FYI's for Future Retirement Planning

For starter's there is a basic equation for what you will need for your future retirement:

current income x 75% = after retirement needed income

And here are some FYI's on things that increase in cost:

Property Taxes

Insurance Rates

medical expenses especially pharmaceuticals

utilities

Self Discipline and Debt elimination

Debt Elimination


When it comes to eliminating debt there are basically two effective strategies to tackling the beast.  They are as follows pay off the highest interest debt first or pay off the smallest debt first.


Debt-Free for Life


When taking the strategy of paying off the highest interest debt first the focus is to reduce the interest as much  early off so as to spend less in the long run.  The second strategy which is two focus on paying the smallest debt first may seem counter intuitive but its advantage is psychological.  By eliminating the smaller debt there is progress seen and this helps with motivation which is good because when there is a lot of debt and debtors  sending in bills motivation may be just about the only positive thing coming from this mess.


Crushing Debt



Self Discipline


Regardless of the strategy that is chosen both require self discipline for one to live within there means of income and often times having to choose to sacrifice desires and wants.  Also with debt an effective strategy is to take the money from paying off debt and create a snowball effect instead of spending the regained money.


Willpower

Also See this article on budgeting

Percentages in your Budget

Today I just want to cover a short blurb on the importance of using a budget and more specifically a percentage based budget.

A budget is an invaluable tool for anyone because it allows us to monitor and control our spending habits.  When we see how much we spend on an unnecessary item we then way the true importance of that item in our lives.  Case in point is getting a treat from the vending machine usually just $1 daily adds up to being about $20 bucks in a month.  After we see the issues in our spending habits we can then take control and change them.  So by taking out that vending machine habit and instead spending the 20 bucks on a thing of greater value perhaps saving or a steak dinner or something.

My personal favorite type of budgets are the percent based one because they grow and shrink as you earn more or less.

Here is an example layout from Dave Ramsey and his gazelle budget tool:

Charity    10%
Saving     10%
Housing   25%
Utilities     5%
Transportation  10%
medical     7%
Misc.         33%

Source: http://www.daveramsey.com/specials/mytmmo-gazelle-budget/


So there you have a quick and simple budget, if you have not started I recommend getting into one today.

Also see:

Financial Peace By Ramsey, Dave/ Ramsey, Sharon 
The Total Money Makeover By Ramsey, Dave