Going into debt has forced most households to struggle to make ends meet across the globe. Without evaluating the repercussions, they keep borrowing money from different sources over and over again to fulfill their dreams and desires. There comes a time when they find themselves stuck miserably in financial obligations and it becomes extremely challenging for them to meet their debt repayment schedules. This indicates that debt levels among poor, marginally poor and moderate-income households have significantly increased over the past decade or so.
Even high-income households are not that far behind poor or moderate income level households. According to a study, the highest-income households carry the largest amount of debt. This is an alarming situation for all of us no matter how well we are managing our debt repayment schedules. Once you get into it, it can feel that there is no way out! The study further revealed that people usually don’t borrow money for fun, they borrow it for meeting financial uncertainties. The need for going into debt is driven by micro and macro level economic factors, such as recessions, high-inflation rate, internal/external financial mismanagement, etc.
Debts—Tackle Before Your Retire!
Money does not discriminate. It doesn’t matter if you make $25K or $250K a year, you will never win a race against high-interest debt. If you want to enjoy complete financial freedom, you need to spend less and save more for your rainy days. They will never tell you before coming—they will show up any time, when you’re least expecting it. As far as the debts are concerned, you need to tackle them before you retire or you’ll probably find yourself surrounded by a retirement crises.
No matter how much you earn through your working years, loans or outstanding amounts always raises serious concerns around managing your finances. Even a slight mismanagement in finances can cause you a great deal of stress. Loan repayment obligations, during your working years, will restrict or prevent you from saving more for retirement. Therefore, it is ideal to deal with your loan obligations or repayment schedules within your working years in order to save more for your retirement. Here are four debts that you need to tackle before you retire.
Credit Card Debt
Winning a race against high-interest debt is no easy feat, you have to be very careful whether you can afford a credit card or not. Getting a credit card is easy but repaying it is a lot harder than anyone can imagine. According to accounting data, about 1 in 3 American adults regularly use a credit card, which means that its usage is quite extensive. This doesn’t make it hard to see why most American are strangled in debts. Thus, you must get rid of it, as credit card debt typically carries a high-interest rate.
Moreover, you will have less money to put in retirement funds or savings. It is something that eats your retirement savings without even realizing it. Hence, you must handle credit card debt or it could even raise serious legal and financial issues.
Student Loan Debt
It gets really hard for baby boomers to save money, especially when they are liable to make debt repayments. According to a survey, those who carry student loan debt find it very difficult to save money for retirement. This is why paying them off within your working years is a big plus for you no matter how much one may argue. The ultimate goal is to maximize your retirement savings, so you have to be very careful in dealing with student debts. You must not miss your repayment schedule. Ensure that the record is well-maintained for dealing with any sort of discrepancies.
Mortgage debts are a huge stress for most American households. In fact, most people die before paying their mortgage loans, especially those who start a mortgage plan a bit late in their lives (let’s say in their 40s-50s). However, those who start at a relatively younger age (in their 20s-30s) manage to pay their mortgage loans by the time their retirement rolls around.
Nearly 75% of people fail to meet their monthly mortgage repayment schedule. This indicates that people find it extremely difficult to pay off their short and long-term debts. You need to devise a repayment mechanism in order to make scheduled payments. A mortgage loan is one of the most important loans that you must tackle before you retire or it will eat up your retirement savings.
Medical loans acquired at any stage of life must be repaid in time. If not, expect to face a possible financial crises at the end of retirement. There are agencies who may finance your medical needs, but look out for those who offer easy and smooth repayment schedules. Medical loan debts are very burdensome on those who are near their retirement age. Therefore, you plan and tackle these before you retire or be mentally prepared for facing financial difficulties at the end of your career.
People across the globe face extreme difficulties in meeting their financial debt obligations. Debt loans can help us to meet uncertain financial situations. But, paying them off, in the long run, becomes extremely challenging for the entire family, especially when you are near your retirement. You must prioritize and tackle your debts before you retire in order to have a financially secured retirement life.
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