Vivian Tu breaks down her STRIP method for fixing your finances: build an emergency fund first, pay down debt starting with the highest interest rates, and start retirement savings early. Over a quarter of people 59 and older have zero retirement savings.
What about if you have a sick financial health and you're just, you're not sure where your money's at, you're not sure where you're spending your money, you're not sure how much debt you have. You're, you know, buying three lattes a day or whatever it is, and you're just like, huh, I really don't have an emergency fund. I really don't have much savings, I don't have any investments, and I'm in debt. How can they get back to a healthy place? What are practical steps they can do?
Yeah, this is my you're rich BFF strip method.
Ooh, strip it up.
If you want to be good with money, you got to strip.
Strip.
So S stands for savings. It's so important to get that emergency fund first. You break your leg, some bad happens to you, you, you're going to need it.
Yeah.
And if you don't have it, you're going to get worse into debt.
Start with emergency fund.
Emergency fund. T stands for total debt. And I say total debt because people think about debt as this evil thing. Not all debt is created equal. And debt with higher interest rates, things like credit card debt, when you're looking at a 22 to 25% interest rate, is a lot dicier than something like federal student loan debt. You might have like a 3% interest rate on that. Like, those two do not compound at the same rate. It's just math. So what you do is you rank your debt from highest to lowest interest rate and you pay it down in that order. You pay off the minimum balance of every single account on the higher one first. So you pay off the minimum balance on everything.
Okay, gotcha.
But any money you have left over to pay down debt, you put towards the highest interest rate.
The highest first.
Yes. R stands for retirement. I know. You know, especially my audience. So many people are young and they're.
Like, they're not thinking about retirement.
It's 40 years away. It's 30 years away.
It's like millennial Gen Z.
It will be here before you know it. And again, now I do know where this study come from. Credit Karma did a survey and over a quarter of people over the age of 59 have not a dollar saved for a time.
Come on.
Not a dollar over 59.
25% don't have anything to say.
27% is the actual percent.
Wow.
Not a dollar. I. Moving on from retirement is the part that everybody misses. Everybody puts their cash into those retirement accounts, into their brokerage accounts, and they're like, doing a great job. I'm done. That's it. But I. No, no, no. Investing is not putting cash into those accounts. It's actually buying stuff with that money. And people forget to do this all the time. NP Stands for my favorite part. You got a plan? You do not get to have your happily ever after. You don't get to ride off into the sunset if you don't have a plan.
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