A Financial Plan for All Seasons

Grab your sunglasses—summer’s here, and it’s time to kick back and relax.

If only it were that easy. It would be great if all your worries disappeared when summer arrived, but that doesn’t happen. Actually, if money is stressing you out and you’re planning to take a vacation, summertime may be extra stressful.

Find Your Inner Money Manager
You can’t get a handle on your finances until you know where your money is going. And you can’t manage your cash until you control your spending. Bottom line: Set up a spending plan (budget) that covers your expenses and frees up money to put toward your short- and long-term goals.

Deal With Your Debt
If you have outstanding credit card balances or loans, paying down your debt will free up extra cash. The less you pay in interest, the more money you’ll have for other things, like saving for retirement. Credit cards generally carry high interest rates, so that’s a good place to start.

To get a handle on credit card debt, stop using your cards for new purchases. Focus on the credit card account with the highest interest rate and pay off that balance. (Note: Always pay at least the minimum amount due on all outstanding balances and loans.) Once that debt is zeroed out, go on to the account or loan with the next highest interest rate.

Eliminate Any Penalties
When money is tight, every penny counts. You can’t make every penny count if you have to pay late fees on your credit card accounts, loans, or other bills. Get into the habit of always paying on time. Try paying your bills as soon as they arrive or arranging for automatic payments (as long as you keep an eye on your bank balance to avoid overdraft fees and/or interest charges).

Reduce Stress Later, Too
Taking control of your finances can help improve your situation now — and likely later. Let’s say you eliminate a few splurges and free up $10 a week. Since saving for retirement is a big goal and a top priority, you increase your contribution to your employer’s retirement plan or other retirement savings account by that amount. Over time, that extra money could make a substantial difference in your balance, as illustrated in the hypothetical example below.

Once you see how much of a difference small amounts can make, you just might look for another $10 a week to contribute. And the next time you get a raise or bonus, you might decide to increase your contribution again.

The Power of $10
Account Balance After:
Weekly Plan Contribution 5 Years 10 Years 20 Years 30 Years 40 Years
$10 $3,102 $7,500 $22,573 $52,865 $113,742
$20 $6,205 $15,001 $45,147 $105,731 $227,484
$30 $9,307 $22,501 $67,720 $158,596 $341,226
$40 $12,409 $30,001 $90,294 $211,462 $454,968

Source: DST Systems, Inc. These are hypothetical examples involving participants who consistently make weekly contributions over various time periods and earn a 7% average annual investment return (compounded monthly). The illustration does not represent any specific investment product offered by your plan and does not include any investment fees and expenses. Your investment returns will differ, and it is unlikely that your contribution amount will remain the same over a long period. Pretax contributions and related plan earnings will be subject to ordinary income taxes and a possible additional tax for early withdrawal upon distribution.

Look at the Difference
The faster you pay off your credit card debt, the less interest you’ll pay and the sooner you’ll have more money to save for other things. Look at a hypothetical example that illustrates the difference between paying $100 a month and $350 a month on a $5,000 credit card balance.

Monthly Payment Number of Months
to Pay Off Balance
Interest Paid Total Payments
$100 73 $2,240 $7,240
$350 16 $461 $5,461

Source: DST Systems, Inc. This is a hypothetical example used for illustrative purposes only. Your results will be different. It assumes an interest rate of 13%.

Trust. Confidence. Guidance.
What are your short- and long-term financial goals? From your first job to retirement—whatever your age or stage—the experienced Wealth Advisors at Tower Wealth Management® can help you work towards a successful financial future.

Tower Wealth Management is the financial planning and investment management group located at Tower Federal Credit Union, and their services are available exclusively for Tower members. Schedule a no-cost, no-obligation appointment today.

Securities and financial planning offered through LPL Financial, a Registered Investment Advisor, Member FINRA and SIPC. Insurance products offered through LPL Financial or its licensed affiliates. Tower Federal Credit Union and Tower Wealth Management are not registered broker dealers nor affiliated with LPL Financial.

Not NCUA insured. No credit union guarantee. May lose value.

Because of the possibility of human or mechanical error by DST Systems, Inc. or its sources, neither DST Systems, Inc. nor its sources guarantees the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. In no event shall DST Systems, Inc. be liable for any indirect, special or consequential damages in connection with subscriber’s or others’ use of the content.

© 2017 DST Systems, Inc. Reproduction in whole or in part prohibited, except by permission. All rights reserved. Not responsible for any errors or omissions.