Debt Counseling for Homeowners
Do you own a home and feel constrained by debt?
Are you looking for a way to better manage your finances? At Allgen,
we feel debt management is critical to ensure your retirement goals
are achievable.
Why do most people find themselves in
too much homeowner debt?
Lack of proper planning and budgeting before
purchasing a home to determine affordability. It is not bad to pursue
the American dream of owning a home but one has to make sure one
can afford it first, taking into account possible negative circumstances.
What steps can someone take to manage
debt better?
- Control spending
- Minimize the effects of daily compounding interest (DCI)
- Design, implement and follow a plan that directs pay down method
As a homeowner, how much debt should I
have?
Home expenses should not typically be between
30- 40% of one’s household income. This will vary per household
situation but the range is used as a general target.
What options are available to reduce homeowner
debt?
- Biweekly mortgage
- Debt acceleration programs managing or neutralizing the DCI
- Send an extra payment a year
- Avoid refinancing or borrowing equity to spend on consumer items
How can Allgen help with homeowner debt
as it relates to retirement?
We have access to a coaching program that teaches
homeowners how to neutralize the DCI minimizing the effects of compounding
interest against them. This will lead to a quicker pay down of their
debt without altering one’s current lifestyle (no extra payments
needed).
How does my homeowner debt potentially
effect my ability to retire?
Our home is usually our biggest expense. If this
debt can be eliminated quicker, it positions us to (1) have more
free cash to invest for retirement and (2) gives us peace of mind
of owning our home out right at retirement.
If an individual is 40 years old and wants
to retire by 65, how much do they need to invest to continue living
the same lifestyle when retired? (annual income = $65,000)
Assuming, (1) They have 25K in a 401k plan (2)
it grows at 8%/year, (3) the company does not match, (4) inflation
at 2.5% pre and after retirement and (5) there are no other income
benefits such as social security or pensions.
They would have to invest approximately $1,875/month to accumulate
enough assets to maintain $65K/year income in future dollars.
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