Debt in RetirementDebt in Retirement isn't a good thing... especially if income is limited after retirement. This is a debt elimination plan I about heard 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. 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).
However, 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 (no added interest for all those months) and LATER, after your debt is long gone, you can even SAVE the total of these payments, each month, towards retirement!! As a better explanation, download or print out the spreadsheet here – so you can add your own figures to see how this works: List your debts in order, from the smallest balance to the largest. Pay the smallest amount due on all of your debts except for the smallest one on top. Every extra dollar should go towards paying off that smallest amount.. go on, you CAN do this! Pay that top debt off! Next, put the old minimum payment from the debt that was just paid off plus any extra money toward the second debt on your list... and don't you dare charge more on that card you just paid off! Get Debt #2 on the list paid off! Pay off Debt #1 and Debt #2 on your list and add those minimums (plus extra) to Debt #3... your snowball is running! More and more is paid onto each debt amount so it can really get paid off. So, as the snowball rolls over each debt, it picks up more snow... more payments towards the next debt! Good-Bye Debt in Retirement! The “New Payment” each time is the total of the previous debt’s payment PLUS the current debt’s minimum. Get it? 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! More Retirement Advice here! New! CommentsPlease consider leaving your two cents... questions and comments about what you just read! It only takes one retirees thoughts to help another retiree... |
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