That walk-off touchdown from Case Keenum to Stefon Diggs was probably the greatest/craziest play I have EVER seen in an NFL game. The Vikings had the ball at their 39-yard line and had 10 seconds (no timeouts) to either score a touchdown or get into field goal range. The field goal scenario was highly unlikely because the Vikings had to advance the football at least 25 yards AND get out of bounds. That left the Vikings with 1 plausible option- run a well-designed play that would put them in the best statistical chance to score a touchdown.
Enter Marcus Williams into the equation with the missed tackle that has been heard around the world. The Vikings drew up a great play that gave Stefon Diggs a chance to make something happen. All Marcus Williams had to do was tackle Diggs inbounds and the game would’ve been over. The Saints would be moving on to face the Eagles next week, and the greatest play I have ever seen would’ve never happened.
I feel bad for Marcus Williams because he will never stop hearing about this play for the rest of his life. He knew what he had to do but over-analyzed the play, which led to him completely missing the tackle. He knew that he had to make that play and he completely whiffed.
I have been hearing people destroy his decision making process and burying him every chance they get. The funny thing is that I see people every day who make the EXACT SAME MISTAKE. No, they aren’t football players having to make tackles, but the mistake they are making is very similar.
The mistake they make is that there is a clear and obvious financial resource they can use to secure their financial independence, yet they over-analyze it and never make a “play” on it. Like Marcus Williams, these people know what this resource is and that it can be beneficial to them, yet they never take the initiative to use it until it’s too late. That financial resource is the…
Individual Retirement Account (IRA)
The Almighty IRA
Have I ever told you how much I love Mr. & Mrs. Frugal Money Man’s IRA’s? I was very fortunate to discover and understand IRA’s at a very young age (23). I was fortunate to discover this because it is the single greatest financial resource that the average American can use to aid in securing their financial independence.
An IRA is a financial tool that anyone can fund if they are receiving taxable compensation (i.e. anyone that has a job). They are used for individuals and families to fund their retirement. You can open an IRA with almost any financial institution, but I personally recommend you either use Vanguard or Fidelity. Mr. & Mrs. Frugal Money Man’s IRA’s are with Vanguard if you are wondering.
IRA’s are A LOT to try and break down into one article, so I will further expand on them in future posts, but for now I will leave you with these important highlights for the IRA.
- As long as you are receiving taxable compensation, then you can fund an IRA.
- The MAX you are allowed to contribute annually to an IRA in 2018 is $5,500, or $6,500 if you are age 50 or older.
- Growth is tax-free.
- You can’t withdraw the money until you’re 59 ½, otherwise you will be hit with a 10% penalty for early withdrawals.
One thing I hear a lot of people complain about is taxes. I’ll be honest, I do as well. If you have ever looked at a paystub at the end of the year, you might cry when you see all the taxes that have been taken from your paychecks. That is where the IRA has come in to save the day!
The biggest advantage of funding an IRA is that the growth within your IRA is TAX-FREE! You heard that right, all the investments you hold within an IRA are not taxed if they are sitting in that IRA. They can grow and compound for decades without the government being able to touch them! One thing I need to make clear though is this…
AN IRA IS NOT AN INVESTMENT BY ITSELF. IT IS SIMPLY THE VEHICLE THAT IS USED TO HOLD YOUR INVESTMENTS.
Your IRA is simply the vehicle that holds all of the investments that you would like to have. Types of investments you can buy within an IRA include stocks, bonds, mutual funds, index funds, Real Estate Investment Trusts (REIT), and more.
Think of an IRA as a magical force field. This force field protects everything inside of it from outside danger. The danger in this scenario is taxes. As long as your investments are sitting inside that IRA force field, then taxes will never be able to penetrate and tax your investment’s growth.
Do you fully grasp how amazing that is!? Can you even imagine how much money can grow if it’s growth is never taxed? Well if you can’t understand how amazing this is, I will give you an example, using my IRA as the example.
Frugal Money Man IRA Example
Mr. Frugal Money Man is currently 25 years old. I currently have about $11,500 in my IRA. All of that money is invested into the Vanguard Total Stock Market Index Fund. This specific index fund has returned about 9.5% annually since it was created in 1992. I will continue to fully fund ($5,500) my IRA ever year until I turn 60 and am eligible to begin withdrawing from it penalty-free.
My money will be compounding over the course of the next 35 years. After 35 years of me contributing $5,500 annually into it AND it growing at 9.5% annually, my IRA will be worth $1,730,054. I will say that again…
AT AGE 60, MY IRA WILL BE WORTH $1,730,054
I know, I know. 60 years old is a long way away. I hear it all the time- “What good is it to have that money when you’re old?” Trust me…You’re going to want that million dollars when you’re older.
I also don’t think most people understand that 60 isn’t that old anymore. Let’s use a married couple as a reference. If there is a man and woman that are married, there is actually a 72% chance that one of them will live to the age of 85 AND a 45% chance that one of them will live to age 90. That means that you need to able to fund potentially 25-30 more years of life after age 60. That is close to the same amount of time that most people spend in their working years! So before you rationalize that you won’t need that money when you’re old, understand now that although you may be “old,” your body won’t think so and it will probably still function for another 25-30 years. Start paying your future “old” self now so that they won’t have to worry about money when that time comes.
THINK OF IT AS YOUR FINANCIAL FREEDOM SAFETY NET
With the rising costs of living, healthcare, and college tuition, you’re going to need all the financial help you can get. If you think life is expensive now, what do you think life will be like years from now when you have children, a mortgage, and unexpected emergencies?
Inflation will continue to eat away at the purchasing power of every dollar you have, so you need to take advantage of every tax-free financial resource you can. The IRA is the first resource you should be jumping on today and reading more about.
My next article will be breaking down IRA’s even more so that you will feel comfortable opening one and funding it every year. Don’t forget, you are probably making the exact same mistake Marcus Williams did at the end of the Vikings-Saints game. You know the play (IRA) is there to be made, you simply need to take action and make it! Your future financial freedom depends on it.