By the way, don’t forget to watch the video on the Amazon page. It’s a hoot!

And thanks to all of you for some great comments.

Best,

Joe & Denise
The Money Book for Freelancers
feed-the-monkey.com

My accountant always recommends maxing out the Individual 401K (or a SEP-IRA) first, before making contributions to a ROTH IRA. Contributions to an Individual 401K or SEP-IRA reduce your taxable income.

I’ll have to take a look at this book. Thanks for reviewing it!

Why not fund the SEP-IRA first (reducing your tax) and then when that’s maxed out then go to the ROTH-IRA if you have more to invest.

There are reasons to fund an ROTH IRA first, (easier to remove contributions if needed, able to take out for first home etc…) but if you’re using both for strictly retirement and don’t plan to touch it, maybe it makes sense to consider the SEP-IRA as an option.

As J.D. always says “Do what’s right for you”. But I caution eliminating a certain account because you “don’t make that much money”. Some are definitely more advantageous to use than others depending on your situation and can provide important tax benefits.

I thought it was clear that she was talking about SEP-IRAs for money AFTER the 5K. Perhaps the very last sentence muddies the water, but prior to that,I got it and I’m not even a freelancer who needs to know about SEP-IRAs!

While I don’t want to harp on single sentence in an otherwise completely awesome post, I do feel it’s worth pointing out that Snowballer is correct -every dollar you put in a Roth IRA is a dollar you can’t put in a Traditional IRA. The maximum is a $5000 total for both types of accounts.

However, SEP IRAs are *really* easy to set up. I set mine up in Ameritrade in 15 minutes. You just specify that you want an SEP IRA and fill out a simple form (simple as in there are only about 3 blocks to fill in besides your personal info). Your contributions are limited to a percentage of your salary, but the contributions are tax deductable, just like a Traditional IRA or a 401(k).

Thanks again for a great and relevant post, and good luck with your savings goals!!

I’m really interested in the retirement suggestions and other ideas. The way I’ve managed to even out my random income is to spend as little as humanly possible and save the rest. Clearly that’s no way to live, but this is the first year of my life I’m not totally broke or relying on credit cards to make ends meet. I still have to save up 6-months of living expenses, but I’d like to have a vision beyond that. I hope this book helps.

I’ve been reading the prologue on the Amazon website, and I’m interested what they’ve got to say about health insurance. (Ha! Health insurance!) And whatever else they can suggest to help me make and grow money.

Thanks again for posting this. And please keep the advice for freelancers coming on a regular basis! We’ve had posts that discuss how to negotiate your salary. What about how to negotiate with clients, and setting fees, and collecting unpaid bills? I know this is not a small business blog, but the prologue says that consultants, freelancers and part-timers make up 30% of the work force, and the GRS staff belongs to our ranks– yes?

Ok– thanks for the 3rd time!

I look forward to seeing the books’ suggestions for evening out uneven income.

Unless the author of this post knows something I don’t, which is very possible, the $5000 (as of now) annual maximum for contributing to a Roth IRA is reduced dollar for every dollar contributed to a traditional IRA.

In other words, you can put $2000 in a Roth IRA and $3000 in a traditional IRA in the same year, but you can’t put $5000 in your Roth and another $5000 in your traditional IRA in the same year, unless of course the author of the piece is referring to the SEP-IRA, which is not a traditional IRA and therefore not subject that rule.

To accomplish what I think the author is implying, one would have to have a Roth IRA and an SEP IRA. A Roth IRA and a traditional IRA would not help a situation where one wanted to put more than $5k in a tax advantaged account.

Thanks for your review!

As income often fluctuates from month to month, it’s hard to put aside a set amount so this often paralyzes freelancers into doing nothing. It sounds ridiculously simple once you learn it (and it is) but it really helped me be more disciplined.

It was also great to read a book dedicated to my situation.

I think you need to do some more research regarding the difference between SEP IRA’s and Roth IRA to understand the difference.

I have been self employed since 1987. The SEP IRA is tax deductible and will lower your taxes. The Roth IRA is not. To me, it makes more sense to fund the SEP and lower my taxes. Only after the SEP is fully funded, would I put money in a Roth account.

I will check out the book. Thanks for your review.

Debbie

Even Dave Ramsey Total Money Makeover, which you mention here, deals cursorily with budgeting and emergency funds for the self-employed. Yes, we are only 1 out of every 10 workers in America, but we do exist.

Thanks for your review of this book. I’m going to look for it RIGHT NOW.