Eliminate Your Canada Debt Before Your Retire

Posted by: Shawn Stack on 11/11/2011

More and more seniors are entering their Golden Years with large amounts of debt, which can make what should be a relaxing and peaceful stage of life stressful and worrisome. Paying off your debt before retirement provides a number of benefits, including:

• More money for emergencies
• Less money spent on interest
• Reduced stress over money
• More money left for pursuing recreation and hobbies

 

Holding debt into retirement can lead to financial difficulty and leave you more at risk for Canada bankruptcy, especially if you are on a fixed income. Whether you're 5 years from retirement or 15, paying off your debt before retirement can be done with a little planning and effort. These tips will help you pay off or greatly reduce your debt before you retire: 

• Make a plan.  The first thing you will need to do is make a plan for paying down your debt. Sit down and figure out exactly how much money you owe and to whom. List interest rates and balances. You can approach it several different ways. One way would be to pay off the smallest amount of debt first, which can be very motivational. Another way would be to pay off the largest interest debt first, which may take a little longer but will save you money on interest in the long run.

 

• Make a timetable.  In order to reach your goal of paying off your debt, you will need to decide when you want to have it paid off. If you are not planning on retiring for 10 years and you aren't swarming in debt, you will have more flexibility than if you plan on retiring in 5 years. There are many online calculators that allow you to input the balance of your debt, interest rate, and monthly payments to determine how long it will take you to pay off your debt. This can be a useful tool in developing a plan of action.

 

• Pay more than the minimum payment.  You must pay more than the minimum payment if you plan on paying off your debt before retirement. Minimum payments are designed to squeeze the maximum amount of interest out of you as possible; even adding $10 or $15 a month to your bills can drastically reduce the amount you pay in interest over time and allow you to pay off your debt much faster than if you simply paid the minimum required to stay in good standing.

 

• Look for ways to cut expenses.  In order to pay off your debt, you will probably need to look for ways to trim expenses from your budget and apply them towards paying off debt. There are many ways you can save money, most with little effort. For example, cut the amount of money you spend on food each month by using coupons and shopping sales. You can also cancel pricey cable or gym memberships and put that money towards debt reduction. Taking advantage of senior discounts if you are over 55 is also a great way to save money. 

 

Developing a solid debt reduction plan and then having the discipline to follow it will allow you to retire debt free and leave you with more money to spend on enjoying your retirement.