How Seniors Can Get Out of Debt

Your retirement is supposed to be when you get to relax and enjoy the spoils of working for your entire life. However, for many people, retirement is not nearly this easy. More and more seniors find themselves struggling with debt. These struggles can cause numerous problems and make it incredibly difficult to have a comfortable retirement if retirement is even an option at all.

One major issue is that, if you have a lot of debt, there’s also a good chance that you don’t have very much saved for retirement. You might have a government pension or a work retirement plan, but you probably don’t have a lot of actual savings. This means you’ll be living on a very restricted budget. If any unexpected expenses come up (your vehicle breaking down, significant home repairs needing to be done, medical bills, etc.) you won’t have money available to pay for the expense. This means you’ll need to go even deeper in debt. Eventually, you’ll reach a situation where you can’t afford to pay for your living expenses and your debt.

Before you reach that point, know that there are ways to improve your situation. Here are some tips for how seniors can get out of debt.

Having a plan for your retirement is critical. Some people retire voluntarily, but many do not. A lot of seniors end up having retirement forced on them when they are laid off and unable to find new work. An unplanned retirement can be very difficult, as it happens unexpectedly so you didn’t have time to prepare for it financially.

If you are a senior but are still in the active workforce, you’ll need to make sure to have a plan for your retirement even if you plan to keep working for the foreseeable future. While you’re still working, it’s important to do everything you can to pay off your debts as quickly as possibly, so you don’t end up retired and still carrying significant debt.

Having a budget and sticking to it is critical for everyone. Whether you’re working or retired, and whether you have debt or you don’t, it’s important to have a budget.

Make sure you know how much you spend each month on living expenses and on debt repayment. Too many people wind up in debt trouble because they don’t know how much they owe and how much they are spending. Keep track of your purchases and your debts and make sure you can fit your expenses into your budget with some money left over for emergencies. You may need to adjust your lifestyle and make cuts to afford everything, but it will be worth it to reduce your debt.

When you’re trying to pay down your debts, you likely won’t have the resources available to pay off everything at once. That means you’ll need to prioritize where you spend your money. It’s often a good idea to target the debts with the higher interest rates first. These debts (often credit card debts) cost a lot of money if you are carrying a balance. Focus your attention and your efforts on reducing and eliminating these high interest debts as quickly as you can, while still making sure that you don’t miss payments on your other debts.

If you’re trying to eliminate your debts, you’ll need to make sure that you’re also not adding on more debt at the same time. For instance, while you’re focusing on paying off your credit card debt, you’ll want to stop using your credit cards to make purchases. Otherwise, you could be adding on new debt as quickly as you pay off your old debt.

This means you’ll need to live off cash. To do so, look at your budget, track your spending carefully, and be sure to avoid any purchases that you can’t afford to make.

Many people are too proud to get help with their debt issues. They see it as failure if they speak with a financial professional about money. Other people may believe that money matters should remain private and that spending and debt are topics that you shouldn’t talk about. The reality is that you shouldn’t struggle in silence. There are resources and professionals that can help you.

Speaking with a licensed financial professional can help you understand the options that are available to you and improve your debt situation. Contact us today for more information.