Q: How do I build a savings plan after I'm out of debt?

A: Once you've worked so hard to forge your way out of debt, the last thing you want to do is wind up in the same uncomfortable place just a few years (or months) later. In order to avoid this, the obvious thing to do is not take out more debt. But things happen, and emergency expenses tend to pop up. That's why a great solution for developing a savings plan after you're out of debt is to just keep paying your monthly debt payments -- only now, instead of paying them to credit card companies, auto lenders, and other creditors, you pay the payments to yourself!

You can set up a new checking account and literally write yourself checks each month for deposit in that account. But if you're afraid you lack the discipline to not spend that money, you can keep it at arm's length by establishing a Roth IRA (Individual Retirement Account). Unlike a traditional IRA, a Roth allows you to withdraw contributions, so long as your withdrawals do not exceed the amount you've contributed (i.e. you cannot withdraw any investment earnings from your account). However, because you have to fill out a lot of paperwork each time you make a withdrawal, you're less likely to do so for anything less than an emergency.

Currently, the limit on Roth contributions is $4,000 a year, and once you've made a contribution, that limit continues to count against you even if you've withdrawn it. In other words, you can't deposit $4,000, withdraw it, and then re-deposit it in the same year. For that reason, you do need to develop the discipline to stash money away in a savings account as well. A good way of doing this is setting up automatic transfers from your checking each month (or week), and not having an ATM card attached to your savings account. You may even want to look for a bank that only allows a certain number of withdrawals each year, in order to discourage you from making withdrawals that are for anything other than emergencies.

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