Despite your best austerity measures – and possibly due to unexpected expenses – your retirement plans may have gotten into the dire reality of not ending up with the nest egg you planned.
Indeed, with credit card debt, you are facing your golden years.
Unfortunately, this is the case for many Americans – 46% of retirees have no mortgage debt (including credit card debt, as well as car loans, student loans, and medical debt), according to a survey by the TransAmerica Center for Retirement Studies. And 14% of them have a debt of $ 10,000 or more.
Without your previous income, you might be concerned about the surge in fixed income credit card payments, especially when the average monthly Social Security benefit is $ 1,514.
It is possible to permanently charge the credit card debt when you are retired. We have eight ways to get you on your way to a debt-free retirement.
8 Ways To Pay Off Credit Card Debt In Retirement
Retirement presents unique opportunities and challenges as you pay off debts.
You may have new sources of income like social security or retirement and new expenses like increased health care costs or fun things like hobbies.
Here are eight post-employment strategies that you can use to reduce debt.
1. Make a budget
Tackling credit card payments as you near retirement starts with a budget review.
According to Joseph Valenti, Senior Policy Advisor at the AARP Public Policy Institute in Washington, D.C., making lifestyle changes and using your free time to save money is a good place to start.
"One thing we know from retirement studies is that people typically have less set costs compared to what they do," he said. "If you have more time, you might cook more meals at home."
If you need help creating your budget, check out our step-by-step guide to budgeting or this beginner's guide to budgeting
Once you know where you are financially, you can start looking for ways to lower your credit card balance.
2. Negotiate with credit card companies
The best way to know where you stand is to look at the numbers – in this case, the interest rate on your cards. It is easier to pay off a debt if you accumulate less interest on top of the original amount (learn more about compound interest).
According to Valenti, asking your credit card company about a new tariff is an option, especially if you're ready to be credit card-free in the future.
"In some cases, even if you close this card, you can pay it with little or no interest over a period of time," Valenti said. "Assuming you don't need the card anymore."
When you call the credit card company, the first person you speak to may not be able to help you, even if they think they can. Ask to speak to a manager who will handle the winding-up arrangements.
Check out this post for more tips on how to negotiate credit card debt.
If you are too overwhelmed to negotiate with the creditors on your own, you should seek help from a credit advisor who can help organize your accounts and possibly negotiate a lower interest rate for you.
3. Transfer your balance to a new card
Loyalty isn't necessarily rewarding. If you've had the same card for years, moving your balance to a new card may result in a lower interest rate than your current provider can offer. Take advantage of most of the benefits by paying off as much debt as possible during the promotional period.
When deciding which card to work with, compare this information for all offers:
Fees (usually a minimum of $ 5 to $ 10 or 3% to 5% of the balance)
Interest (search 0%)
Promotional APR duration (typically 12 to 18 months)
Creditworthiness requirements (generally good or excellent)
Credit Limits (make sure it is more than your current balance)
The Debt Lasso Method is for tips on how to save the most money using a balance transfer.
4. Reduce (previous) work-related expenses
Are you still sticking to that gym membership even though you only signed up because it was near your office?
By reviewing your monthly, regular, and yearly budgets, you may find work-related expenses that have become so common you forgot about them, according to Valenti, who cited expenses on transportation, clothing, and cell phones as examples.
Cancel subscriptions to professional associations and other automatic billing-related work (such as a subscription to ink cartridges) to avoid having to pay for services that you no longer need. If you're having trouble keeping up with recurring payments, consider using a subscription tracking tool.
And if you still love going to the gym, cut costs by asking about senior discounts – AARP has plenty for its members.
5. Set up self-imposed limit values
Before retirement, those small expenses that exceeded your budget for a month may have been easier to cover with your regular paycheck. And remembering some was maybe a little easier a few years ago.
To help you keep track of expenses and avoid unwanted surprises at the end of the month, Valenti suggested setting up notifications from your bank or credit card provider.
"It is one thing to immediately find out through text that you have reached a limit – even if it is a self-imposed limit – as opposed to a statement that will shock you at the end of a cycle," said Valenti.
6. Ask for professional (financial) help
If you are overwhelmed with managing your day-to-day finances or worry that you will forget to pay bills and continue to run into debt, consider hiring a daily money manager.
In addition to tracking bills, Daily Money Managers can help you clear your checkbook, collect tax documents, handle medical bills, and even help you avoid fraud.
The American Association of Daily Money Managers has a searchable database on their website.
7. Earn extra money with your empty nest
Now that the kids have (hopefully) moved out, you're stuck in that big, empty house.
One way to make money is to sell it and downsize to a smaller place and then use the profits to pay off your credit card debt. However, moving still requires a cash outlay and can add additional stress as you adjust to life in retirement.
If you're looking for something less drastic, consider new ways to use your home – and its contents – to make some money today, advises Moira Somers, a Winnipeg, Canada-based wealth psychologist and author of Advice That Sticks : How to give financial advice that people will follow. "
"Look at the resources you have and say," Could this turn into money somehow? "She said." One of the cool things in our lives these days is that sometimes there are opportunities to make extra money that wouldn't have been possible 10 years ago. "
For example, consider all these buried treasures in the attic. (Did you know Urban Outfitters sells five packs of random VHS tapes for $ 40? Yes. That's a thing.)
One of the cool things in our lives at this time is that sometimes there are opportunities to make extra money that wouldn't have been possible 10 years ago.
Somer's Notes, which provide a complete inventory of your wealth – both physical and mental – can help you find ways to pay off debts you may not have thought of before.
"Don't just make this inventory of (your) work readiness and social networking skills and what it might help," Somers said. "But also to look at your existing possessions and how they could be turned into either a source of income or a small injection of money."
8. Earn extra cash by working from home
When all else fails, there is always work. However, that doesn't necessarily mean you have to go back to 9-to-5 mode.
Performing a gig from home in retirement gives you extra cash to pay off credit cards without the expense and hassle of your previous commute to the office.
In addition to income, a part-time job can help avoid the boredom – and the resulting expense – of suddenly adding hours to the day.
Stick to trusted sites like our home work job portal. We review all entries according to strict guidelines to avoid fraudulent job offers.
And that should leave you enough time to enjoy some well-deserved relaxation.
Tiffany Wendeln Connors is an associate and editor at The Penny Hoarder. Read her biography and other work here.
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