Pay Off Debt or Suffer In Your Retirement

Pay Off Debt or Suffer In Your Retirement

I don't know about you, but I am really sure that if I pay off my debt as soon possible, my retirement will remain a dream. Though, debt in itself is not really a bad thing, it depends on how you are using debt.

The problem really, is with consumer bills. You better pay off your bills, or you don't get to retire at all. A lot of people invest in long term investments like the 401k, mutual funds or the stock market, but unless they pay off their bills that they have today, all those investment will eventually be paid to consumer debt.

So the important deal here is to pay off old bills first before even thinking or starting to invest for your retirement.

Hence, the first step would be to classify your existing bills today. Label each one whether it is a consumer debt or an investment debt. By the way, consumer debt is simply defined as debt that takes money off your pocket. Investment debt is debt that puts money in your pocket, or and is known as good debt, as coined by Robert Kiyosaki.

After classifying your bills as either consumer or investment debt, list all the consumer debt that you have and quantify them based on the interest rate and the balance involved. Then, used the debt snowball method and pay off the debt with smallest balance. Slowly eliminate each consumer bill until all your consumer bills are paid off.

Now that all of your consumer debts are paid off, it's time to focus on your retirement. Use the monthly allocation that you used to pay off your old accounts, and convert it into an investment fund. Choose wisely, the kind of investments where you will put your money and soon you are on your way to an early retirement.

Just apply the little steps that I have given you above, and make sure to make a mental note as you improve on your financial life. As you can see the elimination of old bills can be a great factor in your long term plans, so choose to pay off debt or suffer in your retirement.

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