Consolidating debt by paying off high interest loans and credit card balances with a secured line of credit can help homeowners who have neglected retirement savings to exercise the fiscal discipline necessary for a successful retirement – at the same time exorcising the haunting thoughts that they have put off investing for the future in favour of spending now.
“Saving for retirement can be a bit like trying to get in shape,” writes Dianne Nice of the Globe and Mail, “You need to start slowly, work at it regularly and don’t expect to see immediate results.”
Problems of “paralysis of choice” and “immediate gratification”, Ms. Nice reports, “are creating a disconnect between what Canadians believe they should be doing to prepare for retirement and what they are actually doing.” Citing a recent report by the BMO Retirement Institute surveying Canadians 35 and older, she observes that these “same psychological barriers that prevent us from shaping up may also be keeping Canadians from bulking up their retirement savings.”
Investing money now, together with the effects of compound interest, is the basis of sound retirement investment. However, making minimum payments on credit cards and/or servicing other high interest loans can slow down, or put off altogether, the retirement savings plans of even the best intentioned homeowner. “(W)hen your tummy’s rumbling,” Ms. Nice observes, “its tempting to just buy a chocolate bar now and put off the diet – or the saving – until tomorrow.”
Utilizing a secured line of credit to pay off high interest loans or credit cards can be a key component in establishing a prudent financial diet – a diet that allows homeowners to more easily service existing debts with a low-calorie, low-interest line of credit – while affording homeowners the financial leeway to make the investments that will beef up their retirement savings.
