Strategies Baby Boomers Use to Maintain a Debt-Free Lifestyle
Most baby boomers aren’t dealing with credit card debt. A recent survey by GOBankingRates found that 52% of Americans aged 65 and older reported having no credit card debt at the time of the survey. Additionally, 53% of this age group said they hadn’t accumulated any new credit card debt in the six months prior to the survey.
Other generations might wonder what strategies baby boomers use to stay debt-free. Financial experts suggest that the key lies in a few specific practices.
**Budgeting**
Baby boomers who create and stick to a monthly household budget are much more likely to avoid credit card debt. Howard Dvorkin, chairman at Debt.com, compares this to dieting, where success comes from burning more calories than consumed. Similarly, those who budget are mindful of their spending, ensuring they spend less than they earn. Dvorkin notes that boomers are comfortable using both traditional budgeting methods and modern budgeting apps. Many banks and credit unions now offer online budgeting tools, making it easier than ever to manage finances.
**Following a Financial Plan**
Another strategy that helps baby boomers avoid credit card debt is following a financial plan. Erin Voisin, managing director of wealth management services and partner at EP Wealth Advisors, explains that many boomers focus on maintaining their lifestyle in retirement without depleting their savings. By working with financial professionals to develop and regularly review a financial plan, they can budget effectively and live within their means.
**Utilizing Additional Income Sources**
Baby boomers understand the importance of quickly and efficiently paying off credit card debt. Brian Kuhn, CFP and SVP at Wealth Enhancement Group, points out that boomers often use additional income sources to expedite debt repayment. Beyond Social Security or pensions, these sources might include severance checks, inheritance money, or proceeds from selling a home.
By employing these strategies—budgeting, following a financial plan, and utilizing additional income sources—baby boomers are able to maintain a debt-free lifestyle.