You want to retire in a few years, right? And you know you haven't saved enough. But there are bills to pay, and at the end of the month there’s nothing left. In fact, there’s often a shortfall. What can you do?
Short answer: a lot. If this is your situation, you’ve let your money be your master rather than your servant. To turn it around so that your money accomplishes what YOU want it to is going to require a change of thinking and some effort on your part.
Here’s the change in thinking: In your mind separate out spending that is necessary from spending that is discretionary. In other words, what do you need to spend for food, clothing, and other necessities – car payment, various insurances, etc.
And then think about what is discretionary. What do you spend by choice and not out of necessity? Think back over just this last week. What did you spend? Was it on necessities? Or how much of it was discretionary? Because if the budget doesn’t balance, or you’re not saving enough, it is the discretionary spending that gets cut back.
To make your budget balance begin with cutting the fat out of your spending. Here are some do-now suggestions:
And Dear Readers, as you work through this list and find that you have some bitter medicine to swallow, best to take it in one big gulp.
Once you’ve done these, challenge your remaining (fixed) expenses and get out of debt!
By now you should have freed up lots of dollars to aggressively pay off debt. Start with the smallest bill and pay it off first. Give yourself that first victory. Then roll that payment onto the next smallest bill, and so on. In this way you go from one victory to another.
Do you have anything to sell on Ebay or in a garage sale? That’s new-found cash you can put toward debt repayment.
No one ever retires and looks back and says, I saved too much. I should have spent more. This just doesn’t happen. Retirement security comes from the size of your investment account.
Establish an emergency fund. This should be 3-6 months of bare bones budget, depending upon the number of income sources. It is not a matter of whether but when you’ll need it. This is simply cash on hand to keep you from going into debt and disturbing long-term savings.
Once you’ve done these, your budget will most likely balance, and you will have extra cash flow to allocate toward future goals. It if doesn’t, then you may need to dramatically alter your lifestyle. Maybe sell the boat, or the house you can’t afford. If you do all these things, you’ve put yourself in a great position to retire from your job, and prepare for life’s next adventure.
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