The following is a guest post about how to save money and retire rich. If interested in submitting a guest post, please read my guest posting policy and then contact me.
The problem that most retirees encounter is that government and/or employer based retirement plans can barely keep them above the median standard of living. As a result, retirees are forced to stay at home and save up what little money they have/receive for basic necessities. Worst case scenario is that retirees have to suffer foreclosure and live in a retirement community.
My Personal Experience
If you do not want this to happen to you, meaning you want to live out your retirement in style; go out of the country on a regular basis; enjoy gourmet meals at least once a week; afford that kitchen renovation you’ve always wanted; be able to invite your loved ones for holidays; or whatever your dream retirement scenario is, then you need to actively plan your retirement. Incidentally, my dream retirement is to migrate to a tropical island, which I am actually living right now, thanks to the tips I am about to share to you.
Overspending For Financial Services
I started by checking my bank accounts. I cut unnecessary accounts and left one current/savings account with 1 debit card and 1 credit card. By centralizing my savings and spending I am easily able to meet minimum balance, deposit requirements, annual credits, etc. This in turned prevented the bank from charging me anything.
Unfortunately for me, I had a few credit card debts and an overdue automobile loan. Fortunately I learned about debt reduction. This is through a program called debt negotiation and settlement. My plea was simple, “I want to pay off my debts but unfortunately I cannot afford to pay the outstanding balance. So you (lender) can sue me, declare the same as bad debts, get a tax write off OR we can negotiate”. Well, the lenders chose to negotiate, condoned the interest and penalties plus gave me a discount on the principal.
Save Then Invest
After a few years with no debt and regular deposits to my savings account I realized that money in the bank can be comforting. But when I computed the cost of my dream retirement, I still couldn’t afford it! So I consulted with a financial guru and I was told to invest my money. I tried several investment alternatives and eventually settled for binary options. Why? Because the same allowed me to earn as much as 50% to 75% on each contract, the trading was simple, and the outcome was win or loss. There were no gray areas, and I did not need to hold my breath several times a day swing trading.
Seasonal Strategies for Spending Smart
A problem I regularly encountered was unexpected spending during the holidays and on special occasions like birthdays and weddings. I manage the same by reciting a mantra “an invite is not an invoice”. In other words I did not have to break my budget every time I received an invitation. All I had to do was find a simple, useful and heartfelt gift. Oh, and a bit of miscellaneous expense saved up helps a lot.
I was saving for retirement but I did not have to lock myself up in the house until that time. On an annual basis I checked my savings, and then planned a trip with my family. Trust me on this, in most cases, especially if your whole household will be vacationing, it is cheaper to rent a home than check in on a hotel. For one, rental homes usually mean you are outside the city, communing with nature. More importantly there are no shopping malls and expensive meals.
Take Taxes Seriously
Before I forget, make sure to prepare your taxes on time and in the proper manner. It is a good idea to consult a financial specialist about this. A few hundred bucks paid for consultation is small potatoes compared to the savings you will get with proper tax shielding.
Big Ticket Infrequent Spending
I have this brother who likes to buy second hand. He buys second hand appliances, he has a second hand car, and he even bought a fixer upper home. But here is the thing, unless you are an expert at what you are buying, better buy brand new. Why do I say this? Well, simple, the TV he bought broke after a few weeks, and the car required constant repairs plus the insurance was really high. So he lost on those two purchases. Thankfully he is a foreman/carpenter so He did save up on the fixer upper home. Remember, as a general rule the seller is not only selling a second hand item, but is hoping and praying you’d take away a problem property out of his/her hands.
A neighbour of mine divorced her husband. My wife was part of the ‘comfort group’. At night I always got an incident report on how expensive divorce was. After the messy divorce my neighbour had to pay 5 digits in attorney’s fee, docket fees, audits, etc. The worst part was, since they fought tooth and nail on who got the home, the judge forced them to sell it instead. On a positive note, she (my divorcee neighbour) told my wife that they could have prevented the huge bills had they settled/compromised by themselves and gave their lawyers no room to delay the proceedings. At the very least the home could have been saved and given to the party who got the kids.
In relation to the divorce of my neighbour, they had to move out. Now it was my turn to do the helping. I learned that it was a lot cheaper to hire a self hauling service (i.e. U-Haul) than to hire someone to actually move out your things. The first reason is that movers are not too careful with your stuff so there will be breakage. Second, the difference in fees is at least 50%. Third, you’ll be actively participating in the hauling anyway so why not do it yourself!
In Closing: Financial Freedom By Spending Smart.
Building wealth is not easy. It is a step by step process that requires your attention to details. However, after a while you will get the hang of it, and it is well worth it when it comes time to retire. Remember, saving money starts small and slow. But you should not stop there, because saving smart also means investing smart. Believe me it’s the only way to make your retirement dream scenario come true.
Author Bio: If you hate get rich quick schemes, penny pinching, and advice without substances, you might just love Bill’s Blog. Are you interested in being Debt FREE?