Today we are going to continue listing the 30 steps anyone can take to have great finances.
If you are new to this series, please read through the steps we've already covered, starting with 30 Steps to Great Finances: Steps 1 through 3, before reading this post.
Today we'll be talking about making good investing moves as well as begin to get rid of all that debt (if you have any).
Let's get started.
Step 16: Get the Full Employer 401k Match
What if you had an investment that gave you a 50% or even 100% return on your money guaranteed? Wouldn't you put all the money you could in it? I sure would.
Well, that's what a 401k does. You put in money and your employer matches that with a given percentage. You're "up" by that percentage before your money is ever invested. Then, if you invest it properly for 20, 30, or 40 years, you'll be up BIG when you retire.
Great deal, right? And yet every year employees leave $30 billion on the table in matching funds that aren’t used!
Don’t be one of those people. Don’t let that free money slip through your fingers. Contribute enough money to your 401k to at least get the full employer match amount.
Step 17: Pay Off All Debt but the Mortgage
One of the best ways to increase your surplus is to pay off debt.
According to Morningstar the average American will pay over $600,000 in interest over his lifetime. Wouldn't you like to save yourself $600k? Me too.
If you are tens of thousands of dollars in debt, you are likely paying out at least several hundred dollars in minimum payments every month. Get rid of that debt and your gap will increase significantly -- which will help you grow your net worth.
If you don’t know where to start or you are overwhelmed by the process, take a look at my posts Seven Steps to Get Out of Debt. This article will take you through a step-by-step process for getting rid of all debt except your mortgage (we'll work on that one in a later post).
And even though you aren’t going to tackle mortgage debt at this point, you may want to consider refinancing your home to give you more cash flow to get rid of your other debts faster.
Step 18: Invest for Retirement Using Index Funds
The key to retirement investing is to invest as much as you can for as long as you can while getting a good return rate. It's as "simple" as that.
I put "simple" in quotes because, like with personal finances in general, investing success is simple to understand but not easy to implement. The reason is that it requires discipline, patience, and persistence, three qualities that many American's seem to lack these days.
More than any other factor, the amount of time you save/invest is the variable that most impacts your investing performance. So start saving NOW -- and save as much as you possibly can.
As for getting a good return on your money, I am a big fan of index funds. Their beauty lies in the fact that they perform better than most actively managed funds once adjusted for fees. In addition, they are VERY easy to manage and require little over-sight. Little time + good returns = an investment I like.
So, those are the tips for today. They should give you plenty to work on, right?
Stay tuned -- the series continues with the next post.
Update: Click here to read steps 19 to 21.