Debt is something which plagues almost everyone. Even those who have just started with their college education may have already been saddled with debt and they have yet to find a job to pay back their college loans. When veterans, those who served in the World War II, retired, they generally didn’t have debts to worry about since austerity was in the air and saving was the trend. Things have changed drastically since then though. People approaching retirement age are not only worried about not having enough saved up but, moreover, they’re struggling with debt.
Why do people enter retirement with debt?
If a person was given a chance between having debt and being completely debt-free upon entering retirement, then the choice would always be the latter. It’s not like individuals want to retire with a huge debt that’s weighing them down, but sometimes there’s simply no choice. When you live pay check to pay check, you may have to take a second mortgage on your house or rely on car loans in order to send your kid through college or replace a rundown vehicle. While retirement is always at the back of a working person’s mind, something which occurs in the distant future will always bow down to the present demands such as the kids’ education, and day-to-day expenses. If you fail to settle these debts before you retire, you’re merely pushing the boat. However, you’ll have to still face your financial obligations even after you retire.
How can you lift yourself up from debt?
If you want to put a stop to your acquisition of new debt and pay off your existing ones before the twilight years of your life come, below are five simple steps to doing just that:
Step No. 1 – Create a strategy.
You need to have a plan if you want to get rid of all your debts. What are your goals? Do you want to simply pay off your debts, sell of your home and then live off somewhere remote for the remainder of your lives? Or do you want to stay in your current home and aspire to save enough money to sustain you throughout your retirement years? Knowing exactly what you want in the long-term will allow you to come up with a better plan.
Step No. 2 – Know the numbers.
Make an inventory of all the debts you have accrued. And then get rid of the debt with the highest interest first. Of course, this will mean making payments double or triple that of which you usually make. However, if you really want to make a dent on your debts, financial tips from careers with Nick Scali include being prepared to make sacrifices.
Step No. 3 – Save your pennies.
In order for you to eliminate your debt, you need to make aggressive payments. To do the latter, you need to start pinching your pennies. Live frugally. Look for coupons which can slash your grocery bills. Get rid of your cable subscription or your NetFlix subscription. Cancel your gym membership if it’s not that important to you anyway The point is to make cuts.
Step No. 4 – Commit
You need to be committed if you want to achieve your goals. Commitment means letting go of all wasteful spending all for the hope that you’ll be able to retire in relative comfort in the future.
Step No. 5 – Review your plan every now and then.
No matter how great your plan may be, it can easily become irrelevant over time. This means that you must be flexible for you to be able to reach your goals especially if the best means to getting to your goals have become immaterial.
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Kent Farell is an experienced registered financial planner and writer. His blog is full of useful tips to overcome bad debts. He also shares his insights on investing, financial management and lease financing.