Baby Step #4 now in progress: Andrew’s Roth IRA

In December we commented on completing the full funding of our emergency fund, and that the next step in the process would be to begin funding our retirement (following Dave Ramsey Baby Step #4 from The Total Money Makeover). Both of us have pre-tax accounts through our employers (Julie has a 401K through John Hancock, I have a 403b with Fidelity), but an even more essential part of this is to also begin funding a Roth IRA*.

Julie had already started a Roth IRA; a gift she had received after graduating from Hope.   I did not yet have one in place, so I had been looking for a couple weeks to find a game plan for getting this going.  At first I looked at Fidelity, but I quickly realized that I’d either have to have $2,500 to open an account, or else commit to contributing more than we had in the budget to do so.  I then checked with our credit union, but I was unhappy with the options and minimums there as well.

Then I remembered the Investing ELP program available through Dave Ramsey’s organization.  ELP stands for “endorsed local provider”, and these are people that must meet certain requirements in order to receive referrals from Dave’s website.  They basically have to take the time to provide really excellent customer service — to have the “heart of a teacher” when explaining the investment process.

I did a search for ELPs in our area, but was disappointed to find that the closest organization with the ELP endorsement was a half-hour drive from our home.  I was hoping to find someone a little more conveniently located, but I was also trying to just get the account opened, so I decided to proceed nonetheless.  This person gave great service from the outset, following up to my request for information no less than 3 times before I was able to give them a call back.  Once we got the conversation started, it was clear that this was going to be the right choice.

We set up an appointment for last Tuesday night, and during that short meeting, my adviser went through an investment plan that they had thoughtfully prepared prior to the meeting.  They took the time to go through the investments they had selected, and didn’t assume too much about my pre-existing financial knowledge (this is good, because there’s not much to assume about!).  I also appreciated that the mutual fund selections were in line with what Dave typically suggests, a relatively equal mixture of:

• Growth
• Growth and Income
• Aggressive Growth
• International

It meant a lot to me that this person was willing to take on such a small account as well.  We’re investing a reasonable percentage of our monthly income into our Roth IRAs, but I’m guessing that they probably could find “bigger fish to fry”, so to speak.  This was affirmed when I showed gratitude for their willingness to do so, suggesting that this approach to growing the client base had been beneficial to their career.

At any rate, we’re both off and running!  Our budgeted amount may shift in the future as we balance other demands on our financial life, but we are committed to saving for retirement with the same “gazelle intensity” that eliminated all of our debt, with the exception of our home mortgage.  And in this, we’ll also continue to recognize that we are simply stewards of the resources that our Father has given us — it’s an important job, and we’re so excited to do it!

*We’ll again defer to Mr. Ramsey’s wisdom on the basics of investing in a Roth IRA.  Essentially, he points out that it’s important to make contributions to a Roth IRA because the money invested in the account grows tax-free.  That being said, there are income limitations for who can invest in a Roth IRA — at this point in our careers, we’re in okay shape!