No one wants to be dealing with their debt when they are a few years away from retirement, however this is a reality for many people. Debt tends to remain on and stretch through the years, unless dealt with. When your retirement years arrive, you don’t want to still be paying debt. You will not be earning a lot of income and the savings you have will be drained by the remaining debt. Becoming debt free sets you on track to enjoy your retirement without any financial hassles.
If you are above 50 and haven’t thought about it, now is the time. Aim to become debt free before you retire. So, how can you go about becoming debt free in time for your retirement?
Assess your Debts
Find out how much debt you are under and who it is owed to. This is the first step you need to take. You need to be aware of every debt that you owe and the interest that it carries. A look at your Credit Report will provide this information. It will help put things into perspective; you have to aim to pay off this debt in the next several years.
Start a Budget
A budget is essential for maintaining a healthy finance. It keeps track of your income and expenses. Through careful analysis, you can find ways to improve your income and reduce your expense. You will be able to identify expenses which are unnecessary, expensive and should be avoided or reduced.
A budget is vital to collecting sufficient funds to make the debt payments.
Negotiate Better Interest Rates
Speak to your lender agencies and get better interest rates. Better interest rates will help you pay it off faster. Having a high credit score (above 700) puts you in a strong negotiating position to push for a better interest rate. A high credit score says that you are financially responsible.
If your retirement is a few years off, don’t hesitate to play that card. With retirement, comes lower income and this is a strong point to negotiate better interest rates.
Plan it Out
Make a plan with milestones. In 5 years you should have xxxx debt and in 10 years you should have xxx debt. This way you can really ensure by the time you reach your retirement, you will be debt free. If you find that you are not able to achieve a milestone, you can increase the debt payments and still try to meet the next one.
So assess your debts, get the interest reduced whenever possible, begin budgeting and ensure you set aside funds for debt payments and get all your debt paid off before you turn 65.
