“How do people in my circumstances deal with having money that doesn’t go exclusively toward debt?”
Photo: Debrocke/ClassicStock/Getty Images Get That Money is an exploration of the many ways we think about our finances — what we earn, what we have, and what we want. In My Two Cents, advice columnist Charlotte Cowles answers readers’ questions about personal finance. Email your money conundrums to [email protected] I’ve spent the past couple of years working my way through my credit card debt.
Congratulations! I could go on and on about how great it will feel when you pay that final credit card bill, but you won’t need me to tell you. Go ahead and luxuriate in that sense of accomplishment — not only because it’s gratifying, but also because it’ll help you stay on track moving forward. In the long run, cultivating self-efficacy will save you a lot more than a $10,000 credit card bill. So that’s what’s next: Continuing what you’ve started. Think of this phase as emerging from financial triage and into a more stable condition where you’ll keep building up strength. The muscle is already there. You’re just giving it something new to lift. And that thing, for now, is your savings.
Christine Benz, the director of personal finance at Morningstar, once told me to think about savings as “financial multitasking”: “We’re all juggling multiple financial goals throughout our lives, and the key is to get comfy with that,” she said. “Early on, maybe it’s a combination of stoking your emergency fund and paying off student loan debt and contributing to a 401.
As for your 401: As a lifelong rule, most financial experts recommend putting about 10 percent of your income straight into a retirement account until you actually retire. Since you haven’t touched yours in a while, overshoot that number if you can. You mentioned investing — that’s what your 401 is for. Once you’ve built yours up, you can look into other types of investments, but for now, focus on the long-term, to give that money time to grow.
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