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Retire Debt Free

The average American household with credit card debt is carrying more than $15,000 in balances. If you鈥檝e been carrying a balance on one or more credit cards, now is the time to pay off that debt for good. 鈥淒edicating a portion of your income to credit card payments every month is hard enough to manage when you have a full-time income,鈥� says Eric Rosenberg, MBA, a personal finance expert from personalprofitability.com in Ventura, Calif. 鈥淚n retirement, when your income decreases, freeing up that cash flow every month from credit card debt to cover your living expenses is even more important.鈥�

These strategies can help you pay down your balances while still working toward your retirement savings goals.

Attack higher interest rates first. 
鈥淚 suggest using the debt snowball approach. That means, you make the minimum payment on every open debt account every month,鈥� says Rosenberg. 鈥淗owever, you should make any extra payments possible on the account with the highest interest rate until it is completely paid off.鈥� Once that鈥檚 taken care of, move on to the account with the next highest interest rate, and so on, until you are debt free. Rosenberg says he used the debt snowball method to pay off $40,000 in student loans in just two years.

Reduce your spending.
It鈥檚 never fun to think about cutting back on spending, but it鈥檚 one of the best ways to free up the cash you need to tackle your credit card debt. If you鈥檙e this close to paying off a car loan, get it taken care of now. No longer having that pesky payment cutting into your monthly budget will be a huge relief and help give you more cash to put toward paying down debt.

Sell what you don鈥檛 need. 
Are there items sitting in your closet, garage, or family room that have become obsolete? Consider selling them to free up cash for credit card payments, suggests Devin Carroll, founder of Social Security Intelligence in Texarkana, Texas. Sell clothing and accessories on poshmark.com, old electronics on gazelle.com, and various household goods on craigslist.org.

Save for retirement automatically. 
While you鈥檙e directing regular payments toward credit card debt, it鈥檚 important that you don鈥檛 neglect saving for retirement. Using automated options can make saving as painless as possible. Rosenberg suggests taking advantage of any automatic deductions your employer allows, especially if they will match your contributions.