A lot of people get to this point in their journey and get stuck, not because they don't want to continue on, but because they get distracted by other things or more often just don't know what to do next! Can I just interject a thought right her? Now would be a really great time to reevaluate and refine your budget. Take a good hard look at where you're at, what you're spending, and what you have available to you for saving and investing. My personal conviction is that your first two priorities should be your retirement and your children's higher education. To that end, my advice is to start here:
1. First make sure you're regularly putting 15% of your income into Roth IRA's and pre-tax retirement. If you have a 401K at work, contribute up to your company's matching amount, if they have one. Put the balance in Roth IRA's in mutual funds with long standing track records of good growth. If you can't save 15% right away, start where you can, then increase the amount by 1 or 2% each year as the incremental changes will help you get where you want to be without having a huge impact on your finances. The easiest way to keep this up is to make it automatic - have the money deducted from your paycheck or withdrawn monthly from your account automatically to help you resist the temptation to skimp on contributions.
2. If you have kids, begin saving for their college education. You really don't want your kids to start off the way you had to, do you? Here's some websites that will help you identify some different savings vehicles and determine which one is right for you.
- http://personal.fidelity.com/planning/college/content/compare_options.shtml.cvsr
- https://personal.vanguard.com/us/CompareCollegeSavingController
Once you've determined which vehicle is the best choice, you'll need to do a realistic evaluation of how much you can save (and how much you want to save!) and create a plan based on the number of kids you have and their ages. Depending on your available resources, this may mean that your kids will have some limitations on where they go to college, what expenses you will cover for them, and what expenses they will be responsible for themselves.
3. Pay your house off early. Can you imagine the freedom you would feel if you were living debt free, including your mortgage? Think of what you could accomplish with NO PAYMENTS!
After you've covered retirement, college, and the house, the possibilities are limitless! When it comes down to it, there's a lot ideas about what you should do first when it comes to saving and investing. But what it really boils down to is this - you have unique goals and priorities for your life and your family, and you're the only one who can make those decisions for yourself. So ask yourself, "What are the things that are most important to me right now and down the road?" Here's some ideas of different priorities:
- We'd like to pay for our daughter's wedding (or weddings, for those of you blessed with lots of girls!)
- We want to take that vacation we've always dreamed of as a family
- We want to give to support a particular ministry
- We have a business idea that we'd like to pursue
- We want to retire early (50/55/60)
- We want to buy a car for our son/daughter
- Insert your dream here....
Have fun dreaming! You've reached a place that the majority of Americans (still steeped in debt) will never see. And remember, even though there's a definite order to the process, when you get to this phase, a lot of your saving will be done simultaneously. Don't feel like you have to have college completely paid for before you start saving for the vacation you've dreamed of or launch the business you're envisioning. Just use good judgment and common sense, and most important, make sure you have a plan!
