Retirement can become an unreachable dream when unmanageable debt becomes a nightmare.
More than 61% of elderly Americans owe $31,000 or more in various debts. In 1989, the average retiree owed about $7,500.
If you don’t eradicate debt before retiring, then retirement can become a self-defeating effort.
Here are three ways to reduce debt years before retiring.
Downsize your life
“Lifestyle creep,” is a lifestyle phenomenon in retirement where retirees subconsciously or unwittingly begin to slowly start living above their means.
Lifestyle creep and retirement fund depletion can occur if you disregard debt to enjoy your retirement years.
Start downsizing your life at least a decade before retiring, if you are saddled with debt. Downsizing is the process of aggressively living below your means as much a reasonably possible.
Sell your house and move into an affordable apartment. Move from a high cost of living city to a small city or town.
Start buying only non-branded generic consumer products. Sell your car and move closer to work or work from home.
Examine your life financially and find every legitimate way to downsize it.
Begin paying off debt
Become laser-focused on paying off all your debt before you hit retirement.
Contact your creditors and make repayments plans based on your finances. As long as you aren’t financially irresponsible or ghost your creditors you will be surprised how accommodating they can be.
Use the snowball method: Methodically pay all of the lowest balance debts first while paying the minimum balances on the largest debts. Stay disciplined and incrementally you can off your debts in a few years.
You can always pay more than the minimum balance when due. And you can make multiple small payments on a debt when possible.
Consult a financial advisor and adopt a debt repayment plan that suits you.
Get a side gig
There are many ways to make supplemental income in the online gig economy.
There are only 24 hours in a day, but you can find the time to make a supplemental income in the week.
Leverage professional skills and talents into an online hustle. Teach academics or music online. The typical online teacher can make $34,000 to $64,000 annually.
And you could possibly make more if you are credentialed and licensed.
Hire yourself out as a consultant based on your work experience. Network with former work colleagues to find a side hustle.
Just start somewhere and see what you can build and use any money your earn to pay off debt first.