Your first mistake was entering into your retirement years with hefty load of debt on your shoulders. Afterall, retirement means stepping away from a job and that translates into no more weekly or bi-weekly paycheck. But more and more Americans are carrying “financial baggage” into their retirement years, and that debt can be burdensome to say the least. Debt among retirees continues to grow at an alarming rate. Polls show that in 2016, 60 percent of retirement age households were carrying debt, compared with only 42 percent back in 1992. In the pandemic plagued 2020s that percentage is bound to be even higher.
According to Katie Ross, education and development manager for the national financial education nonprofit, American Consumer Credit Counseling, “It can be difficult to pay off debt after retiring, especially if you are on a fixed income.” But luckily, there is more than one way to consolidate or even pay off these debts. Here’s just a few you might want to consider if that debt burden is keeping you up at night.
Downsize or Get a Reverse Mortgage Loan
Says personal finance expert Andrea Woroch, “The biggest bill most people pay is their mortgage.” If you’re still paying on a hefty mortgage into retirement, you might think about selling your home and purchasing something more affordable. Or how about renting a nice apartment? Renting also means you no longer must pay for grounds care, heat, water, or pesky appliance and structural repairs.
But if you can’t bear to move out of your family home, you can look into getting a reverse mortgage loan. This type of loan taps into the equity you’ve been building up for decades. If you qualify, you will never have to pay another mortgage payment ever, if you so choose. You can also live in your home until you die or decide to move. To find out how much of a loan you qualify for, you can check out a reverse mortgage calculator (https://reverse.mortgage/calculator) from All Reverse Mortgage, Inc.
Interest rates have never been lower which makes refinancing an attractive solution to at least lowering your overall debt. The Federal Reserve Board also seems to be committed to keeping interest rates down due to the economic hardships caused by COVID-19. Do your research and find out what the rates on car and home loans are now compared to when you purchased them. Then approach lenders who will consider refinancing them which could lead to lower payments, at least in the short term.
Establish New Financial Priorities
Experts attest that you need to come up with a plan on how exactly you are going to pay your debt off. One great way to take action on multiple credit card debt is to pay off the smallest balances first. This is a great way to motivate yourself into improving your financial situation since you might be able to pay off one of your cards or loans in just a matter of a few months. Then you move onto the next smallest debt, and then the next one after that.
You can also choose to pay off those cards/loans with the highest interest rates first. This method can also give you the motivation necessary to improve your overall financial situation.
For those of you who are juggling multiple debts, you can simplify the payment process by consolidating all of them into one big bill. The best option is to qualify for a personal loan or line of credit that will cover all of your high interest credit card loans. The average interest rate on a credit card is 13 percent while personal loan rates go for as little as 6 percent, but it all depends on your credit score.
Freedom Debt Relief Vice President, Tanya Peterson, states that while your new loan rate will depend largely on your credit history and score, “some lenders offer discounted rates to applicants who have accumulated retirement savings.”
Grab a Side Hustle
Side hustles seem all the rage these days, many of which, you can do from home. From starting your own “Mommy Blog,” to writing books and articles for Kindle Direct Publishing, to becoming a social media influencer, to selling products on Amazon SBA, to trading Cryptocurrencies, side hustles can not only bring in extra money, but you can make a nice living from multiple streams of income. Some people are not only able to pay off their debts with side-hustles, they are getting rich.
However, you choose to go about paying off your debt in your retirement years depends on how much effort, research, and commitment you’re willing to put into it. But by making a plan for consolidating and paying down your debts while taking on a fun side hustle or two, you can not only achieve financial freedom, but you can also actually make a heck of a lot of money.