Tagged: savings

Don’t Retire, Strive for Financial Independence Instead, Part 1

Our featured article in this edition of Financial Freedom News recommends a very different approach to the idea of planning for retirement.  Richard Eisenberg, a contributing writer for Forbes magazine, recommends that we focus on attaining financial independence instead of planning for retirement.  In this two-part article Richard outlines his views on how to make this goal a reality. 

In this article, we are given the 5 rules for declaring our financial independence.  The second part of this article, in our next edition, will discuss several types of retirement calculators and their role in the planning process. FFN Editors

Plan For Financial Independence, Not Retirement
Richard Eisenberg, Contributor to Forbes Magazine Personal Finance Section (www.forbes.com)

 Declaring your Financial Independence Day is a better idea than trying to come up with “the number” you need to retire, especially if you’re in your 50s or 60s and don’t have much time to pump up your savings.

What exactly is financial independence or, as some call it, financial freedom? That depends on your own definition.

In a new Capital One 360 survey, 44% of U.S. adults said financial freedom meant not having any debt, 26% said it meant having enough saved for emergencies and 10% defined it as being able to retire early.

I go with Jonathan Chevreau, the Toronto-based author of the new U.S. edition of Findependence Day, a “fictional finance” book, and creator of the Findependenceday.com site. His novel is about a young debt-ridden couple, Jamie and Sheena Morelli, and their road to reaching you know what.

Chevreau says that when you’re financially independent, you work because you want to, not because you have to. “Findependence is necessary for retirement,” he says. “You can be findependent and not retired, but you can’t be retired without being findependent.”

Chevreau targeted April 6, 2013 – his 60th birthday – as his Findependence Day and reached that goal, but he still edits Canada’s MoneySense magazine. “I have a job I like, so why would I quit?” he asks.

5 Rules to Declare Your Findependence

Chevreau’s five rules for achieving findependence:

1. Pay off your home in full. “That’s really the foundation,” he says.

2. Find multiple sources of income for retirement. These can include interest and dividends from your investment portfolio; rental real estate; freelance or consulting work; Social Security; an annuity; and perhaps a guaranteed pension.

3. Develop “guerrilla frugality” habits. Chevreau calls this “becoming a Frooger.” Keeping expenses low while working full-time will make it easy to live that way in retirement and reduce the amount of savings you’ll need for a comfortable retirement.

“If you spend like a millionaire, you’ll end up a pauper,” says his book’s protagonist, Jamie. “Spend like a pauper and you have a shot of becoming a millionaire.”

4. Save 20% of your gross income. This will be impossible for many people, but not for others. If you can’t save 20%, try for 15 or 10%.

5. Invest with a “Lazy ETF” portfolio. That means selecting, say, three exchange traded funds– a U.S. stock fund, an international stock fund and a U.S. bond fund – and holding onto them.

Review their performance once a year. Then rebalance your portfolio if the markets shift and you discover you have a higher percentage in one of these asset classes than you want. (Use index funds instead of ETFs, if you prefer.)

Women, Men and Money

At the risk of overgeneralizing, I think many women gravitate toward the concept of financial independence, while men often prefer focusing on “the number.”

In the initial episode of the two-part Consuelo Mack WealthTrack public television series on Women, Investing and Retirement that premiered June 28, Jewelle Bickford, senior strategist for GenSpring Family Offices, said the first question her male clients ask in their monthly or quarterly meeting is “how has their portfolio done, whereas the women tend to think: ‘Will I have enough?’”

(This ends part 1 of this article.  Part 2 will follow in our next post). FFN Editors

Let us know your thoughts iregarding this nformation in the Reply Section below.  Also, please click “Like” and “Share” this artilcle with others who may be interested in achieving financial freedom.

(Disclaimer:  The views in the above article are strictly those of the author.  They do no necessarily represent those of FFN. Please use due diligence prior to applying the concepts, recommendations and/or in purchasing any products or services offered by the author).  FFN Editors 


Get Your Retirement Plan Back on Track

Does your goal of retiring seem farther away than ever.  Well, you aren’t alone. The reality for many is that normal retirement at age 65 is being postponed to some later date.  As a result of the financial crisis of 2007/2008 and the widespread lack of retirement preparation, many have to work longer to reach the  financial level necessary to retire. 

Putting a retirement plan into effect is a critical step in making retirement a reality.  Trent Hamm writing in The Simple Dollar outlines several  steps that can get your plan underway. And, perhaps close to where it should be if it has been side-tracked.

Let us know your thoughts about this information in the Comments section at the end of this page.  Also, please “Like” and “Share” this information with others you may be interested in achieving financial freedom. FFN Editors

How to Approach Retirement Catch-Up
By Trent Hamm for The Simple Dollar

December 10, 2013

It’s well established that if you start saving about 10 percent of your income for retirement starting at age 25, you’re going to be in excellent shape for retirement when you hit age 65. This fact should be emblazoned on every single college and trade school diploma issued in the United States today: start saving for retirement now, not later.

Unfortunately, that fact doesn’t represent reality. Quite a few of us didn’t save at all during our 20s, and some of us didn’t save during our 30s, either. All the time, I hear from readers in their late 30s or early 40s (or even later) who are just now realizing that they need to start saving for retirement or they’re going to work forever.

If this describes you, the obvious answer is to start saving immediately. Right now. If you’re reading this article and you’re a professional adult without any retirement plan in place, you need to start a retirement plan.

If your employer offers a 401(k) program with matching contributions, run (don’t walk) to the HR office and sign up for that plan. Contribute enough to get every dime of that matching money because it’s essentially free retirement savings for you. If your employer doesn’t offer matching in their 401(k) program, look into opening an individual retirement account. I recommend contributing 10 percent of your income to that IRA, for starters.

So, you’re saving. Now what? The first thing to think about is time. If you’re only contributing 10 percent of your income per year to a typical retirement fund, it’s going to take about 40 years of saving before you can safely retire. Like it or not, that’s the reality of it.

If you’re 30 when you start, that means you’re looking at retiring when you’re 70. If you’re 40 when you start, that means you’re looking at retiring when you’re 80.

Another problem is that simply doubling the contribution doesn’t mean that you can halve the time. You can’t expect to contribute 20 percent for 20 years and match what you would get out of 10 percent over 40 years. That would only work if you were getting no return on your money – in other words, if your retirement plan involves stuffing cash into a mattress.

Saving for retirement once you’re behind the curve looks quite scary. Thankfully, there are a few things you can do to help improve your situation.

1. Get a Social Security estimate. The average American earns 40 percent of his or her retirement income from Social Security benefits, so knowing what you have coming to you can go a long way toward soothing retirement fears. The Social Security Administration offers a calculator to help you figure out how much you’re going to receive in benefits. It’s a good idea to wait until you’re as old as possible to start collecting benefits so you can maximize the income.

2. Look for ways to boost your income. Many mid-career folks find opportunities for freelance work and side businesses that can supplement their current income. Instead of simply spending that money, however, channel all of it into retirement savings (or into a mix of retirement savings and debt repayment). If you’re unsure where to start, visit your local library for information on side businesses and freelance opportunities related to your career path.

3. Hike up your savings. If you wish to retire earlier than 40 years from now, you’re going to have to save more. That means stowing away a higher percentage of your income. A good quick rule to use is that for every 10 years you want to shave off your goal, you need to double how much you’re saving. If you want to make it in 30 years, shoot for 20 percent per year. Twenty years? You should be saving 40 percent of your income per year. You need that boost to make up for the time you lost.

4. Cut out unnecessary expenses. Finally – and this is the tough part – you may have to consider some cutbacks. If you’re living a lifestyle that makes saving for retirement inconceivable, then you’re simply living beyond your means. You can’t assume that your ship will come in someday and everything will be OK. Everyone has expenses that they can cut from their life.

The road to retirement is a challenging road – but it’s not an impossible one.

Trent Hamm is the founder of the personal finance website TheSimpleDollar.com, which provides consumers with resources and tools to make informed financial decisions

(Disclaimer:  The views expressed in the above article are strictly those of the author.  They do not necessarily represent those of FFN.  Please use due diligence prior to applying the concepts, recommendations and/or in purchasing any products or services offered by the author)  FFN Editors

How to Invest for Financial Freedom with Little or No Money

This edition of Financial Freedom News features a video by Mr. Ian Thompson with 21st Century Investing.com that outlines the key steps for the small investor’s success. Often considered as something…”nice to do if I can ever get enough money together to start”, investing is actually an important component in creating financial independence.

It is one of the main ways to build a passive income stream. And, can become one of the pillars of a multiple income stream (…that phantom notion often spoken of, but, rarely seen implemented ). 

In fact, Mr. Thompson advocates becoming wealthy as the ideal way to achieve financial independence. And, it’s hard to argue with that idea.

So, take a few minutes and view this video. And, let us know your thoughts about this information in the Comments section at the end of the page. Also, please “Like” and “Share” this post with others who may be interested in achieving financial freedom.

(Disclaimer: The views expressed in the above video are strictly those of the presenter.  They  do not necessarily represent those of FFN.  Please use due diligence prior to applying the concepts, recommendations and/or in purchasing any products or services offered by the presenter).  FFN Editors 

Smart Financial Steps To Take Before Year’s End

Here are a dozen money actions to consider taking before closing out 2013.  Deborah Jacobs of Forbes magazine offers an insightful collections of financial steps to both protect your current wealth and set a course for increasing it.

Let us know your thoughts about this article and “Like” and “Share” with others who would wish to take advantage of this information.

“12 Smart Money Moves To Make Before The End Of 2013”

Deborah L. Jacobs, Senior Editor, Forbes Magazine, 12/02/2013

Many people, rushing to make holiday plans, would like to take a vacation from thinking about money. Not so fast. In the process you could whiz by some crucial financial deadlines on Dec. 31. Miss them and you might get hit with substantial penalties or lose the opportunity to take advantage of some smart money-saving moves. Here are strategies to consider in the countdown to 2014.

1. Fund employer-sponsored retirement plans.

For 2013, you can contribute up to $17,500 to a 401(k) plan, or $23,000 if you’re 50 or older. These dollars can be put in a pretax 401(k), cutting your current tax bill. Or if your employer offers the option and you believe tax rates will rise, put some of those dollars in a Roth 401(k). The money goes into a Roth after taxes, saving you nothing now. But the Roth grows tax-free. You can withdraw from it tax-free when you retire or before that if you leave the company, have had the account for at least five years and are 59 ½ or older.

Think it’s too late to top up your 2013 contributions? Maybe not. Ask your employer to withhold extra dollars from your last couple of paychecks.

Self-employed? Set up a one-person 401(k). So long as you create it by Dec. 31 you can make contributions for 2013 until the due date of your 1040 with extensions – as late as Oct. 15, 2014.

2. Buy business equipment.

Here’s another tax goodie if you’re a business owner or moonlighter. Instead of recovering the cost of new equipment by depreciating it over a period of years, you’re allowed to deduct the entire cost of most new business property in the year you acquire it. Currently, the limit is a generous $500,000, which comes in handy if you’re in the market for computer equipment, furniture, or a car, for example, but it’s scheduled to drop to $25,000 Jan. 1. For the current rules on this Section 179 Deduction, check IRS Publication 946, which downloads here as a PDF.

3. Accelerate income tax deductions.

The most obvious examples are property taxes and state and local income tax. That’s assuming, however, you’re not paying (or in danger of paying) the fiendishly complicated alternative minimum tax, which can turn that traditional advice on its head. For example, since state and local taxes aren’t deductible in AMT, you might delay the payment of your fourth-quarter state taxes until 2014 – if you’re stuck in AMT this year but likely won’t be for 2014.

4. Take required distributions from your own IRA.

You are considered the owner of an IRA that you set up and funded – either through annual contributions or the rollover of a 401(k). Unless the account is a Roth, you must take yearly minimum distributions starting at age 70 ½. You have until April 1 of the year after you turn 70 ½ to take the first one. After that, you must take distributions by Dec. 31 of each year.

The payout is based on the account balance on Dec. 31 of the previous year divided by your expectancy, as listed in one of three different IRS tables (really) contained in Appendix C of IRS Publication 590, “Individual Retirement Arrangements (IRAs),” downloadable as a PDF here. After doing the calculation the mandatory withdrawal is expressed as a dollar value. You are required to pay income tax on this amount.

5. Take required distributions from an inherited IRA.

Generally, non-spousal IRA heirs must withdraw a minimum amount each year, starting by Dec. 31 of the year after the IRA owner died. Note: This is true whether it’s a traditional IRA or a Roth (a common misconception).

To calculate this distribution, you take the balance on Dec. 31 of the previous year and divide it by the individual’s life expectancy, as listed in the IRS’ “Single Life Expectancy” table (see p. 88 of IRS Publication 590. Unless the account is a Roth, there is income tax on this required payout.

Don’t make the mistake, as some people do, of using the number from the table to figure a percentage. In subsequent years, you simply take the number you used in the first year and reduce it by one before doing the division.

6. Split inherited IRAs that have more than one beneficiary.

Co-beneficiaries must take distributions over the life expectancy of the oldest beneficiary. It’s better to split it into separate inherited IRAs. That avoids investment squabbles and allows a longer payout period for the younger heirs. But you must take this step before Dec. 31 of the year following the year of the IRA owner’s death. If you don’t, the payout schedule will continue to be based on the life expectancy of the oldest beneficiary.

7. Make yearly tax-free gifts.

You can give anyone (and everyone) $14,000 annually without eating into your lifetime exemption from gift or estate tax. (That exemption is currently $5.25 million and goes up to $5.34 million in 2014.) Couples can combine this annual exclusion to jointly give $28,000. Just make sure 2013 gifts are complete (received and, in the case of a check, either deposited or cashed) by Dec. 31.

8. Fund 529 state college savings plans.

A popular use of the annual exclusion is to fund these plans. The main appeal of a 529 is income tax savings: You put money in one of these plans and you don’t have to pay federal or state income tax on the earnings, provided the cash is withdrawn to pay for college or graduate school tuition, fees, room and board, or books. In some cases you also get a state income tax deduction for your contribution. To take advantage of that tax break your contribution checks must be postmarked by Dec. 31; if you contribute by electronic bank transfer, your online request must be submitted before 11:59 p.m. on Dec. 31.

When it comes to 529s, there’s a special twist with annual exclusion gifts: You can make a lump-sum deposit of as much as $70,000 ($140,000 for a couple) and treat it as five years’ worth of annual $14,000 gifts. To do this you must file a gift tax return, and if you die before the five years is up a pro rata part of the gift goes back into your estate. Still, it’s a good way to get a large lump of college money into a 529, where it can grow tax-free.

9. Harvest capital gains and losses.

A popular way to reduce the tax on investment gains is to take capital losses to offset them. Should you go this route, beware of the “wash-sale” rule of the Internal Revenue Code. It prohibits deduction of losses if you either buy back the property you just sold or buy “substantially identical” securities 30 days before or after the trade. If you violate the rule, you can’t deduct the loss until you sell the new shares.

10. Pay estimated taxes.

This is relevant to people who are self-employed, have a business on the side, or have taxable investment income. To avoid underpayment penalties for the 2013 tax year, you must prepay on a quarterly basis 100% of what you owed in 2012 or 110% if your adjusted gross income in 2012 was more than $150,000.

11. Make charitable donations.

Publicly traded appreciated securities – assuming you have any – are by far the most tax-efficient asset to donate to charity. You can deduct their full fair market value at the time of your gift (offsetting up to 30% of your AGI), yet you don’t have to recognize the appreciation as income. If you want a 2013 deduction but don’t yet have a charitable recipient in mind, transfer those securities to a donor-advised fund. You can claim your deduction now, then recommend grants to your favorite causes later. (Fidelity, Vanguard and Schwab all have affiliated charitable funds.)

If you’re 70 ½ or older and still need to take a 2013 required minimum distribution from your IRA, consider transferring the payout (or part of it) directly to your favorite charity (it can’t be a donor advised fund). You won’t get a charitable deduction, but you also won’t have to recognize this “charitable rollover” as ­income, which has other benefits. For example, it might hold down the amount of extra income-based Medicare ­premiums you must pay in 2013.

Even if you’ve already taken your RMD, you can do a charitable rollover for up to $100,000 – before Dec. 31. This provision expires at the end of 2013. For details about how to do this, and pitfalls to avoid, see “The Dollars And Sense Of Giving IRA Assets To Charity.”

12. Schedule checkups and stock up on meds.

All the more so if you have met your deductible for 2013. In that case prescription refills that cost you nothing now may add up to considerably more starting Jan. 1 until you have met your deductible for 2014. Likewise, if you need surgery and have a choice about whether to schedule it this year or early next year, you might be better off financially having the operation this year.

A similar strategy applies if you have incurred enough unreimbursed medical expenses this year for them to be deductible on your federal income tax return. Medical expenses are generally deductible if they exceed 10% of your adjusted gross income – 7.5% if you or your spouse is 65 or older.

Deborah L. Jacobs, a lawyer and journalist, is the author of Estate Planning Smarts: A Practical, User-Friendly, Action-Oriented Guide, now available in the third edition.

(Disclaimer:  The views expressed in the above article are strictly those of the author.  They are not necessarily those of FFN.  Please use due diligence in applying any of the concepts, recommendations and/or the purchase of products or services offered by the author) FFN

Try the 5% Solution to Achieve Financial Freedom

Do you find it difficult living up to the old adage that says the way to financial security is to save 10% of your earnings…daily, weekly and annually? Well, don’t give up hope of ever achieving your financial freedom goal. Daniel Myers offers a smart alternative. He says go for a 5% saving/earning target instead. It may take a little longer but can prove more doable.

Let us know your thoughts about this approach in the comment section below. Also, please “Like” and “Share” this with friends and family.

The 5% Solution To Financial Freedom

By Daniel Myers on February 26, 2009, Investopedia

Conventional wisdom says “save 10% of your income to achieve financial security”. This little piece of advice has become conventional wisdom because it’s true. However, many people struggle to pay their bills every day and see saving 10% of their income as a fairy tale – an insurmountable hurdle that makes them give up before they can save any amount at all. However, a new twist on that traditional advice may make that savings goal more achievable.

Instead of saving 10% of your current income, another alternative is to focus getting that 10% from two sources: 5% by making extra income and 5% by lowering expenses. The key is to make small but concise financial moves – and avoid counting on striking it rich with one big payoff, such as by winning the lottery. Read on for some ideas on how to find an extra 10% to save for your future financial security.

Cut Spending by 5%
A spending cut may seem old-fashioned and trivial, but remember that many fortunes have been made by those who simply spent less than they earned and invested the difference in assets that increased in value over time. Small savings will add up quite a bit over the course of a year and, more importantly, over your lifetime.

You may scoff at the idea of cutting spending as a strategy, but it works. It should come as no surprise that some very well-off members of society still clip coupons. For them, of course, it’s a matter of principle, but for you, those little savings add up and, more importantly, your efforts become part of your money habits. These habits determine your future. Maybe you or your kids will someday be billionaires who still use coupons. (To lean more, read Warren Buffett: The Road To Riches and Downshift To Simplify Your Life.)

Start With Household Bills
Utility bills come every month like clockwork and can add up to a hefty sum by year’s end. To lower these bills, consider switching to providers that offer better rates, or cutting unused services. There are hidden benefits to making these changes as well. For example, most of us will become more active when we cut our cable and head outside to occupy our time, which may lead to lower medical bills in turn. Getting all those premium HD-channel packages can add up to quite a bit. According to MSNBC, the average cable bill was around $60 in 2006. Don’t let yourself think, “Cable’s not that much money, so why bother?” Instead think, “No one watches that tier of TV channels, and cutting it will leave me with 1% to save.”

If you’re planning on saving energy (and therefore saving money on your electric bill), there are a lot of little things you can do around your house. Unplugging unused electronics, switching to energy-efficient light bulbs, using sunlight to your advantage for heating and lighting, and many other techniques are just a start. And, if you’re making some long-term plans, consider installing energy-efficient appliances for additional savings. (For more insight, see Ten Ways To Save Energy And Money.)

Save on Insurance
Insurance companies typically offer discounts if a consumer buys multiple types of insurance (such as both auto and home insurance) from the same provider. Likewise, having one’s spouse go under the same insurance provider for auto insurance may result in a discount to the policy’s premium. Advertising claims shout that you can save hundreds by switching our car insurance company, but you should consider shopping for homeowners insurance (a.k.a. property insurance) as well. Due to differences in insurance underwriting, there is potentially a lot of variety in rates and coverage between the major insurance companies, so shop around. (To learn more about underwriting, see Is Insurance Underwriting Right For You?)

Taxes Are an Easy Target
By knowing legal deductions available ahead of tax season, you could save hundreds or even thousands of dollars by making smart decisions that lower your tax bill. For example, some retirement account contributions qualify for a tax credit, not just a deduction, for those under certain income limits. (See IRS Form 8880 for details.) It is at least $200 per person per year and in some cases can be up to $1,000. This is only one example, but every public library and major bookstore should have a good tax guide – get one and read it! IRS.gov is also a good source of information. Tax savings can mean big money for you. (For more insight, read Give Your Taxes Some Credit.)

Professional Services Can Add Up
Many people simply have a certified public accountant (CPA) prepare their taxes without drawing on their expertise to actually save on taxes. If you use a high-end CPA to prepare your taxes when a standard tax preparation firm could give you the same service for less, it could cost you $500 or more per year. Determine whether you really need a CPA. If it makes financial sense, hire one and hire a good one. (To read more on this topic, check out Crunch Numbers To Find The Ideal Accountant.)

Vanguarding® is staying focused on your future. Learn more Consider what you pay for other professional services as well. For example, some doctors will give discounts for payments made upfront, presumably to prevent having to wait for insurance companies to pay them weeks or months later, if at all. If you have a major medical bill that you’ll have to pay out-of-pocket, consider asking for a reduced fee for early payment. The worst they can say is no.

Increase Your Income by 5%
Most people think that in order to really save money, they’ll need to increase their income by about 50%. If you are convinced this is true, and no amount of reasoning will change your mind, then you’ll need big changes to get there. These changes include earning advanced degrees and changing jobs, or even careers.

However, many people overlook some simple ways to earn more. Here are a few to consider.

Get Your Company’s Retirement Plan Match
This is free money – take it! You only need to contribute enough to get the full match. If your employer matches your 401(k) or other retirement-plan contribution dollar-for-dollar up to 3% of your salary, then you need to contribute 3%. It’s just like a 3% cash bonus, but you’ll have to wait until you turn 60 to cash the check. Later on, you can evaluate how much more to contribute above and beyond the company match, but the first priority is to get that match. (To learn more, read Making Salary Deferral Contributions.)

Add to Your Workload
If you’re an hourly worker and can work an extra hour or two per week, go for it. Working an extra shift once a month accomplishes the same goal. Both are a big boost to your income, anywhere from a 1-5% boost in the average month.

Add to Your Skill Set
Instead of just demanding additional pay, ask your employer what additional skills or certifications (think online classes or vocational school) could lead you to higher pay, even if it’s only 1-2% more annually. Put yourself in your boss’s shoes. Your boss wants more profit than he or she can produce independently – that’s why you were hired. When you can earn additional profit for your company, you command more in pay. Helping others reach their goals can reap big rewards for you.

Create Multiple Sources of Income
Besides serving as an insurance policy if you happen to lose your job, a part-time job or even freelance work can help you to get to the goal of an extra 5% income. It can also be a nice change of pace from the daily routine.

These steps, if taken singularly, appear insignificant, but collectively they lay the groundwork for your personal financial success. No drastic changes are needed, only a little conscious effort. Most people make changes only if they can easily save 10-20% of their income or get a big raise, but financial success rarely works that way. If you don’t have a plan after that big raise comes, you will find that your newfound cash quickly disappears. More income isn’t always the answer – it’s good habits that will lead to financial security.

(Disclaimer: The views in the above article are strictly those of the author.  They do not necessarily represent those of FFN.  Please use due diligence in applying any of the concepts or recommendations including the purchase of products and/or services offered by the author.)  FFN Editors

Seven Ways to Achieve Financial Freedom

Here are some great suggestions for making financial freedom a reality. Entitled Stop Living Paycheck to Paycheck: & Ways to Achieve Financial Freedom, the author, Kaia Zawadi, outlines a straight forward process for creating financial independence.

Let us know your thoughts about this article in the comments section below. Also, please “Like” this article and “Share” it anyone else who might be interested.

“Stop Living Paycheck to Paycheck: 7 Ways to Achieve Financial Freedom”

By Kaia Zawadi for Bank Tracker, Wed  Sep 18, 2013

Managing money and saving for a nice cushion during retirement can seem like a challenge to those who live paycheck to paycheck.

If it’s your own personal goal to financially free yourself in the immediate future and stay out of debt once and for all, you can be on the way to financial freedom. As long as you have a positive mindset from the beginning and you stay the course make baby steps to be financially free.

Here are some tips and resources to consider when planning to be financially healthy.

1. Set goals
The first thing you should do is set a concrete goal and stick to it. These goals can help guide you, even in the toughest financial situations.

When you are coming up with these, think of it as a kind of mission — they should be important and personal in order for them to be effective. If you’re focused on a specific goal, for instance, saving up for an emergency fund, keep this at the forefront of your goals.

Write it down and post it some place where you will see it on a regular basis, so you can remind yourself of your goals.

2. Track spending
We’ve all heard of the term “penny pincher.”

If you actually keep track of every cent that comes in and out of your pocket, you can become conscious of how this money comes and goes in your life as opposed to how you think it comes and goes. You can track your spending the old fashion way by using a cash notebook or with online tools.

3. Get rid of the plastic
If your credit card use is out of control or beyond what you can afford to pay right now, consider putting them aside for a while until you can pay the balance down.

Use cash or your debit card until you can get everything in order.

4. Save fast
As you’re working diligently to pay off your debt, try to save up to $1,000. This can be used as a starter emergency fund.

Set aside this money and put it in a money market account or savings account to deter you from dipping into it. This will also deter you from using your credit card to pay off necessary bills.

5. Pay your debts
Take the time to make a list of all your outstanding debts.

This can include car loans, student loans, credit cards and any other bills that aren’t related to your home mortgage. Arrange them in order from smallest to largest.

Designate a certain amount each month to pay towards the debts except the one with the lowest balance. The debt with the lowest balance you can pay as much as you can on it. Continue down the list until all debts are paid off.

6. Increase your retirement
Set a goal to increase your retirement income up to 15%.

Start with your 401(k) or Roth IRA if applicable or traditional IRA. Your savings will increase and you will receive many tax incentives that will set you up for a stress free financial future.

7. Educate yourself
Personal finance doesn’t have to be an obstacle. Visit your local library and borrow money books and personal self-development books such as, “How to Get Out of Debt and Live Prosperously,” “The Magic of Thinking Big,” or “The Random Walk Guide to Investing.”

(Disclaimer: The views expressed in this article are strictly those of the authoer.  They are not necessarily those of FFN.  Please use due diligence in applying any concepts or recommendations and/or purchasing any products or services offered by the author.)  FFN Editors