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5 Smart Moves For Millennials To Boost Retirement Savings

5 Smart Moves For Millennials To Boost Retirement Savings

Retirement might not be coming your way for quite some time, but if you haven’t started planning for it yet, it’s possible that you’re already a bit behind. As the outlook on retirement looks dimmer and dimmer for our generation, the need to contribute early and often to a retirement savings fund becomes all the more important. Fortunately, there are several ways you can boost your savings now to build your funds faster and secure a more stable future for yourself in your older age.

Here are six smart moves you should be making now to boost your chances of building a sufficient fund for the future.

1. Automate Your Savings

Americans are notorious for neglecting the importance of building a savings account. Nearly seven out of ten Americans have less than $1000 in a savings account. One of the best ways to make sure you’re actually putting money away instead of spending it is to automate regular contributions to your savings accounts. Of course, you’ll want to automate your retirement savings so that a small amount comes out each month, but you’ll want to contribute to a personal savings account as well.

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Set up an automatic funds transfer between your checking and your savings account. Set an amount that is large enough to build funds over time, but small enough that it doesn’t break your bank each month. For your retirement savings, check with your employer to see if the company offers an automatic payroll deduction that contributes to your 401(k).

2. Take Advantage of 401(k) Matching

While you’re discussing your savings options with your employer, be sure to ask if the company offers 401(k) matching. Many companies will offer this to their full-time employees. In its simplest form, 401(k) matching means the company will match a percentage of your monthly contribution to your 401(k) with its own money to help you build funds more quickly.

Not all employers will offer 401(k) matching, but just asking about it can be helpful in putting the idea of implementing a matching program on their radar.

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Before you head in to talk to your employer, it will be helpful to have a little background information on what a matching program entails. Check out this guide for a quick overview of what a typical 401(k) matching program might look like.

3. Refinance Student Loan Debt

Debt from student loans is one of the most common factors affecting the millennial generation’s ability to put money away in a retirement savings account. In fact, about 40 million Americans are currently paying off student loan debt. Although it might seem like you’re stuck with the same monthly installments for the rest of your life, you actually have an option to lower your monthly payments and free up some of your monthly income to put away into your retirement savings account.

Refinancing student loan debt can help you adjust your payments to an amount that makes it easier to have enough money to save each month. The process can even help you identify ways to lower interest rates where possible.

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If you have any type of loan out, chances are you’ve received a letter from at least one company offering to help you refinance your debt. What you should know is that not all companies are equal in terms of their abilities to provide a trusted refinancing service. If you’re a bit new to the idea of refinancing, check out this guide to learn a little more about some of the top companies for refinancing student loan debt.

4. Cut the Cord on Cable

The average cable bill is around $99 a month. When you add on your internet connection, this will likely be an additional $20 to $45 per month for a standard connection. Add this up, and the amount you spend each month for entertainment gets pretty high! If you have a monthly cable subscription and are constantly wondering where your money went at the end of each month, this is likely one of the major culprits contributing to your lack of funds. This is why the trend of cutting the cord on cable is growing among the millennial generation.

Although most of us aren’t quite ready to cut the cord on internet, many of us are willing to nix cable and sacrifice the ability to binge watch marathons on our favorite channels to save about 100 bucks a month. You can sign up for a monthly streaming subscription like Hulu or Netflix for around $15 a month to replace cable and save big on your monthly expenses. All you need is a streaming device like Chromecast or Apple TV to stream content from your computer to your television.

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Cutting the cord will help you save quite a bit of money each month that will be put to better use in your retirement savings account.

5. Stick to the Same Car for Awhile

We all love the idea of cruising around in a beautiful new car, but what we often don’t realize is that we’re throwing a lot of money down the drain when we insist on swapping out cars every couple years or so.

Experts say that when an individual is able to stick to a plan of keeping a car for at least 10 years, they purchase half as many cars in their lifetime. This means you could save a huge amount of your money and be better set for retirement if you commit to owning a car for awhile before you look into a newer option. Not to mention, after the course of a three to five year loan, you’ll have at least another five years of debt-free ownership of your car if you keep it around for at least 10 years. This means more money in your monthly budget to put toward saving for retirement.

So there you have it, five smart ways you can save money now to boost your retirement savings and prepare for a comfortable lifestyle in the future. Hopefully these tips will help you establish a few healthy saving habits to build an effective retirement savings account. If you have any questions or perhaps a tip you’d like to add for other readers, comment below!

Featured photo credit: Pexels via static.pexels.com

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Last Updated on July 10, 2020

The Definitive Guide to Get out of Debt Fast (and Forever)

The Definitive Guide to Get out of Debt Fast (and Forever)

Debt can feel crushing, like a weight that is always weighing you down. Looking at those numbers, it can feel as if you’ll never get out from under it. However, if you really want to learn how to get out of debt, it is possible with a great deal of focus and self-control.

Getting out of debt isn’t impossible. Like any big goal, all that it takes is an action plan to identify where you are and creating a plan to zero out your debt.

Identifying All of Your Debts

The first part of paying off your debt is getting a complete picture of what you owe. When you have everything written out in front of you, it makes it much easier to create an action plan. Depending on how much you owe, it might also help you realize it’s not as bad you might have originally thought.

Here’s how you can get started identifying your debts:

1. Own Your Debt

Before you start identifying all of your debts, take a moment to process that you have debt but want to get out of it.

Forgive yourself for any past mistakes, missed payments, or overspending. It might be painful to accept how much debt you have at first, but you must own it.

2. Make a Debt Tracker

It’s astonishing how few people ever created a tracker to understand their total debts. Most likely, it comes from not wanting to accept the guilt of having debt, but, if avoided, it can make it nearly impossible to get out of debt.

Open up a new Google or Microsoft Excel sheet and list out all of your debts. Start with the name of the creditor, interest rates, total balance, loan term length (if any), and the minimum amount due each payment. This will include student loans, credit cards, and any other type of debt owed.

3. Get Your Debt Number

Once you’ve made your debt tracker and taken the other steps, identify your total payoff number. This is crucial, as you will have a starting point and a clear goal that you are trying to achieve.

Prioritizing Your Debts

All debt is not created equal. It’s imperative to understand that there are different types of debt.

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1. Understand Bad and Good Debts

Bad debts are usually paying for things you want instead of always need. While there might be some emergencies that max out your credit cards, often times it’s excessive spending[1].

There are three main types of bad debt:

  • Credit Card Debt: The average American household owes over $16,000 in credit card debt!
  • Auto Loan Debt: According to CNBC , the average auto loan in the US is $30,032!
  • Consumer Loan Debt: Consumer loan debt isn’t as common as credit card and auto loan debt, but it’s still considered bad as interest rates are usually between 10-28%.

Good debt is identified as investments in your future. Here are three common types of good debt:

  • Student Loan Debt
  • Mortgage Loan
  • Business Loans

2. Decide Which Debt to Pay off First

Once you know each type of debt and their interest rates, you can begin to pay off debt quickly.

Focus on paying off bad debt first, regardless of if it is a credit card or auto loan. Start by paying off the loan with the highest interest rate first.

If you have several credit cards with different interest rates, you want to focus on the one with a higher APR. You will actually save more money by eliminating the card with the highest interest rate.

3. Don’t Pay the Minimum Amount

Paying the minimum amount digs you into a hole as interest rates will offset your payment. Even a small amount more than the minimum can help you pay off debt much faster.

Removing Obstacles to Pay off Debt Quickly

Creating a debt tracker and prioritizing a plan is simple, but avoiding temptation can be difficult.

1. Set a Reminder to Track Your Debt

“If you can’t measure it you can’t manage it.” -Peter Drucker

It’s so important to track your debt to ensure that you get it paid off quickly. Similar to working out and measuring your results, you need to track your debt constantly. Start with a weekly reminder, where you sign on and log your updated number. Did you increase, decrease, or stay the same?

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Regularly tracking your student loan balance can be incredibly motivating, as well. You will get a huge confidence boost each time you see your total debt amount decreases.

Set weekly and monthly goals so you can have short term wins and keep the momentum going.

2. Hide Your Credit Cards

If your biggest debt is credit cards, you need to eliminate temptation and remove them from your wallet.

Some people have gone to extreme measures by freezing their credit cards. Why? This would create an ice block around your card, which would require you to chip away at it slowly. This will give you time to think if it’s the best idea to buy that thing you’re about to buy.

3. Automate Everything

Willpower can be a huge downfall to paying off your debt. By automating your bills each month, you will ensure that willpower isn’t involved.

4. Plan Ahead

Getting out of debt will require some sacrifices, but with enough planning, you can make it work.

For example, if you know that you have a friend’s birthday or family dinner coming up, plan ahead for the costs. Whether you need to cut back on spending the week before, pick up a side job, or meet them after dinner, do what is needed.

5. Live Cheaply

The only way to get out of debt is to make some sacrifices on your spending habits. Find ways to save money each month so you can apply that amount to your outstanding debts. Here are some ways to save money each month:

  • Live with roommates
  • Cook dinners and prepare lunches for work instead of eating out
  • Cut cable and choose Netflix or Amazon Prime
  • Take public transit or bike to work

Finding the Lowest Interest Rates

The higher your interest rates, the harder (and longer) it will take you to pay off any debt.

If possible, you want to find ways to lower your interest rates to help get out of debt quickly. Here’s how you can get started:

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1. Maintain a High Credit Score

Your credit score will have a large impact on your ability to refinance your loans and receive a lower interest rate. If you have a low credit score, it’s unlikely you will be able to refinance your loans. Use these credit tips to increase and maintain an excellent score:

  • Never miss a payment
  • Don’t exceed 30% of your credit limit
  • Don’t sign up for more than one card at once
  • Limit hard inquires, like auto-loans and new credit cards
  • Monitor frequently with free credit-tracking software

2. Find Balance Transfer Offers

Start by opening a free account on credit.com. Credit.com offers you the chance to open a free account and see what type of balance transfer offers you can receive. Some of your existing credit cards might already have 0% or lower APR balance transfer offers available.

Contact each of your credit card providers to ask about lowering your rate for a one-time balance transfer offer[2].

If you do take advantage of this option, make sure that you use a balance transfer and not a cash advance. Cash advances have a ton of high interest fees (15-25%, depending on your credit card) and will only compound your debt problem.

How to Get Rid of Debt Forever

Setting up a plan, removing temptations, and getting the lowest interest rates is the first step to get out of debt.

1. Keep Monitoring and Adjusting

Once you have a plan, don’t get comfortable. Track your debt payoff plan and make the necessary adjustments when needed.

Monitor your credit scores with a free site like CreditKarma. The higher your credit score climbs, the more likely you will be to secure a new, lower-interest loan.

2. Earn More Money

There are only so many ways to save money. Instead of clipping another coupon or making sacrifices for your morning coffee, find ways to earn more money!

Think about it…it is much easier to find ways to earn an extra $1,000 per month than find $1,000 to cut from your budget.

Here are some examples of ways to earn more money:

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Talk to Your Boss

Have a conversation with your boss about current salary and/or commission rates. If you’re not satisfied or want a change, don’t be afraid to look around at other positions. Some of them might even have a student loan debt reimbursement plan!

Start a Side Hustle

This could be coaching students on the weekends, driving for Uber, or taking paid online surveys. There are tons of ways to make money outside your 9-5. Now that you have a clear plan to pay off your debts, you’ll be more motivated than ever to figure out creative new ways to earn money.

Build an Online Business

There are so many websites and blogs that earn money from ads, affiliates, and other online products. Find your niche and get started.

3. Celebrate Your Wins

As you progress in your debt payoff journey, don’t forget to celebrate your wins. You need to always reward yourself for the hard work and discipline that is required to get out of debt.

While you shouldn’t celebrate so big that it increases debt, make sure to factor in little rewards to keep you motivated.

4. Set New Financial Goals

Eventually, with a plan and these steps, you can rid yourself of your debt. Once you do, make sure to celebrate your monumental achievement, but don’t stop there.

Now, you can focus on acquiring wealth and increasing your net worth. Set new financial goals so you have a new target to aim toward. Here’s how to set financial goals and actually meet them.

These could be anything now that you are debt free! Think about where you want to travel, buying your first home, or saving for your future retirement. Just like before, make sure that your goals are specific, measurable, and achievable.

Conclusion

Congrats, you can now set a plan in motion to finally pay off your debt quickly (and hopefully forever)!

Remember, if you want to get out of debt quickly, it’s not always easy. Just like any big goal, there will be sacrifices, challenges, and problems to overcome.

More Tips on Getting out of Debt

Featured photo credit: Pepi Stojanovski via unsplash.com

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