While most Americans colloquially call this holiday the “4th of July,” the day that arrives on the fourth day of the seventh month is officially known as “Independence Day.” While many publications will be talking about freedom from stress, or maybe even freedom from parental control, here at Golden Financial Services we’re focusing on freedom from mounting debt, focusing on retirement, and how to maintain a pension – a financial Independence Day.
Achieving financial independence in today’s economy can be tricky though; while jobs are seemingly back on the rise, the newest generation is still budgeting while shying away from traditional purchases like houses and cars. The trickle effect means more focus on commodities and tourism (which is where 4th of July vacations reside). But you have a family, and you want to give your kids some lasting memories of what it was like to celebrate our nation’s independence. So how do you generate some financial flexibility while still making a day of it? Here are some ideas.
Run Your Numbers
The question to pose is, “How would a vacation for the 4th of July affect my goals for saving and retirement?” Forbes details a situation for retiring at the age of 62, and how to prioritize your goals to stay on pace: “If you’re planning to retire after you’re eligible for Social Security at age 62, you can use our quick and simple retirement estimator here. To be on the safe side, use a 3% inflation rate, a life expectancy of at least 90 (remember about half the people live longer than average), and investment returns of 4% if you’re a conservative investor, 5% if moderate, and 6% if aggressive.”
What to Do Today
Pretty simple – pay more than the minimums on credit cards. We recently covered how to use the Debt Snowball Payment method to free up financial flexibility and cash flow, but Black Enterprise offers some additional insights here: “When you just pay the minimum on your cards, you’re not effectively chipping away at the debt. This approach will just prolong repayment and result in paying more interest. Here’s a great example from the NFCC:
“With a $10,000 credit card debt at 18 percent interest, even if a person never adds any purchases or fees to the account, and makes a monthly on-time payment of two percent of the balance, it will take them 48 years to become debt free. Further, that original debt of $10,000 will cost them $36,825, with $26,825 going toward interest.”
Maybe Take a “Staycation”
Flights and hotel rates are typically considerable higher than average around the 4th of July holiday. There’s a reason while all the television advertising around Independence Day focuses on dreamy backyards and big grills; if the formula ain’t broke, don’t fix it!
The 4th of July falls on a Thursday in 2019 – which means you’d have to miss several days of work if taking a vacation. Deeply in Debt points out some important details about what to do when the 4th of July falls in the middle of the week: “Instead, plan a celebration at your own house or somewhere in your city. You’ll avoid overpriced hotels, flights, and traffic! It could be something as simple as hosting a brunch in the morning or BBQ in the evening, or getting friends together to watch fireworks at night.”
Seriously, Save Now, Not Later
CNBC shares some important info they found on Bankrate here: Many Americans are woefully ill-prepared for an unplanned expense, so much so that 66 million U.S. adults have zero dollars saved for an emergency…an emergency fund ideally should be three to six months of expenses set aside.”
Sometimes the best memories are made right at home, and 4th of July traditions have so much to offer without even having to leave your neighborhood. Fireworks can be viewed in most towns, campfires and s’mores can be done at the local park, and backyard tent camping is the new bonfire at the beach.
When was the last time you sat down and calculated your monthly debt and budget numbers? Golden Financial has new tools to help with both, and it while you are taking a day off from work, you may want to start your morning with these simple tools. With your mind at ease knowing a simple plan is in place, enjoy the holiday with family!
For more tips and tricks, head over to our blog!