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How many times have you heard the
phrase, "Rich people earn interest and poor people pay interest"? Or how
many times have you heard that social security will not be around when you retire?
And, even if it were could you really live on what they pay you? I once knew a
couple who worked hard all of their lives, retired, and ended up receiving a mere $510 per
month from Social Security. Is that really how we envision retirement?
How about those debt managment techniques
where they tell you -- "to stop using your credit cards, place them in a tub of water
and freeze them, or bury them in your backyard under some rose bushes."
Let’s get realistic here. All you have to do is place the tub in the microwave and
melt down the water. You can always dig up the cards too.
Let’s say you do get out of debt. Life always seems to throw you a curveball,
doesn’t it? You're right back in debt again. First its a dental bill. Next it's a car
repair. You think to yourself, there’s already $600 on the card, what’s another
$20 going to hurt. Soon you've reached your credit limit, and you say to yourself,
"What’s the use?" I know I have said that several times. I have been
debt-free more times that I can count. And, yet it never fails. Something always
happens and the balance on those cards start climbing again.
I am here to tell you that there is a "use" to all this madness. And that is the
simple fact that no one in this world is going to look out for your best interest, or the
interests of your children, except you. The choice is yours. You see, we usually sacrifice
for the immediate pleasure of something. So that we can get something now. So that we can
have material or monetary items like a new house, car or boat, the wedding of our dreams,
or an expensive vacation. We sacrifice in small ways, so that we can eat out three
times a week or have our daily Diet Coke or Café Latte from Starbucks.
The Longer You Wait
Do you realize that the longer you wait to save each month, the harder it is going to be
to retire with your dreams and goals intact? And the longer you wait to save, the
more money you will need to save to make up the difference.
Let me give you a quick example:
1. A 4 year old girl starts saving $25 a month for the rest of her life. When compounded
at 12% rate of return, in mutual funds (with the normal market highs and lows) that child
can retire with anywhere from 1 to 7 million dollars.
2. Now lets look at a 25 year-old just starting out. They will have to put away at least
$184 per month (increasing that amount by 4% each year) to even approach 1 million
dollars.
3. Let’s take it one step further -- a 35 year-old just starting out. They will have
to put away $440 per month (increasing that amount by 4% each year) to reach that same 1
million dollars.
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