How to retire debt free

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Debt settlement and income taxes - Your questions answered
Debt settlement has become a popular approach to resolving problem debts without having to file bankruptcy. With this approach, creditors agree to accept a portion of what you owe (usually around 50% or less) to settle the account, and the remaining balance is forgiven. This technique will certainly continue to grow in popularity now that the new bankruptcy law makes it tougher to fully discharge ... Read debt consolidation article



Unemployed debt consolidation - Twin burden of unemployment and debt
Okay, did you wish on the fairy godmother to take away debts? You are doubtful if it will work- especially when you are unemployed. You are certainly not happy with the current circumstances. You want to work, have the ability to pay your own bills. Everyone wants that freedom and control. Debt consolidation for unemployed can enable the borrower to do exactly that - pay your bills! Unemployed deb... Read debt consolidation article



How to retire debt free
Retirement. We dream about it, whether it is five years or 15 years away. We fantasize about the day when we march into the boss's office and declare that we are retiring in one month and plan to take off to Bora Bora to unwind from decades of stress and office politics.

Retirement can indeed be the "golden years," if you are not bogged down with money issues such as keeping current on mortgage payments, affording medical insurance, buying a car, taking vacations, enjoying golf, enrolling in continuing education, etc.

Retirement means that you will need less money because expenses such as professional attire, lunch, weekly parking and commuting gas will be gone. However these expenses will be replaced with other expenses.

It is estimated that the average American will need 70% of the income that they earned during their peak earning years for retirement. In other words, if you make $50,000 per year when you are nearing retirement then you will need approximately $35,000 per year as a retiree. This may seem like a lot of money but consider these facts:

Medical Expenses. Your medical expenses will be higher since you are older. In addition, since you are not working, you may have to foot the entire bill yourself. To give you some idea of your medical expenses per month, a family of two on a Kaiser Permanente plan with a copay of $10 - $20 will be around $1050 per month. This is a nice chunk of change.

Leisure Expenses. Now that you have all the time in the world, you will want to do something nice for yourself. Your leisurely activities such as golf, vacations, and shopping will take up a bigger portion of your budget. You may also want to go back to school and take that Astronomy or photography class that you always wanted to take.

During you working years your monthly expenses looked something like this:
- Mortgage and Insurance
- Auto Payment and Insurance
- Utilities
- Food
- Credit card

Some of these expenses are what I term "persistent" expenses, meaning that you will always have them. These expenses include items such as insurance, utilities and food. The other types of expenses are those that you can purge permanently, namely: Credit card, Mortgage and Automobile loans. Relieving yourself of these debts should be your number one priority in the quest to retire debt free.

Credit Cards. This is your number one enemy expense. Obliterate it from your life. If you walk away with one lesson after reading this article, let it be the motivation to get rid of credit card debt before you retire. Credit management has become one of the biggest challenges facing Americans today. It is estimated that 30 million Americans struggle with some form of bad credit stemming from living beyond their means via excessive credit card debt.

Take the time to Analyze your current debts and create a systematic plan to achieve a $0.00 balance on all your open accounts.

Automobile Payments. If you are carrying a car note, try to pay it off before you retire. You do not want a car payment looming over you at this point in your life. A car does not appreciate - you will not get much value out of it, once you drive it off the car lot. It is a necessary evil. After all, how will you visit those grandkids now that you have all this extra time?

Mortgage Payments. This is your biggest and most important expense. You need a place to live. There is no way to get around this expense but you can get rid of it. Start making an extra mortgage payments every year. If your mortgage is $1000 per month then you should send an extra $1000 to your mortgage company at the end of the year. In lieu of sending a big check at the end of the year, you can send an extra $85 every month for a total of $1085 per month. On a 30 year loan, this will reduce your mortgage term to approximately 23 years.

Once your mortgage is paid off, your biggest expense will be gone. If you run into financial difficulties in the future, you can always take out a reverse mortgage or a home equity line of credit (HELOC).

TIP: Many parents fall into the trap of paying for their children's college education before getting rid of their debts. Remember that your children have a stronger earnings potential than you. As a retiree, your ability to work in a fast paced, high paying job is limited in comparison to your children. In addition, a good credit file is vital at this point because you need to retain the ability to apply for credit in case of emergencies. Eliminating your "permanent" these debts will ensure that you are in good credit standing before you retire.

The author is the owner of the information-rich website www.poorcreditgenie.com. The website offers free advice on how to rebuild credit and manage debt. The site also features numerous articles and news stories on credit report, credit cards and bankruptcy.

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Debt consolidation - How to avoid the scams

If you are overwhelmed and decide to seek the services of a debt counseling agency, make sure you find a good one.

Before we delve into this topic, let me say that every trade has good people and bad people. Unfortunately, some debt counseling agencies give the good ones a bad name. With that said, there are PLENTY of legitimate Debt Counseling organizations that will help you manage your money and develop a budget that is suitable to your situation.

The first thing to do is RESEARCH. Look for a debt counselors in your area of residence that will work with you face-to-face. You may want to check with the State Attorney General or the Better Business Bureau (BBB) to get a sense of their reputation. Both sources can tell you if complaints have been filed against the counseling agency.

The FTC recommends asking questions such as the following, when looking for a good credit counseling service:

- What services do you offer?
Stick with debt counselors who offer a full range of services including budget counseling, savings and debt management classes. Avoid organizations that do not encourage you to analyze your current debts or financial situation. This is important as we discussed in step #4.
- Will you help me develop a plan for avoiding problems in the future?
- What are your fees? Are there set-up and/or monthly fees? Get a specific price quote in writing.
- Will I have a formal written agreement or contract with you? Do not sign anything without reading it first. Make sure all verbal promises are in writing.
- Are you licensed to offer your services in my state?
- What are the qualifications of your counselors? Are they accredited or certified by an outside organization? If so, by whom? If not, how are they trained?
- What assurance do I have that information about me (including my address, phone number, and financial information) will be kept confidential and secure?

In addition, avoid organizations that promise to: - guarantee they can remove your unsecured debt
- promise that unsecured debts can be paid off with pennies on the dollar
- claim that using their system will let you avoid bankruptcy
- require substantial monthly service fees
- demand payment of a percentage of savings
- tell you to stop making payments to or communicating with your creditors
- require you to make monthly payments to them, rather than with your creditor
- claim that creditors never sue consumers for non-payment of unsecured debt
- promise that using their system will have no negative impact on your credit report
- claim that they can remove accurate negative information from your credit report.

The author is the owner of the information-rich website www.poorcreditgenie.com. The website offers free advice on how to rebuild credit and manage debt. The site also features numerous articles and news stories on credit report, credit cards and bankruptcy.


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How to retire debt free
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