Achieving Personal Finance Success
Achieving personal finance success should be a goal for everyone, but how do you do it?
Pay off all debt using the Debt Snowball
List your debts in order, and make the smallest debt your first priority. This is a psychological method in the sense that by paying off the first few debts you will be motivated to pay off the rest. Check out DTSS Restoring America’s Freedom first, though, as you may be able to wipe your debts.
$1,000 emergency fund
It is a good idea to keep an emergency fund for any unexpected events that may occur that you did not plan for, for example; an unexpected pregnancy, a vehicle breaking down, or the loss of a job. An emergency fund makes certain you have funds to cover these events and prevents you from getting into debt.
3-6 months of costs in savings
Once you have completed the first two steps consider what would happen if you were out of work for three to six months? Once you have found the answer this is how much you should then save, and add it to your emergency fund.
Invest 15% of family earnings into pre-tax retirement and Roth IRAS
Once you reach this step you will have a substantial emergency fund and no payments, except your house. Now invest 15%, no more, into Roth IRAs and pre-tax retirement schemes. Remember no more or no less than 15%!
College funding for children
First and foremost, do not use any of the following methods to save money/ for your child’s college fees; insurance, saving bonds, zero-coupon bonds, or prepaid college tuition. You need to keep in your mind that a loan is not essential at college and the best way to save is probably through a 529 college saving plan or an Education Savings Account also known as ESAs. To begin the saving process you need to have a goal, determine how much you are going to put away each month. Experts recommend saving at 12% interest in order to have a substantial amount for college.
Pay off your house early
Now you are getting to the closing stages of the plan it is time to pay off the home. All your additional funds should go towards repaying your mortgage. Once you begin to settle parts of your mortgage you will get momentum and will power to pay your entire mortgage off.
Build wealth and give
Now you are at the final step it is time to build money and give, provide an inheritance for your kids or the people you love, and help other people with the capital you have built up. This is something you can continue to do for good once you have done everything else that has been mentioned in this post. Once you are here, you know that you have attained personal finance success and you can use this to help others too!