Football 🏈 withdrawal is real...and so is the red zone
In this issue, we’ll address the retirement red zone and the schemes created by Buy Now Pay Later (BNPL) companies.
The Wealth Minute
The Retirement RED ZONE
My NFL withdrawal is official, so pardon the football reference this week.
Many of the individuals and couples I work with for retirement planning have no idea of the retirement red zone.
They simply wake up one morning and decide that it's time to start retirement planning.
Fortunately for them (and you), I am very familiar with the retirement red zone and spend a great deal of time running scenarios to help make the five years before retirement and the first five years of retirement financially secure for my clients.
It is critical to not only understand the three phases of retirement (accumulation, preservation & distribution), but to prepare for them.
Mishandling any one of these can lead to costly mishandles in the red zone.
Taxes, sequence of returns risk and interest rate risk are all factors that warrant significant discussion and planning.
The window to create a successful retirement plan that effectively tracks all of these elements gets smaller as the retirement red zone approaches.
Wealth Move
Watch this 3 minute video by my partner to learn more about the red zone.
Schedule a Financial Forecast appointment so we can determine what your red zone currently looks like.
The client below was unpleasantly surprised to see that she is not ready. On her current track, she will literally have zero money in year six of retirement.
Knowledge is power and this appointment will empower you to be well-prepared for retirement, whenever you’re ready to transition.
The Freedom Path
Buy Now Pay Later (BNPL) Poised To Make More
Here's a news flash for you...
Buy Now Pay Later Is Actually DEBT!
Like it or not, it's true.
A recent article showed that those who have a cash flow gap are 3.5 times more likely to use BNPL plans.
And these companies are ready to swoop in and "assist."
But please don't be naive enough to think that they are really assisting. The question you should be asking is "what's in it for them?"
The cycle of constant buying and paying is hard to break, once started and that's when these companies start to make money. And billions are what they are making on...
Late fees
Transaction fees
Merchant fees
All have double digit percentages when you look behind the curtain. They are waiting patiently to collect their tolls.
Check out this article which gives shocking details of how it all works.
So what do you do if you are already in a BNPL plan?
I'm glad you asked...
Wealth Move
Here are three next moves to make to break free of BNPL plans.
Stop using them. It sounds elementary, but it's not. Make the decision to only buy what you can pay for with cash that is currently in hand. The lie we tell ourselves is that we can "afford" the payment. But inevitably, expenses are not included in the calculation (or pop up unexpectantly) and the cash flow pinch gets even tighter. Help yourself by not making it any worse.
Put them at the top of the debt repayment list. Many are tempted to not pay these off quickly because they believe there is no interest. But the truth is the penalties and fees are worse than the interest. These companies are like legal loan sharks. Once you get hooked in, it's painful and costly to get out. So get out of them as fast as possible.
Sacrifice to pay extra until they are gone. There is no magic solution here unfortunately. As with all debt, paying it is the only way out. A rose by any other name is still a rose and debt by any other name is still debt. Make the payments as quickly as possible and get out.
My Debt Freedom Blueprint can assist. Download a copy today and add your BNPL debts to the top of the list.
Book of The Month
The February 2025 book of the month is "Take Your Seat at the Table" by Anthony ONeal.
So many nuggets in this one. Read it with a notebook handy.
Coffee Chat Question
If we were to meet for coffee, what would you want to know?
Feel free to email me questions that will anonymously be added to this section during each edition.
“Should I pause my 401(k) contribution to get out of debt?”
I remember struggling with this question myself...both as a single person and also once Keith and I got married and began paying off our debt.
The key element that many miss is that getting out of debt IS building wealth.
So if you choose to pause your retirement contribution (we chose to pause both of ours for about three years), you aren't "losing" opportunity.
Instead, think of it as redirecting your income to gaining interest through debt repayment.
Remember that it is not a permanent end to investing, just a temporary pause.
And I do not recommend removing any money from retirement. Unplugging the investment is definitely not a wealth move.
I hope that helps.
