When your credit card debt gets in the way of saving for retirement, it is frustrating. According to an article by time.com, there are situations when credit card debt prevents you from saving responsibly for retirement. It does not make financial sense to put aside 10 or 20 percent for retirement when you have high interest rate credit cards at high balances you can’t pay. With debt consolidation, you avoid the conflict because you work on the goal to save for retirement and get out of debt at the same time. A new Pew Research study shows most people don’t have enough money for emergencies let alone retirement savings. Sixty percent of those surveyed said they experienced a major financial surprise in the past year such as loss of income, death or significant loss from a car or home. Financial setbacks aren’t as difficult to handle when you have a budget.
Paying a strict budget
Some people don’t do well financially because they have no structure. With a Debt Management plan, you get the structure you need. Every month you make one payment to cover your credit card debt. A trained credit counselor guides you when making a strict budget to follow that also includes some discretionary spending and flexibility. Saving for retirement is an item to add to your budget.
Preventing reoccurring debt
When a person earns a lot of money, they also tend to spend more money. If you lose your job or can no longer work, massive credit card debt creates larger burdens compared to people with lower income who never qualified for a high credit limit. By consolidating your debt through a Christian credit counseling program, you gain a specific and doable plan to get out of debt. You can then stay out of debt by putting money aside in a Roth IRA and savings account in case you stop working.
Experts say the other major benefit of debt consolidation is the lower interest rate that most people achieve through a Debt Management program. Getting rid of credit card debt by the time you retire or in your younger years helps you avoid bankruptcy and problems in your senior years. Research shows senior bankruptcy filings went up during the recession. Focus on debt elimination and start a retirement savings plan to avoid financial risks.
At Christian Credit Counselors, we help consumers get out of debt with a solid Debt Management Plan. For more information on debt consolidation please contact us.