How To Be Debt Free by 50

Freedom from debt. What a beautiful notion. No more mortgage payments. No more car payments. No more credit card balances to drag you down. Nothin’. Everything you make, you get to keep or spend at your leisure without worrying about interest rates.

And wouldn’t it be nice to get all that debt out of your way by the time you’re, say, 50?

Guess what. You can do it!

When you do, you’ll discover that it isn’t just the good life at 50 you’ll appreciate. You’ll also have the unfettered ability to spend the rest of your working years salting away the money you’ll need to support the kind carefree post-job life you deserve. You’ll avoid the retirement roadblock that unattended debt puts between many people and enjoying their golden years.

One recent study found that 71% of retirees were still carrying debt after they stop working, and The National Council on Aging’s newest analysis shows that over 16.5 million Americans at 65 or older are economically insecure.

Retirement might still feel like forever into the future for you, but if you start dealing with your debt now, you’ll be thanking your younger self when it’s finally your time to walk away from the rat race. You won’t have to count yourself among that 71% or those 16.5 million seniors.

So why not shoot for 50 to be out from under the debt you already owe? There are moves you can make right away to be able to retire debt free.

» Learn More: How to Prepare for Retirement

6 Steps To Be Debt Free at 50

It’s the journey, not the destination. You’ve heard that bit of conventional wisdom, right? And, of course, there’s something to it.

Keep in mind that the road to becoming debt-free by 50 won’t happen overnight and it probably won’t be an easy trip. You’ll face challenges and make sacrifices as you chip away at your credit card balances and speed up your mortgage payments. Chances are, you’ll look back on the journey with pride when you reach its end, and rightfully so.

For these purposes, though, we’re going to quibble a little with the premise of the proverb because the destination here is pretty darn meaningful, too. When you’ve shed your debts by the time you’re 50, you’ll be at the start of a financially-strong future. Don’t lose sight of the value of that as you consider the six steps in this expedition.

Here’s how to make it happen.

1. Create a Budget

You need a plan. You need a plan with structure. You need a plan with structure that serves as a road map to your long-term goals. A budget is all of that and more. So, the first step to being debt-free at 50 is to create a budget that will help you save money, keep you from overspending, and put you in control of your own finances.

How to do it? Start by tracking every dollar you spend over the course of a month. You’ll find expenses such as your car and mortgage or rent payments in the financial documents you already have. Others, such as groceries and movies, you’ll need to record every day as they happen. List all of it and add them together at the end of the month. Make the same sort of list with your take-home income, including your paycheck, alimony, child support, social security, investment income and anything else that winds up in your bank account. If it gets too complicated, don’t give up. There are apps and online spreadsheets out there that can help you organize those expense and income lists.

Next, compare your monthly expenses against your monthly income. You’ll be able to see where you can cut back on your spending as well as how you might better use the money you’re bringing in. By the time you put together next month’s budget (and yes, you need to do this every month!), you’ll see a difference in the bottom line. Voila! You’ve got the makings of a road map to your long-term goal of being debt-free by 50. Your budget will steer you through your decisions about how and when to step up the payments on your credit cards and other outstanding loans.

2. Pay Off Debts with High-Interest Rates First

Usually, the highest interest rates you pay on your outstanding debts are attached to your credit cards, so that’s the place to start. The median credit card interest rate in June 2023 was almost 24%. If you’re paying that much or more on any of your debts, make it your top priority to get those balances paid off. But interest rates lower than that, including on personal loans, should have your attention, too.

One way to attack it: Rank the interest rates you’re paying from highest to lowest, and work in order from top to bottom on eliminating those balances one at a time. (Remember that you’ll have to make at-least minimum payments on all your other debts each month, too.) Whenever you can, send in a payment more frequently than once a month on that highest-rate balance and include more than the monthly bill requires. When you’ve cleared out that balance, move on to the one with the next-highest interest rate in your ranking. This is called the Debt Avalanche or the Debt Stacking method for tackling high-interest debts. It’s also sometimes called the Debt Wrecking Ball because in many cases it’s the most efficient way to demolish someone’s series of debts.

A second approach comes at the problem from the other direction. Leaving interest rates out of it, the Debt Snowball method advises you to rank your debt balances, and then start at the bottom by paying off the smallest one first and working your way up from there. Each time you pay one off, you move up to the next largest balance. The idea is that you build momentum that way, like a rolling snowball.

There are advantages and disadvantages to both approaches.

» Learn More: Debt Snowball vs. Debt Wrecking Ball

3. Increase Your Income

We know what you’re thinking: “Increase my income? Well duh! If I could make more money, don’t you think I’d already be doing it?” And yes, we do. But just to be sure, allow us to suggest a handful of options that might not have occurred to you. They won’t necessarily make you rich, but they could generate enough new cash every now and then to help you make an extra payment on your credit card bills or mortgage and car loan, which is a key to being debt-free by 50.

Hold a garage sale. Rent out an extra room, either to a long-term tenant or to short-term  Airbnb guests. Try babysitting or dog-walking or any number of other side jobs. Do you have a hobby that might be more marketable than you realize? Could you sell something you create on your own time at home? Do you have a special skill you could teach to others? Think outside the box. There’s gold in them thar hills. (Just so we’re clear, that’s a figure of speech. We aren’t recommending literally heading to the hills to prospect for gold. There are more practical and reliable ways than that to increase your income.)

4. Make Extra Mortgage Payments

If you’re a homeowner, chances are your mortgage is the single-largest and longest-lasting debt you’re carrying. Unless you come into an unexpected windfall – win the lottery, inherit a fortune, find Blackbeard’s buried treasure – paying a mortgage off early is going to take a lot of baby steps. But it can be done. Whenever you have extra cash, maybe from that garage sale or your dog-walking gig, send it to the mortgage company in addition to your regular monthly payment. You’ll be cutting the balance and the length of the loan down to size at a more rapid pace.

Here’s another little way to speed up the process of paying off the mortgage early. If your lender will allow it, cut your monthly payment in two and send in one half of it every two weeks. By the end of the year, you’ll have made an extra payment or two. Trust us: We did the calendar math!

Too, it never hurts to shop around for refinancing opportunities. If you can lock in a lower interest rate than you have on your current mortgage, your monthly payments should be smaller, which in turn ought to make it easier to put together the additional payments that will get you out from under the home loan load earlier.

5. Prioritize Your Health

The older you get, the more you pay for healthcare. One study found that the average annual healthcare cost for people who reach 65 years of age is around $11,300, which is almost three times more than the average cost of care for those people when they were in their 20s and 30s. For what it’s worth, the average spending on healthcare is nearly twice as high for adult women as it is for adult men.

Obviously, unexpected medical costs are more likely to crop up as you get older, and they can lead to – you guessed it – more debt.

In the context of being debt-free by 50, then, there are a couple of courses of action you can take now to minimize the damage from unforeseen health expenses later.

• Take care of yourself right now, as well as in the future. You’ll run into fewer unforeseen doctors’ bills in your senior years if you maintain a healthy lifestyle.
• Look into investing in a long-term care insurance policy. If you can afford it, it might make sense to buy one sooner rather than later. It’ll cost you more per month if you wait until you’re 60 to sign up.

6. Avoid New Debts

This sounds like a no-brainer. If the idea is to be free of debt by the time you’re 50, it doesn’t make sense to take on additional debts before then that aren’t absolutely necessary. But it’s one thing to say it, and quite another to be able to avoid another new car loan or a bigger mortgage when needs or opportunities present themselves to upgrade and expand.

So, this won’t be easy. But if you’re careful about how you spend your money, you can manage to keep paying off your existing debts without undermining that effort with new ones. Some suggestions that will help:

• If the only way you can buy something is by using a credit card, don’t buy it.
• Prioritize your needs over your wants, and allocate resources accordingly.
• Establish an emergency fund and keep it robust enough to cover the next six months of your living expenses in case you lose your job or suffer an injury or need money for any other sort of unexpected reason.
• When it’s time for your next car, look for something on the less expensive end so you can buy it outright instead of taking out a loan. Remember, what you need and what you want are different things.
• Live by the three golden rules of avoiding debt: 1. Budget. 2. Budget. 3. Budget.

Speak to a Credit Counselor About Your Debt

Much as we’d like to pat ourselves on the back for providing all this comprehensive and useful information, we know we probably didn’t answer every question you’ll have about how to be debt-free by the time you turn 50. So, allow us to give you one final piece of advice here: Don’t think you have to do this all by yourself. Help is available from credit counselors, and we recommend getting it.

Credit counseling is a great way to address your debt-relief issues, from start to finish through all six of these steps. Counselors are trained and certified in the areas of budgeting, consumer credit, money and debt management. If, for example, you’re struggling to manage your credit card debt, a counselor will talk you through a number of options and help you choose the one that best fits your unique financial situation.

Oh, and here’s another cool thing about credit counseling: If it’s provided by a nonprofit credit counseling agency certified by the National Foundation for Credit Counseling (NFCC), the service is free. You get the help you need and Avoid New Debt (See Step No. 6) at the same time!

» Learn More: How To Become Financially Independent