Tonight I was doing some YouTubing and catching up with a famous vlogger who I used to watch regularly. After a few videos about her favorite tech gadgets of 2019, newest top of the line computers, and back to school shopping, the jealousy hit me. Everyone knows that feeling.
The Wall Street Journal recently reported that most students with loan balances over $50k failed to reduce this outstanding principal balance after four years. In spite of their payments made over that four year period, that money was used entirely for interest. The article further states that their student loan balances actually rose an average of 5% over that time. These folks were not only not keeping pace, they were actually falling further behind!
Recently I was browsing /r/FinancialIndependence and read a post from someone with modest, yet respectable income who was concerned about their ability to retire early. They felt they were playing a good defensive strategy (controlled spending) but that their weaker offense (modest income) would prevent them from an early retirement. Financial planning is not just a pastime for the wealthy. There are powerful tools for those at all income levels, although the goal posts are set in different places.
According to the FDIC at the time of writing (June 9, 2019), savings, interest checking, and money market accounts are not doing much for your money, at just 0.10%, 0.06%, and 0.19% respectively. In fact, CDs with 60 month maturity are only yielding 1.23%. There is a better place for your hard earned money!
The other day I was at happy hour with a group of coworkers and the topic of 401k savings came up. One of my coworkers passively said she didn’t really understand anything about the plan but that she was contributing a few percent and hoped that it would take care of itself.