Tuesday, March 10, 2009

What Are You Doing About Your Finances and Retirement? How to Plan



What Are You Doing About Your Finances and Retirement?  How to Plan

Financial and Retirement Planning Information - 
for Beginners



Now is the time to make your retirement plans and to get ready as early in life as you can.

Don't wait until you are 50 or 55 years old to start thinking about retirement -- that is too late. You need to start thinking about retirement on the day you make your first dollar.

Too many people put off retirement planning until they are in the late 40's or 50's because they have children and bills and they think they can't afford to save when they are young. Even if you save only $5.00 a week at 3% interest, compounded monthly, you will have about $20,000.00 at age 60 if you start at age 20. There are plenty of retirement planning calculators online to help you achieve your goals.

Unfortunately many people today have saved all of their lives and suddenly find themselves broke. The stock market crash has ruined thousands or maybe even hundreds of thousands of people's lives.

Far too many people can't retire because they lost all of their money in the stock market or 401K's.

If a person is in their early 50's or younger, then they have time to wait for the market to recover -- which it has always done. Of course, there is no guarantee it will this time, but if it doesn't, it won't matter much as we will have a lot more to worry about than just retirement.

But we have to remember, as bad as the economy seems to us today, it is nothing compared to the great depression of the 1930's. We just feel like it is so bad, because unless you are over 70, we have been spoiled all of our lives, and have never really had a hardship.

You may have been living from paycheck to paycheck, and barely making ends meet, and now you find yourself out of a job. Or perhaps, you are still working, but don't know for how long.

You may have a lot of credit card debt, a mortgage, two car payments, and kids in school.

How are you going to make that house payment and car payment and still be able to eat?

You might be thinking you have a good FICO score, and a large line of credit, so you will just borrow money to tide you through the bad times. What if the bad times last longer than expected. What will you do then? How will you pay back your new debt as well as your previous debt?

If you find yourself barely able to make ends meet, you should consider consumer credit counseling. You also need to think about another way to make money. Is your spouse working? If not, they could get a job. You could also get a second job, maybe part-time.

You could try consolidating credit card debt and loans, and that would help some. You might want to consolidate credit cards into one new loan and all other loans into a separate debt consolidation. Or you might try just a student loan consolidation, if you have a lot. When you do it that way you won't be paying off your credit card and mortgage for the same length of time.

If you do decide to have only one loan consolidation, don't make a mistake a lot of people make: roll in very small amounts. For instance, you owe $100,000.00 on your house, you just purchased a $40,000.00 car, you owe $20,000.00 on a student loan and you have $500.00 left on a loan you took out to repair your old car before you traded it in.

The tempting thing to do is to roll $160,500.00 into a consolidated loan. Sounds good, right? Get rid of all of your bills and just have one payment! Stop and think a minute. You still owe $500.00 for repairs on a car you don't even own anymore, now you want to add that to a 30 year loan at 7% interest? Do you realize if you do that, you will be paying 7% interest on that $500.00 for 30 years! That $500.00 could end up costing you about $4000.00. Go ahead and consolidate the other loans, but pay off that $500.00 separately. There are a lot of ways to make money, especially a small amount. Stop and think.

Let's see, you could have a yard/garage sale. Or just sell a second or third vehicle you don't use a lot. Find all the junk in your house and put it on eBay. Do you know someone who delivers newspapers? Volunteer to do their deliveries while they go on vacation. You can pick up a few bucks, but you aren't committed to a job forever. Mow yards, shovel snow, walk some dogs. Get a part-time job as a delivery person. That has a very high rate of turnovers.

There are a lot of ways to earn money, but if all else fails, maybe you will have to cut back on your expenses.

Just know that you are not the only one with debt problems. Almost everyone today is in the same boat, but given time, we will pull through, and before you know it, your finances will be in good shape again and you will be all ready to enjoy your retirement.