Your Financial Future
Posted by Advice Guy in Take Control
A wise man once said, “If you fail to plan, you plan to fail!”. Many of us spend more time planning a vacation or a birthday party than we do planning our financial future. If you find yourself in this boat, its not too late! Start today by applying the steps below to help ensure that you are ready to enter the next stage of your life.
1. Imagine yourself in retirement, if money were no object, and answer the following questions. Where do you live? What do you drive? What type of lifestyle do you live?
2. Now that you know what you want when you retire, what would it cost each year to support that lifestyle? Take that annual income need and divide that number by .04. Are you sitting down? That is the amount you would require in savings in order to safely provide the income you need.
3. Are you there yet? Well, most other people aren’t either. Now it is time to buckle down and take control of your financial future. You must get your financial house in order. You must take a close look at where you are financially. How can you get anywhere if you do not know where you are? Make a list of all your debts; the balance on each account, the interest rate, and the amount of time left on the loan. Before you start serious saving toward retirement, you are going to get out of debt!
4. Once you have your list, you are going to prioritize the debts. List the debts from lowest balance to highest. You are going to take every penny not needed for necessary expenses and apply them to the bill with the lowest balance. Once that bill is paid, you will take that same “regular payment” along with the “extra payment” and apply that to the next bill on your list. The next thing you know, you have a snowball of money working to “clean your slate” of all debt.
5. Once your debt is gone, you will start sticking that huge amount of money each month into some sort of savings account. We will discuss different options for savings later.
What are you waiting for? You have work to do! Get up right now and start with step 1.
This is great advice! My husband and I followed this strategy when we first got married, after college and landing jobs. We have eliminated almost all our debt and have reaped numerous financial benefits including a brand new house! We also have both retirement and savings accounts. We have prepared our financial path so that we can live on one income when we have children, as well. Besides the material gains, we have earned the peace of mind that we are almost totally debt-free, have a comfortable retirement plan, and have avoided years of stress wasted money.
For those consdiering the best way to eliminate debt, this is it. If you have questions, post them.
Thanks for caring Financial Advice Guy.