3 on: December 04, 2015, 12:14:37 PM »
Congrats! best time to be taking that low tax rate now haha

PatronWizard11

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Re: Maxed out my Roth IRA
« Reply #4 on: December 05, 2015, 08:08:02 AM »
lucky bastard. i didnt know what an ira was until i was 28

tarheeldan

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Re: Maxed out my Roth IRA
« Reply #5 on: December 05, 2015, 08:31:54 AM »
Congrats! That's badass!

palebluedot

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Re: Maxed out my Roth IRA
« Reply #6 on: December 06, 2015, 10:36:54 AM »
Congrats dude! You have much wisdom for your age. I was also able to max out my ROTH IRA in 2013 and 2014 while working two part-time jobs and going to engineering school. I was already 25 years of age though so you are doing very well.

newton

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Re: Maxed out my Roth IRA
« Reply #7 on: December 06, 2015, 06:18:21 PM »
Congrats! When I was your age I was only able to contribute $600.  You are well ahead.  Keep it up.

maxpower

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Re: Maxed out my Roth IRA
« Reply #8 on: December 08, 2015, 09:20:32 AM »
Well done HydroJim! I'm curious, what has gotten you excited about this path? As others have mentioned, it's surprising to hear a 19 year old talk like this! Most of us didn't come to our financial awakening until much later in life. I'm inclined to think that there's a pretty significant psychological maturity element at work here. For most of us, the mental capacity to really practice delayed gratification doesn't sink in until later. I was noting recently how, from a psychological standpoint, until a certain developmental point, the future is simply not emotionally real to us. What do you attribute it to? I'd love to know! And again, well done!

maco

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Re: Maxed out my Roth IRA
« Reply #9 on: December 08, 2015, 11:39:42 AM »
Congrats! I didn't even hear of a Roth IRA until the day senior year of college that was set aside to tell us about finances.

I do have a friend who, while his finances today aren't great (failed business venture), isn't terribly worried about retirement because at age 18 his grandma sat him down and explained retirement accounts to him, so he maxed out Roth IRA every year from age 18.

AmandaS1989

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Re: Maxed out my Roth IRA
« Reply #10 on: December 08, 2015, 02:28:20 PM »
Congrats! I didn't even hear of a Roth IRA until the day senior year of college that was set aside to tell us about finances.

I do have a friend who, while his finances today aren't great (failed business venture), isn't terribly worried about retirement because at age 18 his grandma sat him down and explained retirement accounts to him, so he maxed out Roth IRA every year from age 18.

Too bad everybody doesn't have someone in their lives to do this for them. And maxing out at age 19? Damn dude, you should feel pretty good. You shouldn't even feel bad about only being able to do $3k last year. The fact that you're only 19 and already socking money away? You are so far ahead of your peers man. Don't ever feel like you're behind. And many kudos to you for your badassity. ;)

HydroJim

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Re: Maxed out my Roth IRA
« Reply #11 on: December 11, 2015, 11:19:23 AM »
Thank you to everyone for the kind words! It's nice to know there are at least a few others out there like me. I suppose that's why we all are on the forum. There just aren't too many people who understand this way of life.

Well done HydroJim! I'm curious, what has gotten you excited about this path? As others have mentioned, it's surprising to hear a 19 year old talk like this! Most of us didn't come to our financial awakening until much later in life. I'm inclined to think that there's a pretty significant psychological maturity element at work here. For most of us, the mental capacity to really practice delayed gratification doesn't sink in until later. I was noting recently how, from a psychological standpoint, until a certain developmental point, the future is simply not emotionally real to us. What do you attribute it to? I'd love to know! And again, well done!

I can't pin down an exact date so I'll give you the life synopsis:
Age 4 or so my dad gave me his old leather wallet. I still use that wallet every day actually. It's pretty worn now but it still works just fine. I started keeping all my money in there. Eventually I had so many dollar bills and coins saved up that my mom took me to open my first savings account around age 6 or 7. Something like that. Always worked odd jobs growing up and saved every penny. Cutting grass, shoveling snow, etc. $5 was $5 and much better than playing video games. I can't explain why, but I was never like my peers. They saw no problem dropping $1 on a soda or some candy. I hated spending money. My parents weren't exactly frugal either. They both spend every cent they get. Which wasn't much growing up. Only recently have they started saving thanks to my encouragement.

By the time I was 16, I bought myself my first car. Naturally, I didn't even buy the car to drive it. I bought it to turn into a project. My natural frugal-ness turned into a passion for automotive efficiency. Among many other projects, I built this back in high school. It started at 32 MPG highway and I got it up to 47. The money I spent on the car and modifications was won back in prize money in the science fair so it was definitely worth the experience.



I always had interests in optimizing efficiency in every aspect of my life. Fuel economy, finances, engineering, etc. When it came time for college, I told myself I wasn't going to pay a cent for college. I was nominated to The United States Military Academy but eventually couldn't move on in the process due to hearing loss in my right ear. I still found a quality school that fits my interests where I know get full tuition, housing, fees and then I get refunded about $7000 per academic year which I use to cover car insurance, health insurance, books, food, and other misc. things. I track all of my expenses in an excel spreadsheet. I've spent $9500 so far this year not counting tuition, housing, and fees.

Due to my refund, I started looking into doing my own taxes. I wanted to see if my refund would be taxable income or not. Eventually I stumbled upon MMM and I really liked his blog. I did my research on retirement options and figured a Roth IRA would be best while I'm in the 10% and 15% tax brackets. I was lucky enough to get an awesome internship after my freshman year. Now I have an even better paying internship lined up for next summer.

So everything is coming together. I'm hoping to become financially independent in my early 30s. If I count my current girlfriend into the equation, we could actually be financially independent in our late 20s. She's also studying to become an engineer. I don't include her in my calculations for the time being because shit happens and I'm still young. That being said, she is also very like minded and completely on-board with the frugal lifestyle. We're both fairly ambitious so I can't say if early retirement is for us. Overall, we're a good match.

tl;dr: Randomly saved all my money from a young age. On pace to be financially independent around age 32 assuming 3% withdrawal rate and above average engineer salary.


shadesofgreen

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Re: Maxed out my Roth IRA
« Reply #12 on: December 11, 2015, 12:11:46 PM »
Great job on both accomplishments.
The car looks like a Ford Focus correct?
You are stepping into the wonderful world of compound interest early.

HydroJim

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Re: Maxed out my Roth IRA
« Reply #13 on: December 11, 2015, 12:18:37 PM »
Great job on both accomplishments.
The car looks like a Ford Focus correct?
You are stepping into the wonderful world of compound interest early.

That is correct. It started life as a beat up 2000 Ford Focus ZX3. Today I drive a 1993 Geo Metro XFi. I still get 50 MPG but without all the attention.