By sitting down with their finances in recent years, Ann and Ralph have been able to get a handle on their spending and increase their savings. Not having large debts. Credit card debt, especially, can hurt your retirement planning. Paying off such debt can be a sound initial investment. After all, if a card has an 18 percent interest rate, you'd have to find another investment guaranteeing returns of 19 percent or more to beat it.
Money can be a huge cause of stress between partners.
Ann and Ralph's only danger, says Thomas, is that they started late. Because their savings won't have much time to grow, the Bakers will have to make up for time with cash. Put savings before the mortgage. The Bakers had planned to pay off their mortgage in 15 years instead of 30, but that money could be better used elsewhere. The value of the house will rise regardless of how much of the mortgage has been paid, but a savings plan earns interest only on money deposited.