So, after a couple years, I finally decided I had enough to say to make a blog worth doing. When I started all of this, I had vague goal to make money. I’d just been laid off, and unemployment was coming to an end. Problem was, I couldn’t really come up with anything I though anyone might want to read. Then I got tied up in the process of making money, and was too distracted to come back to it.
Now, a few years later, I have much more to say, in a variety of areas. Things that my loving children – aka “the little smart asses” – would refer to as “folksy wisdom”. I still want to make money, and I’d much prefer to do it without having to slog through a job in retail. Go figure. I don’t expect this to do much of that, but hey, I’m always typing in a journal, and trying to write the latest novel going on in my head, so I figured “why not?”.
One of the things I do on that meandering route to retirement is try to build my retirement accounts. When I was laid off, my 401K was thriving, albeit modestly. This brings me to the first tip of this blog: Start putting money away early.
It doesn’t matter how much. The key is to establish the habit of doing it. It can be $5 a paycheck. It doesn’t matter how much. It’s all about establishing the habit.
Kids, I know you’ve heard it a hundred times before. Believe it or not, I heard it too. I was in the Navy, and blew entire paychecks on things that young sailors spend money on. Now I’m sixty-one, and I really wish I’d put just $10 a paycheck away for all those years. I console myself by reminding myself that I didn’t have things like online-only banks that pay decent interest on savings, or online investment brokers with no trading fees. Of course, that means nothing; I still should have figured out how to do it. But it underlines all the advantages “today’s youth” have in that regard. There’s no excuse for me not doing it… but there’s really no excuse for a youngster today not doing it.
Got credit card debt, and collectors calling you? Fine. Cash that check, take a nice crisp $10 bill, and put it away in a shoebox. Do it religiously, every paycheck. Don’t tell your girlfriend/boyfriend husband/wife. Get with any one of the debt reduction specialists out there, and get those debts taken care of. For me, it was Chapter 13. It doesn’t matter. Here’s the second tip: Credit card companies don’t make money off of people who pay their credit cards off. They want you to keep paying them interest. But wait… they paid for that cool iPhone you bought with the card, right? If you don’t pay them, they’ll lose money. So no way they let you off the hook.
Yeah, except that’s a business expense. They can write it off against their taxes. Unlike you and I, corporations pay their bills, then they pay their taxes. There’s a famous saying from the world of corporate accounting. “You can make a good living going broke every year.” So yeah. Do the debt reduction thing.
In the meantime, go on the Internet, and find a bank. I like Ally.com. They have free money-market and savings accounts, with no minimum balances, and they pay much better interest than some place like Bank of America. They’ll reimburse you for ATM charges.
Once you’ve got that nailed down so no one is going to come after your assets, pull out that shoebox you’ve been stashing that $10 a paycheck in for however long, and use an ATM to deposit them in an interest earning account. If you can, set up a direct deposit from your employer to drop that $10 into that account before you see it.
If you haven’t already, sit down and figure out what you can cut out on a weekly basis, and put it in that savings account.
That’s Step One. Now for the big one.
Step Two: Find an online broker. Vanguard, Fidelity, Schwab, any reputable broker. Ally even has an investment side. Personally, I used Vanguard, but I’ve switched to Fidelity. You can even cut the savings account step out, and go directly to Fidelity. They’ve got a debit card, and their Cash Management account pays interest.
In any case, open a Roth IRA. Transfer that savings account into it. Keep adding to it with your weekly savings amount, up to the contribution limit. I believe it’s like $8000 this year. Even if you do absolutely nothing with it, just depositing $10 a week is $520 a year. Fidelity’s core position is a money market fund, so you get some interest on it. After 40 years, that’s $34,702.84 assuming a 2.35% interest rate. For doing nothing but giving up a combo meal a week.
The important part is to get that Roth. Because no matter how much you put in that account, or how much it earns in interest, or investing, you will never, ever pay taxes on that account, even when you eventually start withdrawing from it, as long as you obey the guidelines. Read up on Roth IRAs. They are potentially you’re best friend when it comes to investing.
Search the Internet. Go on Reddit. You can find dozens of stories from people who started investing early, and should be able to retire early. Some of them may have lucrative side hustles – most don’t. The key is, they started early. Even if you think you’re in a dead end job, with no real way out… do it.
Yeah, you’ve heard it a hundred times before. But you heard it from people who did it, most likely. I’m telling you as someone who didn’t do it. I wish I’d been less self indulgent, and found a way to do it.
That’s my public service announcement. We’ll see where it goes from here.
See ya next time!