How To Achieve A Debt-Free Retirement?
There’s no doubt that all of us are working to earn money and support not only ourselves but our family as well. We need to have a sustainable and stable source of income in order to pay our bills, duties, and responsibilities. However, we also cannot deny the fact that around 70% of the world’s population chose to live in present and fail to prepare for the future. A notable example of this case is our retirement. Oftentimes, we look forward to our next payday in order to pay our bills, foods, mortgages, and our debts.
What we don’t realize is that as we grow older, our body’s capability to be productive and accomplish all the tasks diminishes. Sooner or later, we need to retire. And where will we be by then? Are our savings enough to sustain us when we’re not working? Do we even have savings at all? Or does our retirement money get drained because of our never-ending debts like paying mortgages and loans for 10 or more years? How can we eliminate our debts to attain a debt-free life? Here are the things you should do and consider.
Eliminate Your Consumer Debt
This is the most common type of debt most people get into. Consumer debt refers to a debt we have in order to buy a common good or services. Credit card debts or loans are the most common type of consumer debts we have. Most people go into debts because of credit card overuse. Would love to buy that new dress that makes you look stunning for the upcoming Christmas party but got no money? No problem. I can just buy it in one swipe. Because of our lavish lifestyle, we keep swiping our credit cards whenever we want something.
Thinking that these credit cards provide us money “for free” and we’re feeling rich whenever we do it. Not realizing that as we purchased an item through credit cards, we need to pay its expensive interest rate which keeps on increasing every month that we missed paying! If your current income cannot pay the credit card rates, then it’s better for you not to get a credit card yet. Don’t overspend. If you have personal loans, be diligent in paying them every month so that you can eliminate them sooner. The same is true for your personal debt you owed from your friends and family.
Eliminate Car Payments
Some people just love to have cars because they feel that they’ve fulfilled their dreams of having a stable life. But is having a car really led you to a sustainable life? We think it’s not. Of course, if you can afford to buy a new car without affecting your cash flow, then, by all means, do so. But if you are struggling to pay for the car and its insurance (yes, you have to pay both), then you’re better off of the car. Why don’t you take the public transportation instead of getting a car? If you’re living in the US or in Europe, they have a great public transportation system that you can take advantage of. Not only it’ll help you save more money but it’ll also help you achieve a healthy lifestyle by moving constantly instead of sitting inside the four wheels.
Pay off Student Loan
According to a survey conducted by the Sallie Mae, around 14% of our parents are borrowing money from university institutions to pay the college education of their children. This prompts the parents to pay for years (sometimes even nearing their retirement) the tuition loan for their children. Or if not, we often deprived our own children of earning money from their salaries during their first year of working because they’ll also be forced into paying their student loan. If you have a small kid now, better invest in an educational insurance to prepare your children’s education and future. You can invest in 529 college investment and savings plans so that by the time your children reaches college, you won’t have any problems paying for their education while enjoying your retirement life.
Buy a Paid-off Home and Avoid Rentals
One of the major hurdles in achieving a debt-free retirement is your mortgage fees. Most of the housing loans marketed by real-estate companies take at least 10-30 years to pay. In this case, there’s no doubt that it’ll also affect your retirement life. How will you be able to pay off your debts if you are retired? It’ll greatly drain your savings. If you want to buy a home try to canvas for second-hand homes, which are still functional and presentable. Secondhand homes are often more affordable than brand new ones and oftentimes, you only get to pay it one-time. Thus, eliminating any debts in the future and the same goes for your rentals. Instead of renting, why not buy a house of your own?
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