If you have debt that you want to pay off before your retirement, it is important that you come up with a budgeting strategy to help you do so. It is also crucial that you continue to have strong communication with your partner throughout the entire process. You must work together with a sense of direction to take out the debt.

If you are married or share finances with your partner, the success of your budgeting strategy is dependent upon your willingness to communicate openly about money and spending habits. Regular discussions about money with your partner may be uncomfortable at first, but if you approach it in the right way, it can form a vital pillar in your partnership. A good way to go about it is to schedule it. That way, you will eliminate the undercurrent of emotion that can sink these discussions. If you only talk about money when you are fuming because your partner went on an exorbitant shopping spree or paid a bill late, you will assume the mental pattern that talking about money is to be avoided because it is the time you fight. If you and your partner cultivate a financial environment where systems are in place, for the good times and the bad, you will be effectively removing emotion from the equation. This will reduce the possibility of any discussion being construed as a personal attack. Attack your debt, not your partner.

A married couple named Bill and Mary had recently become our clients. After our first meeting, which had gone well, we got a call from Bill asking us not to mention the fact that he had amassed $25,000 in debt that Mary did not know about. We advised him that we would need to factor a debt of that size into their financial plan. We also let him know that we could wait on that step until he felt comfortable discussing it with Mary. As we progressed through the planning process, it became crucial that the secret come out. When he finally revealed it to his wife, it was a hurdle, but they overcame it through open communication. Once the secret no longer held us back, we were able to transition smoothly into a plan that included the necessary goal of paying off the debt. The couple has now been happily retired for ten years. The reason we know they’re doing well? We saw them at a client breakfast and they mentioned that both are more aware of their expenses. If you are finding it challenging to start up a regimen with your partner, begin by reviewing your expenses in doable increments, such as quarterly. After you become accustomed to this habit, you can try moving your meetings to once every two months, and eventually to monthly.

Another client story shows how just a little information, when applied to a specific situation, can make all the difference. We met with a couple who were really discouraged about their present retirement situation. They had amassed $60,000 in debt and were having difficulty making the $2,600 monthly payments while working. They assumed that if they could not pay down the debt while receiving a salary, there was no way it would be eliminated in retirement. They were scared that the debt would fall to their heirs, which they could not abide.

We looked at their options and found that their IRA would support a one-time distribution that would eliminate the debt. I advised them that knocking out the debt this way would save thousands in interest over their retirement, in addition to saving them from the monthly payments their budget could not support. Suddenly, retirement seemed possible again.

Eliminating that stress opened doors for the couple that were unimaginable before. After retirement, they took advantage of their new freedom by traveling to places they had always wanted to see. Spending time with their grandchildren, they say, has really added a new dimension of happiness to their life. They both received a scare a few years back when the husband had to undergo a quadruple bypass surgery, and that has made them both perfectly aware how important it is to enjoy their quality of life while they can.

Here at Miramontes Capital, we can help you figure out the best plan to pay off your debts so you can live comfortably and with less stress in retirement.


Schedule an in office or over the phone consultation to discuss how Miramontes Capital can help you with your new beginning through retirement planning.

Miramontes Capital is a Registered Investment Adviser. Advisory services are only offered to clients or prospective clients where Miramontes Capital and its representatives are properly licensed or exempt from licensure. This blog is solely for informational purposes. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. No advice may be rendered by Miramontes Capital unless a client service agreement is in place.