Think Your Credit Score Doesn’t Matter in Retirement? Think Again.

credit score

You have battled with your credit score your whole life. You wanted a good score so that you can could get the best loans, especially for your home mortgage. Finally, you’ve reached retirement, and you have it in mind that you can rest easy. You have your mortgage, you are done taking out loans for education, so you don’t have to think about your credit score any more right? Wrong. Your credit score still maters in retirement.

You Need to Watch Your Money Carefully in Retirement

Unless you happen to retire with extreme wealth at your disposal, you need to be frugal after retirement. You need to budget. After all, you don’t have the kind of income coming in that you once did. You aren’t going to get raises and other windfalls. You have to make do with what you have.

Therefore, it’s really important that you watch your money carefully. If you have bad credit, then you put yourself at risk. What if something happens and you need to refinance your home? Or what if you need to take out an emergency loan? So many things can go awry in life. Medical expenses, natural disasters, the needs of adult children … you just might need to get credit or a loan again even after you’ve retired.

If you don’t have good credit, then you’re going to end up with a loan that has terrible terms (if you can get a loan at all). A bad credit score means you’ll have a higher interest rate, which in turns means that you’ll have higher monthly repayment bills. If you’re trying to budget in retirement then you can’t afford to waste money on those exorbitant fees. If you maintain a good credit score in retirement then you don’t have to worry about that so much.

You Probably Have More Bills in Retirement Than You Anticipated

People like to paint a rosy picture of retirement. You’ve worked hard your entire life, so now you can rest. You can take the money that you set aside and enjoy your sunset years. However, this financially lovely picture simply isn’t the reality for many Americans reaching retirement age today.

Baby boomers who have retired or about to retire have much higher bills than they might have expected. In fact, many still owe on their homes, either due to an original mortgage or to refinancing over the years. Additionally, older people increasingly have high levels of credit card debt to their names. Some people even still have student loan debt when they retire!

If you have these types of outstanding debt, then you really need to make sure that you have a good credit score in retirement. You should work to improve the score as much as possible. You can do that through debt repayment, increased credit lines, disputing incorrect credit report information, etc. Once you have boosted your score as much as possible, you can then use that good credit score to get a great rate on a consolidation loan. This will allow you to repay that debt as quickly as possible so that it doesn’t hang over you throughout your entire retirement.

Plus more and more Americans retire but then start a post-retirement business of their own. If you’d like to start a new business, then you might need a business loan. If you have a good credit score in retirement, it’ll be significantly easier to get that loan.

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Time Freedom: Embracing an Abundance Mindset for A Better Quality of Life

time freedom

One of my favorite things about my life is the time freedom that I have. I worked hard to be independently-employed. The money I earn is nice but it’s simply a means to an end. The structure of this kind of work affords me the opportunity to define how I spend my time. Recently, I’ve been reading a book about abundance that allows me to take this to the next level.

What is Time Freedom?

Time freedom is really a very simple concept. It’s the ability to define how, where, and with whom you would like to spend your time. It is the cornerstone of why I love working freelance instead of 9-5.

Time freedom doesn’t mean that I don’t work. It means that I do work that I enjoy. More importantly, I’m able to adapt my work to a schedule that allows me to maximize my time. I’m able to do all of the things that I want to do in a day including my work.

The Fear of Scarcity Reduces Time Freedom

One of the traps that I’ve fallen into over the years is that of reducing my own time because of scarcity fears. I worry that I’m not going to make enough money. Therefore I devote more hours to work than is healthy. If I’m passionate about a project and really involved in it, then that’s different. However, if I’m driving myself to the brink of exhaustion because I want to earn more money, then I’m eating away into my own time freedom.

Embracing Abundance

Recently I’ve been reading The Abundance Project by Derek Rydall. The gist of his belief system is that we all have exactly what we need within us. In order to experience abundance, we merely need to recognize this fact.

Of course, he goes into a multi-step approach to practically realizing abundance. The main point, however, is that changing your perception from one of scarcity to one of abundance makes all of the difference in your life.

This makes perfect sense when it comes to time freedom. When I am in a scarcity mindset, afraid not to earn enough, I overwork. I don’t give myself the balance that I need. On the other hand, when I am in an abundance mindset, I balance everything better. I still give time to work. However, I use my time freedom to make sure to enjoy my other priorities as well.

Giving Time to What Really Matters

Abundance means so much more than just having more-than-enough money. In fact, to embrace an abundant lifestyle means digging deeper into core values. Money helps, and certainly aiming for an abundance of money is fine. However, when you look at what you really value, you realize that you need much more than money. Some of the things I personally value include:

  • Long walks with my dog
  • In-person chats with my friends
  • Attending performance art and other events in my city
  • Connecting regularly with my siblings
  • Spending time each day reading and writing
  • Creating art of various kinds

These are just a few of the things I want to focus on. Earning money isn’t on the list, though it’s necessary. In order to have these things, what I really need is time freedom. When I recognize how important it is to give my time to those things, I loosen up on a work focus. As a result, I more thoroughly enjoy each day of my life.

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Financial Freedom: Step-By-Step Stages for Goal Setting

financial freedom

I definitely dream of financial freedom. I would love to just have so much money that I don’t have to think about money ever again. Of course, that’s not going to be realistic for most of us. However, we can start small and then go step-by-step to increase how close we can get to financial freedom. A recent Forbes article laid out the 8 levels of financial freedom, which provide a good guide for setting personal finance goals.

Start By Earning More Than You Need

If you’re living paycheck to paycheck then the first step is to get out of that rut. Cut back drastically on spending. Do all that you can to increase income. If you can’t save money then you definitely can’t ever reach financial freedom.

Save Enough Money to Take a Work Break

Most people want financial freedom because they don’t want to work so much. When you’re in that paycheck-to-paycheck phase, it feels like you’ll never be able to stop working. Therefore, the next step is try to save enough money to give yourself a small taste of that life.

For example, create a savings account that will allow you to take a sabbatical from work. Even if you decide not to take it, having the money in that account will make you immediately feel like you have so much more financial freedom. Personally, I love my work, but when I feel like I have to do it just to get by then I start to resent it. That savings helps a lot.

Work Towards Small Luxuries and Extra Savings

Once you have enough in savings that you feel like you can breathe, it’s time to start thinking about your daily life. Financial freedom means that you’re able to buy the things that you want. Of course, I don’t think it’s useful to just splurge on a lot of unnecessary spending. However, I do think it’s good to recognize what small little luxuries will make your daily life better. The goal at this stage is to balance your income and spending so that you get to enjoy those luxuries regularly while still setting aside savings from every paycheck.

Financial Freedom: Money or Time

The Forbes article says that “freedom of time” is the next level. I actually think this is super important. I consider it to be one of the first steps, prioritizing it over a work sabbatical or those small luxuries. However, everyone has different needs and desires when it comes to financial freedom. For me, freedom of time means that even though I work a lot, I’m able to do so on my schedule. I’m also able to be location-independent. Those things make me feel like I have the freedom that I want.

Plan for Retirement

Once you are living comfortably, it’s definitely time to think about setting aside money for retirement. After all, that’s when you’re really going to need financial freedom. Forbes breaks this down into two levels. First, save enough for a decent basic retirement. Then, once you’ve achieved that, start saving for the type of retirement that you really want to have.

Of course, life happens, and we can’t always work through these steps in a linear fashion. Nevertheless, they provide a great guideline for some basic goal setting with financial freedom in mind.

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