It's Time to Start Building for the Future

A Straight Talk on Debt

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It's Time to Start Building for the Future

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To be successful with our debt consolidation plan,we had to take several actions to be able to make our program payment as well as meet all our other financial obligations each month.

In addition to reducing our lifestyle footprint by cutting costs, we also had to take more extreme actions to maximize the amount of money available in our budget each month.

We stopped contributing to our retirement accounts.

Since we completed our program, we've working through a list of "to dos" to solidify our financial well-being. 

1.) We've refinanced our home, consolidating our variable interest rate first mortgage and interest only second mortgage into a more stable fixed rate 30 year loan.

2.) We've changed our tax withholdings to ensure that we won't find ourselves again in the situation where we owe thousands of dollars during tax season.

We've taken some actions to stabilize our month to month budget, making sure that a change in interest rates, or tax season doesn't put us into crisis mode and struggling again. Now it's time to look out for our future by restarting our retirement account contributions.

I've filled out the forms to begin contributing 2% of my salary to my employer sponsored 401K program. 

That may not sound like a lot, but the net change is actually much more significant. My employer contributes 1% even if I don't participate at all so at least our retirement accounts have been seeing some  growth over the last four and a half years. Additionally, my employer provides 100% matching funds up to 5%. 

So, my 2% contribution is matched by my employer, plus the 1% they contribute automatically results in total retirement savings of 5% of my pre-tax income.  

I'd like to work my way up to taking maximum advantage of my employer's matching funds, but right now I just want to get my foot in the door and start contributing. We have some other items on our financial to do list that we need to take care of, then we'll look at increasing our retirement savings again.

Completing our debt consolidation program was all about paying for our past mistakes, and in a way just getting back to ground level. Now, I feel like we're ready to start building our financial future. 

We have all the tools, we just have to get to work.

Did you stop contributing to your retirement accounts while enrolled in a debt consolidation plan? How will you restart once your program is complete?

Related Links:

Can You Refinance Your Home When Enrolled in a Debt Consolidation Program?

Making Sure I Never Owe on Taxes Again

Retirement Planning While on a DMP? Yes You Can!

 

Travis Pizel, debt management plan customer with leading provider of debt relief, CareOne Services, Inc. Travis Pizel

Travis is a contributing writer for the A Straight Talk on Debt blog. He is also a very active member of the CareOne community forums. Travis is currently enrolled in a CareOne Debt Management Plan (DMP). Travis candidly shares his personal journey to pay off his debt and the tips he's learned along the way. As a father and husband he provides a unique perspective on balancing debt, finances, and family in Minnesota. You can also read more from Travis on the Enemy of Debt blog, where he is a featured blogger. Compensated Blogger for CareOne Debt Relief Services.

To connect with Travis on Google+ click the

You can follow Travis on Twitter @DebtChronicles

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  • My husband hasn't contributed to his retirement savings since the hi-tech bust of the early 2000s. We are paying off his business debt now (still a whopping $42,500 to go), but once that's paid off, we plan for him to put 15% of his pre-tax income towards his retirement. I am very fortunate as a teacher because even when I was much younger and much more foolish with money, my school board was deducting 10% of my income for my pension plan contributions. Once we've paid off my husband's business debt, I will put an additional 5% of my income towards retirement savings. All the best as you go from ground level to building your financial future.

  • I have always put at least 1-2% in retirement. My employer matches 100% up to 5%.  We are still paying off debt, but we are in our mid-50's.  As each debt is paid off, a portion of the amount goes into retirement, and a portion does the 'snowball' thing into the next debt on the list.  The debt is gradually going down, and the percentage going in retirement is gradually going up.

  • @prudence - sounds like you've been in the same boat - it may not have been as much as you wanted to contribute, but at least *something* has been contributed.  With the recent increases in the stock market our retirement nestegg has grown fairly significant, but I know we have a long way to go to be ready for retirement.  Thanks for reading!

  • @Sassy Mamaw - I suspect that seeing the contrast between debt (doing down) and retirement savings (going up) would be extremely satisfying - good for you, and thanks for stopping by!

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