*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
Having money set aside for the future is great, but not at the expense of paying the bills in the present. That's the predicament I found myself in about 7 years ago.
Since I was self-employed for a number of years, I didn't have access to a company-sponsored 401(k) plan in my 20s. As soon as I began working for a company that offered a 401(k), I jumped on board with extreme enthusiasm. I was a little too excited.
I began saving too much for my retirement. I was having 30 percent of my salary withheld from my paycheck so it could be invested into my 401(k) plan. I was also contributing to my Roth IRA account that I had opened when I was an independent contractor. After just a few months, I started to notice a few signs that I had made a major financial goof that would cost me.
Although I did have a lot saved for retirement, I didn't have a lot saved for other things. And I was having trouble paying the monthly bills.
I didn't save a car fund
Because I didn't have a car fund, I decided to take a loan from my 401(k) to buy a car. I could have left my money in my retirement account so it could grow. Instead, I was panicked when my car broke down. I realized I was saving too much for retirement at the expense of having money saved for car repairs and a new car.
I didn't have a house down payment
Even though I knew I wanted to purchase my first house, I didn't save for the down payment. When it was time to come up with the three percent I needed to purchase my townhouse, I tapped my Roth IRA. Since it was my first home purchase, I was able to withdrawal money from my IRA without any penalties. Still, the fact that I had no other place to turn for the money was a warning sign.
I didn't have an emergency fund
When my hot water heater broke down, I needed to spent $600 for a new one. I should have been able to tap an emergency fund, but my emergency fund was set to zero. I started to feel the heat of my own embarrassment since I had to resort to using a credit card. Fortunately, I was able to pay the $600 bill within a month. But I realized I needed a 6-month emergency fund more than I needed a huge retirement fund in my 30s.
As I approach my 40s, I know saving for retirement will become a major priority. However, I don't save for retirement at the expense of my more pressing concerns. I now just put aside 10 to 20 percent for retirement, depending on my bills. I personally don't live an extravagant lifestyle so I won't need more than $750,000 to $1 million by age 70 when I retire, but I still have more than 30 years to get there.
In the meantime, I make sure I have enough money put aside for my car and house expenses as well as for my sons' college expenses.