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5 Super Tips That Will Keep You Out of the Red

Debt has got an ugly habit of snowballing into crisis proportions, leaving many consumers indebted beyond their means and more importantly with no clear sign of how to dig themselves out of the debt trap. Contrary to common belief you can live within your means, without feeling like a martyr or having to sacrifice the “joys of life.” Here are 5 tips that will keep you out of the red effortlessly.

1. Use a Debit or a Cash Card Instead of Credit Cards

The first and the most important tip to stick to is to stop using credit cards unless you can pay the balance owed immediately when the bill is due. Carrying a balance on credit cards, month to month, means you will pay much more in the long run. At times, this increase can add as much as 39% per year to your balance, which also accrues compound interest. Shocking, isn’t it?

The reality is that many purchases made using credit are wants and not needs. With today’s financial issues still rearing its ugly head, it is important to watch where your money is being spent. Eliminate wasteful spending like interest paid on credit purchases. Instead, move a predetermined budget amount onto a debit card that will be used to pay expenses. Many consumers find it much more difficult to spend money when they see their balances dwindling before their eyes. With that being said- keep careful track of your spending and eliminate unnecessary spending like eating out and unnecessary shopping.

2. Pay Yourself First

Ideally, you should save about 25-35% of your take home salary for that “rainy day” or for emergencies. Unfortunately, most consumers are not able to save that much or simply do not want to allocate so much of their salaries to savings; and then there are those who will save just a little something once they have paid all the bills and had their entertainment funded. The result is that they may never really see a significant amount of savings.

In order to correct this financial blunder, have your financial institution or your employer divert funds for savings before the money actually reaches your hands. Pretend that money does not exist. Learn to live off of the remainder of the money. Be resourceful and learn ways to live more frugally, in order to live fruitfully in the future. It is a small sacrifice today for a gratifying reward in the future.

3. Have an Alternative Source of Income

It really does not matter what your current profession, job, source of income etc., is today; everyone needs to have an alternative or second source of income. It really goes back to that saying “don’t place all your eggs in one basket.” As we have witnessed with the current recession, job sectors that once were regarded as having continued job security have seen countless layoffs and downsizing. There is no longer a guarantee that the job you have held for years will still be there in the future. Businesses have closed or downsized, companies have moved overseas to maximize their profits and employees are facing a much more difficult job market, with much more competition from equally qualified applicants. Having a second source of income allows you to supplement your primary income or even create a savings account that can be used for emergency purposes.

Use the internet to research possible streams of income. Use keywords such as “passive income;” “work- from- home; “second income” and so on. Be cautious when signing up for “work- from- home” programs. Read all the fine print and be realistic with what you are capable of doing. Do not fall for pressure tactics and spend the least amount of money possible until you can determine if this will generate a profit for your time and effort.

Unless you have a steady stream of people willing to buy things from you constantly- steer clear of MLM (multi- level marketing) and get rich quick schemes. Also, always remember if it sounds too good to be true- it probably is. It is much easier to create a second stream of income by selling home- made goods or cleaning homes, for example, than it is to get people to buy things they cannot afford or actually need like selling make-up or time- shares. Be bold but be smart, as well, when it comes to generating money.

4. Plan Ahead On Retirement Plans

When it comes to saving for retirement there is no such thing as “being too young” or “starting too soon.” Start as early as possible. Teach your children to begin saving their money for retirement from the time they get their first job. This is one of the most valuable tools you can instill in your children. Just imagine how much money you could have saved by now if you had begun saving for retirement when you got your first job.

Calculating at a modest rate of 3% inflation, the cost of living would be about double in 24 years of what it is today. Hence, the longer your money grows in a savings account or investment plan, the better your financial outlook will be in the future. Just $5 per day can become $100,000 in 20 years with a return of just 9% per year; in 35 years this would snowball to $440,000, and in 43 years this modest $5 per day, at 9% return, would flower into a $1 million jackpot.

5. Seek Financial Advice for Real Changes

In order to take full advantage of the financial advice you receive you must want to stick with the goals you have set. The above tips can only work if they are used. The best financial advice is only useful when implemented.

Having financial discipline is as much about the journey as it the destination. Saving for retirement may seem difficult at first but just as with most things in life- the longer you do it the easier it becomes. Saving money does not mean that you will be depriving yourself now or in the future. When you think of savings the equation is simple – plan, save, and invest over as long a period of time you can for the best financial returns possible.

45 And Have No Savings? Did You Know You Could Still SAVE $1 Million For Your Retirement?

If this title appeals to you, it is because you want it to be true. Perhaps, you need it to be true. During the years spent working a main focus should be the conscience act of saving for retirement. While there are many ways to save for retirement, many workers do not take advantage of them and find themselves lacking resources in the future. If your retirement is about 20 years away there is still time to turn your future financial prospects around. It is still possible for you to save a million dollars for your retirement.

With projected inflation and continued financial fluctuations, it is expected that in 20 years the cost of living will be roughly double what it is today. What this means, is that you will have to have saved at least a million dollars by the age of 65, in order to live comfortably for the remainder of your life. In order to save this amount of money, you will need to make a conscience choice to save that money. It will require focus and determination in order to reach that goal of a million dollars in twenty years.

Yes, You Can Do It!

Saving such an enormous amount of money is quite possible if you devise a plan of action and stick to it. When temptation strikes to deviate from the plan- imagine yourself financially secure and use that image to keep you motivated on the right track. So what exactly would you be sacrificing now- to be financially secure in the future?

If you have absolutely no savings to start with, you will need to save about $1,700 every month for about 20 years with some strategic investments. This is a retirement plan projection that has $0 to start and 20 years or more to grow. If there is some savings the amounts come down significantly.

Perhaps, you were fortunate enough to be able to have some savings by the time you turned 45. If you had accumulated $50,000 then your investment each month would be $1,300 with investments. Let’s imagine that you received a windfall of or purely saved $100,000, and decided to invest it for retirement. In order to have that amount grow to a million you would then only need to save an additional $861 each month over the course of the next 20 years. Realistically, all of these amounts are feasible and you can very well be a millionaire when you retire.


The Trick Is To Start Early!

Now that you know that even being 45 with no savings does not rule out the possibility of being a millionaire when you retire- what are you going to do to make that your reality? The most important step is to actually start saving today. Make it a point to have some savings before you turn 45 so that you will not be under such financial strains in order to just save for retirement. Here are some tips that can help you begin ensuring that you have money when you retire:

1. Maximize your contribution to 401(k) – The maximum you should aim to contribute to your retirement plan is about $1,300 each month. This is much more effective if you are one of the lucky employees whose company offers to match contributions. Matching contributions allows you to get a 100% return on your investment immediately. Check with your company to get information on their retirement plan terms.

2. Do Not Use Your Retirement Savings To Fund College Educations– No, this is not to say that you should not help your children fund their college educations, however, you must look at the long term goals and do what is best for everyone involved both now and in the future. Using your savings to fund college educations will actually do more harm than good in the long run.

Keeping things in perspective, there are numerous ways to fund college educations- grants, loans, scholarships, work study programs, college specific savings plans and good old “paying for your own way”; however, there is only one way to pay for your retirement- you must actually save your own money. Let’s say you do choose to use your retirement money for education expenses- then what? Who, then, supports you during your golden years? If your children must support you once you retire- what have you really done to help them? Ensuring that you are financially self-sufficient through the end of your life will be more of a financial relief for them, than if they simply had to repay a loan from their college education. Retirement saving will ensure that you can cover your living, medical and miscellaneous expenses instead of laying that burden on your children, who may have their own families to support and their own expenses to cover.

3. Keep Your Assets In 80:20 Ratio of Stocks and Bonds – Stocks have a better return rate than bonds, although they are a little riskier. Ensure that your financial portfolio balances the risk across the stock investment as much as possible. Bonds, generally, are a better investment if there is 10 years or less before you wish to retire. Always consult with a financial professional before making decisions as to how to invest your retirement savings for the greatest returns with the least amount of risk.

With all the possibilities to earn money and invest those earnings, it is very possible to be a millionaire when you reach retirement age. Write out a plan with your goal and your projected plan for reaching that goal. When possible save money in a separate account that will be used for emergencies, so that you will not be tempted or forced to use your retirement savings in a crisis. Keep your plan within reach and always refer to it when making financial decisions. Ask yourself- Is this going to help me when saving for my future? Balance your financial decisions on the needs of the future with the wants of today.


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