There are many financial accomplishments out there:
- winning the lottery,
- making more money than your friends,
- earning a million dollars.
But some goals are more realistic than others, and there are some that almost everyone should aim for.
Let’s take a look at five:
1) 800+ credit score
Having a high credit score means having access to home loans, better interest rates, and cheaper insurance! Building that 800 number always takes some time, but there are definite tricks that will help you reach that goal more quickly.
The best way to build credit fast is to have a mix of loan types, build your credit utilization by having the largest gap possible between your credit limit and your credit card balances, and never miss a payment or make a late payment.
Did I mention, don’t miss or make a late payment?
Missing payments or making late payments is an immediate step backward along the journey to good credit.
Not only are you charged a fee, that fee then earns compound interest – along with the credit card balance that you didn’t make any progress toward paying down. It’s the start of a downward trend that can easily spiral out of control – and it decreases your credit score at the same time. Just don’t do it.
There’s some debt we take on to improve the quality of our lives, and then there’s some we just don’t need.
A mortgage is the best example of “good” debt, but we eventually plan to eliminate that debt too.
So remember the keys to the best way to build credit fast:
- never miss payments,
- have multiple types of loans (only when needed…not just for the purpose of building your credit score), and
- maximize the gap between credit limits and credit balances.
This means paying off credit card balances every month and diligently paying off quality-of-life installment loans like mortgages and auto loans.
3) Saving enough for retirement
It’s a pretty simple equation:
- If you have a job,
- you dream of retirement.
What doesn’t always factor in is how much money you need to save to retire – and still live comfortably, the way any retiree deserves.
You should start as soon as you’re eligible (age 21), and you should save 10% to 15% of every paycheck in a tax-advantaged retirement account like a 401(k), a 403(b), or an IRA – which come in either traditional or Roth varieties.
And never, EVER leave an employer’s 401(k) match sitting unclaimed – that’s free money. Contribute enough each paycheck to ensure that match goes into your retirement account, not back in your employer’s coffers.
4) Paying off your home
If you can reduce your monthly bills by the time you retire, then the amount you need to save goes down. The easiest way to do this is by paying off the largest monthly bill most of us have (or should have): our mortgage.
Mortgages are typically 15 or 30-year commitments. If you start well before retirement age, in theory, you should be able to eliminate this monthly payment by the time your income is reduced at age 65 (or whenever you retire). But paying that bill early means not only having extra working years to save for retirement. It also means paying less in interest over the course of a 30-year loan.
- If you get a bonus check: make an extra house payment.
- If you get some birthday money from your folks: make an extra house payment.
- If you win second prize in a beauty contest: make an extra house payment.
And also be sure to put those payments toward the principal, not the interest. The principal you pay for means equity for you. The interest you pay for means a bonus for the bank.
5) Spending a Little to Ensure a Happy Life
Let’s face it, if you’re only living to work and not working to live, you’re going to miss out.
You only have one life, and you should do things that enrich you and your family’s time on earth. Sacrificing a yearly family vacation might not be worth the financial freedom of a couple years’ early retirement down the road.
However, sacrificing a second (or even third) annual vacation might be worth the financial payoffs at the end of your career.
Always make the best decisions for you and your loved ones, and never sacrifice happiness in order to meet financial goals.
Will you sign up for these financial accomplishments? Which is your favorite?
My name is Derek, and I have my Bachelors Degree in Finance from Grand Valley State University. After graduation, I was not able to find a job that fully utilized my degree, but I still had a passion for Finance! So, I decided to focus my passion in the stock market. I studied Cash Flows, Balance Sheets, and Income Statements, put some money into the market and saw a good return on my investment. As satisfying as this was, I still felt that something was missing. I have a passion for Finance, but I also have a passion for people. If you have a willingness to learn, I will continue to teach.