Money Strategies for the Fiscally Confused

Simple Strategies You Can Use to Jack Up Your Net Worth

Tuesday, February 28, 2006

You Need to Start Today!

In my last post about paying yourself first, I mentioned that a key to success is to begin now. Now means today; not tomorrow or next month. It sounds easier than it is because we can always come up with numerous excuses to procrastinate.

My wife and I are pretty good about contributing as much as possible to her 401K and my SEP IRA. She maxes hers out, and I contribute about $10,000 per year. But I know that these retirement accounts will not be enough to retire on. So, I pay myself first every month in order to build up savings in taxable accounts. Just yesterday, I had to work hard to put the "start today" adage into effect.

I run my own business, so my cash flow is different from month to month. February was okay, but it wasn't a windfall. My pay myself first plan is to deposit $230 each month split among two DRIPs (which is withdrawn from one of our bank accounts automatically), deposit $250 into a fee-based, managed investment account, deposit $200 into our "vacation" account (so we don't have to put our vacations on credit cards), and deposit $200 into our "house renovation" account. My wife wasn't sure if we could afford making each of these payments in February. It got a little dicey there for a minute, but I reminded her of the plan and how it will pay off in the long-run, and she made the deposits.

Slowly but surely, these accounts are building. But if we neglect our plan even once, it can get us off track and make it harder the next month to work the plan. I've been a believer in this type of system for years, but even true believers can let doubt creep in if one is not vigilant. So start now, and stick with it!

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