Life in retirement can be rich and meaningful, but it's not necessarily cheap. Accomplishing your goals and maintaining a comfortable lifestyle will likely require you to plan strategically before you decide to leave the workforce.  

Saving and investing are often key components of a retirement plan that works. But retirement planning is about more than assets, investments, and net worth. At heart, it's about retiring with security and the confidence that you have what it takes to accomplish your goals.

For almost everyone, that means entering retirement with minimal debt. Car loans, mortgages, parent PLUS loans (from your kid’s college), and credit cards can all add up reducing your ability to save towards retirement and creating a significant monthly expense for a time when your income might not be as high as it once was, retirement.

Eliminating debt — or avoiding it in the first place — just might need to be front-and-center in your retirement plan.

Unfortunately, In most American homes debt has become so woven into ordinary life, that it's tough to imagine a home with no mortgage or an educated student without a lifelong loan. Debt doesn't have to last forever, though. Regardless of your circumstance, You can take steps to break free from debt now and enter your retirement years with more confidence.

Let's talk about how to avoid debt altogether.

Plan Out Sustainable Monthly Expenses

Your most valuable weapon in the war on debt is your budget. For many people, the word budget sounds like a curse, but it can actually a blessing. Just think of your budget as a spending plan or a plan for your money. You deciding ahead of time how you will spend the resources God has provided to you.

Start your plan by focusing on the core components of your monthly expenses, the things that determine the basic quality of your life. Most of us would name housing, transportation, food, health, and education among these. 

Often, something that might be considered just a little better can actually cost a lot more— a luxury car, for instance, or that house you just gaped over on Realtor.Com. Sure, it might seem like a few thousand dollars now, but over time, debt adds up. More debt now can mean less money to meet other monthly expenses during retirement. 

As you approach retirement, planning for your expenses grows even more important. Debt, including a car loan or even a mortgage payment, can saddle you with heavy expenses in your 60s and 70s. 

Avoid Buying Things on Impulse

You have a solid spending plan, a budget, in place. You're telling your money what to do; it's not just disappearing on you. 

Now comes the hard part: you have to stick to the plan. Avoiding debt isn't a set-it-and-forget-it strategy. You have to make a choice to stay out of debt every day. It might take some practice, but you might be surprised that with a small shift in perspective you’re spending habits might just change. 

Proverbs 22:7 reminds us that "The rich rule over the poor, and the borrower is a slave to the lender."

The Bible gives a vivid picture of what uncontrolled debt can do to a person or a family. Recognizing that scripture does not necessarily condemn the use of the debt, but it plainly warns us against the consequences of misusing debt. 

But what about… ?

What about your mortgage? Is a 15-year loan okay? A 30-year? 

Can you make an exception for student loans? Or a business loans? 

What about a car payment? Is that okay if you really need the car and have no cash on hand?

As you consider the role debt will play in your financial future, remember that borrowing money is a double-edged sword. Yes, it can allow you to enjoy an asset you couldn't otherwise afford. For example, a lender can help you afford a home for your family. But on the other hand, debt always brings some degree of bondage. Once you borrow money, you commit to make ongoing, regular payments until that debt gets paid in full, including all interest and fees. Not to mention, a change in circumstances such as illness, an accident, or a job loss can increase and even amplify this bondage. 

The key is to avoid the burden of debt. Consider borrowing sparingly and only after careful — and prayerful — thought.

Because let's be honest: most of us aren't regularly borrowing for something we need. And in some cases, We're digging ourselves deeper in debt to maintain an artificial lifestyle. It can be easy to fall prey to comparison, wanting to look as good as, or better than, our neighbors, friends, and co-workers. 

But someone has to pay the piper eventually, and that someone is going to be you. 

Plan for Discretionary Spending

Part of financial responsibility is facing the truth that a new best thing always pops up when we aren't paying attention. Maybe it's something as big and expensive as a house upgrade or something small like the latest iPhone or home audio system. Stay alert for what tempts you.

It's important to be mindful and deliberate when it comes to borrowing, especially when borrowing consists of using a credit card or a personal loan to fund an impulse buy.

Are we against every impulse buy? No. Within reason, discretionary spending isn't a problem. But chances are you should always avoid an impulse buy that will carry debt implications.

So how much discretionary spending is okay? Well, there’s no right or wrong answer. Often it’s a decision between you and your spouse. 

In general, though, your spending should align with your goals and allow you to practice biblical principles of financial stewardship.

Spend less than you earn. Prov. 21:20, Prov. 10:4

Avoid the burden of debt. Prov. 22:7; Ps. 37:21

Build reserves and liquidity. Prov. 6:6-8; Luke 14:28

Think and plan long term. Eph. 2:10; Phil 3:14

How do you avoid buying things on impulse? - Budget wisely, and stick to your plan.

Identifying how much disposable income you have lets you determine how much you can spend today, without sacrificing your goals, and what purchases might need to wait until a later date. 

Minimize Your Use of Debt  

Handing over a credit card or signing up for a home equity line of credit can be all too easy. However, If you overuse these instruments you can put the wealth and pleasure of your retirement years at risk. 

Consider making major purchases with cash - no, this doesn’t mean with dollar bills, but it does mean without carrying debt. Pay off that credit card each month. Buy that new car or washing machine with cash, not a payment plan. 

Plan for regular expenses you know you’ll have, build an emergency fund for the unexpected expenses that you know may arise (easy rule of thumb, consider 3-6 months of living expenses) and whenever possible, avoid the burden of debt. 

Eliminate existing debt 

What can you do if you already carry a lot of debt?

Simple. Pay it off as fast as you can. - ok, sounds “simple” or easy in theory, but as we all know this can take discipline and sometimes sacrifice. 

According to researchers at Northwestern University, the quickest path to living debt free is what we, or Dave Ramsey, often refer to as the "debt snowball method."

Under this approach, you line up your debts from smallest to largest. Make the minimum payment on each of them, and put as much extra as you can toward paying off the smallest debt on the top of your list. As soon as that one's paid off, move to the next smallest, and eliminate it.

The debt snowball method harnesses the power of psychology to help you win against debt. When you feel like you're making progress by knocking out entire debts one at a time, you're more motivated to stick with your debt elimination plan. 

Conclusion

Debt avoidance and debt reduction are great ways to enhance your flexibility and opportunities in retirement. Debt can be a major expense so eliminating it could save you hundreds or even thousands of dollars every month. By using the approaches above — and staying consistent — you can reduce or completely eliminate your debt before you retire