Reducing Your Debt before Retiring

It is imperative to have a healthy portfolio before you retire. However, it may not look as healthy as it should due to a falling economy and downsizing. Many individuals have had to make concessions with their 401(k) plans and pension plans.

Moreover, who knows what Social Security will look like a few years or even one year from now.

However, one of the things you can control is how much debt you have going into retirement. There are many tips you can use to minimize and even eliminate debt altogether - even before you retire.

Consolidate Debt

By consolidating debt, you eliminate multiple payments and reduce the accumulation of multiple interest rates. Make sure that you shop around before consolidating credit card debt from one card to another.

The terms and agreements are almost always in fine print and you need to know what the penalties, fees, surcharges, and time frame are before signing on the dotted line.

By consolidating debt, you now have the opportunity for one low monthly payment and one interest rate.

This will open up the opportunity for you to pay off your credit card debt faster and eventually become credit card free.

Eliminate Future Debt

The only sure-fire way to eliminate future debt is to live within your means. If you purchase something and use the thought process of figuring out how to pay for it later, you are already automatically in the danger zone.

Eliminating future debt is achieved by not creating it in the first place. Take a class on how to budget or attend a budget workshop.

Seek the expertise of a financial planner. Do not leave your finances to chance. By learning how to create and stick to a budget, you can guarantee yourself being free of future debt.

Refinance, Home Equity Lines of Credit, Reverse Mortgages

There are many finance-related workshops and seminars that are free of charge, and it would be a wise choice indeed to attend as many of them as you possibly can.

This will help you to learn about whether or not it is in your best financial interest to refinance, purchase a home equity line of credit or not, and even the do's and don’ts of a reverse mortgage.

As with everything else, an informed consumer is a wise consumer. When it comes to matters of your money, seeking out wise counsel is the best choice to make.

Find estate planners, eldercare attorneys, and other legal professionals who are willing to give you a free one-hour consultation. Gather as much information as you can from these free one-hour sessions before consulting a financial advisor.

Reducing your debt before retiring and learning how not to recreate it are two sure-fire ways to enjoy retirement more with fewer financial woes.

Learning to Live within Your Means during Retirement

One of the biggest responsibilities for planning a retirement is exactly that – planning. And included in that planning is the creation of a budget to ensure you don't spend more than you can afford.

No matter how well prepared you are for your retirement financially, you still need to live within your means. There are several tips for achieving that task.

Create a Retirement Budget

Once you have retired, it may be easy to feel free of your employment obligations. Sometimes that also includes the feeling that money is no longer a worry or obligation. However, nothing could be further from the truth.

Creating a budget during retirement will allow you to live within your means the same way that you lived within your means while working.

Budgeting is really a simple matter; however, many individuals make it more complicated than it needs to be. Take into account your income and your expenses, and what is left is your spendable income.

Staying within your budget and not going over your allotted spendable income will allow you to live within your means.

If you have prepared properly for retirement and budgeted properly, there should be no reason why you cannot have a good time while also staying financially fit.

Emergency Situations

If you incur an emergency situation such as your car breaking down or the boiler stops working, of course this will upset your finances.

However, if you have allotted some funds to go toward emergency repairs, then you are one step in the right direction.

If not, however, there are always other options. A financial advisor will be able to guide you properly on how to handle emergency situations.

Sometimes something as small as taking advantage of senior citizen discounts on dining, traveling, and prescriptions, combined with a possible discount on a refinance or home equity loan for seniors, is just enough to handle the situation with ease.

Do Not Make Too Many Changes at Once

While your new-found freedom in not working may find you wanting to eat out every night, keep in mind that you will be expending much more money than if you stayed in and cooked.

It is perfectly fine to treat yourself once per week to a nice meal out; however, cooking in can save you tons of money.

If you are finding yourself a bit bored and needing extra income, do not feel that you have to stay fully retired. Find a hobby and turn it into some extra cash. Craft fairs are a perfect way to do this.

Still maintain frugal habits, such as repairing broken household items rather than running out to buy new.

Refurbish your wardrobe with some good old-fashioned cleaning, sewing, and dyeing to freshen it up without running out to buy a whole new wardrobe.

These are just a few good tips on how to live within your means when you retire.

What’s your biggest issue? How do you handle it – or can you think of any additional tips you can share with others if you don’t have an issue with this in your life?

Share them with us in our Comments – or share this blog post on Twitter or Facebook or wherever you feel it could help someone you know.

Cheers, Helene Malmsio

Related Reading: https://www.discoveryhub.net/how-to-retire-in-comfort.html

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