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Hi Julie,
Well…where to start? My husband and I, we have always worked hard, but for some reason we have just never quite managed to get on top of things. Our kids are adults now and it’s just the two of us at home. But we still have a big mortgage and a few debts that are going nowhere fast. I just can’t see how we will ever find a way to retire…It’s all starting to feel a bit hopeless. Do you have any advice? – Cathie
Hi Cathie,
Firstly, thank you for your courage in writing honestly about your situation. Secondly, be assured that you aren’t alone.
Paying for education, extra-curricular activities and all the bumps along the way is enough to sap your savings. Giving your kids every opportunity in life can also mean sacrificing your own.
As you know, retirement is a big deal: I can’t give you any specific advice related to your situation right here. What I can say is that it is imperative for you to seek advice from an accountant or financial advisor. When you are trying to save every penny, it can be difficult to justify outlaying money to understand your financial position. But in this case it’s money well spent. A professional will help you to implement a strategy which makes retirement viable.
As a starting point, you can also head to the Money Smart website and use their tools to get a basic understanding of your super and your future.
While planning, keep in mind that there is more than one way to retire: working part time or maintaining a form of passive income could be an alternative that allows you to step away from the stress of full time work while still bringing in a wage.
Downsizing your house or selling an asset that has debt attached may also be a creative way to improve your financial position.
Another way of erasing debt that a lot of experts swear by, and that I have used myself, is the snowball method. It essentially follows the logic that the fewer debts you have, the less interest you are paying, and the faster you will pay off all of your debts in the long run.
The snowball method follows the below four steps:
- Make a list that orders your debts from smallest to largest.
- Decide on a budget to contribute toward clearing these balances every month. From this, allocate only the minimum payment to each of your debts, except
the smallest debt. - Dedicate the remainder of your budget toward paying off the smallest debt.
- Once you clear your first debt, continue to contribute only the minimum payment amounts to each of your debts, except the one with the next-lowest balance.
Using this method you will ultimately knock over your debts faster and free up more money to dedicate toward your retirement…or at least a nice bottle of red!
I’m sensing a lot of stress on your end – ultimately, it’s time to stop worrying about it and start taking action. See an accountant, implement a debt clearing strategy and get planning.
Best of luck!
With every good wish,
Julie
