How to Be Debt Free Before Your Retirement

Imagine you’re in your 70’s. You are sitting in your balcony, sipping your favorite tea and just…savoring your golden years. Retirement is good and you have no financial crisis hanging over your head.

Sounds like a dream, right? Like it can’t possibly be real?

But it is.

Here are our tips to be debt free before your retirement.

#1 Say goodbye to your pile of debts.

Obviously, to live your golden age with no financial worries, you need to get out of debt fast. It’s not surprising and it’s not a picnic either, but the good news is that you can pay it off gradually. To do this, you need to know first your choices.

Settling a debt is more complex than you would think.  You have four options you can choose from and they are as follows:

The Debt Snowball

It is better to start small than nothing. This also proves true in paying your debts. First, make sure to get an accurate report on your debt/debts. With this report, you can analyze and apply what we call, “The Debt Snowball”. This is where you start with your smallest debt and pay it off as quickly as possible. After your smallest debt is settled, repeat the process until you finally cleared all your credit.

The Debt Avalanche

Quite the opposite is applying the Debt Avalanche method to settle your credits. In this option, you pay off the debt that has the highest interest rate. Then, you work your way through to the lowest interest rate debt.

Here’s a quick tip: What is important for both methods is to still pay the monthly minimum required payment for each debt, so you can still meet deadlines and avoid fees.

Aside from these two, you can also choose to transfer your credit card balance to a different card. This means paying off one credit card using another card. In the same sense, you can also settle your debt by getting a personal loan. Of course, this goes without saying that these methods are both dangerous especially if you don’t use credit responsibly and you’ll likely just end up further in debt.

Further options are debt consolidation, debt settlements, or declaration of bankruptcy.

#2 Fatten up your savings.

For some of us, applying for debts might be the easiest way out to solve a financial crisis, but it doesn’t have to be.

Instead, having solid savings can be our trustworthy rescuer when we’re deep-neck drowning in financial nightmares.

To do this, you have to set tangible goals. Find out how much you can afford to save or how much you need to save to live comfortably in your retirement years.

However, let’s face it: the world is full of material things and all things come with a price. This is the problem, my friend. Saving may be the last thing you’ll think of when you’re out living your life to the fullest.

Fret not, you can still enjoy your retirement years when you…

#3 Earn more.

You guessed it: Larger paycheck is the ultimate key to being debt free before your retirement. When you have a larger income, you can spend more freely and you can pay off your debt faster. Also, in today’s technology, there are a thousand opportunities waiting for you. If you have a low-paying full-time job, you can get a side hustle to earn additional income.

Earning more cash allows you to enjoy more of what life has to offer. After all, financial freedom is truly one of today’s goals.

#4  If you’ll spend money, be wise about it.

Unfortunately, not all of us are filthy rich or six-digit earners. Sometimes, the best thing to do to stay debt-free is to reduce expenses and avoid spending beyond your means. This means choosing the appropriate lifestyle according to your income. Also, undoubtedly, spending is inevitable, so try to be wise when you’re shelling out your money. To do this, make sure that you have a set budget that you can follow. Or…

#5 Get help from financial advisers.

Luckily, financial advisers are available to help us make the best decision about our money. You can reach out to these professionals and get an expert’s advice on how to handle your money. This will help you in creating years that are debt-free and peaceful.

 

About Retire Early Lifestyle

Billy and Akaisha Kaderli retired two decades ago at the age of 38 and began traveling the world. As recognized retirement experts and internationally published authors on topics of finance and world travel, they have been interviewed about retirement issues by The Wall Street Journal, Kiplinger's Personal Finance Magazine, The Motley Fool Rule Your Retirement newsletter, nationally syndicated radio talk shows and countless newspapers and TV shows nationally and worldwide. They wrote the popular books The Adventurer's Guide to Early Retirement and Your Retirement Dream IS Possible.
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