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If you think you can save enough for retirement by giving up lattes, I’ve got a question for you. How many lattes are you drinking?

Look, the struggle to manage current vs. future needs is real. But, at about $4 a pop, you may need to look beyond giving up your favorite espresso-based drink.

It’s about debt

In 2017, NASDAQ reported that the total average debt of all American households (including those who have no debt at all) is $139,500.

So it looks like it’s actually debt, not lattes, that has us wondering how we can save for retirement.

Don’t let debt hold you back

If your debt is holding you back, if it feels like an insurmountable obstacle, please know that it’s not. You can tackle your debt, and when you do, you’ll feel like a superstar!

Before we get started, a word to the wise. If your employer offers a company matching contribution to your retirement savings plan, don’t pass it up. Save at least as much as the company match. It’s essentially free money. You’re about to become a saver. And savers take free money where they can find it.

Tackle your debt

Now, here are some suggestions for tackling your debt so you can save more.

First, go easy on yourself. This is strictly about numbers, not who you are as a person. I know credit card debt feels especially awful. Probably because it’s not societally sanctioned, like debt incurred to buy a new car or a house…or to get a degree or pay for medical treatment. But, regardless of what kind of debt you have and how that debt is making you feel, it’s all the same on paper.

Next, list all your debts—excluding your mortgage, if you have one. (Because, baby steps.) You’ll need to know the amount you owe, the interest rate and the minimum required payment, for each.

Let's get to work!

There are a few ways to approach tackling debt: The Avalanche method, the Snowball method and consolidation.

The Avalanche method

The Avalanche method advocates paying off debt with the highest interest rate first. While you’re tackling the debt with the highest rate, pay the minimum amount on the rest. When the first debt on the list is eliminated, move on to the next, etc.

The Avalanche method is a great way to minimize the total amount of interest you pay over time, saving you money.

The Snowball method

The Snowball method advocates paying your debts in order, from the smallest amount to the largest. While you’re paying off your smallest debt, pay the minimum on the rest. When the first debt on the list is eliminated, move on to the next, etc.

The Snowball method is a psychological approach that has you building confidence, enthusiasm and momentum (like a snowball!) as you tackle your debts from easiest to hardest. It may cost more money over time, but breaking your goal into smaller, more manageable steps may increase your odds of success.


With consolidation, you’ll take out a single loan to pay off all your outstanding debt. If you decide to consolidate, don’t jump at the first loan opportunity that comes your way. Shop around for the most favorable terms you can find.

Eliminating debt by first consolidating lets you focus on tackling a single loan balance. This method is best for those who are disciplined enough to resist using those freed up lines of credit to make new purchases.

A nice problem to have

Deciding how to allocate your money is never easy. But, when you eliminate the financial and psychological burden of debt, managing current vs. future needs will begin to feel like a nice problem to have.

And, with your debt elimination goal crushed, you can set new goals…like planning an epic 95th birthday party.

Happy saving!



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Retirement counselors are registered with Empower Financial Services, Inc., Member FINRAopens in new window/SIPCopens in new window. EFSI is an affiliate of Empower Retirement, LLC; Empower Funds, Inc.; and registered investment adviser Empower Advisory Group, LLC.

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