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Managing Debt when You're Retired
No one wants to or plans to retire in debt, but life and circumstances happen and sometimes we reach that magical stage of life where we're supposed to slow down and enjoy not facing the daily 9 - 5 grind with a burden hanging over us.
Managing debt in your retirement years can be a challenge since increasing your income to get caught up on your payments is not always an option. Managing debt is possible but it’s important to adopt an effective strategy and stick to it.
First things first: budgeting. Go over your finances to figure out what your income is and look for ways to cut down on some expenses. Figure out how much your living expenses amount to and how much you can pay on your debt each month.
Then set up a payment plan. This may involve contacting your creditors to let them know you intend to pay them back. Try settling for less than what you owe. Creditors will often agree to dropping late fees and interest charges. Agree to make monthly payments you can afford.
Set up the payments so they are taken directly from your bank account on a regular basis so you never miss a payment. If your creditors are generous enough to allow you a payment plan, then it is your responsibility to uphold your end of the agreement.
Some may suggest you choose bankruptcy. It may seem the only way out, it may even seem the easiest way out of your debt problems. But while filing for bankruptcy can erase your non-secured debts, your secured debt will not be affected. Keep in mind that this will negatively affect your chances of getting future loans or credit of any type for many years.
Bankruptcy should be the absolute last resort you take to eliminate your debt. It wasn't designed to allow you to just wrack up debt then ignore it. Bankruptcy was originally designed to help those who genuinely, through circumstances beyond their control, couldn't repay debt - it was a solution to sending them to the poorhouse.
If you've run up debt you have a moral obligation to repay it.
If you own your home outright, then a reverse mortgage may be of help. A reverse mortgage can provide a lump sum or an additional monthly income so you can have more money to pay your debts back. The amount you can receive is based on the amount of equity in your home. With a reverse mortgage, you never have to pay the finance company back as long as you live in your home, but the mortgage falls due when you die or relocate. In most instances, the mortgage company gets your home once you die or relocate.
Again, while a it may seem an easy solution, get good advice, read the fine print and make sure you understand all the implications of a reverse mortgage,
At the very least create a spending plan so that you can live within your retirement means and stick to it.
It may not be the retirement you dreamt of but you won't be racking up any more debt giving you peace of mind to enjoy your retirement lifestyle.
Managing debt in your retirement years can be a challenge since increasing your income to get caught up on your payments is not always an option. Managing debt is possible but it’s important to adopt an effective strategy and stick to it.
First things first: budgeting. Go over your finances to figure out what your income is and look for ways to cut down on some expenses. Figure out how much your living expenses amount to and how much you can pay on your debt each month.
Then set up a payment plan. This may involve contacting your creditors to let them know you intend to pay them back. Try settling for less than what you owe. Creditors will often agree to dropping late fees and interest charges. Agree to make monthly payments you can afford.
Set up the payments so they are taken directly from your bank account on a regular basis so you never miss a payment. If your creditors are generous enough to allow you a payment plan, then it is your responsibility to uphold your end of the agreement.
Some may suggest you choose bankruptcy. It may seem the only way out, it may even seem the easiest way out of your debt problems. But while filing for bankruptcy can erase your non-secured debts, your secured debt will not be affected. Keep in mind that this will negatively affect your chances of getting future loans or credit of any type for many years.
Bankruptcy should be the absolute last resort you take to eliminate your debt. It wasn't designed to allow you to just wrack up debt then ignore it. Bankruptcy was originally designed to help those who genuinely, through circumstances beyond their control, couldn't repay debt - it was a solution to sending them to the poorhouse.
If you've run up debt you have a moral obligation to repay it.
If you own your home outright, then a reverse mortgage may be of help. A reverse mortgage can provide a lump sum or an additional monthly income so you can have more money to pay your debts back. The amount you can receive is based on the amount of equity in your home. With a reverse mortgage, you never have to pay the finance company back as long as you live in your home, but the mortgage falls due when you die or relocate. In most instances, the mortgage company gets your home once you die or relocate.
Again, while a it may seem an easy solution, get good advice, read the fine print and make sure you understand all the implications of a reverse mortgage,
At the very least create a spending plan so that you can live within your retirement means and stick to it.
It may not be the retirement you dreamt of but you won't be racking up any more debt giving you peace of mind to enjoy your retirement lifestyle.