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How To Catch Up On Your Retirement Savings

How To Catch Up On Your Retirement Savings

We are all looking forward to a time when we can relax and enjoy ourselves without worrying about such trivial things as getting up early or finishing a report. Going through different schools and then several jobs throughout our life teaches us to treasure the precious moments we have to ourselves, but sometimes we can focus so much on this cycle of “work hard – play hard” that we lose sight of the bigger picture.

Many of us tend to spend money on vacations, drinking with friends, gadgets and food in an effort to make the most of our free time, and it isn’t until we hit 40 or 50 that we begin to think about our retirement savings, or lack thereof. Even if you have been leading a somewhat hedonistic lifestyle and not really thinking about the future, you can still catch up on your retirement savings with these few simple strategies.

Generate some additional income

It’s easy to get used to a lifestyle of unrestricted spending, but the problem with such a lifestyle is that you’ll have very little money left over each month, money that could have been tucked away in your bank account. A quick fix is to find a way to earn some additional income. Part-time jobs can give that extra bit of cash you need, but you can also use your skills. You may be able to:

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  • Offer tutoring – you can give lessons to others on anything from music and dancing, to cooking, math or a foreign language. Whatever knowledge and previous experience you have can be put to good use.

Violine lessons
    • Do some freelance work – people need a lot of different services, ranging from ghostwriting and translating to designing and programming, or even bookkeeping, accounting and legal advice. You can do this online, from the comfort of your own home. Good places to look for such work are websites like Upwork and Freelancer.
    • Create and sell a variety of items – toys, clothing, jewelry, furniture, paintings and sculptures are just some of the things that you can sell to people if you have some talent and patience. You can end up earning quite a bit this way if you are good.
    • Sell some of the stuff that is collecting dust in the attic – there are always a few old items that we barely use up in the attic, down in the cellar, or just littered around the house. Some of these might fetch a good price.

    Earning extra money will require you to devote a bit more of your time to work, but you can always try to make some money from the hobbies you enjoy doing anyway.

    Cut down on living expenses

    If you catch yourself worrying about life in retirement, it means it’s time to try and cut down on some unnecessary expenses as soon as possible. Effective budgeting doesn’t mean going into the woods and living of the land to save every possible penny – it’s just about making smart decisions, prioritizing and learning to do without certain luxuries.

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    Pink piggy bank surrounded by stacks of gold coins.

      Looking for things that are on sale, buying in bulk, switching to a more cost-effective brand and using your DIY skills are all great money-saving tactics that don’t require you to significantly lower your quality of life. Being careful about how you spend your money means you will have more funds to put aside, which brings us to our next point.

      Catch-up contributions

      In the US, for people who have hit 50, the best strategy is to put as much money into your 401k as you can. Some company retirement savings plans allow you to put additional funds into your 401k by way of reducing your salary by said amount. You get a bit less money per month, but it goes into your retirement fund and you get a tax deduction. These catch-up contributions can go all the way up to $5,500, which can make a big difference in the long run. Other countries such as Canada and Australia have similar schemes, so check out what is available in your locality.

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      Consider an IRA rollover

      An IRA gives you a greater freedom and because the penalties for early withdrawal are far less than with your typical 401k plan, you have the option of making good use of your money a bit earlier, e.g. in case of emergency or tempting investment opportunity. Experts agree that rolling over your 401k into an IRA is a good option for those who haven’t put much thought into their retirement fund for years and want to catch up quickly. You also have the catch-up contribution option with a maximum of $1,000 on both traditional and Roth IRAs.

      Move to a smaller home

      Sold Home For Sale Sign & New House

        If you are in your late forties or early fifties, chances are you’ve sent your kids off to college, and if you live alone there is not a whole lot of need for huge amount of space. Moving into a smaller home in a quiet neighborhood – or perhaps an apartment in the city – and selling your old house can be a good way of infusing your bank account with a large sum of money, as well as drastically cutting costs on maintenance.

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        There is no need to panic if your retirement fund doesn’t look that good and you’re already pushing 50 – with a bit of strategic planning you can implement money-saving measures, get some additional income on the side and do a number of different things to ensure that you can spend your retirement relatively carefree.

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        Ivan Dimitrijevic

        Ivan is the CEO and founder of a digital marketing company. He has years of experiences in team management, entrepreneurship and productivity.

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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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