Retire a Millionaire

Steps

1 Manage your income1 Manage your income

2 Manage your spending2 Manage your spending

3 Start an emergency fund3 Start an emergency fund

4 Pay down debt4 Pay down debt

5 Invest5 Invest

Manage your income

Ensure you are paid the correct amount Ensure you are paid the correct amount each month.each month.

Ensure monthly deductions are going where Ensure monthly deductions are going where they are supposed to.they are supposed to.

Manage your spending

BudgetBudget

Stick to the budgetStick to the budget

Avoid the “Latte Factor”Avoid the “Latte Factor”

The “Latte Factor”

Coffee in the morning $2.00Coffee in the morning $2.00

Soda from the vending machine $1.00Soda from the vending machine $1.00

Chicken and Cheese Special $6.00Chicken and Cheese Special $6.00

The “Latte Factor”$2.00$2.00

$1.00$1.00

+$6.00+$6.00

$9.00 a day$9.00 a day

5 days a week5 days a week

$45.00 a week$45.00 a week

45 weeks a year45 weeks a year

$2025 a year$2025 a year

Start an emergency fund

Should be in “liquid” accountShould be in “liquid” account

Equal to 3 months payEqual to 3 months pay

Uses include unexpected car repairs, Uses include unexpected car repairs, emergency leave travelemergency leave travel

Pay down debt

Pay off high interest accounts firstPay off high interest accounts first

Credit Cards 10% - 25%Credit Cards 10% - 25%

Car loansCar loans 5% - 10% 5% - 10%

Student loansStudent loans 5% - 10% 5% - 10%

Credit Cards

Call company and ask for lower APRCall company and ask for lower APR

Avoid fees from late or missed paymentsAvoid fees from late or missed payments

Your credit report

www.equifax.comwww.equifax.com

About $20About $20

Verify all information on credit report is Verify all information on credit report is accurate and correct. If an error is found accurate and correct. If an error is found write a letter to Equifax and have them fix write a letter to Equifax and have them fix the mistake. the mistake.

InvestTax advantage account

TSP (Thrift Savings Plan)TSP (Thrift Savings Plan)

IRA (Individual Retirement Account)IRA (Individual Retirement Account)

-Traditional-Traditional

-ROTH-ROTH

401k (Civilian equivalent to TSP)401k (Civilian equivalent to TSP)

Traditional IRA

Investment is tax free. Income tax is paid Investment is tax free. Income tax is paid upon withdrawal, starting at age 59.5upon withdrawal, starting at age 59.5

Must start withdrawing at age 72Must start withdrawing at age 72

ROTH IRA

Investment is taxable. Withdrawal starting Investment is taxable. Withdrawal starting at age 59.5 is tax free.at age 59.5 is tax free.

Withdrawals are not mandatory at any age.Withdrawals are not mandatory at any age.

Can be willed to your heirs. Can be willed to your heirs.

IRA’s

Maximum contribution is currently $3000 Maximum contribution is currently $3000 per year. per year.

Can invest up to April 15Can invest up to April 15thth for the year for the year prior.prior.

In 2004 max contribution is $3000In 2004 max contribution is $3000 In 2005 max contribution increases to In 2005 max contribution increases to

$4000$4000

Example

On March 30On March 30thth 2004 you can invest $3000 2004 you can invest $3000 for FY 2003 and $3000 for FY 2004.for FY 2003 and $3000 for FY 2004.

Invest

Start earlyStart early

Stay disciplinedStay disciplined

Low risk investments

Savings account, Money Market account Savings account, Money Market account 0.5% - 1.5%0.5% - 1.5%

CD (certificate of deposit) 1.0% - 3.5%CD (certificate of deposit) 1.0% - 3.5%

Treasury Bills (Savings Bonds) Treasury Bills (Savings Bonds) – Rate changes every 6 monthsRate changes every 6 months– Federal Reserve sets rateFederal Reserve sets rate– Currently 2.61% for series EE bondsCurrently 2.61% for series EE bonds

2.19% for series I 2.19% for series I bonds bonds

Medium risk investments

Mutual FundsMutual Funds• Sector FundsSector Funds

Corporate BondsCorporate Bonds

Municipal BondsMunicipal Bonds

Commodities Commodities

High risk investments

StocksStocks

IPO’sIPO’s

OptionsOptions

You control your financial destiny