January 6th, 2011

The Baby Boomer’s Guide to Getting Rid of Financial Debt

Financial debt is bad enough at any age, but it’s a special concern when you’re getting ready to start thinking about retirement.  Who wants to retire with a load of debt hanging over their heads?

I know I didn’t.  But I also didn’t want to keep working at some corporate job just to get ahead again.  Fortunately, I have found a business model and a wealth management plan that have helped me keep my finances in order and get out of the debt I had.

With that in mind, here are some guidelines you can use to rid your finances of debt.  After all, interest payments are wasted money!

First, see if you can consolidate your high-interest credit cards into one, lower-interest loan.  Then get rid of all but one of your cards, and just use that card to keep your credit score high by using it sparingly and paying it off in full every month.  In the meantime, attack your consolidated debt with the highest monthly payments you can.

If you don’t want to consolidate your debt, another good idea is to make a list of your current debts, from the smallest to the largest.  Arrange your monthly debt payments so that you’re paying double or more on that smallest debt until it’s gone.  Then shift that money so that half of it goes into savings and half goes into the next highest debt.  Getting out of debt is important but so is tending to our finances by saving money!

Finally, can you sell your house and downsize? Even if you can’t get as much equity from your house as you’d like to right now, the fact is that renting costs about half what owning does—and that’s just the monthly payment, not the cost of upkeep!  You can take the difference in housing costs and pay down that debt even more quickly if you take this route.

No one wants to retire in the face of financial debt.  On the other hand, we also don’t want to have to keep working at jobs we’re ready to retire from because of that debt.  But if we take our debt by the horns and pay it off, our financial future starts to look a whole lot brighter.




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