Making sure that you are debt-free is perhaps the best way to save for retirement. When you don’t have any debts eating up all your income, then you’ll have more money than you can set aside for your retirement.
But did you know that certain debts can have advantages? It all boils down to whether you have excellent debt management skills and if the debt can potentially make you some money. In this post, we’ll share some helpful tips on how you can better manage your debts:
Make a Comparison of How Much You Earn, Spend, and Owe
Aside from determining how much you owe, you should also figure out how much exactly you are earning each month and how much you are spending.
This will help you determine whether you can spare more cash to add to your repayments. This will also help you figure out where you can make adjustments. For instance, if you still have a lot of debts to pay, you might want to try making your own coffee for a few months and bring your own lunch to work so you can avoid expensive food from restaurants.
Pay Your Debts on Time
Time management plays a big role in debt management because you need to pay your debts on time, or you’ll have to pay late fees and other extra charges. You might want to set up an alert on your phone and laptop so you’ll be reminded of the payment due at least three days ahead of time and on the day itself to ensure that you won’t forget.
Late payments also leave black marks on your credit record, and that could affect you in the future should you find yourself needing to borrow money. Your credit record will reflect whether or not you are able to pay bills on time.
See If There’s a Better Deal Somewhere
When you have high-interest rates added to your debt plus other fees to think of, that could affect your ability to pay back the debts. Keeping that in mind, you might want to consider shopping around to see if there are other businesses that could help you with your debts. For instance, if you have a hefty credit card debt, you might want to consider looking for a personal loan with a lower interest rate that could allow you to pay the credit card debt in full.
Always Have a Contingency Plan
The unexpected always happens, especially when it comes to one’s finances. For instance, no one anticipated the pandemic happening, and a lot of people lost their jobs. You should always have a backup plan so you wouldn’t miss out on your repayments. Having an emergency fund is a good idea.
Put Financial Windfalls Towards Repayments
Whether it’s a winning lottery ticket or a surprise bonus from your boss, a financial windfall is something that you can use to repay your debts sooner. Instead of thinking of it as extra money to use for shopping, think of it as the key to becoming debt-free faster.
There are a number of retirement strategies that you can do, but before you can start working on them, you should first make efforts to be debt-free. Once you are financially free, you can better plan for your retirement as there are no financial obligations to worry about every month. Of course, getting the help of experts in retirement planning would greatly help, too.
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