A Plan For All Seasons As summer winds down, we hope you had time to enjoy a vacation, at home or to a far away destination, kick-back, and relax. Making time to decompress is essential for our well-being.However, many of us spend more time planning our vacations, than planning how we will pay for them. Your finances deserve at least the same attention as vacation planning because as many of us know too well financial stress can strike at any time. A vacation away from your concerns will not fix them. If you're worried about money (paying for college, retirement, etc.) and your solution is to wait for things to get better, delay may actually cost you. The best way to tackle your finances is to take control and make some changes. Find Your Inner Money Manager You can't get a handle on your finances until you know where your money is going. And you can't manage your cash until you control your spending. Bottom line: Set up a spending plan (budget) that covers your expenses and frees up money to put toward your short- and long-term goals. Deal With Your Debt If you have outstanding credit card balances or loans, paying down your debt will free up extra cash. The less you pay in interest, the more money you'll have for other things, like saving for retirement. Credit cards generally carry high interest rates, so that's a good place to start. To get a handle on credit card debt, stop using your cards for new purchases. Focus on the credit card account with the highest interest rate and pay off that balance. (Note: Always pay at least the minimum amount due on all outstanding balances and loans.) Once that debt is zeroed out, go on to the account or loan with the next highest interest rate. Eliminate Any Penalties When money is tight, every penny counts. You can't make every penny count if you have to pay late fees on your credit card accounts, loans, or other bills. Get into the habit of always paying on time. Try paying your bills as soon as they arrive or arranging for automatic payments (as long as you keep an eye on your bank balance to avoid overdraft fees and/or interest charges). Reduce Stress Later, Too Taking control of your finances can improve your situation now -- and likely later. Let's say you eliminate a few splurges and free up $10 a week. Since saving for retirement is a big goal and a top priority, you increase your contribution to your employer's retirement plan or other retirement savings account by that amount. Over time, that extra money could make a substantial difference in your balance, as illustrated in the hypothetical example below. Once you see how much of a difference small amounts can make, you just might look for another $10 a week to contribute. And the next time you get a raise or bonus, you might decide to increase your contribution again. The Power of $10Account Balance After:Weekly PlanContribution5 Years10 Years20 Years30 Years40 Years$10$3,102$7,500$22,573$52,865$113,742$20$6,205$15,001$45,147$105,731$227,484$30$9,307$22,501$67,720$158,596$341,226$40$12,409$30,001$90,294$211,462$454,968Source: DST Systems, Inc. These are hypothetical examples involving participants who consistently make weekly contributions over various time periods and earn a 7% average annual investment return (compounded monthly). The illustration does not represent any specific investment product offered by your plan and does not include any investment fees and expenses. Your investment returns will differ, and it is unlikely that your contribution amount will remain the same over a long period. Pretax contributions and related plan earnings will be subject to ordinary income taxes and a possible additional tax for early withdrawal upon distribution. Look at the Difference The faster you pay off your credit card debt, the less interest you'll pay and the sooner you'll have more money to save for other things. Look at a hypothetical example that illustrates the difference between paying $100 a month and $350 a month on a $5,000 credit card balance. Paying Down A Credit Card BalanceMonthly PaymentNumber of Monthsto Pay Off BalanceInterest PaidTotal Payments$100 73$2,240$7,240$350 16$461$5,461Source: DST Systems, Inc. This is a hypothetical example used for illustrative purposes only. Your results will be different. It assumes an interest rate of 13%. These are just some of the ways a financial planner can help you see the bigger picture and make better financial decisions. Contact us today to learn more about the value of a financial plan. Request A Complimentary Consultation or Second Opinion Name Email Phone Question Thank you! Oops! The Cost of Procrastination Procrastination can be costly. When you get a late start, it may be difficult to make up for lost time. Learn More The Rule of 72 Do you know how long it may take for your investments to double in value? The Rule of 72 is a quick way to figure it out. Learn More Your Cash Flow Statement A presentation about managing money: using it, saving it, and even getting credit. Learn More Required Attribution Because of the possibility of human or mechanical error by DST Systems, Inc. or its sources, neither DST Systems, Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall DST Systems, Inc. be liable for any indirect, special or consequential damages in connection with subscriber's or others' use of the content.© 2017 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. 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