You’re 70 years old. You shuffle out to your mailbox on a crisp Monday morning and you are not at all surprised by what’s inside: junk mail and bills.

• “You’ve been pre-approved for this credit card.” — garbage
• “I’ll do great things for your city. Vote for me!” — garbage
• “It’s that time of month. Time to pay your car loan.” — sigh
• Annnnd….the home mortgage — double sigh

The junk mail…that doesn’t bother you, but man these bills! They just keep washing away your money! Why didn’t you just take care of these loans when you were younger? What on earth made you think that taking debt into your retirement was a wise move? Even if you are at or nearing retirement now, it is not too late to get serious about paying off your debt.

7 Reasons to Go Into Retirement Debt Free

I’m a firm believer in getting out of debt. Heck, I even paid my house off before my 30th birthday! Let me just tell you, life after debt is amazing, and I recommend it to everyone that reaches out and asks about it. I don’t care if you’re young, old, rich, poor, male, female, democrat, or republican, life will be better if you ditch your debt. Why? There are 7 solid reasons.

1) Reduce Your Nervousness

You might be considering retirement…but what about those major bills? What if something happens with your income and you run out of money? If you can’t afford your house payment, where will you live? What will you do? This is what debt does to you. It makes you worry. Most likely, if you crunched the numbers with a financial planner and they give you the head-nod, you’ll be completely fine. But you know what? You still won’t be able to shake those worries until the debt is completely gone. Stop your worrying and pay off your debt already. You won’t regret it.

2) It’ll Teach You to Live Within Your Means

What does it really mean to have debt anyway? It has become so common that we often don’t think twice about it. If you’re in debt, it simply means that you didn’t have enough money to buy what you wanted and didn’t want to wait any longer to get it. So, you asked the bank for their money and promised to pay them back with interest. Sure, you’ll pay way more for that thing than if you would have just saved up the cash, but now you’re able to have it today. This is what’s known as, “living beyond your means”. If you can’t pay for something and need to borrow in order to get it, you’re living in excess of what your money will allow. Again, this typically isn’t that big of a deal when you’re working and can easily foot the monthly payments. But in retirement, it definitely becomes a strain. Learn to stop borrowing money today (and pay off all that you’ve already borrowed) and your retirement will be much less of a mental exercise and more about enjoyment and experiencing new things.

3) Get Rid of Those Interest Payments

So sure, it’s important to train yourself to live within your means (and it’s a very practical step to enjoying your retirement), but think also about all the interest you could save by ditching your debt long before your ‘salt-and-pepper’ goes completely gray! Let’s say you took out a 30-year mortgage for $250,000 at 4%. Sounds pretty reasonable, right? But do you realize how much extra money you’ll have to fork over because of that seemingly miniscule interest percentage? $180,000!! You borrowed $250,000 so that you could pay back $430,000. That’s not too smart. Instead of making everyone else rich with your interest payments, why not pay down your debts and invest the money instead? That’s what millionaires do.

4) Improve Your Cash Flow

How much do you make in debt payments each month? Seriously, think about it and come up with a number.

• Your car
• The house
• Your second home
• The boat?

What’s the total? $1,500? $2,000? Maybe even $3,000 in payments each month? What if you didn’t have those payments anymore? Suddenly, all that money would just go into your bank account. How cool would that be?!

5) Hassles Start Going Away

When you’re in debt, it just seems like there’s always a hassle…

• The bank held back too much money in your escrow and $2,000 of your hard earned dollars are now held hostage for another year…
• The credit union didn’t register your last car payment even though you sent it in early
• You signed up for a 0% interest loan and forgot that the payoff was due last week. You now owe all the interest from the last 12 months…

You know how you can get rid of these hassles? Stop owing people money. It’s amazing how simple life becomes when you take as many people out of it as possible (especially if they’re licking their chops, waiting for your money).

6) Easier to Become Wealthy

Imagine that you’re on a gameshow. The game you’re playing is simple – just grab a water gun and shoot as much water as you can into a bucket that’s 10 feet away. Simple right? Well…as with most game shows, there’s a little more to it than that. While you’re targeting the bucket with your stream of water, three other lucky folks will be targeting you…one with a nerf gun, one with a trailer load of dodgeballs, and the other with wet soapy sponges. How much water do you think you’ll get into the bucket? Ha, not much! And why not? Because you’ve got some serious distractions. The same is true when you’re trying to invest and get wealthy while juggling house debt, car debt, student loans, and various other payments. You’ve got no focus and there’s always a constant distraction. But, when you first focus on debt and clear that out, and then focus on building wealth, the results are shocking. This is exactly how I paid off my $54,000 mortgage in less than 12 months and how I’ve amassed $400,000 of wealth in the three years following. Could I have done that while trying to dodge the nerf bullets, dodgeballs, and wet soapy sponges in my financial life? Absolutely not. Focus on one thing – paying off debt, and then it will be a breeze to create wealth going into your retirement.

7) Make Decisions More Clearly

“Derek, I bought a new car two years ago. I owe $16,000 on it, but it’s only worth $12,000. I really want to get rid of it, but how can I sell it when I’m so far under water?” …I hear this complaint almost every day. It’s crazy how many people get trapped into bad decisions because of debt. Imagine a life of no payments:

• Something breaks on your car, you get it fixed
• Your truck no longer makes sense with your growing number of grandkids, so you simply sell it and buy a sexy minivan instead
• You lose your job and instead of taking the first crappy new job that comes along (because you need to make your payments), you wait, find the job you’ve been dreaming of, and are now making $20,000 more each year.

Get rid of the debts and life’s difficult decisions get a heck of a lot easier.

3 Ways to Get Out of Debt

Did I inspire you? Are you ready to get out of debt before you enter retirement? I hope so! So how do you get started? Which debts should you tackle first? And how can you do it as fast as possible? Based on my experience, there are three methods for getting out of debt. Two are with brute force and intentionality, and the third is the passive approach.

1) The Debt Snowball

This is by far my favorite. Start with your smallest debt and pay it off as quickly as possible, all while making the minimum payments on all the other debts. When your first debt is gone, apply that payment to the next largest debt. Follow this pattern until all you officially slayed the dragon and all debts are paid. Why is this my favorite? Because people stick with it. When you pay off a debt and strike it off your list, something inside you just goes berserk with enthusiasm. You want to do it again! “What’s the next debt? Let’s kill that one too!” And you just go absolutely nuts until all the debts are completely gone. Want to start your own debt snowball tracker? Check out this article and get yours started today.

2) The Debt Avalanche

What does the debt avalanche do that the debt snowball doesn’t? It considers the interest on your loans. Instead of ordering your smallest debts to your largest, you pay them off from the largest interest rate to the smallest. Maggie McGrath does some great analysis on Forbes if you’re interested in the math and want to get your nerd on, but apples to apples, the avalanche does pay off debts faster. However…fewer people make it through this plan because you don’t see the immediate wins to keep you motivated. If your highest interest loan is your $20,000 maxed out credit card, it might take you a full year to pay it off. By that point, most people have lost motivation and moved onto the next shiny object of life. If you’re super nerdy and determined to get rid of your debt, the avalanche will probably work for you. If you need the small wins to pep you up and put that spring in your step, use the debt snowball.

3) Loan Consolidation

If you have a few debts that have a high interest rate, and if you’re more passive about getting rid of them, then setting up a simple loan consolidation might be your best bet. Set up the term length, negotiate the new, lower interest rate, and you’ll get rid of your debts at a pre-determined time – hopefully long before your retirement date. It’s not the most effective way to pay off your debts, but it is better than ignoring your debts entirely.

Try Out Any or All of These Scenarios on Your Own Finances

Not sure paying off your debt will really make a big difference to your financial life? Try it out. The Boldin Retirement Planning Calculator is a really detailed and powerful tool. After setting up your plan, you can try different scenarios. See what happens if you:

• Use the debt snowball or debt avalanche techniques
• Pay off all your credit cards in the next year or two
• Pay off your mortgage before retirement
• Downsize and eliminate your existing mortgage
• Consolidate all debts into a lower interest rate

Once you see how accelerating your debt payoff can impact your finances (now and into the future), you may have the motivation you need to get rid of debt.