What Will Your Reality Be?

The realization kicks in around the time we are in our forties.  We feel we have been working endlessly and begin to seriously contemplate retirement.  Will we be financially ready in fifteen or twenty years?  

Up to this point, we haven’t adequately saved.  When we glance at our bank or investment statements, we feel like someone’s been stealing our money.  But the stark reality opens our eyes. We don’t need to worry about anyone stealing our money.  We do a good job of spending it.  When we recklessly spend, we steal money from ourselves.  The harsh reality is we exchange our money for every simple pleasure life offers us now. The practical reality tells us we don’t have to give up living and enjoying life to save money.

Let’s be W-I-S-E about the ways we save and spend while we enjoy life. 

W – Wealth can be built up in multiple ways, both in our investment accounts and home (and other real estate). Putting yourself on “automatic” is the best way to accumulate wealth.  In David’s Bach’s book, The Automatic Millionaire, “automatic” means setting up payments to automatically transfer into a savings plan.  The concept is known as paying yourself first.  The first 10% of your salary belongs to you (to be tucked and hidden away) with the remainder directed to other needs.

I – Investing for the long term is a slow and steady process. We talked about the rabbit and turtle analogy in the previous blog, Connect the Dots.  Because things don’t happen as fast as we would like is not a reason for us to be discontented with the results. Think about someone dealing with a shoulder injury; the healing process cannot be rushed.  A child born today doesn’t graduate from high school tomorrow.  Because you invest $100 a month now, doesn’t convert you into a millionaire in a year.   The world view believes everything should instantaneously happen.  For certain things, like instant oatmeal which cooks up in two minutes or less, this is true but investing in the markets has its own philosophy.

S – Simply spend and borrow wisely. These two need your attention when everyone and everything whisper in your ear, “Why wait when you can have it now?”  Television ads, Facebook posts, and marketers encourage us to part with our money.  If we don’t catch ourselves when temptation knocks, we fall into its trap. 

This point comes from the book, The Automatic Millionaire.

“If we didn’t have enough cash to buy something, we didn’t buy it.  The entire time we’ve been married, we’ve never carried credit card debt. When we used the cards, we paid them off the same month.”

Can you say the same as Sue does?  The interest paid on any unpaid credit card balance squashes dreams.  We don’t want this.  

E – Enjoy life. You are encouraged to dream, the very premise of this blog website. So don’t stop dreaming rather “chase” and “create” the very things you desire to achieve.

Saving for retirement does not require discipline when you heed the advice of making savings automatic. The discipline is only required to set up the process. Your future reality will then take on a life of its own.  The reality of a comfortable retirement is yours to paint in the colours of your choosing.  Do you see the endless possibilities?     

Wait For "It"

Capturing the perfect image of the ocean splashing onto the rocks requires patience.  When you wait, you get the perfect snapshot.  This scene sends an important message: “Wait for It.”  Wait for the things you want in life.    The blood, sweat and sacrifices (and of course, discipline) you pour into savings will pay off because you’ll have a greater appreciation for the things you purchase. 

BUT do we? Do we “wait for it"? Most times the answer is “No!” We’re bombarded with marketing ads.  The advertisement tells us, “Why wait when you can have it now?  The advertisement tells us,  “It’s easy! With these low monthly payments, it’s yours.”  The advertisement also tells us, “There are only a couple items left in stock and then they’re gone.” The pressure is on to buy. And we buy.  In the end, do we actually own it or do we owe money for it?

Most times I see people fall victim to the easy purchase plan (myself included.)  If we are not able to pay the debt in full, the payments seem to go on and on forever.  Having payments restricts our ability to do anything.  If you have ever felt like a prisoner, this is probably the time.  It’s easy to get into a cycle.  When our debt payments escalate, income is restricted for day-to-day lifestyle expenses, forcing us to buy essential items, like groceries, on credit.  Debt begets more debt.

Living in a world which provides easy access to credit and promotes instant gratification comes with a cost.  The cost is the interest you pay over time for the purchase.   

Recognize that some things are worth the wait. When you focus on your goals and dreams, you avoid the temptation of buying things on impulse. You may be able to relate to two experiences you’ve had in the past.  One, when you saved for something you really wanted.  The second, when you bought an item using credit obligating you to make payments.  Which did you prefer?

If you have the ability to make loan payments, wouldn’t it be just as easy to start saving for the item in advance?  Rather than pay "interest", you can actually earn “interest” while you wait. One easy way to save for what you want is to hide the money.  {Well, not exactly!}  We know we can be our own worst enemy; so to avoid temptation, the best solution is to set up automatic transfers to an account (like a mutual fund) which puts your savings out of reach. This prevents dipping into your “pot of gold” until the time is right.  

In the end, when you wait for it, you get what you want and more: freedom to move onto your next purchase, peace of mind knowing you have no payments, and a sense of accomplishment knowing you worked hard to save for the things you wanted without incurring debt. 

No one says, “Wait for it” is easy; but the one sure thing is, “It’s worth the wait”.