Sunday, September 21, 2014

$14 per day + compound interest = retirement

I could think hard about all the different ways to implement a savings plan. I know the mechanics of what I want to accomplish. The goal is to save enough money now to create a seamless transition into a continued future horseabout. The best approach for non-rich Americans with no career is to sock money away in a Roth IRA and invest in index funds.

The hard part would seem to be done. I did the research needed to plan my approach. I know more than enough about retirement savings, index funds, and compound interest. The only thing left is to get actual money into my Roth IRA.

First, I considered setting up an automatic siphoning of money from my checking account into a savings or money market account. I got lost in the details because my brain decided to continue on a different tangent, and getting my brain on track is like trying to get a locomotive on track once it's already taken a wrong turn.

OK - simplify. I need to get approximately $14 per day into my Roth IRA. Or $98 per week. Or $200 per pay period. Or $5000 per year.

$14 is a lot some days. For some stretches of time, that's way more than I'm spending to eat and walk around. At other times, I make a large enough sum all at once that I would hardly notice if a chunk of it disappeared. An average of $14 per day will have me on track for a retirement that is at least as comfortable as my current low-budget lifestyle: and it's an amount that I feel like I can manage.

The time to begin is now. The longer you wait, the less exciting the readout on a compound interest calculator. Once I had $14 per day figured out, I just had to figure out how to put it aside.

This is an explanation of why I have $42 stuffed in a jar with a little printed-out calendar with X's on the past three days.