Proper Debt Management Will Lead to A Debt Free, Happy Retirement

It is vitally important for retirees to have proper debt management skills in order to enjoy a debt free, happy retirement. When you're debt free you have no money worries. You can focus your mind on leisure activities and not on finding debt solutions.

Debt management tips to avoid debt

• Prepare a financial budget and stick to it. Analyse your monthly income from various sources (pensions, interest on savings, dividends, etc). Then itemise all your monthly outgoings (food, utility bills, motor expenses, etc). Deduct your total monthly outgoings from your total monthly income to give you your surplus monthly income. You can either save your surplus monthly income or spend it. If you decide to spend it, then try not to spend more then the surplus income or youl'll be paying for the excess expenditure from your savings.


• Avoid using credit cards and do not indulge in impulse buying. It is easier to spend borrowed money on things you don't really need.


• Spend on what you can comfortably afford. Don't over-stretch your budget.


• Go window shopping in the high street to be aware of shop prices and then go on the internet to shop at the lowest prices. If you can obtain promotional codes for the items you wish to buy, that will make them even cheaper to purchase.


• Get into the habit of saving some money each month for emergencies such as burst pipes. If you have an emergency fund in place you won't need to borrow money from loan sharks when you have emergeny repair bills to pay.

Many people have credit card debts because credit card companies make it easy for them to apply for cards without charging annual fees. People are treating these cards as though they are free money to spend in the shops without thinking much about how they are going to pay for them when the statements arrive at the end of each month. They often cannot afford to pay off the whole balance on the statement and high interests are charged on the unpaid balances.

The same cycle happens each month and the credit card debts snowball. These increasing credit card debts combine with the power of compound interest mean that people are unable to get out of the debt trap. They are then obliged to find debt management solutions to free themselves from the debt trap.

In order to activate debt management solutions, the debtor must:

• find out who they owe by making a list of creditors


• find out how much they owe by putting the amounts owing against the names of the creditors


• find out from the financial budget how much they can afford to pay each month to get out of debt

If you live in the UK, this website features debt management guides, tools and information.

These debt management solutions may include

• debt consolidation. When they opt for a debt consolidation they take out one loan with the lowest interest rate (usually secured against an asset, such as their home, as collateral) to pay off the balances owing on all their credit cards. As the lender's risk on the secured loan is reduced, the interest rate on the loan is also reduced considerably. However, as the debtor risks loosing the asset if they fail to keep up with the repayment, debt consolidation may not be the right solution for them.


• selling/auctioning items that they longer need on ebay to raise funds to pay off debts


• debt settlement - this is when the debtor, or a credit counselling agency representing the debtor, approaches the creditor to negotiate a debt reduction and an extended period to pay of the debt in full.

If you are in debt, your debt management program should be taken seriously. Destroy all your credit cards and only purchase items on cash terms. Resist over-spending by sticking to your financial budget. By following these simple rules you can look forward to a debt free, happy retirement.

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