Retirement vs. Paying
Should you prioritize putting money towards your retirement, or using those funds to pay off your debts? Going back and forth in your mind regarding saving for the future versus paying off the past can become a complete hamster wheel, getting you nowhere on either front. The good news is, there is no right or wrong answer to the question, the answer is, it depends, and does not have to be so black and white. There are a few methods you can utilize if you decide becoming debt free is your plan, you can explore your options with personal loans in an effort to consolidate debt and get your interest rates under control, for example. The interest rates on credit cards is typically much higher than it would be with a private loan, and you can get matched with loan options in less than 60 seconds, so it wastes none of your time to simply begin to research. 

Type of Debts

Think about who you owe money to, what for, and how much. Once you view your debt as smaller pieces you can begin to decide how to better manage it. If you want to get credit card debt under control, and owe to multiple companies, consolidation might be the right choice. A personal loan can afford you the luxury of only making one payment each month, instead of many, and that in turn will prevent you from having paid out a ton of extra cash on interest alone. Overall a lower amount of debt can also boost your credit score, so think about what’s coming down the pipeline for your life and if it’s realistic to become debt free to be eligible for better rates on any future loans that may be larger, such as a mortgage. 

How Close is Retirement?

A general rule of thumb for a retirement savings plan, is thirty years of contributions, so do the math. If you are closer to retiring than you are starting your career, putting money away for the future may be the bigger priority. If your employer is willing to match you 401k contributions then taking advantage of that free money is smart so that the total in your account can grow based off multiple people adding to it while you are at a stage where you are able to contribute higher totals each month. If your type of debt is large versus small, for example a mortgage as opposed to a credit card, then paying off your mortgage is probably not an immediate need, especially since reducing this debt doesn’t free up additional credit to have at your disposal. 

Put Your Plan on Paper

Your funds and needs will not be identical throughout all the stages of your life, so create a plan for saving and spending extra income that is firm but not concrete, and one that can flex with the seasons of your life, and get it on paper. Creating accountability for yourself each month will help you to adopt the habits needed to be smart with your money, but not stressed or obsessed over it. A plan also gives you peace of mind and prevents you from having to make huge financial decisions every single month. Keep all your goals in mind, but prioritize them, that way nothing gets left behind, but you are less overwhelmed by the total weight of them.