When you are a young adult, the last things you want to think about our old age and retirement.
A lot of young people splurge without worrying about what they would be doing when they’re 65 years old. Once they’re of retirement age, they would have no money left and would accumulate a lot of debts that they’d have to pay for a long time. As a result, they would keep on working indefinitely in their senior years.
You do not have to spend your golden years worrying about creditors and bill collectors. If you can get started on paying off your debts as early as possible, then you will likely be debt-free you are ready to retire. You can leave your job in peace and live out the rest of your life with financial security.
Once you have your home mortgage paid off, then your monthly expenses will be minimal. If you have a monthly pension or retirement payments, that should be enough to pay for all your living expenses.
What kind of retirement do you want to have? No debts equal no stress.
To help you get started in paying off your debts before retirement, below are six quick tips you can take right now.
Talk to an Accountant or Financial Advisor
As you begin your crusade of paying off debt, talk with a professional accountant or financial advisor to get some sound financial advice. They can review your current financial situation and help you choose the best course of action to take, especially if you have a lot of unpaid debt.
Choose Car Loans Carefully
It is impossible to remain utterly debt-free throughout your life. Aside from the mortgage on your house, you will probably have to take out a car loan every 5 to 10 years. After all, cars do not last very long, and you depend on cars to travel to your job and to different places.
Before you purchase a car, you should always compare your car loan options first. Do not allow the dealer to persuade you to use their lender because they will attach a lot of unnecessary fees and unfair terms. Use a car loan comparison website to find a lender who offers the lowest interest rate. This way, you will not accumulate too much additional debt while you’re paying off your car loan.
Refinance Your Mortgage Loan
Mortgage loan interest rates change all the time. If you currently have a mortgage loan with a high-interest rate, then try to refinance your mortgage loan with a lower interest rate.
Visit the bank or lender that issued the mortgage to you and see if they will let you refinance for a lower interest rate with lower monthly payments. If they approve your request, then it will be easier for you to save more money every month while making your mortgage payments on time.
Set Up an Emergency Savings Fund
An emergency savings fund is a good thing to have if an emergency presents itself. You never know when you might lose your job or have to pay for car repairs. It is recommended that you save enough money in your emergency savings fund so that you can survive on it for 3 to 6 months.
By establishing an emergency savings fund, you will never have to resort to personal loans or credit cards for paying your bills. Instead, you will have real money saved for paying your bills.
Pay Off Credit Cards First
Out of all the debts you may have, credit cards should be paid off first. They bear the highest interest rates, which can cause your credit card debt balance to increase quickly. Rip up all your credit cards so that you never use them again. Then keep putting all your extra money toward paying off your debt until the balance is cleared.
Debt Consolidation Loan
Do you have several different debt accounts with varying interest rates? If so, then you should consider getting a debt consolidation loan to pay off all those debts. Then you will only have one debt account to worry about with just one low-interest rate. This will make it easier to manage your debt because now you will not have multiple creditors breathing down your neck. All your focus can be on one creditor.
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