Sunday, March 1, 2009

February analysis

So, how did February go?

Misc income: $1032.46
Which includes
Bonus: $528.17
Interest: $17.61
Flex spending reimbursement: $107.97
Dance Income: $100
Mystery shop payments: $240.62
And assorted survey payments and cash from people in situations where I paid for a meal using a credit card.

Savings
$95 into savings earmarked for travel and gifts
Spending
Blow $29.38 (car service home from book club, Valentine’s candy on sale)
Cell phone $81.10
Dance expense $16.55 (transportation mostly)
Entertainment $30.85 (drinks at pub quiz, book at Goodwill)
Food—dining out $206.42
Food—groceries $77.31
Total food spending: $283.73
Gifts $14.06
Laundry $11.25
Medical $104 (various prescriptions and OTC meds plus a dr copay)
Mystery shop expenses $181.07
Rent $1,100
Therapy $45
Utilities $53.31
Personal items $30.48
Total spending: $1,980.78
Conspicuously missing is my monthly metrocard (unlimited subway and bus rides). This costs me $81 per month and is taken out of my paycheck pre-tax and loaded onto a transit—only debit card. I will probably never, ever remember to include it here since it’s such a weird situation.
Not too bad! My bonus has just been sitting in my checking account, and today I decided what to do with it. The additional $300 I'm getting per month after reducing my 401k contributions to the company match gives me enough breathing room to not need to worry (much) about keeping a large pad there--so I'm going to bite the bullet and open a Roth IRA for 2008. This will reduce my taxable income for 2008, so will reduce the taxes I have to pay to both federal and state, AND will mean that I finally have a Roth IRA (which I can then watch decrease into nothingness). I probably won't be able to contribute anything more to it before the April 15 deadline, but I will aim to also create to a Roth IRA for 2009.

6 comments:

  1. Hi! how do you mystery shop? Is there a site to sign up on? thanks!!

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  2. Hi Hedder02--you can start by reading my post A Mystery Shopping Field Guide and look through the mystery shopping tags--I did several very thorough posts on shopping back in October. Good luck!

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  3. Am I missing something about IRAs? My understanding is that a Roth is post-tax contributions and a Traditional IRA is a pre-tax contribution? So how are you saving on your taxable income by opening a Roth?

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  4. M, that was my understanding too, and it is definitely correct that a Roth uses post-tax money and so grows tax-free, but TurboTax recommended that I contribute to a Roth to save on the taxes that I have to pay. I'm not sure how they work that out--maybe it's a retirement savings credit of some kind?

    I haven't finished doing my taxes yet, so I'm not sure how it will ultimately affect things. I will post when I know more!

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  5. Yeah, I'd be very interested to hear what you find out. I just opened a Roth last month and was wondering how it'll affect (or if it will affect) my taxes next year. So yeah, if there's a credit for it then that would be fantastic.

    Thanks for clearing that up.

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  6. A Roth IRA uses post-tax money. But when it comes time to withdraw it, you will not pay taxes on it. Assuming you are in a higher tax bracket when you withdraw from it, that does save you money on your taxes then.

    A tradional IRA uses pre-tax money, but you will pay taxes on that money when it comes time to use it.

    There are also some other differences, like you can start withdrawing from a ROTH anytime, but you have to wait until you are 59.5 to withdraw from a traditional one.

    Check out this quick guide to learn more about the differences http://beginnersinvest.about.com/cs/iras/f/tradvsrothira.htm

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Thanks for commenting!