Dreaming of leaving a legacy to your spouse, children and grandchildren? If you’re swimming in debt, your dream may be at risk. Discover how to unload the debt with these tips and get on track with leaving your dependents debt free.
It’s a funny thing. In younger years, for many people, the focus is all about acquiring, adding and gaining. Debt may have seemed essential to lifestyle, dreams and goals.
As you get older, it’s all about getting that debt number to a single digit: Zero.
Financial experts are quick to remind us that debt impacts the amount available as an inheritance or legacy. If you’ve been building an empire with the intention to leave it to your heirs, this is now a top priority. Otherwise, your estate has to payout outstanding bills before any money or assets are passed on.
Just recall that moment of pain when the market took a nosedive in 2008. If your investments tanked, you still needed to pay your bills. Your investment woes didn’t stop debtors from collecting.
Financial freedom is about gaining peace of mind. It isn’t just for you. It is a surefire way to leave your dependents at ease and debt free.
Let’s look at 5 strategies to get on the road to financial freedom.
It’s tough, right? Also, take a snapshot of your current income. What streams of income do you rely on? Do you have pensions, gig work and Social Security?
The only way to get free of debt is to get real. How bad is it? The first step experts advise is taking stock. It doesn’t matter if you’ve got one card or twenty. Get them out and make an overview chart. What do you owe? What are monthly payments? What’s the interest on each one?
Once you have an overview, prioritize the order. Many advisors agree: start with paying off the debt aggressively to the card with the highest interest.
For some people, the only good debt is no zero debt. For others, using secured loans with low interest rates may not pose a problem.
Did you ever go backpacking across the Alps? Or live like a monk in Japan or India? If you’ve dreamed of living simply, now is the time to adjust to live your dream.
For many seniors, simplifying and downsizing is attractive. The added bonus is you’ll save money, have less clutter, and be happier with less. This in many ways is a recipe for feeling younger, making fresh-in-the-moment decisions, and not drowning in stuff.
Many people find that over decades, material objects have accumulated. Houses, cars, boats, clothes, jewelry, shoes and keepsakes can take over. If this sounds familiar, you have even more incentives for simplifying your lifestyle.
Consider these options to simplify:
Whether you stay put or travel is up to you. Whether you downsize to help your wallet or the environment is not mutually exclusive. You can do both. The surprising thing? You’ll feel lighter. You’re likely to feel younger, more active and more open to experiencing what life is about — right here and now.
Who knew that getting debt free could be so freeing?
While you’re paying off debts, there are two strategies most advisors recommend:
Pay bills on time. This saves you from late fees and interest rate hikes.
Focus on the card with the highest interest. Direct your extra money to this card, while paying off at least the minimum balances on others.
Once you pay off this debt, continue to the next highest and the next. Don’t reduce the amount until you are out from under all the debt.
This is generally accepted as the quickest way to focus payments and achieve having zero debt.
If you’re up to your eyeballs in debt, don’t struggle alone. Talk to your friends. Confide in your family. You’re aiming to get debt free, for your peace-of-mind, and to leave a legacy to your family.
Opening up and speaking honestly about your situation can be scary. But, your family may be able to help you establish a budget, get a loan or negotiate lower payments.
If you’re not comfortable with talking to them, connect with volunteers who want to help. The National Council on Aging offers hotlines for seniors. Check with the National Association of Area Agencies on Aging. There may be local assistance to help you.
Consult your financial advisor if you’re thinking of withdrawing from a retirement fund. While this may provide immediate relief, you want to make sure it doesn’t leave you without a cushion for unexpected expenses.
An advisor should also be able to clarify any tax implications of making withdrawals from your retirement fund.
The Big Idea: Yes, you can leave your dependents debt free.
With an aggressive, focused and steady approach, you can live your life well—and unload the debt that’s been holding you back.