Live a Debt Free Retirement
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In a society that has encouraged you to spend beyond your means, the idea of living debt free is foreign to the boomer generation. As baby boomers reach retirement age, many want to eliminate the stress associated with monthly credit card debt. Part of planning for retirement is looking at debt. While not easy, (has anything worthwhile been easy?) with a few disciplined changes, you can achieve the feeling of freedom that comes from not having extra bills. Follow the simple guidelines listed here to move toward the financial freedom of being debt free.
Assess your current debt. The best way to get an accurate picture of your debt is to create a chart listing all of your creditors. Across the top of the page (or computer spreadsheet), create a heading for each of the following: Creditors, Interest Rate, Total Amount Owed, and Minimum Monthly Payment. You will want to also add two columns for each month of the year to track the monthly balance and payments made.
Use a debt planner to evaluate your list of creditors, based on the balances, payments and especially interests. Do you have a lot of debt in accounts that charge a higher interest rate? Look for ways to shift your high interest debt to accounts with a lower rate. Determine how much you are paying out a month. Decide how much you would need to increase the payment amount to pay off your accounts.
Once you’ve determined what you’re paying towards your debt, you will need to evaluate your other household expenses to establish costs that can be reduced. With calculators, retirement costs can be determined. If you don’t know what your spending a month, that’s the place to start. Pay for everything with either an ATM or credit card to know exactly where your money is going. After you have a list of what you spend a month, look for ways to reduce your expenses. Instead of looking at it as a burden, become creative in ways you can cut costs.
How can you reduce your utilities bills? If you have outdated appliances that are not energy efficient, compare the cost of buying new ones with the reduced utility bill. Look at replacing expensive incandescent light bulbs with energy efficient fluorescent or LED ones.
If you eat out often, plan to eat at home more by cooking larger portions and having leftovers one night instead of fast food. Use coupons, and avoid impulse buys that aren’t healthy to your body or checkbook.
Put all of your credit cards in a drawer, but one. Use it only in an emergency. Eliminate impulse buying by waiting for 24 hours before making a purchase. This may not be easy for many in the boomer generation.
Take the time to evaluate your purchases every month to determine where you would like to make changes for the following month. Determine priorities for your spending. Instead of buying a new bedroom set, for example, buy new bedding to make the old look new.
Create small weekly goals for yourself around your money. This is a big step in planning for retirement. When you accomplish these goals, congratulate yourself for your win. When you fall short, evaluate how you can be successful next time. Be willing to tweak you behavior, goals and attitudes as you proceed. It took you a long time to fall into your old habit patterns, it may take a while to change them. Keep a firm vision of what it will feel like to reach your goal of being debt free. Most important, don’t give up.
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