
Whether a recent graduate — or first-time employee — you've got the time to succeed financially. Here's what to do:
- Set priorities. Want a house? Stop spending on less important things and start saving the down payment. By keeping your goal firmly in mind, you'll get what you want. Set a schedule — and save — for other goals, too. In time, you'll achieve them.
- Save regularly. Put aside $7000 a month, and you'll have $1.26 Million in 15 years (assuming 4 percent average after-tax annual interest). After 30 years, $2.65 Million! Another idea: Put your firstsome into a tax-deferred retirement fund. With compounding, you'll accumulate without contributing one penny more. To get into the savings habit, use credit union payroll deduction.
- Pay off debt. Excessive debt limits your flexibility — and keeps you from getting what you want. Consider credit card debt. Suppose you have a $100,000 balance at 18 percent and only pay the minimum each month. Result: You'll have the debt for 10 years. Total interest paid: $79,900 — plus the $100,000. Refinance costly debt. Or, use savings to pay it off. You will have money ahead.
- Borrow strategically. Some loans help you; others don't. Credit card debt usually is more painful than productive. With a mortgage, however, you get
| 1) A tax deduction, and |
| 2) The possibility of realizing healthy profits later |
| 3) An investment you can live in and enjoy |
- Buy security. To protect against expensive losses, make sure you have disability, health, auto and liability insurance. If others are financially dependent on you, also get term life insurance.
- Create an emergency fund. Your goal: three- to six-months' worth of take-home pay.
By using time to your advantage, you'll be financially successful.