Debt Consolidation and Retirement
Debt is tightly tied to savings, the more debt you accumulate the less money you have left over for savings, conversely the more savings you have the less likely you will need to borrow money and thus add to any debt problems.
For instance instead of borrowing dollars through using your credit card and increasing your debt problems, you could possibly save that same total amount every month until you had enough to purchase the item you used the credit card to purchase, only you can decide whether having the item today is good value for paying the additional amount of money it costs in interest to own it early, nonetheless when it goes past individual things into the region of saving for retirement you have a bigger issue to give thought to, an IRA Individual Retirement Account, permits you to put away dollars for your later years, that has various gains and a couple of risks.
A few benefits and risks of Individual Retirement Accounts you should consider. When you save that money obviously you are not spending it, you accumulate interest on that cash saved which compounds over time, you can see one of the several on-line calculators to get a feel for how compounding may assist, for instance you can turn a couple of thousand dollars into many thousands over 25 or 30 years, you also obtain a tax benefit since via design any dollars deposited into the account is a tax deduction, in lieu you are taxed on those dollars when you begin to use them several years later.
The theory behind this, is that you'll then be at a much lower tax rate and thus pay a much smaller total amount than you would when it was first earned, often that theory is true in practice and in some smaller amount of cases it's not, you'll need to make many predictions for your own case, but for a large proportion of people it's true.
There are more versions today of the basic IRA's than there were say 15 to 20 years ago when the idea first became a reality, but the basics remain the same, you can still deposit up to $2,000.00 per financial year tax free into the account, one variant for example, is the popular Roth IRA, Federal Regulations allow tax-free withdrawals as long as the contributions remain in the account for five years and you are at least 59.5 years of age, or it's accessed for an initial home purchase.
One more general savings instrument is the 401k, named after a provision in the 1978 Internal Revenue Code, these allow employers to deposit money that's tax-deferred into an account on the employees behalf, you pay no income tax on the dollars until it's withdrawn, those who have difficulty summoning the willpower to save frequently discover these of assistance, since it's allocated before you see your pay check, again there are various variations around in the market today.
These and other savings methods may become part of a total financial program that involves borrowing and investment in many forms, the more options you can learn about, the better program you can design to maximize your hard earned money, good planning today will assist the requirement for any debt consolidation solution in the future.