As older adults near their retirement years, having more financial freedom is important to enjoy a stress-free life after retirement.
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It will be nice to just sit, back, relax and enjoy the fruits of your labor. Besides, after working hard for several long years, who would want to be burdened with credit card debts, mortgage and car payments? Would you?
Being in a recession for more than a year now, just doesn’t help. More and more people, including seniors and baby boomers are struggling with their finances, forcing them to tap into their credit cards to help pay for their bills and postpone their retirement. However, people, including seniors, are sometimes ashamed or embarrassed to get help. People usually do not like to talk about their finances and are scared to admit that they have financial issues. As a result, they end up ignoring their debt, which eventually accumulates throughout the years.
Being debt-free can be challenging since it takes a lot of commitment and discipline. Evaluating your financial situation is the first step. What’s next? Read the rest of the article to get simple and effective ways to a debt free living.
- Charging: You are forced to use credit cards due to lack of cash.
- Living paycheck-to-paycheck:You don’t have any left over money for savings or emergencies.
- Paying minimum: You can only afford to pay the minimum amount due, which increases your debt.
- Maxed out: Most of your credit cards are maxed out and can’t be used.
- Being late:You struggle to pay your bills on time and creditors start to call you.
Sound familiar? If so, then you may be in deep financial debt. It’s hard to admit, but you have to act now before your financial situation becomes worse. Here are some simple and effective ways to help you manage your debt, leading to a happier and worry-free retirement.
- Assess your current financial situation to see whether you are living within your means.
- Do you have too much debt?
- Do you have enough savings?
- Do you need to change your spending habits?
Analyze your answers. Remember, knowing how much money you have and your monthly expenses will help you plan ahead.
2. Track your expenses.
This includes things paid in cash, checks and credit card.
- Check your expenses to find out where your money goes.
This will help you identify whether you are spending excessively on things that you don’t really need.
3. Set goals.
Come-up with realistic goals and be motivated to attain it, like:
- How much savings do you want to set aside each payday?
- How much do you want to invest?
- How much do you want to have when you retire?
- When do you plan to pay off all your credit card bills?
Answering these questions will help you set your short-term and long-term financial goals.
4. Stick to your budget.
If you don’t have one, now is a time to start a budget.
- Be disciplined.
- If you can’t afford it, don’t buy it.
- Set aside money for emergencies (accidents, medical reasons, job layoff, natural disaster, home repairs, etc.)
- Save for taxes if you are self-employed.
If you’re having a hard time sticking to your budget, be realistic and make the necessary adjustments.
5. Stop accumulating.
- If you don’t need it, don’t buy it. Otherwise, you will accumulate more junk and more debt.
- Learn to prioritize and spend only on things you really need.
- Contact your creditors and see if they can help you. They might be able to reduce the interest rates on your credit cards, which will help lower your debts.
By keeping your debt payments below 20% of your total monthly income will help you manage your debt effectively.
Did you know? Keeping your “debt-to-limit” ratio on your credit card below 35% will help improve your credit score.
6. Make more.
Instead of complaining that you do not have enough money, why not:
- Work hard to get a promotion.
- Start a side business or turn your hobby into extra income- It would be great to earn additional income while doing something you truly enjoy.
- Get a second job to help pay for your monthly expenses.
- Organize your closet- Set aside things that you no longer need or use and sell them so you can get additional money. You can have a garage sale or you can sell it online. There are a lot of online sites like eBay, where you can sell your items.
7. Get help.
If you’re having a hard time managing your debt, look for a financial consultant or use a debt management company.
- A Financial consultant can help by giving advice on how to better manage your finances.
- Debt management companies can help handle your monthly payments after negotiating lower interest rates with your creditors.
Before hiring a third party to help manage your finances, do your research to ensure the company is reputable. Be cautious. Remember, if it’s too good to be true, then most likely it’s a scam.
Want to get more debt management tips? Read Simple Debt Managing Strategies For Seniors.
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