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Are You Sure You Can Save Enough For Retirement?

Are You Sure You Can Save Enough For Retirement?

25% of Americans aren’t saving anything for retirement. Are you one of them?

Thankfully, it’s not too late to catch up, but whether you’re twenty-two or fifty-two, the earlier you start, the better off you’ll be.

Here are some simple strategies to get you on the path to a more secure financial future, including savings expert Dave Ramsey’s Top 3 recommendations for catching up if you’re behind:

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1. Invest in Your Company’s 401K Plan.

A 401K allows you to save pre-tax money in an account that allows you to earn compound interest tax-free. When you retire, you can withdraw the money and it is then taxed like normal income (early withdrawal can carry a hefty penalty, however). Microsoft’s website even offers a helpful Excel-based 401K planning template to get an idea of how much you should start with, what you should contribute, and how raises and company matching can affect contributions.

2. Invest in a Roth IRA.

If your company doesn’t have a 401K plan, think about opening a Roth IRA, which allows you to save after-tax money in a retirement account. Unlike a 401K, money saved in a Roth IRA isn’t taxed when it’s withdrawn, which can have its advantages. If you can afford to, consider investing in a Roth IRA and your company’s 401K.

3. Seek Out Sound Financial Advice From a Certified Financial Planner.

Check out the CFP website for someone in your area, read Yelp reviews and Better Business Bureau feedback, or ask a friend or colleague to recommend someone. A good planner will review your goals and progress with you annually, if not quarterly, to make sure you’re still on track.

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4. Check Out These Ten Great Retirement Books.

These books (in the link) will give you some ideas and get you thinking about what you want your retirement to look like. Do you want to be on a beach? Is travel important to you? How many mortgage payments will you have left?

5. Visit the AARP Website’s Free Online Calculator.

AARP gives you a personalized snapshot of your financial future, based on your current lifestyle. The more you know about what you can and can’t live with, the more motivated you’ll be to sow now what you can reap later.

6. Make it Easy.

Planning for retirement doesn’t have to be complicated or difficult. If you put systems in place to automate your financial goals, you won’t have to think about them. The system will take care of them for you!

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7. Get Your Head in the Right Place.

If saving is hard for you, it might be time to be honest with yourself about your money habits. Do you have any attitudes that might be sabotaging your savings strategies?

8. If You Don’t Already, Get Used to Living Within Your Means.

You’re not going to have a choice when you’re living on a fixed income, so cultivate this habit now before it’s too late.

9. Pay Off Your Credit Card Debt.

Even if you can’t pay off your mortgage before you retire, retiring with credit card debt isn’t smart. The interest you’re paying on your debt is likely to be much higher than the interest you’re earning on your retirement accounts!

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10. Learn How to Customize Your Investments.

Did you know that many 401Ks and Roth IRAs offer options for customizing your investments? These customizations allow investors to select the specific funds they want their money going into, which can run the gamut from high-fee managed funds to low-fee Index Funds. The mix you choose to invest in can cost or save you thousands, if you’re willing to do a little homework.

Getting started is the hardest part, but once you take that first step, time will be on your side. Cultivating good money habits, being willing to learn, and putting systems in place to do the heavy lifting for you can ensure that your retirement is secured, and your golden years are happy ones.

Featured photo credit: Markgraf-Ave via pixabay.com

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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