Random thought: what if I used my Roth IRA as my primary savings vehicle?
A while back, I mentioned that I absolutely hate saving for retirement, but I still diligently put $200 per month into my Roth IRA. I simultaneously have been very not diligent with my cash savings (granted, I’ve been focused on paying down debt, but still – I haven’t taken my cash savings very seriously at all). So I thought, since I look at my Roth IRA as “untouchable,” and I’m so good about putting money into it every month, what if I threw all my extra cash into it to build up a nice little nest egg? Especially since I can withdraw my contributions any time, if I really need to?
Now, I know that pulling money from your retirement account to cover emergency spending isn’t wise. That very well might be personal finance rule #1. I’m just saying that I think I would be more disciplined about putting my extra cash into my Roth because it’s such a bad idea to pull it out. Whenever I put money into my ING Freedom Fund, I always sort of know it’s there, and I don’t feel any real impulse to keep it there. My Roth is different, once I put that money in there I feel like it’s gone, untouchable, a non-negotiable way of paying myself. But, if I really had to – in a serious emergency, not a shopping spree – I could get the money without paying any taxes or penalties.
Also, I can withdraw up to $10,000 of contributions and earnings to purchase my first home. Just a nifty bonus I thought I’d mention.
What do you think? Terrible idea, or neat trick for forcing myself into keeping my savings tucked away?
