If you truly want to retire, you will need to pay off all of your debts before you stop working – if not, you may have to delay your retirement plans and continue to work just to service those debts. When you reach retirement age, you will want to enjoy life and see and do as many things as possible – the things you couldn’t necessarily see and do when you were working. So being debt free is something you should work towards. Here are some ways to do it.
The simplest way to pay off your debts is to save money. Open up a separate savings account and put all your ‘spare’ money into it. When you have enough to pay off a loan or credit card entirely, you can take the money out and do so. At the same time, you will need to stop borrowing, so lock the credit card away (for emergency use only) and don’t take on any more finance or loans, otherwise as quickly as you pay one thing off, you’ll have something else to save up for. It’s far better to buy things outright, even if you have to dip into your savings to do so, than it is to borrow because when borrowing you will have to factor in interest, and that can make things very expensive.
Once everything is paid off, continue to save and use that money to fund your retirement plans. If you start early, you will have plenty of money to enjoy some exciting trips and start some wonderful new hobbies.
Investment is another good way of paying off debts and funding your retirement at the same time. If you do your research first and learn as much as possible about what you are doing when it comes to investment, you can make a good return on your initial payment, and pay off your debts much more quickly. You can invest in almost anything including stocks and shares, property, and other businesses. Once you have decided where you want to put the money, finding a broker is a good idea so that you can make the most of your investment.
If you own a property and you’re paying a mortgage on it, will that mortgage be paid off by the time you come to retire? This can be the biggest debt you owe, but you may not consider it a debt and it may not figure in your plans. However, if you’re not working, are you going to be able to continue to pay your mortgage? If not, downsizing is a good option. When you downsize, you sell your current home and buy something cheaper (and usually smaller). That way, if you choose wisely at the right time, you may not have a mortgage left at all – and you might even have money left over, which can be used to pay off any remaining debts.