Do You Pay Yourself?

The typical scenario is that you simply get your paycheck. After you recover in the shock at how little is left after taxes, you proceed to divvy it up among all your outstanding bills, intending to put whatever is left above into your savings.

But there never seems to be anything left over and your savings don’t grow.
A better plan would be to pay yourself very first. Don’t let the money get into your hands.
You may well find which you actually start to grow your savings much quicker this way.
If you work for an employer with a 401K plan, the initial point you should do is to fund it towards the max. In case you can’t afford that, at least put sufficient in to get the total matching contribution form your employer.
This investment is made just before taxes. Your investment is larger and with the employers contribution grows rapidly.

Next have a brokerage or mutual fund company debit your banking account monthly. This cash must first go into an IRA – if you have five years or more to go to retirement, make it a Roth IRA.

Next have a few dollars more be debited to go into a no-load, low cost mutual fund. The younger you’re, the more aggressive your choice of fund can be.

After that is done, then figure out how to pay your bills and living expenses. If funds is tight, cut back on your living expenses and use the extra money to pay down your debt.

Start with the lowest balance initial. Once that debt is paid, take the amount of money you had been paying on that debt and add it towards the payment for the next lowest balance debt. Continue performing this and it is possible to be totally debt free within 5 to 7 years.

Another version of this method is paying the highest interest rate debt initial. The principal could be the same, you just see a lot more progress with the initial method, although it could be more costly based on how your debt is distributed.

(Should you don’t believe me, get the premier version of Microsoft Cash or Quicken and use the “Debt Reduction” module. You may be shocked at how a lot funds you’ll save and how fast it is possible to eliminate debt this way.)

The idea is to scrimp at the expense of your current lifestyle, while leaving your savings to grow and you debt to shrink.

I know numerous of the people reading this will scream that that is an impossible plan.
But it can be quite doable with a little will power as well as the ability to delay gratification for any while.
The problem is that in case you don’t do this, your future may turn out to be really bleak.
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