Your forties tend to be very difficult years, filled with large expense “spikes” as the kids grow into teenagers, and prepare for college. Expense spikes tend to unfortunately be funded with credit cards and lines of credit tied to houses. Balances are often not paid off, to make room for the additional payments that this borrowing pattern creates.
Cautions
- Buy a smaller house to reduce not only your mortgage, but utilities and the cost of maintaining the home. Keep your real estate budget to not more than 3 times your annual salary.
- Use salary increases for savings. Last year you made it, if you got a 3% raise, bank it, invest it, continue to live at last years standard of living because there’s going to be a lot of unexpected expenses demanding attention from that savings pot you have been building.
- Insurance is critical, make sure you have enough insurance to cover the holes in the financial bucket caused by unexpected illness, and death in the family.