Ways to Live Debt-Free and Save up for your Retirement Fund


Other than spending our money wisely—which is something hard to maintain—there are other ways on how we can live a debt-free life while at the same time filling our piggy banks. After all the hours we’ve worked on our respective jobs, we deserve to plan something special at the latter years of our life. Well, good thing is, we don’t have to wait for long because if we plan our finances properly and strategize our spending and make saving a habitual thing, we can retire as early as in our 30’s and live with more time to experience all the things we love such as traveling.

Leap out from the grasp of debt

To help you get closer to that financial freedom, here are some ways on how we can eliminate outstanding debts, make sound investment decisions and properly save money.

Wiggle your Way out of Debt

“Easier said than done” one would say. However, if you come to understand the origins of how you accumulated debt and knowing how to manage it, you can see that there is a way to free your life from debt in a faster fashion.

Photo from Debt Consolidation

There is this good article enumerating the Simple 6-step process to getting out of debt that everyone dealing with a debt problem should take into heart and apply in their personal financial management. The article talks about learning how to organize your debt and understanding where it’s coming from such as unnecessary purchases made through a credit card, how not to miss mortgage payments and so on.

Other tips include figuring out your cash flow and planning your expenses around it as well as setting achievable milestones in paying off your debt until you totally paid it in full.

Capping up your strategy to get out of debt is to eliminate all unimportant expenses and setting up an emergency fund—and this include searching and dedicating an alternative revenue source to funnel money to your contingency fund.

Because trying to get out of debt doesn’t just involve making monthly payments as loan interest rates piles up. It is about making grounds and cutting into your debt as fast as you can courtesy of a sound financial planning.

Invest in Variable Insurance

Investing in variable insurance provides a triple function in your life. First, it affords you a life insurance, a health insurance that includes coverage of hospitalization costs for a serious illness and lastly, a chance to grow your money by investing on several options—mutual funds, bonds, stocks, fixed-income and money market funds.

Ayi Del Rosario

Several giant insurance companies such as Pru Life UK (known globally as Prudential plc) which pioneered the unit-linked or investment-linked life insurance products, offer insurance products wherein the bulk of your premium payments will be invested in one or more investment accounts thereby giving you a chance to also grow your fund while providing you with a life and health insurance coverage.

We all know that everybody is just one illness away from poverty, having a health coverage that will allay your fears of spending your life’s savings on a lengthy hospital stint and having a fund that have a big chance of growing at the same time, sounds like a win-win investment choice.

Treat Inflation as a "Fact of Life"

Inflation causes the value of money to deflate and no matter how the world economy performs, it will and shall happen. So, always assume that the purchasing power of your current savings will weaken upon your retirement years from now. To offset this, you need to diversify your portfolio by looking at investments that can yield more earning percentage than let's say by simply saving your money in the bank.

You can invest on a small business, equity fund, stock market, forex or cryptocurrencies. While all these investment tools come with a risk, you can help mitigate the risk by investing wisely through careful analysis of the market and the economy.

In short, you should do your homework if you want your savings to at least catch up with future inflation rate.

Take care of your physical health

Of course, you would want to spend your retirement years in the pink of health, so you can travel effortlessly and enjoy the fruits of your labor. To achieve this, you must start prioritizing your health right now because doing so can also eliminate future expensive cost of hospitalization and treatment.

The healthier you remain, the less money you would need to spend on skyrocketing health care expenses.

Make Saving as a habit, and start early

Senator Elizabeth Warren further introduced the concept of "50/30/20" in her book "All Your Worth: The Ultimate Lifetime Money Plan", where she stated that one must allocate their after-tax income in the partition of 50% on needs, 30% on wants and 20% on savings.

Ayi del rosario

You can tinker with this formula to speed up your escape from debt by including "debt payment" in your "needs" allocation. This way, your 20% savings will all go directly to your retirement fund as you treat mortgage and credit payment as a need that you must settle immediately.

Also, it is paramount to start saving early to take advantage of the so-called "magic of compound interest" which is defined as "the more commonly your money earns interest, the quicker and bigger your balance will grow". This is attainable whether you opted to keep your money in a bank or invest some of it on top performing stocks or equity funds.

Developing the habit of saving early, will also give your money more chances to grow.