February 21, 2024

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Even for those with a steady paycheck and few financial obligations, saving six or seven figures for retirement is no easy feat. But for those with crushing debt, retirement can seem like an impossibility.
Yet that’s not always the case. While everyone’s situation is different, some people with debt might still be able to retire comfortably when they originally planned to do so. But you need a sound debt repayment strategy. Here’s what you can do to get started.
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Start by making a list of all your debts. Note the creditor, annual percentage rate (APR), balance, minimum monthly payment, and payment due date. You should be able to find all of this information in the online portal for your loan or credit account. If you still receive paper bills, you should be able to find this information on them as well.
Now, you have to decide how to prioritize them. One of the most efficient ways to pay off multiple debts is the debt avalanche method. This is where you make the minimum payment on all your debts and then put any extra cash you have toward the debt with the highest APR first. When you’ve paid that off, you do the same with the debt with the next-highest APR, and so on down the list.
But some people prefer to get their confidence up by knocking out a few of their smaller debts first. This is known as the debt snowball method. It’s essentially the same as the avalanche method above, but you start with the debt that has the smallest balance first before moving on to the one with the next-lowest balance, and so on.
These strategies work well if you have some extra cash you can devote to debt repayment. But when that’s not an option, you might have to try another tactic. A balance transfer card is a solid option for credit card debt if you believe you can pay back what you owe within the 0% introductory APR period. You can open one of these with just about any credit card company, but you won’t be able to transfer a balance from one card to another card offered by the same issuer. 
Or you can try a personal loan. This is an unsecured type of loan, which means you don’t need to put anything down as collateral. It’s even possible to get these loans without amazing credit, but you might pay a higher interest rate if your credit is poor.
The advantage to these types of loans is that they give you a regular monthly payment, so you don’t have to worry about your balance growing further, like you would with credit card or payday loan debt. If you’re interested in one of these, you can apply with just about any bank.
You can also use a combination of the methods mentioned above. If that still doesn’t work, you might have to find a way to increase your income. For example, you could negotiate a raise or start a side hustle to bring in some extra cash you can use toward debt repayment.
The best way to handle debt repayment and saving for retirement depends on the type of debt you have. You can tackle debts with lower interest rates, like mortgages, at the same time that you’re saving for retirement if you can afford to do both.
But if you have high-interest debt, like a payday loan or credit card debt, it’s usually best to prioritize these above retirement savings. That’s because the interest rates on these loans are much higher than what the average person earns in the stock market in a year. So you’ll probably lose more money by carrying this debt than you’d gain by investing for retirement. But once you have your high-interest debt under control, retirement savings should become a high priority once again.
With the right debt repayment strategy, you might be able to pay off most or all of your debt before retirement. But if that’s not possible, it’s best to rethink your plans. Retiring with a lot of debt can cause you to drain your savings faster than you expected. That could leave you without the money you need to pay for food, housing, and other basic needs as you age. You’re better off taking your time. Put off retirement for a little while longer until you feel financially ready.

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