Pay off debt. Full stop. You can't make adequate provision for your retirement if you need to juggle to service your debt.
It won't help for me to warn you not to get into debt. If you read this page, you are probably deeply in debt.
It is difficult for me to give you some advice. I was lucky. As a boy of eleven I desperately wanted a bicycle. In the tiny village where we lived there was only one shop – the General Dealer. The most friendly owner imaginable.
He offered me a bicycle on the never-never. It sounded great to me because I calculated that I would be able to service the payments out of my weekly allowance! When I presented my plan to my Dad, he stopped what he was doing and explained to me in great and frightening detail the consequences of enslavement to debt.
So, yes, I was lucky. The lesson was so engrained in my mind that I even saved up for my first car and I bought it with cash!
It seems to me that the biggest problem around debt is caused by credit cards. It is easy to get, and you can have as many as you like.
I have never been in that situation. So I can't tell you how to handle it. What I can tell you is that I woke up at age fifty and realized that my retirement provision was hopelessly inadequate. We were not in debt, but we were big time consumers.
After a lot of agonizing and trying to blame others and circumstances, my wife and I resolved to stop consuming. We brutally reduced our expenses across the board. That was in 1993 and I told everybody who wanted to listen, tongue in cheek, that I'm not buying a new car 'this millennium'. I got a few disbelieving laughs, but we stuck to our guns and bought a new car at the start of the new millennium in 2001.
What I am trying to tell you is that the effect of such a radical decision is enormous. We practiced minimalism and made retirement provision our priority. We were able to retire with adequate retirement provision in 2001.
I think you can do the same regarding the paying off of excessive debt. And please do not pillage, or even borrow from, your retirement savings accounts. You'll undo and destroy the tremendous benefits regarding retirement provision of your saving plans.
Elsewhere on this Website we discuss budgeting tools – albeit with a focus on retirement provision. I think you can apply the same principles with a focus on the repayment of debt.
When you have paid off your debt, please cancel your credit cards. Keep the momentum and make retirement provision your priority.
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