Paying off debt in pre-retirement is your #1 priority

The 15-20 years leading up to retirement are go-time for your financial life. You are at the peak of your career, your kids are about out of the house if they aren't already, and you are ready to take a big deep breath and sail through the next few years until retirement. Unfortunately, it doesn't quite work that way. Well, it does for some people. That is to say, some people attempt to follow this route but the results aren't great. Actually they are disastrous. Phoning-in your financial life leading up to retirement is one of the worst mistakes you can make. Besides adjusting your lifestyle and making sure you've saved enough to retire when you want, you also need to focus on paying off all your debt before you retire. Yes, this includes your mortgage.

Paying off debt in pre-retirement is similar to paying off debt at any other time in your life, but there are a few unique challenges. Here is your 3 step debt pay-down plan:

Get real

What do you really owe? On your current plan, will you be debt free by retirement? "Debt tends to go hand-in-hand with denial. It’s much easier to avoid knowing exactly how much you owe and how much longer you’ll have to pay, but facing reality is the only way out." (courtesy of SmartyCents.com)

Make a plan

Use the Momentum Method and follow through with it. Just making a plan won't be enough. Stick it out. If you need motivation, imagine running out of money in retirement, that should be the kick in the pants you need.

Break dependency on your income

Breaking your dependency on your income comes in the form of cutting expenses. "Cutting expenses does two things for your financial life, it frees up money to put toward debt and it helps you live even further below your income level. The latter will be particularly helpful during retirement. Cutting expenses can be as simple as using less electricity and eating out less, and as drastic as canceling services and moving into a less expensive home. Cutting expenses is a behavior change. This means every day you have to fight the urge to spend. The good news is that behaviors are hard to develop, but once developed they are hard to break." (courtesy of SmartyCents.com)

This is the peak of your career when you are likely making the most income you ever have or ever will again. And yet it is also the time when you have major financial commitments. Don't get complacent. Make a plan to pay off debt before retirement. For more insight into how to do this, check out my column over on SmartyCents.com.