If you’re thinking about retirement, make sure you’ve got a plan to get out of debt. The best case scenario would be to retire without any debt and to keep it that way. If you’re still working and you have debt, then try to work it down to nothing if you can. Once you retire, getting out of debt is a daunting task. Believe me when I tell you that unexpected costs come up and you end up spending more than you had hoped to spend. “I worked my whole life for this” seems to justify a lot of expenses in early retirement.
If you do find you’re struggling to get out of debt and you’re already retired, then make a plan. I like the idea of relieving as much stress as possible. Think about paying down your debt in chunks over five years. Don’t beat yourself up trying to do it all at once. Smooth, measured decisions are much better than hacking and swinging aimlessly. It’s OK if five years isn’t enough. Make it 10 years. But do make a plan and stick to it.
Paying 4% in interest costs when you’re earning about 0% in your savings accounts makes debt all the more painful. Yes, I like the idea of refinancing your home at a lower rate. But I like the idea of your owning your house outright even better. After seeing the banking debacle of 2008, who wants to partner with a bank? I know I don’t, and I plan on owning my house outright by 2022.