A Retirement Story: An Advantage of Being Debt Free

Retirement Story

A word of advice: If you have debt, get rid of it before you do any other investing.

If you have investments and debt, sell your investments to pay off your debts. Then take the added cash that you will have each month to build back up your investment accounts.

This story is about how getting rid of debt opened up new opportunities for one couple.

With Vince and Noel, we had only been working together for about three years. When we first started working together, Vince (who is in his forties) was employed by a technology company that had recently been purchased by a larger firm. As a result, his stock options became vested immediately and gave the couple a great deal of cash. They had more than enough money to pay off their mortgage but it took me over a year to finally convince them to do so! Link to (Series 1, post 9)

Not too long after paying off their mortgage, Vince’s company was bought out for the second time, by another firm. Unfortunately, this takeover turned out not to be a positive one for Vince and, in fact, he felt it necessary to resign even though he hadn’t lined up another job.

Still, he was comfortable making this decision because the couple no longer had a sizable monthly mortgage payment. Fortunately, he was under no financial pressure to take the first job opportunity that came along. Instead, he has been able to pursue his next career option on his timetable.

Recently, he landed an even better paying position with a firm that shared his moral values.

For more examples of how to set yourself up for an incredible retirement, get your free copy of Worry Free Retirement today.

A Retirement Story: How Debt Can Destroy a Family


This story may seem dramatic, but I tell it as a cautionary tale of how easy it is to fall into debt and live a lifestyle that isn’t realistic due to the illusion debt creates.

As retirement approaches, the hard truth that you may not be able to live the retirement you hoped for can be tough to accept.

A couple, Tom and Mary, were referred to me once looking to hear good news about their future retirement. Tom was a senior executive with a Fortune 500 company and had been with this company for more than fifteen years. His income was over $300,000 (quite sizable at the time) but he and Mary were very worried and apprehensive about their future.

They had nothing other then Tom’s salary. That’s right—Tom and Mary had virtually nothing other then Tom’s nice income. They had the obvious signs of success including a lavish home in the right part of town but mortgaged to the hilt so they had, virtually, no equity. They leased two cars, a Mercedes for Tom and a Jaguar for Mary.

Their financial goals were clear:

Tom wanted to be able to retire within five years. Susie, their daughter, was getting married in six months and they wanted to have a luxurious wedding for her.

Their son, Tom Jr., would be starting college the next year and they naturally wanted to send him to the best college money could buy. They also had accumulated $80,000 of credit card debt and had no other savings or investments, except for Tom’s modest 401(k) plan.

While I ultimately felt that I wasn’t the right financial advisor for them I did give them this advice – spend less, save more.

Recently, I learned that Tom and Mary were divorced a few years ago. Apparently, Mary began to resent all the time her husband was spending at work. With the children grown and out of the house, she wanted to spend time with her husband in “retirement.”

Things were a bit more complicated.

Tom lost his job, apparently because management had difficulty trusting him to run a multibillion-dollar operation when he couldn’t keep his own personal finances straight. Also, the couple’s children no longer “love” their parents who can’t spoil— I mean help them out—the way they had in the past. The children have had to get jobs and support themselves.

You’ve probably seen the bumper sticker, which says,

“I owe, I owe, so it’s off to work I go.”

The choice is yours. You must take control of your money. If you don’t, it will take control of you and your life and you’re probably not going to be happy under its thumb.

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Be Happily Debt Free

Debt Free

The single biggest obstacle to building and keeping wealth is debt.

That’s right—debt! If you’re paying an increasing amount each month to pay off loans or credit cards, you are in good company.

The average American carries an estimated $10,000 in credit card debt.

Regardless of your circumstances, try to imagine having no credit card, car or mortgage payments. I bet you’re seeing a pretty good picture!

When you eliminate debt from your life, you reduce the amount of income you need to earn from your investments. This gives you increased freedom to be more conservative with your investment holdings, since you won’t need to earn as high a return on your holdings.

You’ll be able to accomplish your goals but probably with less stress because you’ve invested in lower risk choices.

If you’re lowering your risk proportionately, then lower investment returns may well be acceptable to you. If lower returns come along with less stress and increased peace of mind, then this strategy may be the one you should be choosing.

People without debt worry less about their money.

I say this with assurance, from first hand experience, having had conversations with more than 700 retirees!

If you haven’t done so already, one of your principal goals should be to become totally debt free at or before retirement. If you have debt, get rid of it before you do any other investing.

If you have investments and debt, sell your investments to pay off your debts. Then take the added cash that you will have each month to build back up your investment accounts.

For more information on how to experience an Incredible Retirement, receive our free 5-part e-course.