Retirement with debt is usually considered one of the cardinal financial sins, regardless of how little the debt is. Your retirement is meant to be a time for relaxation and peace after years of working, enjoying the fruits of your labor. This means that if you are in debt during such a time, every single dollar you owe will reduce the money you would have left to enjoy. Fortunately, by combining debt reduction strategies with effective money-saving, you’ll be on your way to a financially healthy retirement. So, is retirement drawing close? Are you in debt and worried about what your financial future looks like? Here are some ways to avoid carrying debt into retirement.
Crunch the numbers and get organized
Start by calculating how much debt you owe and from what sources. After this, compare the sources to see if there are any spending areas or habits you can cut back on. You might also want to start checking out extra income streams or investment opportunities where possible, so you can start paying off your debt a little at a time.
Look into downsizing
If you’re a homeowner and love your property, downsizing to a smaller home is probably not something you want to hear. But if you’re struggling with debt and retirement is knocking on the door, then this is an option you might have to look into. Downsizing your home means moving into a less expensive, smaller home that doesn’t come with overbearing financial commitments or expenses.
This option helps in two main ways. First, it reduces how much you spend handling various property-related expenses. Secondly, and more importantly, you’ll be able to pay off your debts (depending on how much) and still have enough to move into a smaller home. But before you consider downsizing, take the time to calculate your home’s value and deduct your debt to have an idea of how much you would be left with. Also, be sure to speak with a reliable agent to assist you with selling your home and getting high returns for it. You can visit https://propertiesmiami.com/sell to contact qualified real estate agents.
Pay off your credit card debt before you retire
Many financial experts warn against carrying credit card debt into retirement, and rightly so. Today, the average credit card interest rate hovers around 20%, which means you’re paying an additional dollar for every five dollars you borrow. Being tied down to interest rates this high can cripple your finances at almost any stage in your life, let alone when you depend on retirement packages. If you’re still working, you have some time to pay off as much of your high-interest debts as possible before you hang your tools. It all starts with putting a stop to making purchases from your credit card.
Tackle your high-interest debts first
Beyond your credit cards, make a list of all the debt you owe and rank according to their interest rates, from highest to lowest. Next, do your best to pay off all your high-interest rates first to prevent them from piling up with time.