Make yourself a promise this year – a “new years resolution” – to make and follow a plan for your financial future.
Are you using compound interest to get ahead -or- is it using you, to keep you running behind? I’ve said it before and I’ll say it again – everyone is trying to get in your wallet.
I watched my dad buy so many “get rich quick schemes”, yet he never actually TRIED them. Postage alone probably cost our family what little spare money we had.
And yet, it’s not that tough to plan out your financial future. Part of it is simple math, but the bigger part is changing your own spending habits. My personal budget doesn’t have much wiggle-room, but I do put an extra $100 each month on my regular mortgage payment. This might not sound like much, but your home is your single biggest investment and paying extra principle saves THOUSANDS in interest.
The other day I was talking with a guy who is 64 years old and says he’s only 1 year away from retirement. He had started saving early and put away money consistently. He made good money and so did his wife. He has no children, everything is paid off, and they had a retirement home built for cash. They also have $750,000 in savings. And all I could think was …. how much money does he think he really needs?
Are you planning to live off the interest that your “nest egg” earns or are you going to live off of the nest egg itself? If you have no bills to pay, then you don’t need as much money set aside, and, more importantly, you can retire EARLIER. Isn’t that what it’s all about? Retiring and enjoying life, while you still can?
$750,000 earning 3.85% makes $28,875 per year in interest dividends alone. That might not sound like much, but as stated before, if you don’t have a large debt load, you don’t need a lot of cash. Add in a portion of the nest egg and even a modest amount from Social Security and you’re set for life (no pun intended).
On one user group that I visit there were a couple of people commenting that they had between $1.5M & $2.0M put away. I asked, “How much have you budgeted monthly for your retirement expenses and how many months do you think you’ll survive?” One person replied, saying he had budgeted $7K per month, but did not reply as to how long he expected to live.
HO-LEE-SHIT! I am still amazed by the differences between the “Haves” and the “Have-nots” because this guy is budgeting more in his retirement than I currently earn! But financial gurus (like Dave Ramsey) keep saying everyone can be an “everyday millionaire” yet they look right past the obvious answer — Not without the same resources, they can’t.
So how much do you think YOU need and what are you doing to reach that goal?