People all over the country are struggling with a serious dilemma: They’re trying to get out from underneath a mountain of consumer debt, which just hit a total of $13 Trillion in the US at the end of 2017.
Simultaneously, they’re woefully behind in planning for retirement as nearly half of Americans have less than $10,000 stashed away for their later years.
Both of those goals are important, so what’s a hard-working American to do?
So, is it even possible to pay down debt and save for retirement at the same time?
The question of whether it’s possible or not is moot, because the sad reality is that doing so has become a necessity.
See, the Social Security and Medicare trustees recently released a report with projections that Medicare Part A will be insolvent in 8 years (2024) and Social Security will be insolvent in 16 years (2036).
This means it’s absolutely critical that you start saving and investing for your retirement years right away because chances are you won’t be able to rely on those programs much longer.
Yet, I realize how many people are struggling to find the money to do that when consumer debt is at an all time high while the median wage, when adjusted for inflation, isn’t that much higher than it was in 1970.
So in order to be in full control of our financial futures, we’re going to have to learn how to walk and chew gum at the same time.
Since we’re right in the middle of the summer and I don’t want everyone to get discouraged by all of those bad numbers we just talked about, I want everyone to just think about getting a nice TAN.
See, TAN in my world means “Take Action Now,” but it’s also an acronym for a 3 step process I came up with for paying down debt and saving for retirement simultaneously. Here it goes:
T – Take care of your necessities.
You first have to make sure that your basic needs are met (shelter, food, water, clothing) and that you can make all of your minimum payments on any debt that you have.
A – Add funds to a retirement or investment account
This is simply a must because the power of compound interest is just too powerful to ignore.
For example, did you know that if you had invested $1,000 in Apple in December of 1980 when it went public, that $1000 would be worth more than $480,000 today?
Now certainly, every investment won’t have such outstanding returns, but you have to give yourself a chance to let both time and compound interest work for you and your family.
N – Is for “New” as in find a new job or side hustle
Yes, you absolutely need to look at your budget (or create one) and make sure that you are cutting out expenses so that you can better use those funds elsewhere.
But, there’s a definite limit to what you can cut from your budget. The amount you can earn, however, is unlimited.
So, instead of spending time trying to find out how to cut all of the enjoyment out of your life, use that energy to find a new, higher-paying job, second job, side hustle or a low-cost business that you can start right away.
In my experience, most people (athletes and entertainers aside) struggle not because they spend too much, but because they earn too little.
For anyone in the audience interested in a detailed training on how to improve their financial situation, I’m hosting a free, live webinar on Wednesday, August 1st at 8pm called:
Serious About Wealth: 5 Ways To Fix Your Finances This Week
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