Mastering Debt Repayment & Retirement Savings

As we enter the final quarter of 2024, it’s a great time to start thinking about financial goals for the coming year. Alongside paying off debt and building savings, prioritize your retirement fund. The earlier you start saving towards your future, the greater the benefits long-term.

Tackling debt repayment and retirement savings can be challenging, but it’s achievable with a game plan. Here’s how to navigate this balance:

To start, assess your current financial situation:

• List All Debts: Write down all your debts, balances, interest rates, and minimum monthly payments.
• Evaluate Retirement Savings: Review all your retirement accounts, know your current balances and employer contribution percentages–if applicable.

High-interest debt, like credit card debt, can quickly spiral out of control causing a lot of financial stress and burden. Having a focus can help alleviate that and lead you to the path of stability:

• Focus on High-Interest Debt First: Prioritize paying off high-interest debts first by using the snowball method or by exploring ways to reduce interest rates (next bullet).
• Review Ways to Reduce Interest Rates: Consider financial counseling or a Debt Management Program through a credit counseling agency, to explore lowering interest rates and set a clear payoff timeline.

Neglecting retirement savings can have long-term consequences. Here’s how to kick-start retirement savings:

• Savings Goals: Set realistic and attainable goals for your retirement savings.
• Employer Matching Contributions: Take advantage of employer matching contributions if available.
• Automate Savings: Automate your retirement contributions, you can start small as long as you’re consistent.

Setting a realistic budget can help you establish a simple framework, ensuring  a balanced approach to debt repayment and saving for retirement:

• Select a Budget Style: Consider the 50/30/20 budget rule. It helps you manage your finances by allocating 50% of your income to needs (essentials like housing and food), 30% to wants (non-essentials like dining out), and 20% to savings and debt repayment.
• Track Your Expenses: Monitor your spending for a month to identify areas where you can cut back and adjust your budget.

An emergency fund acts as a financial safety net, helping you avoid debt during unexpected events. Aim for 3-6 months of income, but starting small is what truly matters:

• Start a Savings Habit: Consistently add to your savings by automating the contributions.
• Start Small: Begin with an amount you can sustain without having to withdraw for necessities.
• Adjust as Needed: Update your savings goals as your financial situation evolves.

Balancing debt repayment and retirement saving is challenging but achievable with proper guidance, determination, and a game plan. Remember, financial experts are available to help answer your questions. Apprisen offers support if you have too much high-interest unsecured debt, like credit card debt. If you feel like that is preventing you from being able to save for retirement and/or an emergency fund, consider our Debt Management Program. we can work with your creditors to lower interest rates and monthly payments.