Roth IRA Challenge: How We (Could Have) Fully Funded an Account

We’re starting a new guest series. I’ve wanted a way to highlight awesome people and awesome bloggers. So, I issue a challenge: The Roth IRA challenge is about documenting how you found or earned an extra $5500 and what you did with the money. It’s called the Roth IRA challenge because that is enough to max out one Roth IRA in a year though I realize most people will have other specific goals for that money. Today, our friends over at Two Cup House kick off the challenge. Enjoy! Over to you, Claudia:

When we kicked off our personal finance journey exactly one year ago this month, we started by addressing the most obvious area: spending.  After cutting our spending significantly and setting a realistic budget we could live with, I imagine that we could have met the prerequisite of this Roth IRA challenge within a few months.  But we had other plans for our cash.

In October 2015, the promotional rate on our credit card balance transfer was going to expire and we had $10k left to pay off.  Cutting our spending alone wasn’t going to help us pay off this credit card balance in time and we had nothing in the way of emergency savings.  Our investments were (and still are) limited to traditional retirement accounts.  And with penalties and taxes, we didn’t want to draw on our retirement accounts in order to pay off debt.

When faced with financial difficulties prior to 2015, my default position was to get another job (or two).  I never considered the possibility that I had a problem managing cash flow that I could have easily fixed by cutting my spending.  Rather, I secured consulting clients whenever I needed to make extra money.

By spring 2015, we finally started to figure out personal finance!  But even with significant spending cuts and frugal living, we knew we weren’t going to be able to off our credit card balance in time.  So, I did what I always do in these situations and I started hustling.

As a digital marketer, my skills are always in demand, so finding clients has been relative easy.  Sometimes, I find clients by way of referrals from past clients.  Sometimes, I walk into small businesses and offer help to the owners, i.e. door-to-door style.  Sometimes, I overhear people talking about digital marketing and I casually insert myself in their conversations to see if I can generate any leads.  And then sometimes, I hustle the old-fashioned way: Craigslist.

By March 2015, I hustled and found one of my all-time, favorite clients, courtesy of Craigslist.  It’s a local business, half ecommerce and half content marketing/affiliate marketing.  I knew this was going to be a win-win situation all around when they offered me commission-based compensation for my SEO work, because as traffic increases, sales and compensation increase for everyone!

Here’s a breakdown of the first $5,500 I earned from just one of the client’s revenue streams: ecommerce.

April 2015: $833.56

May 2015: $787.40

June 2015: $1,165.32

July 2015: $1,182.27

August 2015: $1,142.42

September 2015: $1,283.86

Actually, this amounts to $6,394.83 and it’s my commission from just one revenue stream.  In the same span of time, I helped my client ramp up her affiliate revenue, which accounted for about half of total revenue (and more than half of my compensation).

Because side hustle income was money we didn’t need for our day-to-day expenses, we applied every check to our credit card debt and paid it off before the promo rate expired.  However, if we didn’t have credit card debt, we would have had the option to fully fund a Roth IRA.

Though there were many, many lessons learned in the last year, I think the single greatest lesson I learned was how to manage money.  IMHO, it’s critical to have spending under control, maybe even a budget established, before trying to earn more—I wouldn’t recommend trying it the other way around.  🙂

Isn’t that great? Claudia and Garrett have earned their money side hustling in SEO and they are actually kicking off a course next week teaching people how they can do the same! You can sign up for their course email list to be notified when it goes live!

Will you be taking the Roth IRA Challenge?