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This little piggy

The choice to either save or pay off debt is often debate.  I decided to combine the advice from experts and do a little bit of both.

From May of 2009 until July 2010, I was able to reduce one of my mortgage loans by 40% with the rental income.   What I didn’t mention was that I don’t allocate all the rental income to pay off this debt.

Besides reducing my mortgage debt, I was also contribute to my Roth IRA account with the rental income.  My goal from 2010 on is contribute to the yearly maximum allowance.

On the 5th of every month, I contribute $500 per month to my Roth IRA.  The following image is a screen shot of my contribution activity to show proof that I’m actually doing what I’m writing.

I started automated contributions in April of 2010 and will continue to December for a total of $4,500($500 x 9 months).  I made my initial deposit of $475 during the first quarter of 2010.

My anticipated total contribution is $4,975 for the year, $25 short of the $5,000 limit.  I’ll make this budget-breaking contribution sometime this year to reach the limit.

As long as I rent out my spare rooms, I will continue this strategy of paying off debt and saving.  I’m not stressing my budget by contributing to both a Roth IRA and paying off debt because the rental income allows me to do both.

If I have a difficult time filling a vacant room, I’ll simply have to make a choice.  But for now I won’t worry about it until that fork comes in the road.

Creative Commons License photo credit: hill.josh

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