Six reasons why you're broke, and how to set aside more for retirement planning

Senior Resources

Are you living paycheck to paycheck? Where does the money go? How can you even consider retirement planning when you’re not sure how you’re going to pay for new tires on your car? We asked financial advisor Nicole Middendorf, CDFA, author of Lipstick on the Piggy Bank, to weigh in with her opinions.

“I see the same six reasons for debt, over and over,” she says. “The good news is that there is something you can start doing to resolve each of these right away.” Middendorf says that the six reasons you’re probably feeling a money crunch right now are:

1. You’re not controlling how much is going out, versus how much is coming in. “From the latest smart phone to trendy shoes, society pressures us into having the latest “stuff” so that we portray an image of wealth,” she explains. “The people who truly have a lot of wealth aren’t flashing it. They are wealthy because they have saved and invested their money.”
2. You’re not giving 120 percent at your job. Middendorf says, “Just showing up month after month, year after year doesn’t count. Those who work hardest at their jobs are the ones who are getting the bonuses, raises and promotions. Even if they aren’t getting them automatically, they can justify asking for them.”
3. You don’t know your numbers. You need to know where you’re sitting and have a plan for your financial future. “Most people don’t know their credit score or their net worth, or they are in denial,” says Middendorf. “One of the best ways to remove the financial burden from your shoulders is to have an estate plan in place. Know the cash value of your life insurance, in case you need the money while you’re still alive. Savvy people are repurposing their life insurance policy by selling it to a provider such as GWG Life, LLC, to get the maximum value from their life insurance policies.”
4. You’re not taking advantage of contribution plans. “An astounding number of people aren’t contributing to a 401K plan or maxing out their Roth IRA contributions. There are companies that give a match, but if you’re not contributing you are missing out on this free money.”
5. You have too much credit card debt. “Get rid of debt. Focus on paying off the credit cards with the highest interest first. Then go on to the next one.” Middendorf cautions to beware of debt consolidation companies. “They are akin to filing for bankruptcy. Using one may ruin your credit.”
6. You don’t have enough liquid money. “That’s how people get into financial trouble,” Middendorf comments. “They aren’t saving enough. You need to put away enough rainy day money. Without savings, one major expenditure could plunge you into serious credit card debt.”

Middendorf advises everyone who feels broke to first sit down and do a complete financial assessment. “Knowing where you are right now is the beginning of creating a stronger, healthier financial future for yourself and your family.”

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