Can you pay off your debt while saving for retirement? – MoneySense

We commend you for taking the pulse of your current financial situation and assessing if you’re on track to meet your retirement goals. 

The good news: Your family still has time to make adjustments to relieve the financial burden of your ballooning mortgage payments while prioritizing your retirement goals. The not-so-good news is that a maxed-out line of credit likely means your husband is spending more than he can afford. We’ll discuss some ways to tackle the debt you and your spouse have accumulated while balancing your savings goals. 

6 strategies for managing debt before you retire

Here are some strategies to get a handle on your household debt so you can get on track to meet your financial goals, like retirement. 

1. Create a budget

First off, it’s critical for you and your husband to create a monthly household budget. This will paint a clear picture of all your income, expenses and savings. If you look at your bank accounts and credit card statements from the past six months, you’ll get a good sense of what you’re spending your money on, and how much you’re saving. A detailed budget will help you see how much of a monthly deficit you have and identify areas where you can make adjustments. This leads me to my next point, which is cost cutting.

2. Reduce your expenses 

Discuss with your family to see where you can shave costs on unnecessary expenses. By reviewing each entry on your credit card statements, you’ll see where your money is going. Pay particular attention to big expenses—one large sacrifice is often easier to manage than multiple smaller ones. But also look to identify any forgotten subscriptions and “hidden” charges on your credit card. These can include gym memberships, storage and streaming services. Cancelling any memberships or subscriptions that no longer serve you is an easy way to free up some money. 

With a bit of research, you may find a better deal on your insurance plan, utilities or cell phone, internet or cable provider. Call and share what their competitors are offering and ask (nicely!) if they can match it or give you a better deal.  

The big budget breaker can be one-time expenses, like a car repair, dental bill or home maintenance expense. If you don’t already have an emergency fund, be sure to factor these budget breakers in, even if you just estimate. Within a few months, you should see your expenses come down and your cash flow go up. This will enable you to redirect this money toward your registered retirement savings plan (RRSP). 

3. Start saving for an emergency fund

When it comes to financial planning and managing debts, this is one aspect that is often overlooked. Having a rainy day fund is essential, so that when unexpected emergencies arise, like those budget-breakers listed above, you have a safety net to cover the costs. A job loss or a home repair that is outside of what you budgeted for can easily throw you off course.