- For starters, it’s imperative that you open an Individual Retirement Account (IRA) at an early age. How early? How about right out of High School! There are two types of IRA’s that you should familiarize yourself with; the Standard IRA and Roth IRA. Both investments have their benefits and drawbacks that your accountant can go over with you. If you do not have an accountant ask your financial manager of your local bank to guide you in the right direction. You can also do a quick Google search of these IRA’s. The search results will give you an in-depth look at how they work.
- Once you have set up your IRA, a 401K Retirement Plan is a great way to invest your weekly earnings. Most large corporations offer a multitude of 401K plans to suit your needs. Some of these corporations even match your investment up to a certain dollar value. The maximum amount of money you can contribute to a 401K is 10% of your earnings. You might think this is too much but believe me, it’s not. After a while, you won’t even realize its missing from your paycheck. In a few years, that 10% will compound itself into a nice nest egg.
- Now that you have an IRA and a 401K, Debt Reduction is the next key element in striving for that early retirement. Reducing credit card debt should be your number one priority. Let’s face it. Most Americans live in debt. My advice to you is, don’t be one of them! Credit Card debit can consume a large chunk of the money you set aside each month for savings. With credit card interest rates as high as 21%, carrying a $1,000 balance can cost you hundreds of dollars each year if you just pay the minimum amount due. If you are holding credit card balances on multiple cards that amount to over $5,000, you should consider a Debt Consolidation Loan. Your local bank can offer advice on these types of loans or you can contact one of the Debt Consolidation Companies on the web to assist you. Just remember, when dealing with a Debt Consolidation company, they’re in business to make money. Unfortunately, there are many unscrupulous companies that are not looking out for your best interest, so learn as much as you can about them before signing any papers. You can check the Better Business Bureau to see if they have any claims against them. If so, steer clear and look elsewhere.
- Buy a House – Do Not Rent! I can’t stress this enough. Renting an apartment is just throwing money away. When renting, you’re making someone else a millionaire! Here is a little story for you. When my sister got married six years ago, she asked me for some advice on married life. Well, my advice to her wasn’t about marriage at all. I told her to purchase a house instead of renting an apartment. She looked at me funny and said, “Well, we plan on renting for a little while to save up enough money to buy a house.” I told her that if she chooses that route, I’ll be visiting her in that same apartment five years from now. Sure enough, she chose to rent and is now stuck in that same apartment because she was throwing away $1200+ per month in rent for the past six years. She could have been making monthly mortgage payments that were building equity. I know it’s not easy to purchase a home these days but do whatever you can to save up enough for that down payment. There are plenty of programs for first time home buyers that can assist you. You can consult your local bank about these programs.
Follow these simple steps and you will be well on your way to an early and wealthy retirement. Start early enough and you might even be a millionaire! Good Luck!