Why you shouldn’t let debt stop you from saving for retirement
Saving for retirement seems to be wishful thinking when you’re drowning in debt. The obvious solution is to get rid of it, but that’s easier said than done. That’s why we’ll show you exactly how to pay off debt and stay debt-free in preparation for retirement.
Strategically Pay Down Your Debts
Instead of focusing on making payments to all your debtors, identify the debt sources with the highest interest. Continuing paying all your debts, but pay as much as you can towards the high-interest debts. This will free up more of your income for retirement savings over the long term.
Should You Sell Your Biggest Assets?
It’s easier to cut back now than it will be as a senior. If your car or house payment is so high that you can’t save for retirement, determine whether you can sell and buy something cheaper. By saving more now, you’ll afford an easier life later.
Talk To Everyone You Owe
Consider if refinancing your home makes sense. Ask for payment arrangements. Try to consolidate, defer, or refinance student loans. Some creditors may be willing to forgive portions of your debt. Any extra disposable income that results can go towards retirement savings. You won’t know if you don’t try!
Make A Debt-Free Future
Retiring without any debt is optimal. Map out a clear plan for how long it will take you to pay off your debts. This can be a sobering wakeup call, letting you know that you need extra income to get out of debt. Even if your plans fail, you’ll be more informed.
Build Up A Supplemental Savings Account
Once you pay down your debts, plan to stay that way. When financial roadblocks pop up, people turn to retirement savings for relief. To avoid this temptation, save for retirement and for emergencies. Extra savings will help you avoid taking out loans, using credit cards, or dipping into retirement savings.