Things You'll Need:
- Bank Account
- Desire To Save
- Dedication
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Step 1
Evaluate the risk exposure in your current retirement account(401(k), IRS, 403(b)). Does your portfolio contain more than 20 percent of your own company stock or one asset class? Your retirement account should contain a mixture of stock mutual funds, bonds mutual funds and cash to truly be considered diversified.
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Step 2
Create an emergency savings account. This will allow you to have sufficient resources to meet any financial need that should arise. An emergency savings account should contain at least six months worth of living expenses. These funds will enable you to meet any cash crisis' that may occur such as repair bills, medical bills, and unemployment or for any other liquidity need.
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Step 3
Eliminate your debt. It is a wise decision to eliminate debt at any time. It could be by paying off high interest credit card debt or an automobile loan. These are debts that can hinder your ability to save and to invest. Every dollar that is used to make interest payments to the lender is money that could be used to build your financial future. The easiest way to reduce interest payments is to pay off the debt with the highest interest rate first. Sending extra payments to pay down the principal will reduce the total amount of interest owed.
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Step 4
Refinance your high interest mortgage. In today's market of declining interest rates refinancing an adjustable rate mortgage or a high interest subprime mortgage is a smart move. There are a few more hurdles to borrowing today as banks have tightened lending standards on subprime mortgages since the housing crisis. But you can still shop around for the best rate amongst lenders and should be able to obtain a favorable rate.
