The Dangers of Putting Your Retirement on Autopilot

The Dangers of Putting Your Retirement on Autopilot

Blog Post Originally From DaveRamsey.com As pensions go the way of the dinosaur, it’s up to you to make your golden years shine. Yet many Americans put their investments on autopilot without thinking about the long-term effects it can have on their nest egg. Consider this: More than half of DIY investors set it and forget it without even bothering to do a performance check. If you really want to live and give like no one else when you retire, it’s important to understand the dangers of taking your hands off the wheel. Danger #1: Flying Solo These days you can’t throw a rock without hitting the latest DIY craze. We live in a world of Pinterest and HGTV where even Vanilla Ice has skin in the game. If you don’t have sweat on your brow and dust down to your knees, you’re not doing it right! And yet, DIY isn’t always what it’s cracked up to be. During the Great Recession, headlines put financial fraud and failing banks at the forefront, and investor trust suffered a big blow. DIY investing became the natural choice for people who wanted total control of their nest egg. Today, studies show that nearly two-thirds of investors manage their own retirement funds. But here’s the irony: Most folks who invest on their own aren’t actively invested in their own future. According to Fidelity, 54% of DIY investors simply let their nest egg sit and gather dust. Where’s the DIY brawn in that? When you go it alone, it’s far too easy to let your retirement savings take a back seat to life’s more...
Retirement or College Funding: Which Comes First?

Retirement or College Funding: Which Comes First?

Blog Post Originally From DaveRamsey.com If you’re working your way out of debt, one of the most difficult issues you might face is how to prioritize college savings and retirement. If you’re like most parents, you’ll phrase the question this way: What is more important—my own security at retirement or my child’s education and future? There’s a lot of emotion wrapped up in that question, which makes it easy to come to the wrong conclusion. Lately, a lot of parents have done just that by deciding college savings should come first, and they’re dipping into their retirement savings to cover the costs. Stealing From Your Future According to a recent Sallie Mae and Gallup study, 7% of parents took money out of their retirement accounts to pay for their kids’ college in 2014, which is up from 5% in 2013. And that’s not the only upward trend. The average amount withdrawn grew from $2,700 in 2013 to nearly $9,000 last year! It’s an alarming development—one based on fear and guilt. Listen, we get it. The amount of money you’ve managed to save for your kids’ college is no measure of your desire to see them graduate from the school of their dreams. But no matter how much you want to help your kids financially during their college years, you need to be realistic about how you’ll do that and save for your own future needs.   Why Retirement Comes First In the Baby Steps, Dave gives retirement priority over college savings for a reason. You’ll depend on your retirement savings to live, eat, and pay for shelter—the basics. If...
Why You Need Some Fun Money in Your Budget

Why You Need Some Fun Money in Your Budget

Original Post From DaveRamsey.com How does an indulgence allowance sound? You know, a little guilt-free spending that doesn’t find its way to creditors, insurance agents, utility companies, or grocery stores? It’s called fun money and it’s just for you. Fun money (or pocket money) keeps you sane as you continue to make the tough, daily sacrifices it takes to win with money. We like to think of it as the icing on the budget—a sweet topping that, in moderation, can actually help you reach your money goals. Here’s how it works: Why You Need It You need food, water and shelter. You don’t need to get a manicure or play 18 holes of golf. But here’s what happens if you don’t budget some “me” money: you’ll spend it anyway. The reason a cash flow plan works in the first place is that every dollar gets a name. So even if you have the discipline of a monk and vow not to spend on small luxuries, trust us, you or your spouse will eventually buy something just for fun. And then your beautiful budget is blown! So do your budget a favor and factor in some fun before the month begins. Because the more realistic your plan is, the more likely it is to actually work. What It Isn’t Fun money often gets lumped into one of a few categories: your entertainment fund, your restaurant fund or even your miscellaneous fund. It’s none of these. It’s a separate amount to spend however you want, whenever you want. The beauty of pocket money is you don’t know what you’re going to...
4 Steps to Convince Your Reluctant Spouse to Save for Retirement

4 Steps to Convince Your Reluctant Spouse to Save for Retirement

Blog Post Originally From DaveRamsey.com We often say that your journey to becoming and living debt free is a marathon, not a sprint. Once you’ve set your goals and nailed down your budget, becoming debt free can feel like a whole lot of hard work. Then, when you move on to saving for retirement, you’re looking at decades of disciplined saving before you can enjoy your reward. That’s when a lot of folks start to wonder, What’s it all for? No one else is worried about their debt or retirement. Why should we? That’s a dangerous place to be. You’re just one 12-months-same-as-cash deal from being back in debt and deciding where you are is good enough —even though it falls far short of your original goals. I have a solution to help you win this battle, and I promise it will be fun. You’ll learn things about yourself and your spouse that you never knew before. And, if you do it right, it could unleash an intensity that will push you to meet and even exceed your financial goals. What is this magical, all-powerful solution? It’s your dream—your retirement dream. You need to define, in detail, your ultimate retirement lifestyle. Not the retirement you think you can afford, but the retirement you think is nearly impossible to achieve. What do you see yourself doing? Where are you living? Are you working? How much? You need to walk around in your dream retirement and see what it looks and feels like. Step 1: Take Your Spouse on a Retirement Dream Date I’ve found that when you define your dream...