THE BLOG
07/10/2014 04:34 pm ET Updated Sep 09, 2014

The One Dumb Mistake That Is Destroying Your Retirement

Student loan debt is in the trillions of dollars! When will it stop growing? When will it get paid off? The truth is it may or may not get paid off any time soon. If you've taken out private student loans for your kids to pay for their college education, you may want to ask yourself, "Why did I do that?" While it's commendable that you want to help your kids pay for their college education, it's not your job to go into debt for them. Stop co-signing and taking out student loans for your kids!

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Let's face it; we've all been raised in the current consumer/debt society. However, you don't have to follow the crowd. You have a choice. You can say "No" to your kids when they ask you to apply for or co-sign student loans.

It doesn't make sense for you to go into debt or potentially ruin your credit. Remember, student loans have to be paid back. Payments can stretch for 15 or 30 years -- interest continues to increase. If your kids don't pay back loans or worse, they defer them, you will be the one responsible to pay for them back. How does this help you and your kids? It only makes the student loan debt situation worse. And it teaches your kids nothing about financial responsibility.

Student loan debt is a huge crisis! Instead of going into debt for your kids, why don't your save for your retirement?

You don't have to contribute to the growing student loan debt. You don't have to buy into "entitlement" -- that your kids are entitled to having you pay for college. All it takes is discipline and the courage to say "No" to your kids, and you can easily save for your retirement.

How to Save for Retirement

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1. Decide to save for retirement. While it may be tough to tell your kids that you will not co-sign for federal or private student loans, it will empower all of you. Think about this. If you don't have funds to live on after you retire, your kids may have to support you. Is that what you want? Is that what they want? Calculate what you need to save for retirement and create a retirement plan, i.e., cut back on expenses, and start saving.

2. Open a retirement savings account. Contact or visit your local bank and inquire about their savings accounts. Find the right product for you, open an account and deposit a set amount each month. Or, split your paycheck and have a portion direct deposited into your retirement savings account.

3. Increase your 401(k) contribution. If you're fortunate enough to have an employer that offers a 401(k) plan, sign up for it. If you already participate, consider increasing your monthly contribution so that you qualify for the match. You may want to do this for six months to one year; then reevaluate your 401(k) and decrease your contribution, if you must.

4. Open a CD (certificates of deposit). CDs offer a higher interest rate than most savings accounts -- they're a great way to save for retirement. However, if you close out a CD before its maturity date, you may have to pay a penalty fee. Do this, and you'll defeat the purpose of saving for retirement.

5. Buy stocks. Take a look around your home and notice the products you buy. Most likely, you purchase items from companies that are traded on the NYSE (New York Stock Exchange) or NASDAQ (National Association of Securities Dealers Automated Quotations). Choose three to five stocks and follow them. She how much they trade for and watch if their prices go up or down. Also, pay attention to trends within industries. Consider speaking with a qualified financial advisor who can offer you guidance, and help you choose the right stocks for your retirement savings portfolio.

Save for Retirement! Don't Go Into Student Loan Debt

Start saving for retirement today! While your kids may not like the fact that you won't co-sign for a student loan or even give them money toward college, it may be the right decision for you. Consider also that the funds you save could be used for a medical emergency. While you may not want to dip into your retirement savings, the funds will be available in the event your family needs the money.

To combat student loan debt, your kids may consider attending a junior or community college for the first two years. Why? Because most colleges have arrangements to accept credits from these schools. Plus, two-year college programs are less expensive than four-year programs. Even better. Some high schools have partnerships with community colleges. If your kids enroll in college classes, they can graduate with a high school diploma and an Associate's Degree. They'll be one step ahead of their classmates.They can even use their Associate's Degree to land a great paying job.

Before you co-sign a federal or private student loan application, consider your future as well as your kids. Taking on more debt, even if you can afford to pay for college expenses, may not be the right decision. It may be better to teach your kids the value of paying their own way. Plus, grants and scholarships are available. All your kids have to do is research and apply for them. They could potentially pay for half or all of the cost of college. Now that's a good investment!

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