Sunday, October 16, 2016

Guide To Getting Your Debt In Order Before Retirement

Picture yourself back in your high school chemistry class for a moment. You have three beakers. 

One is full of a solution called debt, one is full of a solution called retirement, and the third one is empty. You pour the debt and retirement solutions into the third beaker, and you know what happens? It blows up in your face. 

Why? Because retirement and debt are a toxic combination. Do what you can to get your debt in order before you retire and you will enjoy the retirement that much more.

1. Prioritize Your Debt

Depending on how much debt you have, you are never going to be able to tackle all of the debt at once. The first step is to prioritize the debt you are in. 

You will do this by focusing on interest rate and tackle the debt that is costing you the most money first. Getting rid of the more expensive debts first will speed up how fast you get all of your debt paid off. 

Just create a list of your credit cards, installment loans, student loan debt, and unpaid bills.

2. Consider Getting an Installment Loan

If you have a handful of smaller debts or bills from different places and live paycheck to paycheck, you could consider getting an installment loan and using the money to pay off some of the smaller loans or debts. 

You can apply for installment loans online and pay them back gradually instead of having to come up with a lot of money all at once the way you’d have to with a payday loan.

3. Understand Your Options

The opportunity to settle a credit card bill by paying 50-70 percent of the total bill may sound appealing when a debt settlement company sends you a letter or calls you on the phone. 

However, it is important to slow down and understand more about debt settlement companies before doing business with them. The unfortunate truth is debt settlement companies rarely have your best interest in mind. 

If you work with a debt settlement company, you may end up paying more than you would have if you just paid the debt in full on your own.

4. Create a Budget

In order to prepare yourself, financially, to have the best retirement possible, you should spend time making a budget as well. 

This is to compare how much money you spend every month to how much money you make. If your lifestyle and spending habits do not match your retirement income, you will need to cut back on spending and find ways to save some money.

5. Stick to the Plan You’ve Created

Once you create a plan, a budget, and prioritize your debt, it is important for you to stick to the plan you’ve created. 

It is not uncommon for this to be more challenging than crafting a plan in the first place. If you take a detour from your plan and spend money on things that were not part of your budget, you run the risk of not having enough money to pay your living expenses. 

You can avoid this budget by trying to set a little money aside for random spending or just to save for a future larger spending. The key is to try to avoid spending money you never planned to spend.

As you can see, preparing your finances and dealing with your debt before you retire isn’t complicated if you develop a plan. The earlier you start dealing with your debt and preparing your finances for retirement, the easier it is going to be.

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