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How to Pay Off Debt and Save for Retirement – 8 Quick Tips

The retirement savings statistics in America are shocking to say the least. According to a recent survey by GOBankingRates in  2016, one third of Americans have absolutely nothing saved for retirement. Another 56% have less than $10,000, while only a small fraction of Americans have a substantial retirement savings account.

But how shocking really is this information, when we consider the average debt of American citizens?

Average American debt according to NerdWallet:

Average American Debt Chart (NerdWallet.com)

Does it come to any surprise that so few Americans have any retirement savings when the average debt is so staggering? Your retirement savings are important; without it you have no security.

Save for your retirement – INVEST in your FUTURE

So how can you start investing in your retirement when you have debts, and bills to pay? I have created a list of my top 8 recommendations on how you can pay off your debts, and start saving for retirement right away.

8 ways to pay off debt and save for retirement

8 tips on how to pay off debt and save for retirement: 

  1. Pay the minimum balance
  2. Budget yourself
  3. Open an R.R.S.P.
  4. Prioritize the highest balance
  5. Cut unnecessary costs
  6. Create a financial planner
  7. Earn money online
  8. Stay informed

These are all great methods to get ahead of your debt, and start to build a “nest egg” for your retirement. Below is detailed breakdown of each method mentioned in the list.

1. Pay the Minimum Balance

The immense stress, and anxiety can often be crippling when facing a mountain of debt. In this situation, the best course of action is to take a step back from the “mountain” and take it one small step at a time. Climbing mount Everest takes an experienced climber over 2 whole months to reach the summit. Your debt is no different.

Bare with me when I say this, but paying off your debt is just like climbing a mountain:

  • You can’t do it all at once
  • It takes more time than you think
  • Small steps are victory steps
  • The end rewards are amazing

With this in mind, take your debt one small step at a time, and at the very least, pay the minimum balance. This keeps your credit rating from falling, and you won’t be charged any extra fees that will just add to your debt. However, I highly suggest investing more than the minimum required payment if you want to see results quickly.

2. Budget Yourself

This is no doubt an obvious method for saving money and cutting costs. However, as common as it may seem, budgeting can be extremely hard to do well. Here is a breakdown of how to budget yourself to pay off your debt.

  1. Budget YourselfAdd up total monthly payments
  2. Add up total monthly incomes
  3. Subtract total payments from incomes
  4. subtract 10% from the remainder and pay off debts (as long as this covers at least the minimum payments, if not increase the percentage)
  5. subtract another 10% from the remainder and save it
  6. Use the rest for day to day living (i.e. food, transportation, lifestyle, etc.)
  7. Always add any extra monthly cash to your debt payments
  8. Keep looking for ways to save money

Use this as a general guide to help you budget your money, and start chipping away at your debts. Budgeting can be hard to do, especially with so many ways to easily spend money, but it is the most important factor when it comes to paying off your debts. 

Make the most of EVERY DOLLAR

3. Open an R.R.S.P.

Starting a registered retirement savings plan (R.R.S.P.) as soon as you can is the best solution to your retirement savings. I highly recommend visiting your bank, and starting one as soon as possible. If you don’t want to be working for the rest of your life, then you’ll need money to retire on.

4. Prioritize the Highest Balance

Most people have more than one debt, some times as many as 5 or more. This can get complicated and confusing so it’s important to prioritize. Paying off your highest, and most immediate debts as fast as possible is beneficial because you will pay less interest on your loans.

You will be at a greater risk of your credit rating dropping if your credit is maxed out, or near its limit. You will also pay high interest rates on credit card loans, some of the highest of all loans. So if your credit card debt is growing, be sure to make that your top priority.

One option to help decrease your credit debt quickly is to take out a personal loan, or request a loan within a peer group at a substantially lower rate. Credit card loans have incredibly steep interest rates, which can make them hard to pay off.

5. Cut Unnecessary Costs

There are an incredible number of monthly bills that people pay just because they think it’s necessary by social standards. There are plenty of things that you can do to cut costs around the house that can save you a ton of money. Remember, every dollar counts when it comes to paying your debts, and saving for your future.

Here are a few ways that you can cut your monthly, and even daily costs:

  • Save on your utility bills by minimizing your usage – Utility bills can be some of the most costly monthly expenses, so don’t underestimate the potential savings here.
  • Get rid of your home phone – If you still have a home phone as well as a cell, get rid of your home phone! Chances are, it’s just an advertising tool for telemarketers to call you during dinner. Am I right?
  • Cut back on “lifestyle purchases” – Try to cut back on the amount of money you spend on frivolous or otherwise unnecessary purchases. This means buy groceries instead of eating out, watching movies at home instead of going to the theater, and anything that you spend money on that you think you can live without.

What Can You Live WITHOUT?

6. Create a Financial Planner

Mint.comLaying out all your financials, and organizing them in a way that is clear and comprehensive is incredibly important. If you can see and understand the flow of your financials from when your income is received, to when it pays off bills/debts, then you will have a better grasp of how to manage it.

I recommend taking some time to devise a financial planner that will help you pay your bills on time, and manage your budget.There is a great online financial planning software available at Mint.com that can help you get ahead by creating budgets, managing investments and debts, and discovering new ways to save money.

7. Earn Money Online

A great way to chip away at some of that mounting debt when you have a fixed income, is to supplement that income by earning some extra money online. There are a plethora of faulty claims of earning thousands of dollars in a single night, but this is all just not possible. Earning money online takes time and dedication, but it can actually lead to quite a substantial passive income. 

There is an amazing free training program that will teach you the basics to creating a business online. Tt is my #1 recommendation for earning money online, and has proved to work for thousands of people. It’s hard to sift through the scams online, so jump ahead and dive right in with a legitimate, and proven free training program.

It’s hard to get ahead of your debts when you have a fixed income or salary. Working online has unlimited potential, and even if you’re not looking to pursue a full-time career online, there are still plenty of opportunities for you to make some supplementary cash.

8. Stay Informed 

Being informed on the most current options and opportunities available is a great way to stay ahead of the curve, and always be getting the best deal. Banks often update their mortgage, and credit packages. When they do, it’s a good idea to take advantage of anything that might benefit you.

Also, always keep in mind your own financial situation when taking advice from me, or any other advisers you may encounter. Your priorities will always differ slightly from the next person, so your steps to dealing with your finances will be different. There is no “one size fits all” solution to eliminating your debt, or saving your money. It all boils down to making smart financial decisions, and understanding the value of your money. 

Retirement is Your Future – Make Sure You Have One!

Retirement is Your FutureIt’s exceedingly important to save for your retirement, and eliminate lingering debt before you get there. You don’t want to be paying off a mountain of debt when you’re 70! Your retirement, and ultimately your future, should be about reaping the rewards of your hard work.

Use these tips to help you manage your debt, and start saving for a well deserved future. It’s never to late to start saving, and the sooner the better. Don’t be like the majority of Americans with nothing to their name when they hit retirement, get ahead now and you will be thankful later.


If you have any further questions or concerns that I may not have addressed in this article, or if you have any other suggestions on how to pay off your debt and save for retirement,be sure to leave a comment below and I’ll get back to you in a timely manner.

All the best,

Isaya

Roadtoselfemployment.com

Knowledge = Money | Share the Wealth!

8 thoughts on “How to Pay Off Debt and Save for Retirement – 8 Quick Tips

  1. hong says:

    Thank you for the tips. Very informative and helpful article. Many of us do not save or even plan for retirement. After I read your article, I am encouraged to start incorporating these tips in my everyday life. You never know when you need emergency money, so saving is important for that just in case situation. Thank you for sharing.

    1. Isaya says:

      Hey Hong,

      You are most welcome! I hope you can use some of these tips to help you save for your own retirement or get out of debt. Living debt free, with savings in the bank, is a very reassuring feeling!

      All the best,

      Isaya

  2. Joseph says:

    Thank you, Isaya. I appreciate you putting all this information together in one place. Debt free retirement is a goal for a lot of people. I do have a question though. Is it possible to make money online while also working a full time job?

    1. Isaya says:

      Hey Joseph,

      Great question and thanks for asking. The answer is YES. You absolutely can make money online while still working a full-time job. When you start out online, you won’t see results right away. So chances are you’ll need the income from another source to get you through the early stages of setting up your online business.

      I hope this helps!

      Isaya

  3. Ami says:

    Nice article. We tend to think that retirement is a long way ahead so we postpone saving up for that time. I discovered that I waste a lot of money on impulse buying which I could be saving up to invest in my future. One of my 2018 resolutions is to be more diligent in my spending and start saving up more than I currently am. Thanks for sharing.

    1. Isaya says:

      Hey Ami,

      Everyone should be saving for their future as soon as possible. It’s definitely an incredibly important long-term investment that pays off in the end.
      Hopefully you can use some of these methods to help establish your own future financials.

      All the best,

      Isaya

  4. Dael says:

    Hey there,

    My family have been suffering from debt for quite sometime so I’m glad for the information you have provided in this article. I’ll be trying out mint.com for sure. great information 🙂

    1. Isaya says:

      Hey Dael,

      Debt can be incredibly crippling, and I hope that you and your family can overcome it.
      I hope you found this article to be helpful!

      Isaya

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