#185 - Don’t Be Like Wimpy! How Spending Can Ruin Your Retirement

In the news today, credit card debt has reached over 1 Trillion dollars. In addition, we have 1.2 Trillion dollars in auto debt, 13% above the previous record. Impulse shopping is easier than ever, and this can be bad news for your retirement! On this episode of The Retirement Answer Man Podcast, I talk about spending and some safeguards you can put in place so that you don’t overspend on things you don’t need and may not even really want. Listen in and learn to differentiate between needs and wants, and get some great tips to help you avoid unnecessary impulse spending.

You don’t want to be one of those people who are over-leveraged on their debt

As you are heading into your retirement, you don’t want to get over your head into debt because of personal spending. Lifestyle choices are crucial. In retirement, how much money is needed for your needs, wants, and wishes? On this episode, I describe how you can avoid unnecessary debt and save that money for the things that really matter to you. The happiest clients I have seen are those who value experiences over things. Listen to today’s podcast and start thinking clearly about what you value most and how your spending reflects it.

To prevent overspending, differentiate between needs and wants

We have grown into a society where things that technically are wants are considered needs. On this episode, I talk about defining for yourself what is a need and what is a want. Keeping this distinction clear can help a great deal with reducing unnecessary spending and credit card debt. Listen in to start thinking about needs and wants and how they affect your spending and your retirement lifestyle.

To prevent overspending, build friction into your ability to do transactions

Shopping used to be more difficult. You had to plan out how to get what you wanted, get in the car, drive to a store, find what you wanted, and write a check for it. Now, all you have to do is click and you can have it in an hour. Marketers are experts at taking away the friction and making impulse purchases seem normal. On this episode, I suggest several ways that you can build friction back into your shopping so that you have more opportunities to make wise spending decisions as you approach your retirement. Listen in and take back control of your spending.

The Retirement Answer Man Responds to Listener Questions

Today in the Practical Planning Segment, I respond to questions sent in by listeners like you: Should I pay off my mortgage first, or max out my 401K first? What are the pros and cons of rolling over a 401K to an IRA upon retirement? Should I include my home equity in the asset pool for tapping living expenses in retirement? On this episode, I clarify the considerations that need to be taken into account when making these decisions for your retirement. Listen to today’s questions and answers and then feel free to send in a question of your own.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

• [0:40] Shopping used to be more difficult.
• [3:22] Don’t take financial advice from me on this show. Consider it as helpful tips and education.
• [3:50] The 5-minute retirement makeover

HOT TOPIC SEGMENT

• [4:48] In the news today, credit card debt has reached over 1 Trillion dollars.
• [6:43] You don’t want to be one of those people who are over-leveraged on their debt.
• [7:44] To prevent overspending, differentiate between needs and wants.
• [9:06] Build friction in your ability to do transactions. Here’s how.
• [12:22] Value experiences, not things.

PRACTICAL PLANNING SEGMENT

• [13:35] Answering listener’s questions today.
• [14:20] Current plan is to hit the mortgage hard and pay it off in two years, then transfer that effort into maxing out that 401K. Is that the right thing? 
  [19:46] What are the pros and cons of rolling over a 401K to an IRA upon retirement, vs keeping it in the 401K?
• [29:46] Should I include home equity in the asset pool for tapping living expenses in retirement?

TODAY’S SMART SPRINT SEGMENT

• [37:05] 7-day challenge: Come up with one way you can increase some friction in your life of commerce.

THE HAPPY LAB SEGMENT

• [37:55] Listening to the audio book Steve Jobs, by Walter Isaacson. Commencement story. “Remembering that I’ll be dead soon.” We’re all going to leave this world. Be as intentional as possible on how we live our life, invest our assets, and make little decisions. We don’t want to wake up and say we didn’t follow our heart because we were living for other people’s expectations.

RESOURCES MENTIONED IN THIS EPISODE

TheStreet.com

Book: Steve Jobs, Walter Isaacson

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