Incorporating Debt Consolidation into Your Retirement Plan
Debt consolidation is often a good way to save money and get your finances back under control. This financial product can be used by people who just want to get their finances in better shape. In fact, this can be a good way to prepare for retirement.
What is in a Retirement Plan
Of course, financial advisers hardly ever talk about using debt consolidation to prepare for retirement. The truth, however, is that retirement planning has to focus on two things: income and expenses. Most financial advisors make money by getting clients to invest their savings. The more that gets invested, the more money they make. This makes them tend to focus solely on increasing income. While this is important, reducing your expenses is the other part of retirement planning that is just as crucial. Rather than looking at ways to spend your golden years clipping coupons, why not explore options to reduce your debt.
One of the best things you can do when starting your retirement is get rid of as many financial obligations as possible. Credit cards, auto loans, and personal loans can require a lot of additional income to pay off, and if you miss a payment you’re at risk of losing the assets that they’re tied to. Instead of planning to pay all of those debts, it makes a lot more sense to pay off your debts before you retire. This will reduce the amount of income that you need when you’re not working.
How can Debt Consolidation help your Retirement Plan
Debt consolidation can allow you to replace all of your current debts, along with their variable interest rates and monthly payments, with one loan with a fixed interest rate and monthly payment. This will allow a person to develop a budget in their final working years that gives them some extra money to save for their retirement. Even if you are unable to pay off the loan before you retire, it’s possible to plan a retirement budget that includes a steady, low monthly debt payment.
Once the debt consolidation loan is paid off, you can take the money that you were paying towards that loan and use it to shore up your retirement savings. Many people use a debt consolidation loan to get their budget ready for them to retire.