“It was a simpler time then…”

The good ‘ol days ….

A simpler time when debt was frowned upon and a bitcoin might have been interpreted as 12.5 cents.

That’s not to say that some of the options now available to us today do not make our lives better. But it does make our current financial world more complex with many more options to consider and understand.

 

Credit cards

I’ll bet there’s not a day that goes by that you don’t receive an offer in the mail for a credit card. Why?  Because the average credit card debt is approximately $16,000 with interest rates approaching 30%.  This is gold for the card issuers and attempting to pay off one of these balances can seem like being an indentured servant.

If you’re in this situation, try this:

  • Make an inventory of all of your cards with their balances and interest rates
  • Sort them by interest rate
  • Temporarily replace as much of your discretionary spending with paying down your credit cards, starting with the ones with the highest interest rate (not balance!)

 

Retirement planning

In the good ‘ol days, you started your career with a company and a promise of a lifetime pension when you reached retirement age, typically age 65.  Transferring to another company was frowned upon. At the time, companies did not mind offering these lifetime pensions as the life expectancy was 68, an average of 3 years of benefits.

Today, life expectancy is close to age 80 and the promise of a lifetime pension is enjoyed by less than 20% of workers.  That means the other 80% of workers today have to take responsibility for financing their own retirement.

Companies have helped by offering 401(k) plans, with matching contributions up to a certain percent of salary. But ultimately, it’s now up to each of us to make sure we have a plan to live to the age of 80, 85, 90 or even 95.

Through the magic of compounding, funds that are given long periods of time will grown significantly more than those with shorter time periods. If your employer offers a 401(k) with matching, try to make a contribution that will maximize their match. It is probably the best return on your investment that you’ll ever make.

 

Identity theft

If you were a fan of the original “Mission: Impossible” series, you remember how the good guys would create masks to assume one of the bad guys’ identify.  It’s a bit more sophisticated now with the internet allowing anyone with a password or the right hacking tool to know everything about you.

Some of the things you can do to prevent identity theft is:

  • Check your credit report periodically
  • Change your passwords regularly
  • When available, require that the site you are attempting to log into send a text to your phone with a unique code to verify that it is you that it accessing your data.

 

Conclusion

While it may seem that times were better then, consider that we now live longer and healthier lives and we can enjoy more of what our world has to offer through faster travel and the internet.

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Please call me at (610) 999-3599 or click here to discuss how to help make your financial life better.

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