Debt and Wealth The Extreme of Both!
August 6th, 2010 Filed under: Personal Finance — Finance Author
It is an amazing wonder to me how fast and easy it can be, to be swallowed into a hole that you created! This hole I am referring to is a debt that can take the light out of an end of a tunnel!
Debt it is self is not so bad, it is how we manage our overall finances that leads us into a sticky situation not being able to really afford to live and possibly lose the things we work for. This can stop us in our tracks to live the dreams you set forth for your lifestyle and retirement.
The ironic part for those who experience wealth or debt is the fact it is created and controlled by the decisions we make. Many people in this world are trying to find the right decisions to make so they are successful, but feel they are not and maybe they feel that life just has not been fair. Life is not fair and even to those who are successful and wealthy, but the rich or people who live comfortably had made choices that got them there and you can too! It is a bumpy road but you just roll with it!
This is important for you to realize. If you are not in debt and are young, this is the key importance of this article.
The first important key aspect you will want to get under control is your personal financial budget. Yes you have to save for the things you want!!! What is so bad about that anyway, it is rewarding when it comes! It happens much sooner than you think.
The next aspect is to invest some of your money for your retirement. This means into a lifestyle plan that can either help your day to day lifestyle get better over time, that is linked to your retirement plan, or a long term plan that is meant for the age you want to retire.
Be smart about your purchases. You can budget and save for retirement, but if you finance your self into an endless pit of doom, your hard work for saving and managing a budget is worthless. You may want to start small and buy some things second hand and build up to being able to afford newer things as time goes on.
Just because you may make a lot of money doesn’t mean you are protected from finding your self in a hole. From my experience, it is people who make good money that are the ones to them self before they know it!
It is a very smart thing for any young person to start saving for their retirement by budgeting properly while they are young. The younger you are, the less you need to save and the more you will have when you retire and of course the complete opposite, applies in reaching an unrewarding retirement.
So what would you rather do? Save while you are young, relax the older you get! Or, work harder, while you get near your retirement so you can maybe have enough to pay the bills. That is a strong concept to think about!
So when it comes to finding your self in a position of “I wish I was lucky like that person and could have the lifestyle they do.” You can and it may not come as fast, but it can come and it all begins with investing, staying out of debt as much as possible, or using debt to make smart investments, not racking up credit cards on everyday purchases and unnecessary things, and managing a proper budget, while investing!
Here is a very simple example of a person saving $100 a month at age 15 for 10 years vs a 40 year old starting to save $250 a month. I know people age 50 that are trying to save $100 a month for retirement, as they think about what happens if they don’t have enough money!
Total Principle for the 15 year old = $12,000
I used a calculator from ING Direct and saved $100 a month for 10 years at 5%
The amount at age 25 = $15,592.13
I then took this number and compounded it for 15 years and at age 40 = $32,958.99
Now the at 40 the person B is now starting to save. If person B saved $250 a month for 15 years it would be $67,100.66
Thee value of person A at 55 = $69,655. If person a saved $100 a month from $15 to 55 at 5%, it would be worth $153,237.86
You get the point of what I am saying! Are you very young? then what should you start thinking about! That’s right your future for when you retire and want to be a kid enjoying life again, because finances can take us out of the retirement game or give us it all.
For more information on wealth creation and powerful study material visit http://www.richestoretirement.com
Cameron Edwards
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