There was a generation or two that retired at 65 or even earlier and had enough money saved to take cruises and do other interesting things. That is not the present generation of working people. Social security is scheduled to run out all too soon and in the recent financial troubles, many people have lost money in their 401k retirement accounts.
Unfortunately, the generation that is scheduled to run out of social security is the generation that has lived on credit and has not saved much money. To top it off, this is the generation that is likely to owe more on the house than it is worth. What a mess!
One of the reasons we have lived on credit is that we were raised with the idea that anything worth having is worth having now, particularly if ninety days are the same as cash. We have not been forward-looking and we have typically assumed that we’ll keep our jobs and be able to pay at least the minimum on each credit card.
It’s time for a new way of thinking
The first thing that has to change is our desire to have what we want right now, and that includes financial security and freedom for the future. It’s easy to put off thinking about the future or to get so discouraged by it that we don’t do anything about it because it takes so long to achieve financial security; we can’t have it right now. But the future is going to get here, whether or not we pay attention to it.
It’s time to look at discretionary spending and, in fact, to reconsider what is absolutely necessary and what might be optional. Mortgage and taxes are necessary but cable and internet are not. Whatever you decide to cut back in your discretionary spending should go towards paying off credit cards and creating an emergency fund.
You may also be able to have more pre-tax dollars taken from your paycheck for your retirement without reducing your pay check drastically. Get the human resource people to help you figure this out.
It’s also time to look at ways to save money, such as changing spending habits, as well as ways to make a little extra money, such as getting a second job or creating a small business online. If you have expensive toys such as a boat or an ATV, maybe it’s time to put them in someone else’s hands and use the money to pay down debt.
Belt tightening is hard, particularly when you have never had to do it before and never dreamed it would ever be necessary. We know, however, our grandparents did it during the depression and they became a great generation, moving us successfully through financial hard times, a major war, and helping to create the strong economy into which we were born. It’s time for us to learn to do the same.