≡ Menu

Is debt stopping you from retiring early?

Having many years’ experience in the financial services industry, I understand a lot about debt. The Canadian debt to income ratio is now a whopping 165% our neighbor’s to the south & most of Europe now report huge debt percentages.

There are two types of personal debt. Good debt, mortgages or loans to purchase assets and bad debt, primarily consumer debt, goods and services that do nothing to add to your net worth. Sorry a flat screen TV or closets full of Jimmy Choo shoes does not add to your net worth!

Although we have retired early we do have some debt, we have “good debt” in the form of mortgages, which our renters pay. The additional rental income offsets our travel expenses.

Over the last few years, we have consciously avoided bad debt, which meant no monster flat screens or exotic vacations that we were still paying for a year later. We learnt to live within our means and to spend our money on necessities’ not wants!

Identifying and eliminating “the wants’ is the first step to financial independence. A “want’ is anything that is not helping to feed and shelter you.

Action item~.

  • Track and list your monthly expenditures.
  • Go over that list with a red highlighter and mark items that are “wants’
  • Total the amount that you spend per month on ‘wants” surprised? Most people are.
  • Think about what you could do with that money. Could you pay off debt, save it, invest it?

Coming next, how to…….

Pay it off with a Snowball!

About the author: Born in the UK, with what must be more than a dash of Romany blood in her veins, Yvonne loved to travel even before she met Michael. Yvonne has a varied career history, which includes several laborious years as a laboratory manager, followed by a fun few years as a scuba instructor and crew in the British Virgin Islands, and then many boring years in financial services. Her discontent along with the passing of a dear friend was the prod that led to the realisation that there was a lot more do in life. It has taken almost 40 years to come full circle to realize what Yvonne’s English teacher saw all those years ago……… Yvonne’s true passion (apart from travel) is writing and now finds herself fortunate to have the time to follow her bliss and combine the two as a blogger and travel writer. Yvonne writes most of the content and talk to lots of strangers (the best way to get the real scoop on the place). Yvonne is a “rainmaker” and makes things happen!

0 comments… add one

Leave a Comment