Question- I have credit-card debt and my company doesn't have a retirement plan. What should I do?
Question: I have credit-card debt of $5,500, but I’m working to pay it off, and I’m not adding to it. I have about $2,000 in savings. My company doesn’t have a retirement plan. What should I do?
Ric: First, establish an IRA. Second, look for a job with an employer that does offer a retirement plan.
Most people pay attention only to their salary, but non-cash compensation comprises about 40% of total pay. If you don’t receive paid time off, health insurance and employer contributions to a retirement plan, you’re earning far less than you realize. It’s worth looking for a better paying job — even if the “better pay” is only in the form of benefits.
Does it seem strange that I emphasize retirement savings ahead of paying off debt or building cash reserves? Here’s why: You’ll probably always have debt of some kind (if only due to mortgages and auto loans). If you delay saving for retirement until after you become debt-free, you’ll never start to save for retirement. That dilemma must be avoided. It is vital that you start saving for your retirement and that you do so immediately.
After you open an IRA account, use all excess cash to pay down those credit cards. After the credit cards are gone, please call me and I’ll tell you the next step. It’s really one step at a time, and you must take them in the right order.