Are you looking to pay down debt before retirement? It can be done, and these women are living proof of how your retirement can be debt-free.
Debt — particularly credit card debt — is a burden no matter what stage of life you’re in, but it can be especially taxing for those nearing or in retirement. No one wants to start their golden years saddled with bills that their fixed income can scarcely cover. Yet, many of us are forced to do just that: A recent Nationwide study found that Americans of retirement age had approximately $70,000 in debt. The most common type? Credit card debt.
At HerMoney, we believe our nation’s lack of financial preparedness leading into retirement is a true crisis — which is exactly why we built a dedicated pre-retiree edition of our popular FinanceFixx budgeting program. Over the course of eight weeks, participants work with a dedicated coach to find out exactly what’s going to work for them and their money over the long haul — and the success stories have absolutely blown us away. Some of our participants have been able to free up as much as $5,000 in less than two months, which can be put towards debt, or countless other financial goals. Here’s a look at how three women are using FinanceFixx to make the financial strides necessary to ensure a secure retirement.
Gail’s Story
Age: 56
Her Financial Worry: Having too much debt headed into retirement
Her Realization:
Gail and her husband carried credit card debt for more than a decade, but as they neared retirement, they knew they had to pay it down. She and her husband were earning a good living, but just weren’t able to save enough. Why? They weren’t sure where their money was going. Thankfully, tracking their spending via the FinanceFixx program was the solution — they realized they were spending more than $50 a day on food alone.
“We talk about dinner at 5 p.m. when we’re both starving, then we go to the [grocery store] or we go out,” Gail told HerMoney CEO Jean Chatzky in a profile for AARP (read her full story here!)
Gail also discovered that she was spending a lot on her adult children, something that’s pretty typical — a Bankrate survey showed that 68% of parents to adult children are making financial sacrifices for their kids.
Her Big Win:
After FinanceFixx, Gail was armed with meal planning tips, a solid debt repayment plan, and a plan of attack for their credit card balances. She and her husband started with the highest interest rate cards first. (Known as the “avalanche” method, this debt repayment strategy focuses on the card with the highest interest rate first, to make sure that more of your money is going toward paying down the principal as soon as possible.) At the end of the FinanceFixx course, Gail says she and her husband were able to free up a whopping $5,000, which they put towards the debt on their most expensive cards.
Sarah’s Story
Age: 45
Her Financial Worry: Not having a budget heading into retirement
Her Realization:
Before going through FinanceFixx, Sarah felt she was doing “just fine” financially, but she knew she had no real structure around her finances. “I was saving and investing, but I was on autopilot,” Sarah says. “I don’t want to be the broke person who doesn’t get to travel in retirement because they haven’t saved enough, or because they’re saddled by too many other obligations that aren’t important,” she says. “I was inspired to start budgeting because I wanted to be a realist about retirement. I’m roughly 15 years away from it, and I have to get serious about how I’m spending my time and money during those years.”
Thankfully, Sarah knew she needed a greater understanding of her money in order to embrace the future freedom she craved with her finances.
Her Big Win:
As part of the 8-week course, she says she gained an understanding of the accounts she needs to ensure a successful retirement — “I knew there would be a time, between leaving work and my pension and social security kicking in, when I didn’t want to tap into retirement, but I needed money,” Sarah says. With the help of her financial coach, Sarah now has several different types of accounts, including a brokerage account, and is also a member of the InvestingFixx club where she’s learning to choose stocks.
Susan’s Story
Age: 51
Her Financial Worry: Having debt heading into a retirement that she’s solely responsible for
Her Realization:
Since her divorce several years ago, Susan has been on her own financially. “I remember clearly waking up one morning after my divorce and saying, ‘I’m it for me and my retirement,’” she says. But in addition to saving for retirement, Sarah also had $30,000 in credit card debt she had to pay down before she would feel comfortable embracing the freedom she desperately wanted for her retirement.
Her Big Win:
As part of the FinanceFixx program, Susan laid out all of her expenses and income as part of a spreadsheet that helped her visualize all of her money at once. “I was able to clearly see some areas in my budget where I could cut back, and the big thing that jumped out at me was just how much I was spending on eating out. I used to go out several times a week. Now, I go out once a week and the rest of the time I throw something in the oven from Trader Joe’s.”
As for that debt? She’s paying it down strategically — and successfully. “I have finally been able to start paying down my debt, because I now have a clearer picture of where my money is going — and where my money is coming from. For example, my bonus is coming in February, and I’ll be able to put that toward my debt. Also, I always leave myself in a tax refund position, and now I’ve earmarked my tax refund for debt.”
The Bottom Line
Heading into retirement saddled with debt can feel crippling — but these women are living proof that you can change your life and your financial situation if you just take the first step. The best time to take that first step? Right now. Our next session of HerMoney’s popular pre-retiree FinanceFixx class starts May 14th, and we have a few spots left — we’d love for YOU to be the next person to change their life with us! (Just choose the May 14th pre-retiree option from the “Session Start Date” drop-down menu!)
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