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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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        Published on January 8, 2021

        How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

        How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

        Ever wondered whether your credit card debt is the reason you’re in a bad financial situation? You can’t enjoy any fun activities because a good chunk of your money goes toward debt payment. Heck, you’re even behind on some of your monthly bills.

        The effects of clumsy debt management are too many to list here. This guide is going to help you discover how to pay off credit card debt fast and start chasing your financial goals.

        Debt problems are the last thing anyone wants to encounter. But things can get out of hand when all the “little debts” you take accumulate in interests.

        What if you knew some simple and proven ways to be debt-free quickly? Implementing them would mean better financial health for you. It becomes possible to free up cash for your “wants.” These include taking a trip or buying something you’ve always desired. All that while paying your bills on time!

        Let’s not wait any longer. Here are 7 powerful tips for paying off credit card debt fast:

        1. Pay More Than the Minimum Credit Card Payments

        Many people only pay the monthly minimum on their credit cards. Truly, that’s the right amount for staying on good terms with your credit card company. But you need a different approach if you’re looking to achieve financial independence within a short time.[1]

        Most of your payments go toward interest costs when you only pay the minimum amount. A substantial sum of your balance remains standing. As a result, it becomes more expensive to eliminate your debts.

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        You don’t want to wait more than 10 years to get rid of debt while it’s possible to do it sooner. All you have to do is double that $100 minimum payment to $200 or go higher.

        The good thing is that minimum credit card payments are affordable in most cases. By paying a higher amount, you reduce your interest costs, lessen your borrowing period, and boost your credit score.

        2. Start With High-Interest Credit Card Debt

        If you have more than one credit card debt, prioritize putting the extra money toward the ones with the highest interests. This debt pay-off strategy, known as the debt avalanche method, is essential for being debt-free quickly.[2]

        First, you need to list down all the credit card debts you have in the order of their interest rates. Next, you choose the one with the highest interest and pay a significant amount toward it each month. It can be an amount twice or even thrice larger than the minimum payment.

        At the same time, you make monthly minimum payments on the other debts. Their interest charges won’t be as costly as that of the first debt on your list. You only move on to the next high-interest debt after the first one is gone. Remember that your focus is on the interest rates and not the balances.

        3. Revisit Your Budget

        Budgeting is useful for tracking your financial moves. Once you create a budget, some tweaks along the way can make it work for you better. One situation that requires you to revisit your budget is when you’re struggling with debts. It might hurt a bit to slash some expenses. But you also don’t want to miss out on achieving financial freedom in the long run.

        You can reduce some variable expenses to free up more cash for credit card debt payments. They’re the ones that change from time to time. Some examples are groceries, fuel, and clothing.

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        Other opportunities for cutting down your spending lie in non-essential expenses. Instead of dining out all the time, you can cook at home more to save money. You can also share some subscriptions with friends and pay a fraction of the cost.

        If you’re determined enough, you can eliminate all your unnecessary expenses and focus on paying off your credit card debt first.

        4. Avoid Using Your Credit Cards

        Do you want to know how to pay off credit card debt with a low income? One simple way is to stop using them. Having your credit cards everywhere you go means that you’ll be more tempted to buy unnecessary stuff. In this case, you spend money that you don’t really own and get deeper into debt.

        The quickest fix to stop the debt build-up is spending with cash. You’ll be more aware of everything you can afford at any particular time. If you decide to keep one or two cards to ease the transition, always make wise choices. For instance, only use them when experiencing financial difficulties.

        It’s best to categorize your fun activities under “discretionary spending” in your budget. This way, you won’t need more debt to kill your boredom. By halting your credit debt from accumulating, it’s easy to pay down what you already owe and be happy with the progress.

        5. Start a Side Hustle to Boost Your Income

        You’re probably turning away a lot of money by not monetizing your skills. Everyone has something that they’re good at doing. And you can use that to generate extra income for attacking your credit card debt.

        If you look around your neighborhood, you can find several side hustle opportunities. It can be pet sitting, tutoring, or lawn mowing. You can start an online business by offering services such as digital marketing, content creation, and web development. Such skills go in high demand on freelance sites and job boards.

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        Finding clients on social media is also a good strategy to utilize your skills and make more money. Facebook groups, Quora Spaces, and subreddits are some places to look for side jobs. You only have to join a niche-specific platform, share your services, and respond to any opportunities.

        It’s possible to learn a skill, practice it, and earn from it. Use the free resources online or purchase some e-courses to get started.

        6. Sell Your Used Items for Extra Cash

        Starting a side hustle isn’t the only way to generate extra money. You can turn unwanted items into cash for paying off credit card debt. Whether it’s an old TV, book, or furniture, there is always someone itching to buy your used stuff.

        A garage sale, as much as it’s old-fashioned, is perfect for getting your neighbors and passers-by to buy from you. You keep all the money because there are no business permits or taxes involved. While you may not make much cash, it’s better than leaving your stuff to go defunct in your storage.

        Other than that, you can sell your used stuff on online marketplaces. Facebook groups are great places to start if you want quick approvals and hence sales. You only have to ensure that your listing follows Facebook’s commerce policies.

        When selling any pre-owned items online, ensure they’re in good shape to avoid problems with your buyers.

        7. Know When to Seek Help With Your Debt

        Asking for help with your credit card debt can be challenging to do. But letting it drown you is a road you don’t want to take. While you may feel embarrassed at first, it’s the best way to get back on track when you run out of options.

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        There are tons of non-profit credit counseling organizations that can offer you free guidance on how to escape the debt trap. An example is The National Foundation for Credit Counseling. They simply review your finances and help you determine the source of your financial problems. After that, they match you with an actionable debt management solution.[3]

        In extreme cases, the debt solution can be:

        • Debt relief – where your debt is partially or wholly forgiven
        • Debt consolidation – taking out one loan to repay others
        • Debt settlement – the creditor forgives a significant portion of your debt
        • Bankruptcy – legal process for seeking relief from some or all your debts

        It’s necessary to carefully weigh your options before deciding on the way to go. Find out how it might affect your credit score and any other risks.

        Wrapping It Up

        Debt is a major setback when you’re trying to prosper in life. Paying off credit card debt is essential if you want to reach your financial goals. That means having more free income, a good credit card score, and even a chance to retire early. You become more productive each day because of the peace in your mind.

        So, you now have some tips on how to pay off credit fast. Go ahead and get rid of that good life progress killer!

        More Tips on How to Pay Off Debt

        Featured photo credit: rupixen.com via unsplash.com

        Reference

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