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According to a report from the financial research firm Hearts and Wallets, one-third of Americans have made a financial goal of retiring early.
Which means to become financially independent before qualifying for Social Security.
The Financial Independence Retire Early (FIRE) movement, is based on the goal that you can save and invest in such a way that it speeds up the time of you retiring.
Investing in retirements will help your financial planning, but getting rid of debts like your mortgage before you retire can free up a good chunk of money.
And during your retired years, you don’t have to think about making a large mortgage payment every month.
If you can pay off your home loan at a lower interest rate then early retirement planning is even easier.
To compare mortgage rates and save for retirement one can use an online mortgage marketplace.
Build your budget around your mortgage
When someone is pursuing early retirement they put 50% or more of their income into saving accounts and retirement accounts.
Check if you can manage a mortgage and simultaneously save for your retirement fund.
Juggling both the goals at once may require you to buy a smaller home or move to a place with modest real estate costs.
Hence using an online mortgage calculator can help you determine the cost of your monthly payments.
Once your potential mortgage payment is calculated you will be able to identify if there’s room in your budget for additional savings and extra mortgage payments.
You may manage your budget to ensure you can live comfortably while paying off the mortgage and pursuing your goal of reaching financial independence.
Before you take out a mortgage get rid of all other debt
Mortgage debts usually have a much lower interest rate compared to other types of debt. Hence it will make more sense to tackle all the other consumer debt first and pay off your mortgage in the end.
The credit card interest rates on new accounts are around 20%, it is best to pay it off first.
Then, personal loans, your auto loan, student loan debt respectively. Paying off all these debts can free up hundreds to thousands of dollars that can be saved each month.
Which in turn will lower your credit utilization ratio, which will increase your credit score.
Reference Source: Fox Business
