Doin’ It By the Decade: What NOT to Do in Your 40’s

The other day we covered some great steps to take to keep you on track with your finances throughout your 40s. Here’s a look at some of the traps it would be wiser to avoid.

Here are some things you should NOT do:

1.)   Think your debts will sort themselves out later.

Seriously. Even social security can be withheld to pay off your debts if you don’t get them under control. The government can garnish up to 15% of your social security benefit to pay your debtors. Credit card debt, and it’s attendant interest rates, will eat up your nest egg ridiculously fast, so now is the time to get that really under control.

2.)   Under calculate what you will need in retirement.

Assuming that you will be able to cut costs and live much cheaper in retirement is likely to be a pipe dream – or an unhappy retirement. You’re probably going to actually want the same standard of living you are accustomed to. The only thing likely to reduce on it’s own are your taxes – and there will still be taxes, they’ll just be a little lower. Make sure you calculate your goals for what you really want your retirement to look like, not the Dollar Store version of your old age.

3.)   Leave money education for your children to their schools.

Because I don’t know what you remember about your childhood, but the extent of personal finance I was ever taught in 19 years of schooling was a stock market game that we played for one month in 7th and 8th grade (and I didn’t do well, so I figured I should not even touch these weird stock things with real money). To raise financially solvent children, teach them the skills to make them that way. They don’t come naturally. Living off take out and buying new video games once a week comes naturally.

4.)   Go with the first mortgage you are approved for.

A mortgage is going to be one of your biggest expenses. You need to shop around. You will also save thousands of dollars if you can possibly swing the payments for a 15-year mortgage instead of a 30-year. You should also keep an eye out for better offers and consider if it’s worth switching to them over the life span of your mortgage.

5.)   Let your spouse handle all the money stuff for both of you.

You should always know where your money is going. Heaven forbid you do get a divorce, having played an active role in your finances will help you with all the malarkey that comes with that. Even worse, if your significant other dies, you will need to suddenly play catch up on where all your money is (or isn’t, if you don’t even talk about it, you may be unaware that your financial situation may not be an ideal one). Make sure you remain involved in the financial decisions for your household.

6.)   Cash in your stocks in a bad market.

You still have a lot of time to recover in your 40s. Honestly, if the company is still a strong company, you should take advantage of the bear market and invest in more shares so that when it upswings, you see an even bigger return on your investment.

7.)   Intend to work forever.

You may love your job. It could be awesome, fulfilling and you can’t imagine doing anything better ever. But sometimes life has other plans and your health or mental acuity may not permit working until you die. Also, really, how many people love their job? Even if it’s not so bad, there are probably other things you’d rather do with your time, especially in your Golden Years.

 

Speaking of money education, check out my raffle over at Rafflecopter to win a free copy of Dave Chilton’s The Wealthy Barber! Ends September 30th.

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