Not long ago, most Americans retired with or without debt, and this was considered the norm, but that was then. However, now more and more Americans are entering retirement, buried under huge debts, including lines of credit, partially-paid mortgages, credit card debts, and car loans.
Loaded with debt, baby boomers have become a severe problem, and this is not surprising, given the facts.
Most of them do not want to make any changes in their lifestyle.
However, if you are a baby boomer who understands that a problem will arise if you do not make quick changes, here are four tips that I hope will be useful.
1) It may seem like a good idea to borrow money from your 401 (k) to pay off your debts, but do not do it. It’s an economical solution and, therefore, seems like a great idea, but it can create real problems if you get fired.
In almost all cases, the person who stops working is obliged to pay the loan within 60 days.
2) Work full or part-time as much as you can to eliminate as much debt as possible before retirement. From time to time, remember that paying your mortgage and trying to pay off your debts at the same time, and living with a fixed income will not be a great pleasure.
Does the work now, pay your debts and then retire.
3) Should I pay debts or save for retirement?
There are different opinions on this, but I would advise you to do both at the same time but can get more information in their site.
It will take longer to pay off debts, but it also means that you will have some money reserved for retirement, and the habit of saving can be beneficial. As soon as you start saving, your mindset will change, and you will begin to think like an investor and be less inclined to impulse purchases.
Let’s take a quick look at some numbers that we hope will help you see things in perspective.
- a) To pay a debt of $ 15,000 with an interest rate of 24%, it will take five years if you paid $ 432 per month.
- b) However, you would pay the same debt with the same interest rate in nineteen months if you paid $ 1,000 per month.
4) It means, and then, probably change your lifestyle and spending habits. For a pampered baby boomer, this is one of the most challenging things, and it is often suggested that one of the ways to get rid of the habit of spending a lifetime is to reward each time you eliminate part of your debt.