Well, you’ve made it! You are now debt free (except the home) and have a fully funded emergency fund. You have reached the point of almost NO debt payments. How does it feel? Are you smiling? Because wow, you should be! Now is the time to prepare for your retirement, plan for the kid’s college, and pay off the mortgage. Just some little steps for short and long term financial planning.
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I am no expert in any of these and plan on learning all this when I get there. So if you are here there are some really great resources to help you out, maybe talk to a financial planner. A book I recommend to get you started is “The Total Money Makeover”, are you tired of me telling you this? Well it’s a great book and I have based a lot of my steps from this book! But I would like to say a couple of things on each.
For me retirement is a ways away but I want to be prepared. I know some people in my life that are well over retirement age. But because of their finances, they are not able to retire (one is 76!). They never changed their habits and now they are seeing the impact even more than before. This choice they made is effecting them but also their family. Us!! Now we are worried about us having to take care of them. Please, PLEASE, PLEASE make this a priority after you have completed all the other steps. Save yourself the heartache and your family!
FUND FOR COLLEGE –
Can I tell you how nice this would have been? Most of our debt is student loans. But please ONLY do this if you are debt free with a full emergency fund. I really hope we will be able to help our kids with some of their college; it could be a game changer for them in the future. But I don’t want my kids to expect it because I want them to learn the importance of budgeting. So I do have a plan and maybe one day I can share it!
PAY OFF THE MORTGAGE –
The thought of this makes me happy, NO DEBT PAYMENTS! Does it make you? Well then make the effort to get there!
I wish I had more on each of these but I do not because I am personally not there yet! You inspire me to work harder to be at this point with you!
ONE MORE NOTE – about short and long-term financial planning
What you are doing in this step is setting up the funds, creating your own payments (you get to pay yourself back). If you do not want to pay for your kids college (maybe they are past that age or you do not have any kids), DON’T do that part. The BIGGEST one you should do in this step is to start saving for retirement! Create a payment for retirement every month (this payment will be based on how much you want in retirement) and have a place to put it (aka: 401K’s).
Maybe you’re like us and you want to travel the world before paying off the mortgage. Please just do something little for yourself, add an extra $50+ to your mortgage. It will help you pay the loan off sooner but still allow you to do other things!
This step is also where you would save for a new car, that toy you have always wanted, or saving for that dream! This is your life and you get to decide what you want to do with it. SO DO IT!! But do not got back to your old ways…
Remember these waves you have created because the only thing left is to LIVE YOUR DREAMS!!