Searching for money debt advices to improve your financial positions and to solve money issues ? “What are you planning on doing with your tax refund?” asks Asks financial advisor Zaino. “If you’re like most Americans, the world of instant gratification is beckoning. It could be extremely damaging to your retirement account, however, especially given the time value of money and what Albert Einstein called ‘The eighth wonder of the world”—compound interest. “Based on last year’s data, the average refund should be about $2,800. Let’s say you save your money in a vehicle that earns you 6 percent annual interest and you have the discipline to continue to deposit $2,800 every year for the next 30 years. That would yield $250,726. At 7 percent, you’d have $304,319. That’s an EXTRA quarter-million dollars in YOUR retirement account—just for being disciplined and not blowing your refund.” Don’t miss the smartest way to spend your tax refund.
This philosophy has been around for some time now, but I didn’t really come across it until reading the book Rich Dad, Poor Dad. Sounds somewhat controversial, but having this mindset will keep you on your savings targets. Too many times you pay everything else first, then by end of the month, there is hardly anything for you to save. If you reverse the roles, you are more money conscious to pay your bills on time and reduce frivolous spending. See extra info on Money Management.
If your employer has a 401(k) plan and you don’t contribute to it, you’re walking away from one of the best deals out there. Ask your employer if they have a 401(k) plan (or similar plan), and sign up today. If you’re already contributing, try to increase your contribution. If your employer doesn’t offer a retirement plan, consider an IRA. You’ve heard it before: Pay yourself first! If you wait until you’ve met all your other financial obligations before seeing what’s left over for saving, chances are you’ll never have a healthy savings account or investments. Resolve to set aside a minimum of 5% to 10% of your salary for savings BEFORE you start paying your bills. Better yet, have money automatically deducted from your paycheck and deposited into a separate account.
You might hear the word “budget” and cringe a little, but you shouldn’t. Budgeting is not hard, and it doesn’t mean you have to stop doing things you enjoy. Budgeting is simply creating a plan for your money so you have a better idea of where it’s going every month. A popular and effective way to budget is with the 50/30/20 rule. How it works is 50% of your income goes towards the necessities (bills, food, housing, etc.), 20% of your income goes towards savings and the remaining 30% you can use for whatever you please. This is a nice and easy way to break down your paycheck, but you might need to adjust it a bit to fit your lifestyle. Mortgage: This one’s a tricky one, but mortgages are generally considered good debt. They are usually long-term loans with low interest rates, so you’ll still have money freed up for investments and such. The interest from mortgages is also tax deductible, so that’s a bonus. In the end, it’s up to you to decide whether purchasing a home is the right move, as the value of a house will not always rise as some people think. You’ll also have to add in the expenses of property tax, utilities, and home insurance. Source: http://aspiretomoney.com/.