Roth IRA, so I can be a philanthropist someday!

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sulingsi
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Roth IRA, so I can be a philanthropist someday!

Postby sulingsi » Thu Oct 18, 2007 1:32 pm

Even though I do a lot of frugal things, like buying all my clothes at the thrift store, using coupons, and selling items on eBay in my spare time, the success that I am most proud of is definitely my Roth IRA.

I am 26 years old, and when I was a sophomore in college, I became very passionate about donating to charity. I only had a part-time job but I started saving a piece of my paycheck every week to send to various charities that I truly believed in, that addressed issues like the environment and human rights. Several months passed by, and I realized that I had only managed to send off about $100 to these charities, sending about $20-$25 each time I got a paycheck. By that time I was amassing a huge amount of charity junk mail and free gifts like address labels and cards. I became frustrated that the charities were going to spend more money in marketing to me and trying to solicit more donations from me than what I had sent them in the first place. I daydreamed that someday I would be a philanthropist and be able to give large sums of money to charities, to finance significant projects like land conservation or grants. I realized that if I were going to accomplish this goal in my lifetime, I would need to start early. I would need to save money.

I started researching investing and personal finance when I got home from class each day. I read about stocks, mutual funds, and various types of savings vehicles. I read about the famed miracle of compound interest, and started to get excited. This was how I could make my dream a reality! With compound interest helping me, I could start from nothing and someday be a great philanthropist. It was still going to take a long time. And then I figured out where to put my money while I waited that long time - in a Roth IRA! The Roth IRA was a wonderful concept, and I quickly realized that I would be foolish not to take advantage of it immediately, though I hardly had an income. I started a Roth IRA and managed to scrape together enough from my summer job that summer to reach my goal - an IRA with Vanguard, which cost $2000 to start.

I wanted to max out my IRA every year. However, that was the last summer I would devote to a summer job. In my spare time, I started a nonprofit that works in Africa, and I spent my last two summers (in college and grad school) in Africa, working on projects there. I had to fundraise my airfare and expenses, so I did not make any money for my IRA that way. However, I managed to land a job doing assistance for the US government in Africa, and that paid a little bit. I sold items on eBay and took part time jobs through the rest of grad school. My income was basically zero. And this is my first year in a 'real job' - making very little. Meanwhile, in graduate school, I accumulated $185,000 in student loans. My husband also has $185,000 in loans, so together that is a total of $370,000 just in student loans. I daresay that few people out there can approach this amount of debt that we are carrying.

Now, with my 'real job' (!) I am making monthly payments on my student loans despite the fact that I have an economic hardship deferment and am not required to make any payments yet. I also still make contributions to charities every month. But at the same time, I make sure to max out my IRA with bi-monthly scheduled payments to Vanguard, and by the end of this year, I will have saved $10,000 towards my dream of becoming a philanthropist. If I can do that by the age of 26, I can aim for the stars for when I reach that tender age of 62 and a half! That is my greatest success so far.

kombat
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Re: Roth IRA, so I can be a philanthropist someday!

Postby kombat » Thu Mar 13, 2008 11:31 am

sulingsi wrote:I accumulated $185,000 in student loans. My husband also has $185,000 in loans, so together that is a total of $370,000 just in student loans. I also still make contributions to charities every month.


Wow. I don't mean to sound harsh, but you cannot afford to be giving money away. You cannot help charities if you are bankrupt. They'll still be there when you retire. Donate then. If you don't throw every spare penny you have at that debt, then you will be in debt for your entire life.

You are not "Getting Rich Slowly" - you are "Getting Poor Quickly!"

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kmull
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Re: Roth IRA, so I can be a philanthropist someday!

Postby kmull » Fri Mar 14, 2008 4:54 am

kombat wrote:
sulingsi wrote:I accumulated $185,000 in student loans. My husband also has $185,000 in loans, so together that is a total of $370,000 just in student loans. I also still make contributions to charities every month.


Wow. I don't mean to sound harsh, but you cannot afford to be giving money away. You cannot help charities if you are bankrupt. They'll still be there when you retire. Donate then. If you don't throw every spare penny you have at that debt, then you will be in debt for your entire life.

You are not "Getting Rich Slowly" - you are "Getting Poor Quickly!"


That pretty much wraps it up. I understand wanting to devote your life to a cause, but you are in some serious financial hardships. What did you spend $185,000 getting? What degree? If I paid $185,000 for a degree, it had better get me a high paying job or at least a decent paying job.
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ambition
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Re: Roth IRA, so I can be a philanthropist someday!

Postby ambition » Fri Mar 14, 2008 7:41 am

kmull wrote:
That pretty much wraps it up. I understand wanting to devote your life to a cause, but you are in some serious financial hardships. What did you spend $185,000 getting? What degree? If I paid $185,000 for a degree, it had better get me a high paying job or at least a decent paying job.


I'm assuming (and hoping) it either got her a law degree, medical degree, or an MBA from a top 10 school. In any of those cases, she'd be fine but should certainly focus on paying those down before worrying too much about giving (some would obviously still be alright).


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