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5 Costly Retirement Regrets We Should Avoid

5 Costly Retirement Regrets We Should Avoid

There is much to consider when preparing for retirement. New retirees are always more than eager to share stories, successes and mistakes they have made along the way. If you listen closely, chances are many of them will tell you something they wish they could do over or do different.  Here are 5 costly retirement regrets we should all avoid.

1. Spending too much in your peak years.

When you were young, you wanted the finer things in life; Cars, houses, cloths, boats etc. As you get older, spending too much in your peaks years becomes a retirement mistake.

This is because you lose the power of compound interest. The longer you keep your money invested, the more of it you will get out. Most people in their twenties and thirties unfortunately do not think this way until it is too late.

The best way to avoid this retirement mistake is to first control your spending. Clean up your vision board, you don’t need all those material things to show how successful you are. As Dr Sues once said “Those who matter don’t care, and those who care don’t matter”

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Next, get financially literate. Take some money classes to understand how to build a budget, get out of debt and invest.

Make sure you are also putting some money back in your youth. It may not seem like much right now, but little drops of water make a mighty ocean.

2. Not taking good care of your health and body

Entering into retirement with bad health can have some very costly consequences.  When we are young, we spend so much time working, so much so that health and fitness is often the last thing on the mind. The mistake here is that too often; people pay the cost of their bad food and exercise choices when they have the least amount to spend – retirement.

This retirement mistake will not only have you running out of money too soon into your retirement, it will also rob you of precious time that could have been spent with family.

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The best way to avoid this retirement mistake is to remember that your health is your only true measure of wealth, so take good care of yourself.

Start by making better food choices and also exercising to keep you looking young and vibrant. At retirement, you will probably be paying your own health insurance out of pocket, so it pays to have a solid foundation in health and wellness.

3. Borrowing from yourself

A major mistake people make heading into retirement is borrowing from their retirement accounts to fund large purchases. This could be a second home, a remodel, or a child’s college education. The big mistake here is not only will you have to pay taxes, penalties and fees to get your money out; you may also have to work longer.

The emotional attachment that leads you to justify making these large purchases will cost you big in the long run

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The best way to avoid this money mistake is to remember why you started saving in the first place. These fees are put in place to remind you of the commitment you have made to secure your final future.

Maybe start a fund for whatever project it is you want to accomplish. Set measurable savings goals over a set period of time to meet this financial goal. You may have to get an extra job, however it will be well worth it.

4. Not downsizing soon enough

Life can often feel like one big roller-coaster ride.  We leave the comfort and acreage of our parents homes to the small nest eggs of a bachelors pad or apartment. As we get older and have our own families, we also follow suit and acquire our own large homes to raise our kids in. However this becomes a retirement mistake if you do not know downsize soon and early enough. Whether it’s moving into a smaller home or selling off a second car, don’t forget that you must already be living below your investment income going into retirement. Most folks waiting to cut back at retirement will be drowned out by the cost of downsizing.

The best way to avoid this retirement money mistake is to make sure that you are not blinded by your pride. Do not be given to the temptation of keeping up the perceptions others have of you. At this age you should be travelling and enjoying the world with your spouse much more than you did when you were younger. Chances are you will not need the huge house. Not to mention, you will be paying lower monthly bills.

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5. Not kicking a bad habit early enough

There is a feeling of invincibility we all feel when we are young. We develop vices too often as a means to socialize or pass the time. From alcohol consumption, smoking cigarettes to gambling, most people regrettably count the cost of their vices when it is too late.

While it is OK to indulge yourself in whatever past time you choose, the retirement mistake here is forgetting to count the cost. A regular smoker will very easily spend three thousand dollars a year on cigarettes. This is money that could have been put into a ROTH IRA.

The best way to avoid this mistake is to create an allocation system for yourself or a play fund. This is a reasonable amount of money you have allowed yourself to spend on all vices. Your need to live a comfortable life in retirement must be greater than your need to have too much fun now.

Approaching retirement doesn’t have to be all dark and gloom. Just remember that the choices and decisions you make now will affect the rest of your future.

Featured photo credit: http://theneotericgroup.com/experience/retirement-residences/ via theneotericgroup.com

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Last Updated on April 3, 2019

How to Nix Your Credit Card Debt in Less Than 3 Years

How to Nix Your Credit Card Debt in Less Than 3 Years

Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

Hint: there are ways that are easier than you think.

1. Consider Consolidating Multiple Credit Cards If Possible

This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

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Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

2. Try to Pay the Full Balance You Spent Each Month at the Very Least

You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

3. Pay Extra When You Can – Every Small Amount Counts

This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

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It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

4. Create a Plan on How to Pay Extra

Back to the main point, having this plan is giving you one less thing to think about.

This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

5. Cut out Costs for Services You Do Not Use

If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

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6. Get Aggressive About It

Consider these points:

Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

7. Reevaluate Your Progress at Set Intervals

Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

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Finally (and most importantly)…

8. Keep Trying

Do not get discouraged. Pushing it off will make it worse. Just keep trying.

Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

Start Knocking out Your Debt Today

The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

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Featured photo credit: Pexels via pexels.com

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