Debt in Retirement

Debt in Retirement isn't a good thing... especially if income is limited after retirement.

This is a debt elimination plan I learned at church. It's Dave Ramsey's “Snowball” plan and it seems simple and logical to me... so I wanted to share it with you.

Debt Reduction Plan: Snowball Plan

Consider this Debt Reduction chart to better understand this plan. If the debt shown was your debt, and you paid it off at minimum payments, it would take you 120 months (5 years) to pay it off (assuming no new debt which is a fantasy in itself).

Under the Debt Snowball Plan, paying $200 extra each month to the debt snowball, and all this debt is repaid in only 21 months (less than 2 years!)

That's a difference of 99 months (AND you paid no additional interest for all those months).

It might be worth taking a part-time job, simply to rid your life of debt. Seriously a long time stressor, work a bit longer and live happier.

If you are still working, after your debt is long gone, you can even SAVE the total of these payments, each month, towards retirement! Saving is easy when you are used to living without that extra amount.

How to Reduce Debt with the Snowball Plan:

Step 1) List your debts in order, from the smallest balance to the largest.

Step 2)  Pay the smallest amount due, the minimum payment, on all of your debts EXCEPT for the smallest debt on top. Every extra dollar should go towards paying off that smallest debt... go on, you CAN do this! Pay that top debt off! 

Step 3)  Next, put the previous minimum payment from the Debt #1 (that was just paid off)  plus any extra money toward the second debt on your list... and keep paying off debt.

You are now paying the minimum that you were already paying PLUS the full amount you paid on Debt #1.. rolled into one neat little snowballing payment! Doesn't that feel wonderful?

Hey, don't you dare charge more on that credit card you just paid off!  Why not just cut that card UP? Gone.

Step 4)  Get Debt #1 and Debt #2 on the list paid off.  You just paid off the first two debts  and you really should feel great about yourself. You had self control and that weight is lifted off your heavy shoulders.

Don't stop now -- Debt #3 is next on your list and add that full payment from Debt #2, plus the minimum you've been paying on Debt #3. Your snowball is running away with your debt load!

Do you get the concept?

As more and more is paid onto each top debt amount (your smallest bill) -- it can really get paid off.  As you pay off the smallest debt, you can use those monies to pay off the next level. 

So, as the snowball rolls over each debt, it picks up more snow... more money in payment towards the next debt!

Good-Bye Debt in Retirement!

Study the chart for a moment and you'll understand... it makes total  sense.

You pay larger amounts on each debt, you pay off debt after debt, and you might even STAY MOTIVATED as you see your Debt in  Retirement is GONE!


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