Dave Ramsey’s Advice for Anyone Over 50 and Debt
Having debt can be stressful at any time in your life – but it can be especially worrisome as you approach retirement age. Although it may be almost time for Social Security to kick in, your investment portfolio has a short recovery time from a market downturn, and debt payments can take a toll on your wallet while you prepare for retirement.
Famed financial guru Dave Ramsey has given a lot of advice to people in their 50s and 60s who are in debt but dreaming of retirement, but his main message is clear: It’s time to pay down your debt.
Dave Ramsey’s key message on debt
Ramsey’s tough love advice is that carrying debt into retirement can seriously hurt your finances in your golden years – and that you need to pay off debt before you retire.
Ideally, if you create and stick to the plan, you can pay off your debt before you retire. Ramsey encourages getting involved as soon as possible, which may require making sacrifices, such as shrugging it off or aggressively cutting your expenses.
And while it may be tempting to retire even before your debt is paid off, it may make sense to keep your job a few years longer than you originally planned or to keep a part-time job so you can keep throwing money at your debt payments without sacrificing the important things.
Of course, the best strategy for one person to deal with their debt will look different from what makes sense to another. If you’re unsure of the best way forward, talk to a financial advisor who can help you consider your financial situation, goals and timeline.
Gold Investor Kit Gift: Sign up with American Hartford Gold today and get a free investor kit, plus up to $20,000 in free silver on qualifying purchases.
How to pay off debt
If you combine multiple balances, you can choose a popular debt settlement strategy. The snowball method involves tackling your smallest balance first, then moving on to your second-smallest balance, your third-smallest balance and so on. Accumulating small wins can help boost your motivation.
The debt avalanche method involves focusing on the highest-interest debt first, then moving on to the balance on the second highest-interest debt and continuing until you pay off all of your debt. This approach can help you get out of debt faster, and you’ll save more money in interest than if you choose the snowball strategy.
Remember that whatever method you choose, you still have to make minimum payments on all your debts, such as mortgages, car loans and credit cards.
Pet Protection: See How Spot Pet Insurance Can Help Your Dog or Cat
Adjusting your lifestyle
Getting out of debt in your 50s may require significant lifestyle changes — and skipping your daily coffee probably won’t do the trick. The real savings come when you target your biggest expenses, like housing and transportation. Switching from a new car to a used car and downsizing your home can free up a lot of room in your budget.
You may also need to set limits on how you spend money. Eating less, canceling streaming and other service subscriptions, and taking a short vacation may be all it takes to get out of debt. The more you cut down on extra expenses, the easier it is to keep your debt under control and pay it off over time.
Extra Cash: Get up to $1,000 in stocks when you fund a new active SoFi investment account
