Not everyone can achieve retirement without debt. But if you really want to do it, you can. In fact, if you follow the following 5 steps, you can make sure of it. But please understand that being debt-free isn’t always the most financially savvy step to take.
I say that it’s not always the best financial move because sometimes you can earn more on your money than the debt you have costs you. So it may sound strange when a financial advisor suggests that you might want to do something that isn’t the best financial move. But not everything is about the math, and I’ll admit that I am a sucker for a debt-free life. Let’s get down to brass tacks.
Here’s how you can have a retirement without debt:
Reaching retirement with no debt is a huge goal. It’s not easy and it takes sacrifice and hard work. There will be times when you won’t have fun. The only way to get through those tough times is to be 100% committed. And the best way to get that commitment is to have a clear vision of what retirement without debt looks like and why it’s important to you. Have a clear vision. Create a vision board to burn the idea into your money-saving mind.
2. Willing to Change
Along with having commitment, you must be willing to make some pretty significant changes in the way you think and behave around money. If you continue living the way you currently are, don’t expect a different outcome. Conversely, if you want big changes in outcomes, you are going to have to make big changes in the way you live your financial life.
3. Do the Numbers
If you have consumer debt, you want to get out of credit card debt fast. This should be your number one financial focus. If you aren’t saddled with credit card debt, focus on paying off your mortgage early. Rather than forcing you to do the math, you can simply call your bank. Ask them what the monthly payments need to be in order to pay off the mortgage by the time you want to be debt-free.
If the number is too high, you still have alternatives. You can downsize your home, cut other expenses or earn more money (or any combination of the three). I told you that in order to reach your goals, you’d have to make significant changes. You can see now I wasn’t kidding.
Regardless of how much or little debt you have, you’ll want to keep tabs on your spending if you want to get out of debt and stay out of debt. The best thing you can do to achieve that is to start tracking your spending. There are a number of programs that help you do that. My favorite is You Need A Budget, a tool that allows you to create a budget and track your spending against your budget. I’ve been using it for a few years now, and so have my kids in college. It helps us all stay on track. If you’re not tracking all your spending now, get going. There is nothing more important you can do if you want to get out of debt.
5. Be Flexible
You might do everything right and still not achieve your goal. That’s no reason to be disheartened. You’ll still be far better off than had you ignored the steps outlined above. You’ll have less debt and be in better control over your spending. You may decide to work a little longer or even take a second job or weekend job in order to achieve your goal.
Are you debt-free now? What is the number one best tip you can share to help us achieve that too?