First Person: I Refuse to Spend a Lifetime in Debt

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I marvel at friends who tell me they don't care about having debt as long as they can make the minimum payments on their credit cards. A member of Generation X in my 40s, I cringe to think that many people spend a lifetime in debt. I've spent my entire adult life in debt due to credit cards, car loans and mortgages. But my goal is to be complete free of debt, including car and mortgage debt, by age 50. I want the second half of my life to be a lot more carefree when it comes to my finances. And, I don't intend to die broke. According to one article by CNBC, dying with debt is a dirty little retirement secret are more senior citizens rack up debt than ever before. A report by CESI Debt Solutions showed 40 percent of senior citizens accumulated debt in retirement. Many have not intention to pay it off. A Fox business article claims "generation debt" turns out to be the baby boomers. Instead of carrying debt into retirement, I plan to make eliminating debt as part of a middle-age "debt" crisis.

Starting my debt journey

My journey into debt started in college when I accepted dozens of invitations to open credit cards even though I was just a student. Although I got out of massive credit card debt by age 30, I still struggled with using credit cards for emergencies. Instead of relying on credit cards, I now plan out my savings goal. I figure out how much a big ticket item may cost in the future and set a target savings date.

Avoiding the student loan double whammy

After getting out of my own student loan debt, I avoided co-signing student loans for my two children. I helped them pay cash for college so they wouldn't be burdened by student loans the rest of their lives. Although my younger son may have received student loan forgiveness by working in a public service job, I didn't want to take the risk. If the work for a company that reimburses their tuition costs, that will be great. I've just learned to never make assumptions or count on money that may or may not be there in the future.

Planning for auto loans

I started saving money in my Roth IRA for auto loans because the money I save can be taken out without owing taxes. Ideally, my Roth IRA will grow due to different investments. Each year I get closer to target date for buying a car, I make sure there is more cash available in a money market account within the Roth IRA account. At this stage, I still owe $7,000 on a car loan at a low interest rate. By the time I reach 50 in another 10 years, I hope to have enough saved to never have to take out a car loan again.

Most people view a mortgage as good debt, but most agree it's foolish to retire with a mortgage. I aim to have my mortgage paid off by the time I'm 50. After age 50, I plan to live on the income from my job and dividends. If I die broke, I want it to be because I shared my wealth with my children and grandchildren as opposed to feeding the debt beast.

More from this contributor:

I Lived in Shed to Knock out Debt

I Need $600,000 To Make it to 100

I Blame Boomers for Destroying the Economy

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