Two Long-Term Bucket Vehicles to Start With

There are two types of vehicles that you should be able to use right away to fill your Long-Term Bucket.

1) An Automatic 401K, 403B, or IRA account.
2) Your Mortgage Payment.

First, the 401K or 403B account – if available to you – are the best way to get started with your Long-Term Bucket. Begin immediately putting 3% of your income into this account each payday. It’ll come out of your pay without you ever seeing it – or noticing it. See my article on “Easy as 3, 4, 5…” to learn how this is possible. You get to count this payroll deduction as your contribution to your Long-Term Bucket.

If you don’t have access to a 401K or 403B account through work, then setting up an IRA account on your own is the alternative – but it’s more painful because it has to be funded with after-payroll-tax dollars. You will get your paycheck and have to take some of the money and put it into this account, and those months where you’re wondering how to pay for groceries, you’ll be very tempted to skip this contribution, and the skip it the next month, and the next month…

On the flip side of things, I run in to many people – especially men – who max out their 401K contribution each month – 10% – 15% – and then they run up their credit card debt because they don’t leave themselves enough to live on. If you are NOT able to fund your Short-Term and Mid-Range Buckets each month with an equivalent amount to what you are putting into your 401K account, you need to cut back on this contribution and use the extra take home pay to pay bills and fill these other buckets.

Balance, Baby, Balance…

For number 2 above – Your Mortgage Payment. If you have bought a home – good for you. This is the number one wealth builder of all time. If you look at your mortgage statement, you’ll notice that most of your payment each month is going towards interest, and a small portion is actually going towards paying down the debt.

This “small portion” that is paying down the debt is actually a Long-Term Bucket contribution, and you get to count it as that. So there you have it. Two absolutely painless ways for you to begin filling up that Long-Term Bucket, even when you’re just starting out.

But stay in balance. Don’t go overboard on the 401K if you can’t pay your other bills. And don’t pay “extra” towards your mortgage if you’re not filling the Short-Term and Mid-Range Buckets yet.

Ahh… but once you start getting an equal amount going in to the Short and Mid, paying extra towards the mortgage or increasing the 401K amount is a quick and easy way to increase the Long-Term filling. And eventually, you’ll be using that brokerage idea and buying stocks – but more than likely, you’re a ways away from that. And that is fine.

Stay in balance. Stay even and steady. And use increases in “extra money” wisely. And you’ll be fine – regardless of where you are right now.

Related Articles:

• Should You Pay Off Your Mortgage Early?
• The Long-Term Bucket
• Your Short-Term Bucket
• How Do You Fill the 3 Buckets?
• The Future is NOW! A further explanation of Your 3 Financial Buckets