Retirement Debt Problems Can Come From These Situations

Retirement Debt Problems Can Come From These SituationsThere are retirement debt problems that you need to be on guard for when you are nearing that stage in your life. It would be a shame to undo decades of hardwork just because you did not manage your retirement money well. You might be on track with your saving but a few wrong moves and you start to entertain the thought of going back to work because you do not have enough to retire on.

Retirement should be fun and it needs to excite you because you are about to enter a new phase in your life. You are about to disengage from the nine to five rat race and spend time doing what you love to do. This is a lot more exciting if you really did not love what you have been doing for the past few years. These things tend to happen and make retirement all the more appealing.

This thought makes it more important to take note of potential retirement debt problems. This helps you stay the course and be able to enjoy your golden years. If not, you will need to keep working for a few more years just to reach your goal. That is if you reach your goal because small miscalculations can end up costing you big time.

Compound interest is a great tool that helps you grow your savings and investment over time. When you miss out a few years of using it to your advantage, it might be hard to catch up to your goal. Not only will you save for the actual amount you should have put in, you need to factor in for the lost interest for all the time that you did not save. Here are a few more pitfalls in retirement planning you need to be aware of.

Co-signing loans

One of the retirement debt problems you can get into when you hit your golden years is deciding to help with loan applications of family and friends. It is not uncommon for family and friends to come up to you asking if you can co-sign a loan so they can be approved. The reason for this is that they believe you do not have any big purchases looming in the near future. That and the fact that you might have a good credit score. This is a quick way to get into financial trouble in retirement.

Once you agree to this, think of it like you are applying for a new loan under your name as well. Even if the other person assures you that they will keep up with the payments, once they miss one or two, your score will be affected as well. Worse, if that account goes into collection, you will start to get harassing phone calls.  

Grabbing quick-rich schemes

Retirement debt problems usually start when you begin to gabel with whatever amount you have saved up. You can make the argument that you are simply trying to increase your nest egg but the end will never justify the means. It takes a lot of hardwork and planning to ensure that you have enough funds saved for the future.

It will be enticing when someone approaches you promising you unbelievable returns on your investment with minimal risk. If it sounds too good to be true, there is a big chance that it is. What you might be thinking is that it gives you the chance to reach your goals faster. However, you might end up adding a few more working years. This is because you lost your investment and you are now further away from your goal from when you started.

Spending too much in a hurry

Once you hit retirement, you might be eager to spend your retirement money rather quickly. You go out and neglect the fact that you have a budget to stick to and run up quite a long list on credit card purchase. You lose your sense of direction and just go out and paint the town red. This is because you believe this is what retirement is all about.

Retirement debt problems will not be too far behind if this is your way of thinking. You need to remember that you worked long and hard to save up money for retirement. If you keep on spending like there is no tomorrow, you will soon find the need to go back to work. This is because you have used up all your retirement fund too quickly.

One you hit retirement, you need to stick to your budget and your plan. It is an exciting time for you but you need to keep your emotions in check. Be careful and continue to monitor your finances even in retirement. This is one way of guarding your funds and ensuring that you get to enjoy your golden years with your funds intact.

Charging too much in your credit card

This is a lot similar to being too excited at the beginning of your retirement years. However, this can happen over a long period of time. This might even be one of those financial habits that you need to change. Credit card use can help you manage your finances and even your budget better when done right.

However, when you lose control and start using your credit card aimlessly, you tend to rack up some big debt amounts. CNBC shares that credit card balances of Americans is over $6,000 so you better keep track of your spending. Try not to use your card for a purchase which you cannot pay for in cash. Once you use it to cover your cash shortage, your problems will start to come rolling in. You might even start to alternate and transfer credit card debt just to stay afloat. Debt is something you need to avoid when you get to retirement.

Lending money left and right

One of the most common retirement debt problems is lending money to family and friends. There is nothing wrong with your desire to help but not to the extent where you put your own finances in peril. There are a few reasons why family and friends seem to flock to you asking for help while you are in retirement. One is that they might think that you have no need for cash since you are already retired.

The truth, however, is the exact opposite. You actually need it now more than ever because you no longer have a steady source of income. When you retire, you are actually relying on what you have saved up for the past few years. This will be your main source of funds for all your retirement expenses and needs. Once you lend money to people, you are putting your retirement in danger.

Neglecting your health

When you retire, you need to make sure that you are still able to take care of your health. A healthy and sound mind and body keep you away from sickness. The healthier you are, the less you need to spend on doctor and hospital visits. It also helps that you get to enjoy a better quality of life when you are healthier in retirement. You get to do more activities even at old age.

There are a number of retirement debt problems you need to be aware of when you plan for your golden years. Knowing these potential pitfalls makes you more aware of what to avoid and help you prepare for them better.

Single Senior Finances And How You Can Manage It Well

Single Senior Finances And How You Can Manage It WellSingle senior finances are one of the points in your life that you need to plan for because you will have a tougher hill to climb than the rest. You need to understand that one of the components that makes old life easier is when you have a family with you. If you are going through it alone then it changes the dynamics of old age retirement.

If you start comparing it to traditional retirement planning, going at it alone is a lot different. Parts of your retirement planning might seem a little easier since you are only planning for yourself. However, you need to understand that this is more challenging because you would need to do everything on your own.

Single senior finances mean that you do not have any spouse or even children to help you with old age needs. You might have some friends from work or in your neighborhood but may not be enough. Besides, they might start to focus on their own needs as they get older. When that happens, they might not be able to help you as much as they want.

This and the fact that you are alone makes it all the more important to make sure you plan for old age well. While you can, you need to put in all the work to make it possible your golden years. There is no one else to rely on but yourself so better make it count. Here are a few things you might want to look into to help you prepare better.

Manage all debt payments before hitting retirement

While you can, it is important to manage your debt obligations especially if you are nearing retirement. If you are just starting out, try and plot out your payments to make sure that you pay everything off before you retire. This is important especially when you start to look at your big-ticket debt items.

For one, you need to make sure that you pay off your mortgage loan before you hit retirement. It will put too much stress on your finances because house payments tend to be a big amount in your expenses. Take a look at other big payments such as your student loans and even car loans try to work on the same timeline. Your objective is to pay these off before heading into retirement.

Carrying these debt payments while trying to enjoy retirement will cut into your retirement funds. You can make an argument that you can just sell the house and even earn from the sale. But these types of life and financial decisions need to be planned out very carefully. You also need to time these well so you are not left homeless on the street.

Look for ways to lower your expenses in old age will help single senior finances

Making every dollar count is important in single senior finances. You need to be able to stretch your budget to cover a lot in your expenses. This might even be a good time to start looking into a frugal lifestyle. Whatever you decide on, it is best to identify areas on how you can cut down on your budget expense side.

As mentioned earlier, joining the tiny house movement in retirement is one of the ways you can bring down your expenses. You might even be able to get a hefty sum from the sale of the house. However, timing is important in these types of decision. You need to make sure that selling the house and closing your purchase on the one you want to buy net are in succession. A hitch on one of the will either make you pay for two mortgages until you dispose of your old house or become homeless when you sell the old house but fail to close on the new one.

One other idea you might want to consider is relocating to a new place where the cost of living is relatively lower than where you are now. Forbes shares that Costa Rica is one of the top retirement countries at present. This can help you get more out of your retirement money. Choosing to live in a smaller house and in a new place may look daunting because you are doing something new. Just think of it as an exciting stage in your life where you get to meet new people in a new place.

Identify areas to increase your income

Once you hit retirement, you might have this notion of just hanging out in your porch the whole day reading newspapers or books or knitting whatever you want. Though there are some retirees who feel it is for them and this is their idea of single senior finances, this should not be your default thinking. If at all, retirement should be an exciting stage in your life.

For one, it can give you the chance to pursue something that you really love. That is if you did not have the luxury of doing the same while you were still working. Not everyone lands their dream job so retirement affords the luxury of going after what you really want to do. As an added benefit, you can even earn from it.

This becomes an income-positive hobby that benefits you in two ways. You get to spend time doing what you love doing. In this case, you will not feel like you are working at all. The money you earn can be used to add to your retirement fund. This can give you more elbow room to pursue other activities such as vacations or visiting family and friends.

Lower down your stress level

This is one of those objectives which are easier said than done but it does not mean it’s impossible. There are a few things to look into and try to lower down your stress level. For one, doing a hobby that you earn from can be great in reducing stress. If you love baking, then it can help you manage some stress in your life. The additional income, if you get to sell it, will even help with single senior finances.

You can also try and start putting in some exercise into your daily routine. It helps you feel food afterward. Not to mention that the stronger and healthier you are, the more it can help with your single senior finances. It lessens the need for doctor’s appointments and even hospital emergency visits. You might also lower the need for maintenance medicines.

Look for new friends

If you do decide to retire elsewhere and buy a smaller house, it is important to make new friends in your new place. For one, you will need the support system once you find it harder to move around. If your finance allows it, you can check out assisted living facilities so there will be people taking care of your every need.

Single senior finances might be daunting for single people who are about to enter into retirement. It might feel like you are going to be up against everything all by yourself. However, this is not the case because there are a lot of living arrangements you can opt to make a comfortable life in retirement. You can still have a full life in your golden years if you start preparing for it early on.

Retirement Planning Mistakes You Need To Avoid

Retirement Planning Mistakes You Need To AvoidAs you try and plan for your future, there are a number of retirement planning mistakes you need to be on the lookout. This helps you guard current finances and guides you better into your future. Retirement is not a question of “if” but more of “when.” For some people, it comes faster than they think while for others, they overshoot their timeline.

There are a number of factors that lead to when you get to retire. One of the biggest factors is your start date. You might have heard people saying that the earlier you start with it, the sooner you get to retire. More than just saving early, you get to take advantage of using compound interest to your advantage as well. You need to keep in mind that that average retirement age is now at  66 According to a Gallup survey.

This is one of the retirement planning mistakes people make because they do not have an idea what compound interest is. It is one of the most useful tools when you are trying to save money for future use. What this is is that it allows you to earn interest on top of interest every month. If you have $100 earning 4%, a year will yield you $4. This will then be added to your principal amount. On the next year, you will have $104 earning 4% which is $4.16. As your principal gets higher, your interest earning increases exponentially as well.

This is one of the reasons why you need to save as much and as early as possible is because of your compound interest. It is a retirement mistake when you do not take advantage of it. You will fall behind on your target and miss the chance to retire on your target date. Apart from this, there are a few other mistakes you might commit when it comes to retirement planning. Here are some of them worth looking into.

Thinking that retirement is a long way out

For a lot of people especially the younger generation, they believe retirement is too far away. This is one of the most common retirement planning mistakes which robs you of the chance to retire either on time or earlier than planned. Once you already have this mindset, it now becomes a challenge to save for the future. This is because you believe that there are far more important things to attend to at present.

That may be true where there are immediate needs that require your attention. Bills, utilities, student loan payments, and even mortgage and car payments. However, there you need to understand that retirement will be upon you sooner than you think. Time flies by so fast that you might be surprised you are already nearing it.

The beauty of retirement planning is that consistency early on is the key. You do not have to put in all your extra money into an IRA or your 401(k) at work. You just have to get started with it. The more you get used to it, the easier it would be to save up continuously as you go along. You can also increase the amount a little every year.

Foregoing an employer-matching program is one of the retirement planning mistakes you can make

This is one of retirement planning mistakes people usually make when planning and saving for their nest egg. There are a lot of employers who offer this benefit in the workplace in a bid to attract and retain employees. This is a financial investment on the part of the company to help its people plan for their retirement in the future.

The way it works it that your company matches a percentage of the amount you put into your 401(k). One of the most common programs is the 100% of the first 6 %. This means that the company matches the contribution up to 6% of the gross pay of the employee. This means that if you have a $50,000 annual pay contribute $3000 (3%) of it to your 401(k), the company matches and puts in $3000 as well.

That is why a lot of experts refer to this program free money. Not only will it help you increase your retirement fund, it can also play a big part in how compound interest is computed and added. You just have to make sure that you understand the vesting schedule set by your company. You might lose a lot if you leave the company and transfer to another job.

Gambling on your nest egg too close to retirement

It is not always talked about but one of the retirement planning mistakes people often make is that they take a huge risk too close to retirement. One of the reasons why people do this is because they want to make quick money to help them reach their retirement goal. They might think that taking on a lot of risk for a lot of return is the answer.

It is true that the higher the risk, the bigger the potential reward and a lot of people go into this gamble. However, one thing you do not have is time. If you were to lose a lot of money with that risky move, it will set you back years of work. This means that you have to keep on working just so you are able to save what you need for retirement. You can make the argument of what if you win, but investments are never a sure thing especially the risky ones. If you would have made this risky investment early in the game, you would still have a lot of time to recoup your losses. But if you lose a big amount too close to retirement, you’re in big trouble.

Gambling on your retirement fund while in retirement

You may not go into risky investments before retirement but you also need to be careful with how you manage your finances while in retirement. A part of retirement planning mistakes is not thinking about how you invest your money while in retirement. It is not just about putting your funds in a savings account all throughout your retirement. It should be part of your planning to keep an eye out for possible investment opportunities.

However, what you need to be aware of is that you are no longer in a position to take on high-risk investments. It is better to opt for low risk, low return opportunities. This way, it keeps your principal amount intact while being able to earn more than just what a savings account can offer. You need to be on guard as well on investment scams targeting retirees.

Thinking that you have to fall into a specific identity in retirement

What is your idea of retirement? Is it something you see on tv or an idea your officemates have? Are you planning to simply follow what your parents did for their retirement? One thing you need to understand when it comes to planning for retirement is that you need to know what you want for yourself. You can certainly look at what other people are doing but you need to decide for yourself. Define your retirement before you start saving money for it. Doing so will help you concentrate your efforts on your objective.

There are a lot of retirement planning mistakes people make that is why they are having problems during their golden years. That is why it is best for you to know these common missteps to help you plan better.

Smart Spending Tips For Smart Spenders

Smart Spending Tips For Smart SpendersIt is a good idea to look into smart spending tips to help you manage your finances. In today’s day and age, you might need just about all the help you can get. This is because a lot of consumers and households are struggling to manage their finances. A lot of people are also having a tough time handling debt as well.

According to The Motley Fool, the average household debt is over $137,000. That includes a lot of items from mortgage loans to car loans and even credit card debt. One thing you need to remember is that debt is not necessarily a bad thing. It is how you use it that makes all the difference. That is why you need to be smart with the way you spend your money.

Of course, that is easier said than done. For one, credit cards have made it a lot easier to purchase items even those that are out of your reach. You end up buying things you don’t really need and can’t afford. There are also times where you purchase items that have no real value for you except for immediate gratification.

However, this does not mean that you cannot spend money outside your basic needs. You just need to look into smart spending tips to help you guard your finances against impulsive purchases. There always has to be an end goal to your purchases more than just liking those pair of shoes. If this is what you are looking for, take a look at some of these tips.

Buy things that will help you earn more

This is a sound piece of financial advice when you are contemplating on a purchase right in front of you. While you are out and about shopping in the mall or even if you are at home on the bed browsing through online shopping sites. Before you head out to pay or to check out the item, try to think about the value it brings to your income.

If you are buying a new car, why do you need it in the first place? One of the smart spending tips is to ask yourself this question first everytime you will make a purchase. If you want the car because you want to impress people around you then that will not bring you anywhere. However, if you need it because your business requires you to be on the road a lot then a new vehicle becomes a good investment.

The same thing with personal gadgets, you can always ask yourself the same question. Why will you buy a new laptop? If you just want the same one your friends have then you are better off not buying one. But if you need it to get some side gigs done at home or to stream movies because you cut your cable already then that could be a good choice.

Will your purchase help you save time?

Forbes explained in an article how value is not inherent but rather subjective. Simply put, you have the tendency to put more value to a specific item in relation to how it can satisfy a want. If you were presented right now a bottle of clean and drinkable water and a big diamond, you would reach for the diamond. But if you think about it, you cannot live with water but you can live without the diamond.

Following that approach, you need to make sure that you have your priorities in line and that starts with valuing your time. One of the smart spending tips is to try and figure out if your purchase will help you save time so you can put it to other users. You can either use your free time to try and earn more or spend it with the people that matter to you.

If hiring cleaners will give you more time with your family when you get home then go ahead with it. You might have the chance to get started with a side gig at home if you just order your groceries online. It saves you time from having to drive up and down the grocery when you could already get started with work.

Spend on experiences

One smart tip on spending you might want to contemplate on is where you spend your money. Do you favor gadgets that will depreciate quickly or spend money to learn new things? One of the smart spending tips you can look at it using your money to create a better version of yourself. One is keeping a healthy body by joining fitness classes or going to the gym.

Feeling good can help you become more productive at work or in growing your business. You can also take classes to help you improve on areas you are struggling with or want to improve on your core strengths. The bottomline is to continuously learn and find ways to improve yourself to help you enjoy life better.

Work on your hobby

One of the smart spending tips you can consider is to try and make improvements to your hobby. For one, it gives you the chance to have an outlet in case you are having a bad day or week. It can also be a good form of relaxation for you on weekends or during long holidays. Your hobby can even help you save money when you can gift it to other people.

Another benefit of working on your hobbies is that it can be a good source of income or a valid career option in the future. It can become an income-positive hobby for you to help augment your income in your budget. It may even be a solid option as a career when you decide you want to pursue something you love doing.

As you work on your hobby, you develop a channel to de-stress after a hard day’s work. This is one of the reasons why this is considered one of the smart spending tips to look into. If you love cooking or baking, it gives you something to look forward to when you get home. It can also be a great bonding activity with your whole family. You can ask the kids to help around and you can start teaching them as well.

Hobby for retirement

When you hit retirement, you can turn to your hobby to help keep you pre-occupied in your transition to a new phase in your life. It can even bring in extra cash you can use in retirement. If you love taking photos, offer your services to venues as a part-time photographer. You can also talk to some coffee shops and restaurants if you can deliver some home-baked cookies they can sell to their customers.

There are a number of smart spending tips when you start to pay more attention to the way you manage your finances. The better you are handling your budget, the more productive you can be. You get to do more by carefully selecting where you put your money. As you do this, you achieve more in life and reach your goals faster. You may even be able to retire earlier with a secured nest egg giving you the chance to enjoy the results of all your hard work.

Avoid Late Payments With These 7 Tips

Avoid Late Payments With These 7 TipsOne of the things you want to always look out for as a consumer is to avoid late payments when it comes to your financial obligations. This is one of the most important details you have to look into as an adult. When you were still in college or younger, you might not have thought about it that much. However, this is an important aspect of your life when you are trying to get ahead with your finances and trying to reach your goals.

For one, late payments can greatly damage your credit score. Once that happens, your score will dip and you encounter multiple but avoidable financial challenges. For one, applying for a loan might start to become harder than it already is. Lenders will start to double guess your loan applications and might even deny some if your score is really low.

This is just one of the reasons why you need to avoid late payments. Lenders might still approve your loan or credit applications but you would have to contend with a high-interest rate. This is to ensure that they are covered for the risk they are taking to lend you money. Paying high interest on a loan for years can cost you a lot of money you could have used somewhere else.

One thing you need to understand is that your payments have a direct effect on your credit score. In fact, FICO explains that payment history makes up about 35% of a score. This means that when you have a lot of late payments reported on your credit, your score will have a significant drop. Once you understand this, you will try to find ways to pay on-time. Here are few tips to help make sure you always get to send out your payments on time.

Review your bills

One of the first things you need to look at to avoid late payments is to sit down and review all your financial obligations. This includes all your debt payments from the big-ticket items to credit card payments and even regular utility bill payment. The idea is to get a pen and paper handy and simply list every single detail down. You can do it with a computer but the important thing is to come up with a list.

Once you have your list, one thing you need to take a look at are the due dates in relation to when income comes into your budget. If you get paid every 15th and 30th of the month, you need to look at what payables fall on those dates. Are you able to cover your payments when they become due or do you have to float payments over to the next payday to get by?

If you can pay them all at once with your income then you don’t have much problem in that area. However, if you cannot meet all of your payments because of the due date, there is an easy fix. You can call up your lenders or creditors and ask if you can have your due date moved to another date. Some of them may not approve this but if they do, then you can avoid late payments because you get to schedule payments better.

Make sure you have a comprehensive budget

As you have already made a list of your debt payments, you can use this list to create a comprehensive household budget. One thing you are looking for when you create a list is if you have enough income to support your budget. It is not only your expenses you have to look into. You also need to make sure that you can save enough for the future.

One of the possible scenarios which can happen when you only have enough or barely enough for your expenses is that your savings start to suffer. It can be for your retirement fund where you are unable to make it grow over time. Your emergency fund might also suffer because you do not have any more funds to spare after paying your obligations.

It is important to avoid late payments but you need to balance it as well with your future outlook. For one, you have to save for your retirement fund as early as possible. The sooner you get started with it, the sooner you can retire. You also get to use compound interest to your advantage when you save for retirement early.

Create a payment schedule

After you have written down all your payment obligations and how it stacks up to when you get paid, a payment schedule is next. As the name suggests, this is simply a schedule of which bill gets paid on what date. This helps you remember and keep track of your payments. Once you have this, you can even explore enrolling in automatic payments with your lender. Once you do this, you just have to monitor the payments that go out every month.

Try making advance payments

This can help relieve a lot of stress from your plate because you are making payments for months ahead. Of course, it goes without saying that this would be difficult if you have a tight budget, to begin with. It is an idea you can look at when your finances improve over time. Apart from being able to avoid late payments, you also get to pay off your debts sooner.

Schedule a day for payments

It can be a day where you send out all your payments or simply a dedicated day or weekend to go over your finances. Doing this helps you stay on top not only of your payment obligations but your overall finances as well. When you are able to do this, you put yourself in a position to make changes if and when necessary. The important this is that you are able to make informed decisions because you understand your finances.

Organize documents and paper trail

This will help you stay on top of your payments and be able to dispute any errors that could show up in the future. If you still send out checks to your lenders or creditors, you need to keep track of all statements and payments you send out. If you make online payments, you need to save a paper trail or any form of payment confirmations or notices you receive after a payment. This will help you create a payment history for each lender and proof of payment as well.

Focus on strengthening your emergency fund as well

This might sound a little out of place when you are talking about on-time payments. However, this can actually help you stay current on your payment obligations especially when you are going through a rough time. If you find yourself in between jobs for an extended period of time, your emergency fund can come in and take care of your payment obligations while you look for a new job.

There are a lot of benefits when you try and avoid late payments on your account such as a high credit score. You also get to save money in the process. Instead of paying interest, fees and other charges on late payments, you get to save that money and put it in savings.