Retirement Is Approaching, Are You Debt Free?

Ensuring Financial Freedom As You Approach Retirement

As we advance towards the golden years of retirement, one question often looms large: “Are you debt-free?” In the modern age, the use of credit for everything, from grocery shopping to vacations, has become a norm. However, this shift in spending habits has led to increased credit dependency and financial stress. This article aims to provide you with strategies and options for achieving financial freedom as you approach retirement.

Understanding the Modern Consumer Attitude

Gone are the days when the mantra of “if you can’t afford it, don’t buy it” held sway. Today, credit has become a ubiquitous part of our lives, often leading to a vicious cycle of debt.

 

Due to this, many find themselves cash-strapped and heavily reliant on credit, sometimes even resorting to using one form of credit to pay for another.

Assessing Your Financial Situation

The first step to financial freedom is understanding your current situation. List down your net income and all your expenses and compare this with your debt payments. This exercise will give you a clear picture of your financial health and the steps you need to take to become debt-free.

Alternatives to Bankruptcy

Bankruptcy should be your last resort. Depending on the results of your financial assessment, you may have several other options available to you.

Remortgaging Your Home

If you are a homeowner with house equity, remortgaging your home could be an option. This essentially means your debts are absorbed into your mortgage. However, this option requires careful consideration of whether you can afford the payments when your income level drops after retirement.

Consolidation Loan

If you are still employed, you might be eligible for a consolidation loan to pay off all your debts. This loan typically comes with a lower interest rate and a lower payment than keeping all the accounts separate. However, it is crucial that you stop using your credit cards and focus on paying down your debt once you opt for this.

Credit Counselling

Credit counselling involves making monthly payments to your creditors through a credit counselling office. In some cases, the creditors might even cancel or reduce the interest, and you usually repay the full balance owed.

Consumer Proposal

A Consumer Proposal could be an option if you have leftover money at the end of the month. This involves offering your creditors a monthly payment over a period of time, typically less than the full balance owed. This option preserves your assets, prevents legal actions, and involves no interest.

# Note: To qualify for a Consumer Proposal, the total debt level (excluding the mortgage) must be less than $250,000.00.

How Professional Help Can Make a Difference

With the right help and the right approach, ensuring that you are debt-free as you approach retirement can certainly be achievable. Remember, Retirement Is Approaching – Are You Debt Free?

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