I’m trying to retire but I’m $120k in debt – an expert gave me 4 steps to help

APPROACHING retirement can be a daunting challenge for anyone, but especially those in debt.

One man trying to retire early recently called into a financial advice podcast to seek tips.

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Calling into the Dave Ramsey Show, Jack, from Cincinnati, Ohio, said he was $120,000 in debt.

By the end of their conversation, host Dave had given Jack four steps to “clean this mess up.”

He estimated the entire process would take two weeks or less.

THE SITUATION

“I’ve dug myself a hole,” Jack told Dave over the phone.

Jack recently married after his kids finished high school. Together, the couple makes $200,000 a year.

Then their money troubles put his marriage at risk.

“When it became the business of a relationship, the relationship changed and that’s where the problem lies,” he said.

With several credit cards building up debt, the pair used a 401k loan to pay it off.

Now, the pair have $35,000 owed on top of their remaining credit card debt.

Jack also owed money on two expensive cars, and a trailer connected to his woodworking business.

That business, he said, was failing.

The side-hustle was losing the family about $10,000 per year, taking up hours of his time every night and putting strain on his marriage.

THE SOLUTION

“That sounds like an expensive hobby,” Dave said. “A stinkin’ expensive hobby you wish was a business.”

He summarized the problem by pointing out that they are spending more than they make.

“I can give you four things right now, that if you go do them… within two weeks you’re going to have a completely different scenario in your life,” Dave said.

First, he said Jack should sell his expensive cars.

Next, he said to sell his trailer.

Third, he should sell the business, especially since it’s not making money and driving more credit card debt.

Last, he and his wife need to sit down and make a budget so they don’t overspend.

Where to save your retirement money

There are several different places where you can put the money you save for retirement. Each has different tax advantages, but not all of them are available to everyone.

401(k) – an employer-sponsored retirement account. Contributions are made pre-tax and many employers will match a certain percentage of your contributions. Taxes are paid when the funds are withdrawn in retirement.

Roth IRA – an individual retirement account. Contributions are made post-tax but withdrawals in retirement are not taxed.

TSP (thrift savings plan) – a retirement savings and investment plan for Federal employees and members of the uniformed services. They work similarly to 401(k)s but may have more limited investment options.

Pension – an employee benefit that commits the employer to make payments to the employee in retirement. Pensions are becoming increasingly rare.

MORE TIPS

The internet and media have offered people a convenient way to find basic financial advice.

Dave recently helped a 60 year old with nothing saved for retirement.

He also gave a 66-year-old a tip that would “dramatically change her situation.”

Another retirement advice influencer, Drew Blackston, recently helped a 55-year-old struggling to retire.

Blackston recently shared his ‘$25’ tip directly with The U.S. Sun.