The new withholding charts are being released, and 90% of W-2 wage earners should realize an increase in their take-home pay. That’s great! “Let’s go shopping!”

Hold on a second. Is that what you think you should do? This is precisely what the advocates of the tax cut want you to do. Their reason is that consumer spending drives the economy. They want you to spend that money; and more, they want you to also increase your use of consumer credit to do so! If you do that, you will help the American economy to grow; and by doing so, the deficit as presently projected will only grow another $1.4 trillion in ten years. But wait, we are talking about the American economy and its deficit. Shocking as this may sound, this is not your responsibility. Your responsibility is your economy, your growth in savings, and your elimination of any growth in your debt (i.e. your deficit).

So, what should you do with the extra cash? If you don’t have any debt, you should save it. If you do have debt, use the money to eliminate the debt (assuming you only have a small amount), and then begin to save the money. Your goal – for you and your family – is to make sure that when it comes time to retire you have adequate financial reserves to live. Many articles focus on how much money you will need in retirement so that you can live as you did while working. This is nice, but it’s not the core issue.

The first goal is to make sure you will be able to live without dependency upon your children or the government. Such an outcome is challenging, given that, as reported in the Washington Examiner on May 19, 2017, 44% of Americans cannot presently come up with $400 to pay for an emergency. While challenging, it can be achieved if you adhere to what I’ve called my:

“Three Point Retirement Plan (for the Everyday Joe and Jane)”

  1.  Own your home free and clear.
  2. Have zero debt.
    and
  3. Have some savings.

If you achieve these three core points, with social security income, you will have sufficient reserves to provide shelter, food, and transportation for yourself, along with reserves for grandchildren gifts and modest vacations. Getting there, however, is not a slam dunk.

A report this week in Housing Wire indicates that for all students who entered college in 2004, 40% of them could default on their student loans by 2023. The article indicates that the student debt problem appears greater than has been estimated and that it is the dominant reason that home ownership is denied to millennials. Such obstacles require you to prioritize your actions so that you align yourself to achieve the goal. Step one requires analysis. If you have too much debt, it’s wiser to eliminate it through “special means” rather than take the “extra cash” and pay it off. The reason is simple: The faster the debt is gone, the quicker you can obtain the home or pay it off and the faster you can begin to save. “Special means” is using the bankruptcy laws and our solutions to eliminate debt outside of bankruptcy to eliminate the debt rather than paying it off. It’s about making it “go away” so your future earnings go in the bank. It’s not magic, but it does require proper planning to take into account all the factors – including your need for credit, tax consequences – and more. Once analyzed, the optimal strategy to attain your goal is identified and then you implement it – and it works. Sound easy? You’d be surprised to learn it is easier than you think and it’s far smarter than you could ever imagine.

Interested? Your next step is to attend our FREE seminar this coming Wednesday, January 17th: The Debt Fix is in For this Year. Information to sign up is below. Trust me, the solution to your future is not to spend, spend, spend. That’s the outcome desired by those who crafted the tax bill. Guess what? They don’t know you and they don’t care about you!

Enjoy the weekend,

Ken