Expert Interview with Terry Savage About Financial Health

Financial healthTerry Savage of understands that many individuals worry about money, but knows that with knowledge comes the power to stay ahead of the game.

In this interview, Savage offers several tips readers can use to achieve financial stability, pay off debt, and build a robust savings.

Financial matters are something almost everyone worries about. What do you think is a key element to removing this worry?

There are two key elements in removing worry about money, and they work together. The first is knowledge. You don't have to become an expert in money management, but you do need to know the basics. That's pretty easy these days with all the financial resources on the Internet. But the second key element comes from within: self-discipline! All the knowledge in the world won't help you become financially secure if you don't make a plan and have the self-discipline to stick to it. That's true whether the plan involves paying down credit card debt while not charging another penny, or making a regular monthly contribution to your 40l(k) plan or IRA. It takes self-discipline to conquer those two emotions that play havoc with good financial planning: fear and greed. Either emotion can derail your plan if you don't have self-discipline.

What is your approach to finances?

My basic approach is one step at a time. And the very first step is organization. You need to know what you owe and what you own. And you need to make a plan for ALL the money that passes through your hands (or your checkbook). So start with something basic like Quicken to not only handle your bills, but categorize your spending and create budget categories. Once you're organized, you can set a goal: pay down debt, set aside money for retirement or college or save for a down payment on a home. And you can set up automatic systems that help you to reach your goals - thereby withstanding the temptation to get derailed.

What trends do you see happening over the next year regarding the markets and economy?

While it's important to take a look at the economy around us, it's also important to think LONG TERM. There are lots of ups and downs in the markets in the short run. But over the long run, the stock market has had an average annual return of nearly 10 percent going back over the last 75 years! So short-term thinking isn't much help if you're saving/investing for the long run.

Is there a question people come to you with the most? If so, what would that question be?

That depends on the generation. Young people want to know how they can pay down student loans and at the same time start saving for the future. The answer is to expand your earnings! That doesn't mean asking the boss for a raise. But it might mean taking a menial weekend or evening job to earn extra money to pay down debt, because that saves you a fortune in interest. Or it might mean living at home with parents, paying only modest rent in order to save on expenses.

Then, as people get into their 30s and 40s, the questions become how to save for college (529 plans) and how to jumpstart retirement savings (time is money; start early).

As retirement approaches, people want to know "how much" they need. And then there's an even greater question: how much can you withdraw and make your money last throughout your lifetime? (That's the basis for my book, The Savage Number.) There will always be money questions, and the important thing is that you ask them, get some information and take action - instead of burying your head in the sand and hoping the problem will "go away."

What approach do you take to paying off debt and saving for retirement simultaneously?

The secret is to set up an automatic plan - and to earn more! We can all spend as much money as we make. But just as FICA is taken out of your paycheck before you see it and spend it, so should automatic debt payments and retirement plan contributions come out automatically before you see it and spend them!

Explain what you cover in your books and how they benefit readers.

In my books, The Savage Truth on Money and The Savage Number (and in previous books now long out of date), my goal has been to take you by the hand and lead you past temptation and ignorance into financial security. I'm proud to say that those Savage Truths have remained unchanged over the years, and I have practiced them myself. And they work!

What advice can you offer for those who have already retired or are nearing retirement age who may be concerned about finances?

First, get help - free help - from places like T. Rowe Price, Fidelity, and Vanguard to help you roll over your retirement savings into a sensible mix of investments, and create a retirement withdrawal plan using "Monte Carlo" analysis, which is something you can't do on your own. Delay taking Social Security as long as possible (in most cases), and for sure don't take it before full retirement age. (Use a great calculator at to see the difference that can make.) And if you can, keep working part time in retirement as long as possible. The longer you let your tax-deferred money grow, the better chance you have of making your money last as long as you do. Oh, and one more thing: buy a small long-term care insurance policy. The cost of custodial care (not covered by Medicare) is the greatest threat to your retirement security.

What financial advice would you offer to an individual fresh out of college and working a first job?

It's not a pep talk, it's the Savage Truth: America has created more wealth and opportunity than any other country in history. Don't be discouraged by any newspaper headlines of today. You CAN make your life a financial success and enjoy personal happiness. Just be persistent, work hard, and be open to interesting choices that come your way.

Please share anything else you would like readers to know about your site and services.

At, you can read my twice-weekly columns, post questions on AskTerry and see responses to all questions in various categories, and get some of my favorite websites and calculators. I don't endorse any products or services, nor do I charge any fees or have individual clients. If I say I really like something - a product or website - I really mean it, and odds are I'm using it myself or recommending it to family and friends. You get The Savage Truth!

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