I’ve been thinking a lot about money, retirement and how my finances will change now that I’m living with Sapphire. When she moved in she insisted on helping me with the bills. I declined the offer because I’m capable of handling the household bills myself.

We went back and forth on the issue before we finally agreed I will pay the mortgage and she will pay the utilities and the HOA fee. I chuckled at this because she doesn’t yet know my utility bills are dirt cheap. I guess she assumed because this house is so big I must be paying a small fortune. In reality my utilities look like this…

Hoa Fee (monthy): $205
Energy (monthly): average is about $50-$65
Water (monthly); $15
Internet & Home Alarm: $102

That’s about it.

I don’t have cable and my house is completely electric. So, I don’t have a gas bill. I guess you can multiple the energy and water bill times two and it still wouldn’t be shit. I have two HVAC units. So there is no need to cool the whole house when I’m on the third level which has its own HVAC unit. And because I can only live in one room of the house at a time I don’t burn electricity in the other rooms.

It’s probably important to note Sapphire and I are not equally yoked financially. I work for someone else. She works for herself. I make good money. She makes great money. It took me several years to pay off  my student loans and establish a life for myself. I had no help.

I graduated from college the year the Great Recession hit, and it took me several years to find stable work. I grew up poor. Sapphire grew up well off with parents who paid $1 million plus for their home in the 1990s.  She never had to worry about student loans. Her parents paid for her education.

I don’t think we will ever be equally yoked because she grew up privileged…and let’s be real…Sapphire is a pretty white woman, who will never have to struggle.

Her parents did well for themselves. When they die Sapphire will have a nice inheritance. While they were young they saved and invested for their retirement.

Meanwhile, both my parents are living off social security, and my father is living off a monthly VA check along with social security. I don’t expect to inherit shit from my parents. When my parents die I hope and pray they have a life insurance policy. That’s the best I can expect from either of them. Saving wasn’t part of their plan. Investing wasn’t part of their plan. They lived their lives in the moment as most poor people do. Their children paid the price for their decisions.

I don’t want to be like my parents.

When I’m old I want to have enough money for medical expenses, healthcare, a nice retirement community, and anything else I may need as a senior citizen. I want to leave a nest egg for my kids so they aren’t starting from the bottom. I want to leave a scholarship in my name at Spelman College for future generations of black women.

There is another reason why I’m thinking deeply about my money and retirement. I recently read this article in the New York Times in which the author writes about elderly people filing for bankruptcy because they cannot afford their medical expenses and they are broke. These folks have worked their whole lives yet they don’t have shit to show for it.

I don’t want to be like them either.

I’m 33 years old and I do have a 401k. I also have a Roth IRA that I opened with my bank. Beginning in January I plan to put $500 per check into the Roth IRA to fully fund it every year at the $5,500 max. I invest my Roth into high dividend paying stocks. The money earned from dividends is then reinvested.

I plan to put $300 per check into my 401k.

Why the difference in contributions?

The 401k is a PRE-tax amount while the Roth IRA is an after tax amount.

When I hit 59 1/2 I can withdraw all my money/capital gains from the Roth without paying any taxes whereas the 401k will be taxed after I retire.  The biggest advantage of the Roth is ALL the money (i.e., capital gains) I earn from investing in stocks, bonds, index funds etc is tax free…as long as I don’t touch it before 59 1/2.

In addition to these things, I can convert my Roth Ira to a self-directed IRA. The biggest advantage of a self-directed IRA is I can buy real estate with the money in the Roth and keep those real estate holdings (including the income from the rent) in the Roth…again…tax free.

If at 59 1/2 I decide I want to give my Roth to my kids I can do that as well….tax free. I can convert it into a trust. I can also convert it into a college fund. Either way….I like this flexibility.

When I finally retire, I can look forward to the government taking a cut of my 401k and its capital gains. This is the thing I hate most about a 401k. For more on the disadvantages of a 401k you can read this article.

I now have incentive to stick with my job. I make a good salary. The other glaring thing about my job, and the company I work for, is my pension.

That’s right…when I retire I will have a pension. It’s a guaranteed pension that is insured and cannot be taken away. The insurance industry is one of the few industries left in this country that still offer a pension.

I will have the pension until I die. In addition to this, my spouse and my kids will be entitled to my pension if something happens to me. This is incentive enough to suck it up and stick with my job. Maybe I’ll start applying for other positions with the company…but my ass isn’t going anywhere anytime soon.

I have a feeling finances will stay on my mind for many blog post to come. Get ready!