Get Out of Debt Before You Retire

The closer baby boomers get to retirement the more important it is to get out of debt. Once you retire you will be living on a fixed income, which could be less than you expect if social security crumbles under the pressure of more than 70 million baby boomers who are going to be retiring in the next 20 years.

Therefore your goal needs to be to get out of debt and set aside as much money as possible before you retire. Even if you hope to continue working after retirement age you cannot count on your health permitting it. You need to be prepared for living on your savings by the time you are in your late 60s or early 70s.

The first step to getting out of debt is to prepare a budget. In the budget set aside as much as you can for savings. As you pay off any credit card debt, car loans and home loans you will have more to put into a savings account.

The second step to getting out of debt is to pay off the credit card debt and any loans you have. If necessary you might need to sell a vehicle that you owe money on and pay cash for one that is a few years older but dependable.

If you no longer need that large 3,000 square foot house with four bedrooms, consider selling it and paying cash for a cheaper home (be careful that your property tax bill does not eat up the money you will be saving by not paying on a mortgage).

The third step is to learn how to live within your budget. The sooner you learn to spend wisely and not spend money on impulse buying, the better prepared you will be for living on a fixed income.

Our parents and grandparents learned this during the depression when there were no credit cards and people learned to do without. The ones who survived the best were the people who had very little or no debt.

There were many children in the 30s who felt fortunate to have two or three outfits to wear and one pair of shoes. There is no need to live that way today if you have a job, but we have grown accustomed to spending $200 for a pair of shoes and $15,000 for a Rhino that spends most of the time sitting in our garage.

Learn to do with less now so that after you retire you will already have learned how to live without using credit cards to purchase things you don't need. Remember, your goal is to get out of debt now so that you can have a comfortable, debt free retirement.

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