Debt can delay your dreams of early retirement, keep you working longer, and put you under constant stress. Mortgage loans, auto loans, credit card debt, student loan debt, personal loans, payday loans, home equity lines of credit, etc, put the average American debt at $51,900.
Several factors contribute to this and can keep you trapped in employment if you do nothing about it. With over 80% of Americans in debt, it is important to come up with a definite plan to get out of debt ahead of your retirement.
Between age 40-49, the average American debt peaks at $78, 500. To enjoy a happy, stress-free life in retirement, now is the time to take action. In this post, we shall highlight four (4) proven ways to beat debt and retire earlier starting today.
- Minimize Expenses and Maximize Income
To prevent further debt, it is important to minimize expenses and maximize income. This can be easily achieved by budgeting. By planning out your monthly expenditures in advance, you can better maximize every dollar and cent.
This could mean self-discipline, sticking to a shopping list, avoiding impulse buying, using a debit card, paying cash where possible, being accountable, etc. These can help you keep expenses to a minimum.
This way you can save more money at the end of the month which you can keep in a savings account or invest in a business that can earn you profits. This is how you maximize your monthly income.
- Create Additional Sources of Income
Another way to maximize your monthly income is by activating additional streams of income. The super-rich hardly have a single source of income. Their nest eggs are built with earnings from multiple sources.
If you currently work a full-time job, this may be a bit of a challenge, but by managing your time more effectively, you can save a couple of hours each day. This extra time can be used to create additional income sources.
Most businesses are working fewer hours due to COVID-19, and most are allowing staff to work from home. With zero commute and fewer working hours, you can learn a new skill that can help you grow a side business.
- Start a Side Business
Starting a side business is easier said than done, especially when you have a full-time job, but it is well worth the trouble. Some of them are low cost and won’t get you further in debt.
For instance, dropshipping is a popular online e-commerce business model. You can open a Shopify store online, stock it with virtual products, and sell at any price to any destination in the world. You simply market your online store/products, and your supplier handles the rest, including picking, packing, and shipping to customers globally.
You can also find several other online jobs that may interest you. These jobs are usually flexible and can be done in your free time. Taken seriously, the income can overtake your current salary and help you retire earlier than you imagined.
- Save, Invest, and Repay Debts
As you create additional revenue streams your income will likely improve. Rather than increasing your monthly expenses, you should save at least 10%. A good target should be 80% of your annual income in savings or at least 6 months of income.
From the extra income, you should also look to invest money in safe and secure, yet profitable ventures. This is another way to beat inflation and grow your income. You can invest in stocks, gold, cryptocurrency, forex, etc.
Finally, the best way to pay your debt is to pay it. As you implement these tips and begin to grow your income, have a plan in place to pay down your debt over a specific period. Being debt-free is liberating and empowering.
To start your journey to early retirement and debt-free living today, remember to:
- Minimize expenses and maximize income
- Create additional sources of income
- Start a side business
- Save, invest and repay debts