No matter what age you are, paying down debt sooner than later will always end up saving you money and stress in the long run. It is a matter of financial discipline and accountability that will earn you a financially secure retirement. However, many of us do not have such discipline, so let’s be real. Do you even know how much debt you have now? Do you have a plan to pay it down in a timeline? If you don’t then you’re living in the same group the majority of Canadians are living.
When you’re fresh out of college or university and ready to take on the world with your new skills, you’ll probably be already in debt by at least $10,000. Welcome to the world of employment …and debt! In your twenties and thirties you’ll likely continue to rack up debt with car payments, mortgages, non-essential purchases and more; but that’s ok because you have your whole life to pay off that debt right? Besides the banks have been so generous to increase your credit limits and offer numerous reward credit cards. They even encourage you to pay your debts in minimum payment amounts so you don’t have to worry about using your whole paycheque to pay off a debt. That will help you pay for your necessities in life, and maybe to buy a few more things that will add to your debt. Are you thinking about retirement at this point? Not a chance. You think you have at least another twenty years before you think of retirement, so in the meantime, you’ll continue to live paycheque to paycheque. It is what everyone else your age is doing at the moment right?
In your forties you may still be living paycheque to paycheque, but the plan of retirement may be slowing creeping into your thoughts. Do you have a plan? You may still be deep in debt and paying the minimum payments on your credit cards in an effort to continue to live beyond your means. Many people actually do not recognize how deep in debt they really are. As long as the paycheques are steady and the interest rate remains low, many people “get by”. Living on the edge is the norm these days with the debt to income ratio climbing as high as 164%. Any change in lifestyle could easily sink a person over the edge, like a job loss, illness or divorce.
When you reach your fifty’s and early sixties you’d better hope you are not simply relying on your personal assets or investments to cover living expense costs. Personal income will decreased dramatically and pensions are not as financially healthy as they used to be. Interest rates are on the rise and by the time you reach your sixties, you’ll definitely be paying more interest on the debts you still carry. You may even have more bills due to health concerns or funeral costs. Concern for financial stability is at its peak when you are a senior. You can always seek aid from your loved ones, but they would be also struggling to get ahead in their own pursuits. You do not want to be in such a financial pickle in your retirement.
Paying off your debts before you reach your sixties would be the best strategy. While you still earn a healthy income, build a budget that will help you pay down your debts as quickly as possible. Try not to make any big purchases until your debt has been cleared so you won’t be continually adding to the debt you are trying to pay down.
This strategy will help you clear the road to a financially healthy retirement. If you do not have the means to pay down your debt, do you acquire any loans. They will only add to your debt with ridiculously high interest rates. The best route would be to consult a professional debt counselor who will help you pay down your debts in repayments you can afford while advising on better budgeting. For more information on paying down your debts, visit OCCA Consumer Debt Relief. We can help!.
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