Find More Money to Invest in Your 401(k) With a DIY Sequester

• Cut back on credit card spending. Pretend you are Superman and your credit cards are kryptonite. Millions of people carry high credit card balances, and this is a real budget buster. Instead of contributing to their 401(k) plans, they're making payments on cards that include compounding interest. "Compounding interest is the eighth wonder of the world," said Albert Einstein. "He who understands it, earns it, and he who doesn't, pays it."

If you are running a $10,000 balance on a credit card, with compounding, your annual interest payments could be as high as 25 percent of the balance. Over time, this amounts to financial indentured servitude. Instead, gain your freedom by budgeting, using spending discipline to pay off your card and get out from under those payments. If you refinance your home and use the gains to pay off your cards, you've delayed true, mortgage-free home ownership for the trifles you see listed on your credit card charges every month.

Unfortunately, many people have done this. While such spending is good for the nation's economy, it's not good for your personal economy. One way to end the syndrome of credit card spending is to force yourself to realize that this spending is real. Because the money for credit card transactions doesn't immediately come out of your checking account, you might not think it's real spending. But when you see your balance mounting and compounding, it gets real — real fast.

Learning to spend less involves the discipline to do, or not do, two things: • Stop spending on non-essential items.

• Or, if you must, spend less on the items in question. Instead of a $12 bottle of wine, is there a $9 wine you like, or might like, just as much? Often, there might be.

To paraphrase Warren Buffett's classic statement on investing, cutting spending is like dieting: easy to understand but hard to execute. The key is that you learn to budget now so you can budget later — during retirement, where controlled spending will be critical.

This is the route to a dignified retirement. This road starts now – with every dime you spend.

Anthony Kippins is president of Retirement Plan Advisors, Ltd. a Registered Investment Advisory firm that addresses the needs of retirement plans and the employees who invest in them. An Accredited Investment Fiduciary Analyst (AIFA®) with more than 30 years of experience domestically and abroad, Kippins specializes in providing fiduciary advice to retirement plans on governance, investments and educational services. He also advises individual clients on retirement planning and investment management after retirement. He can be reached at If you have a question for Kippins about 401(k) plans, please send email it and he will try to answer it in an upcoming column.

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