Part One: Reducing debt so your KiwiSaver is spent well 16 Dec 2015
When it comes to planning for retirement, you need to plan ahead rather than just at the time. Thinking about where you will live and how you will afford your lifestyle are important, but arguably even more important than that is getting rid of debt well before you hit retirement and hang up your working boots. This is a two part blog on steps you can follow to get rid of debt hanging around so that come retirement you can use your KiwiSaver to enjoy life rather than paying debt repayments.
1. Pay more than the minimum: If you only make your minimum credit card payments each month, it can take forever to pay off your balance. It is better to up these payments so that you pay it off quicker.
2. Spend less than you need to: Many people get into debt and stay in debt because they tend to buy what they want, when they want. If you want something, don’t buy it unless you have the money. If you can be satisfied with less than you would ideally want, even temporarily, you can use the money you save to pay down your debt. Before buying anything, ask yourself “do I need this? Or do I just want this? Can I live without it for a while longer?”
3. Pay off your most expensive debts first: One of the smartest strategies for getting out of debt is to make minimum payments on all of your debts and credit cards except for one. Chose the one debt that is charging you the most interest and focus all of your extra payments on paying that one off first.
Keep a look out for our next part to this blog for practical ways to reduce tour spending so that more of your current income can go on debt repayments.