Dear Deborah

0 comments Posted on August 3, 2012

Dear Deborah,

I know I need to start saving for my retirement. But I also have credit card balances, car loans, and a mortgage. There’s no more money left over to save. What is my best course of action?

Are you using your money to buy a lifestyle or are you making your life sustainable and balanced? Do your expenses add to your desired lifestyle or do they deplete you in many ways? Think of ways that you can live better with less. Find ways to save more than you spend.

The first step is to take control of your financial statement. That is, look at your Income Statement and Balance Sheet for ways to increase your cash flow.

Your income statement lists your Income and Expenses. Your balance sheet lists your Assets and Liabilities. These financial statements give you a true picture of where you stand financially.

Examine your monthly income and expenses. You can accomplish your retirement goals more easily as you decrease your monthly expenditures and increase income. What regular living expenses like shelter and food can be reduced?

Debt, housing, and transportation are usually three expenses that take a big part of the paycheck. How can these expenses be cut back?

Work toward paying off your credit cards and car loans as quickly as you’re able. Credit card debt and car loans are liabilities. As you get rid of these liabilities you can add more to the asset side of your balance sheet. Avoid future debt by paying for consumer items with cash.

When looking at your financial statements you will have a better picture of where your money goes. When you can manage the money you have, with growing and regular cash flow, you minimize the short-term money problems.

Secondly, have a plan for saving and stick to it. When you save, you are getting security and freedom.

As you find money to save and invest you can: 1) Deduct a percentage of your paycheck and save it in an employer-sponsored retirement plan. 2) If you have direct deposit with a financial institution, have a monthly dollar figure automatically set aside in an IRA account. More savers are favoring Roth IRAs. 3) Invest any money you get from gifts, bonuses or extra jobs. 4) When you invest in stocks or mutual funds, automatically reinvest the dividends on your existing investments.

Remember that there are different vehicle choices for investing. Mutual funds work well for most people since they accept monthly payments. This is a systematic way to save. Consider no-load mutual funds, index funds, money market funds, and CDs.  Find the savings and investment vehicles that work best for you and your family’s needs.

Whether retirement is around the corner or down the road, you will benefit by taking action now.

Copyright 2012. All rights reserved. Permission to reprint required.

Deborah Nayrocker writes on personal money management topics, showing others how to take control of their financial future. She is the award-winning author of The Art of Debt-Free Living and the popular 12-lesson Bible study Living a Balanced Financial Life. Her Web site is

If you have a financially-related question that you would like to ask Deborah, click here.


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