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Planning your retirement
Part 2
In Part 1, we wrote, "What is stealing your wealth?" asks Robert Kiyosaki. His answer is debt, taxes, inflation and retirement. In part 1, we touched on taxes.
Now we address, retiring "bad debt", or debt that is attributed to credit cards and personal loans are a great wealth stealer. Think about the amount of interest paid every month, coupled with the estimated 20 years it takes to pay off the debt based on the minimum recommended monthly payment. It all adds up to a hefty sum.
If you are not sure about your plan or even where to start, contact us today and we can help you formulate a plan that suits your budget. We want to help you develop a sound financial plan. There is an old saying, "plan to succeed or you are planning to fail."
In this post we briefly touched on debt as a thief, but what about the other two wealth thieves? Well, we will address those issues in the next couple of blog postings. Stay tuned to find out more!
There are several reasons why it is a good idea to reduce bad debt. The best reason to reduce bad debt is due to the amount of interest payments that are included with the debt's monthly payments. The banks are making a lot of money on credit card interest payments. These interest payments reduce and individual's in pocket wealth each month.
Some people look at their monthly payment and trick themselves into believing that the payment amount is small each month therefore, it isn't something to take seriously. If the interest payments could be rolled into an investment, even if the amount seems small, over time the increase will be phenomenal. Using the "rule of 7" for instance, an investment doubles in 10 years if it earns 7% and doubles in 7 years if it earns 10%.
There are several ways to reduce your bad debt. One of the best ways is to increase the monthly payment until the debt is paid off. The other way to pay off debt is by using what I call the "rolling debt payment" method. In short, you must increase your monthly payments in order to get out of debt. Even a simple credit card payment is based upon a 25 or 30 year payoff term. You don’t want to wait 20 years to pay off a credit card.
