May 13

Don’t let debt mar your retirement – Downsize it and avoid getting messed up

When it comes to planning your retirement finances, debt is one of the things that can hold you back from achieving your goals. Most people in the US paid off their debts before retirement but given the barely minimum wages and the rising prices of commodities over the past 35 years, Americans have pushed debt higher and are also living beyond their means. No, either people are postponing their retirement or cutting down their living standards or doing both. All kinds of debt owed by this age group have risen like never before but the biggest problem is with mortgages. Reports suggest that 39% of households with heads above 60 years of age had primary mortgages in 2010 and 30% had secondary mortgages, including HEL and HELOCs. Is debt forcing your retirement date to be pushed back?

Retirement debt statistics that might shock you

Giving a glance at the present economic condition, it has been studied that credit card debt and mortgages, apart from the financial needs of the college-goers, are taking a heavy toll on the old retirees and the baby boomers. According to a survey by Fidelity Investments, nearly half of the baby boomers expect to retire with debt. Over the past 3-4 years, there has been a 32% spike in the number of retirees who seek help from the members of AICCCA or the Association of Independent Consumer Credit Counseling Agencies. Older people or the retired people are the ones who have racked up the largest amount of debt.

People who are 55 years and older accounted for 29% of the bankruptcy filers in the year 2011-2012 and this figure was up by 23% since 2008, as per reports from the Institute for Financial Literacy. With such statistics, it is pretty well understood that the retirees are certainly going through some dire financial straits due to which they might need immediate assistance.

Deducing the reasons for the mess and exploring some solutions

Here are some most probable reasons behind the present situation of the seniors and the retirees and some solutions to opt for.

  • The burden of credit cards – Lock them at home

Whether coping with the rising health care costs or investment losses or some other kind of family obligations, seniors usually come to the same conclusion, credit cards. In a recent survey it has been found out that people above 65 have more credit card debt than any other age group. Credit card debt leads to bankruptcy and hence you should try to avoid it as much as possible. Lock in your credit cards at home so that you don’t get tempted to use them when you can’t afford something with cash. Even if you’ve already incurred debt, assure getting professional debt help to eliminate your debt burden.

  • The pitfalls of never-ending mortgage debt – Opt for alternatives

Paying off your mortgage debt before hitting the retirement age might be a worthy goal but not many are able to achieve this dream. Given the rock bottom yields on the savings accounts, people are more likely to save money by eliminating their mortgage interest rate payments. But it has been seen that homeowners are drowning in a sea of mortgage debt and for all of them, tapping into the cushion account is certainly a good option. Withdraw funds from your 401(k) or IRA so as to help repay your mortgage debt. Is debt forcing your retirement date to be pushed back? Please visit here to learn more.

Therefore, when you’re nearing your retirement age and you’re wondering about the ways in which you can avoid the pitfalls of retiring with debt, you should follow the above mentioned points. Don’t let debts mar your retirement goals as this will boomerang you in the long run and spoil your golden years. You might as well read the book Millionomics in order to enhance your knowledge on setting financial goals, saving money, being prepared for financial odds and emerging successful.

Apr 30

How to budget your money for debt relief

SUMMARY
Creating a budget can help you to achieve debt elimination and get you out of debt. Budgeting is a process of create a living plan and managing your money to meet your short and long-term goals. Creating a budget is not a painful process; you will know it by reading this article.

How to budget your money for debt relief

Creating a budget can help you to achieve debt elimination and get you out of debt. In fact it is not a difficult process. You need a piece of paper, a pen, copies of your bills and expenses, and a little time and determination. And to do it successfully requires you to set up a budget which you can live with, adjusting it as needed and follow it.

Create Your Budgeting Plan

Use simple household budgeting tips to get out of debt and get your finances under control. Estimate your housing costs, utilities, food, clothing, transportation and vehicle costs, medical and/or family expenses, entertainment and online services, credit card payments and debt priorities, and lastly, other expenses. In your budgeting plan, allocate a portion of your money under safety net account. The money in your safety net account can only be used on emergencies, to recover for unforeseen expenses, for income lost protection and for myriad of other financial busters.

Track Your Spending

After you have allocated your money, apply all extra funds to pay ahead on your debts. In using your money toward debt reduction instead of treating yourself to another fancy dinner or extra pair of shoes, you can watch your debt dissolve quicker than you might imagine.

Once you have set up your budget plan, track you spending to know where your money is actual going and whether it is within your budget. Keep a record of all money spent, whether it is by cash, check, credit card, etc. Once you know where your extra money is going, and oftentimes, realize how you can save hundreds of dollars that can apply directly to your debts and make huge strides to reducing your debt away.

Monitor & Review Your Budget Plan

Budgeting is a process of create a living plan and managing your money to meet your short and long-term goals. Your budget plan should be flexible and being review from time to time and make the necessary change in line with your current needs and circumstances. A static plan that never changes could doom you to failure right at the beginning.

Online Resources

There are tons of budgeting tips and tools which you can find from internet. From budget calculators and worksheets, to detailed software programs, research your options online for the one that best suits your needs. Use these extra information and help on your budgeting process.

Happy Budgeting!

Creating a budget doesn’t have to be a painful restricting process, what you need to do it to make it a habit to know whether your money is going; and by knowing the flow of your money, you have a better control on your money and eliminate unnecessary expenses and the saved money can by dump debt accounts to reduce your debts and get rid of it one day. You may not create a perfect budget plan at your starting stage, continue to review and make necessary changes to in line with your needs and financial capability and the most important is follow your budget plan to make it successfully relief you from debts.

Don’t forget the 80-20 Rule and other valuable practical insights that are mentioned in Millionomics. Check it out by clicking here and see what 100s of readers are saying too!