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How One Bad Financial Mistake Cost Me 7 Years Retiring Early; Guaranteed You’re Making it Now

Finance Mistakes Retirement

According to the Employee Benefit Research Institute, only 33% of Americans feel confident about retiring comfortably. Many individuals and families struggle to secure their financial future, making it essential to know the pitfalls and mistakes that can derail your retirement plans.

My story began when I was 25, fresh out of college, and eager to make my mark in the world. Like many young professionals, I was keen to start saving for my future and become financially independent as soon as possible. However, I made a critical financial mistake that would delay my early retirement dreams by a whopping seven years.

The mistake? Neglecting to prioritize high-interest debt repayment. I was so focused on saving and investing that I ignored the mounting debt I had accumulated, mainly in the form of credit card debt and student loans. Little did I know that the high-interest rates on these loans were eating away at my potential savings and investments, preventing me from reaching my financial goals sooner.

How Ignoring High-Interest Debt Can Cost You

To put things into perspective, let’s consider an example. Suppose you have $10,000 in credit card debt with an average annual interest rate of 20%. If you only make the minimum payment of 2% each month, it will take you a staggering 27 years to pay off the debt, and you’ll end up paying over $21,000 in interest alone.

Now, let’s say you also have $30,000 in student loans with an interest rate of 6% and a 10-year repayment term. Over the life of the loan, you’ll pay approximately $9,967 in interest. If you had tackled your high-interest debt before focusing on savings and investments, you would have had more money to invest earlier, allowing you to benefit from the power of compounding interest.

In my case, the extra seven years of debt repayment meant missing out on significant investment growth, which could have helped me achieve my early retirement goals sooner.

Why You’re Likely Making This Mistake Right Now

The problem with high-interest debt is that it’s incredibly easy to accumulate, especially when using credit cards for daily expenses, taking out loans to finance education, or other big-ticket purchases. Many people fall into the trap of only paying the minimum monthly payment on their debt, not realizing how much money they lose in interest over time.

Furthermore, individuals often fall victim to the temptation of lifestyle inflation. As your income increases, it’s natural to want to upgrade your lifestyle, leading to increased spending and even more debt. However, keeping your expenses in check and maintaining a frugal lifestyle allows you to allocate more money towards debt repayment and investments, accelerating your journey toward financial independence.

To put it simply, the longer it takes to pay off high-interest debt, the more interest you’ll pay, and the less money you’ll have to invest in your future. The key is to identify and prioritize high-interest debt repayment as early as possible.

How to Tackle High-Interest Debt and Get on Track for Early Retirement

You can refer to the following steps to achieve your financial goals, retire early, and tackle high-interest debts efficiently.

Assess Your Debt And Prioritize High-Interest Debt

First, make a list of all your outstanding debts, noting the balance, interest rate, and minimum monthly payment for each. This will help you gain a clear understanding of your current financial situation and allow you to prioritize your debts effectively. According to a 2022 report, the average American had a personal debt of $101,915, including mortgage loans, credit cards, student loans, and other types of debts.

Knowing your total debt and interest rates will empower you to make informed decisions about your repayment strategy. Once you assess your debts, focus on paying off the debt with the highest interest rate first while still making minimum payments on your other debts. This is known as the “avalanche method” and can save you thousands of dollars in interest payments over time.

For instance, if you have two debts – a credit card debt with a 20% interest rate and a student loan with a 6% interest rate – you’ll save more money by paying off the credit card debt first.

Create A Debt Repayment Plan

Develop a realistic plan to tackle your high-interest debt, including a timeline for repayment and specific strategies for cutting expenses and increasing your income. A study by the National Foundation for Credit Counseling found that individuals who had written debt management plans were more likely to succeed in their efforts. Thus, consider breaking your goals into smaller, manageable steps. For instance, reduce your credit card debt by 10% in the next six months. This may help you stay on track.

Increase Your Monthly Payments And Consider Debt Consolidation

Whenever possible, pay more than the minimum monthly payment on your high-interest debt. This will not only reduce the amount of interest you pay over time but also help you pay off the debt faster. Statistics say that increasing your minimum monthly payment by just 1% could help you save significantly on interest. Besides, it may reduce your repayment term by almost two years. Make it a priority to allocate any extra income, such as bonuses or tax refunds, toward your high-interest debt repayment.

If you have multiple high-interest debts, consider consolidating them into a single loan with a lower interest rate. This can make your debt more manageable and save you money on interest payments. A recent study shows that borrowers who consolidated their credit card debt with a personal loan saved an average of $3000 in interest over the life of the loan.

Create An Emergency Fund

A report by the Federal Reserve found that 68% of Americans would struggle to cover an unexpected $400 expense. While focusing on debt repayment, it’s essential to build an emergency fund to cover unexpected expenses, including medical bills or job loss.

Aim to save at least three to six months’ worth of living expenses in a separate, easily accessible account. Having an emergency fund in place can help you avoid accumulating additional high-interest debt in times of crisis.

Reassess Your Budget

As you work on repaying your high-interest debt, review your budget regularly and adjust it as needed. Identify areas where you can cut back on expenses or increase your income to allocate more money towards debt repayment.

According to the Bureau of Labor Statistics, the average American household spends 50% of its income on housing and transportation costs. By reevaluating these expenses and making adjustments, such as downsizing your living space or using public transportation, you can free up more money for debt repayment.

Stay Disciplined And Educate Yourself

Instead of taking the journey as a hasty dash, see it as a steady trek. Stay disciplined in your debt repayment efforts and focus on long-term financial goals. Besides, take the time to learn about personal finance and investing. Remember, a solid understanding of these topics can help you make informed decisions about your money. Read books, attend seminars, and seek advice from trusted financial professionals.

A recent report reveals that 15% of adults lost over $10,000 because of inadequate financial knowledge. Expanding your financial knowledge can help you make smarter decisions about debt repayment, saving, and investing.

Don’t Forget To Invest

While it’s essential to prioritize high-interest debt repayment, don’t forget to invest for your future. Once your high-interest debt is under control, start contributing to your retirement accounts, such as a 401(k) or IRA, and consider investing in low-cost index funds to grow your wealth over time.

An individual who invested $10,000 in the S&P 500 index in 1980 would have accumulated approximately $699,788 by the end of September 2021, assuming they reinvested all dividends. Even in small amounts, consistently investing can yield significant returns in the long run.

Monitor Your Progress

Regularly review your financial situation and track your progress toward your early retirement goals. This will help you stay motivated and make any necessary adjustments to your plan along the way. In a 2010 study, researchers found that those who had clear financial goals and monitored progress were more likely to achieve financial success. The study reported that people with well-defined goals and consistent monitoring were 20% more successful in accomplishing their financial objectives compared to those who did not follow these practices.

Besides monitoring your progress, try learning from others’ mistakes. Surround yourself with like-minded individuals who share similar or higher goals. Learn from their experiences to avoid making the same errors and to stay focused on your financial objectives.

According to a 2019 report, individuals that surround themselves with even more successful people who have better goals are more likely to succeed. Therefore, consider joining online forums, attending local meetups, or engaging with social media groups to connect with others on a similar or higher financial journey and learn from their experiences.


Prioritizing high-interest debt repayment is crucial to securing your financial future and achieving early retirement. Implementing the strategies outlined above may help you avoid the costly consequences of high-interest debt and set yourself up for retiring at your preferred age.

Once you avoid these interest traps, you can channel your money towards investments that can grow multi-fold in the next few years. Don’t let one bad financial mistake invade your retirement dreams and turn things hectic. Take control of your finances today and start paving the way toward a brighter tomorrow.


1. What Is The Difference Between The Avalanche And The Snowball Method For Debt Repayment?

The avalanche method focuses on paying off debts with the highest interest rates first. Besides, it wants you to make minimum payments for other debates simultaneously. This approach can save you more money in interest payments over time. On the other hand, the snowball method prioritizes paying off the smallest debts first to build momentum and motivation, regardless of the interest rate. Both methods can be effective, but the avalanche method is generally more cost-effective in the long run.

2. How Can I Increase My Income To Pay Off High-Interest Debt Faster?

There are several ways to increase your income to tackle high-interest debt more quickly, including negotiating a raise at your current job, taking on freelance or part-time work, selling items you no longer need, or investing in your education to qualify for higher-paying job opportunities. Explore various options and choose the ones that work best for your schedule and skill set.

3. Can I Negotiate Lower Interest Rates With My Creditors?

Yes, you can try negotiating lower interest rates with your creditors. While there’s no guarantee that they will agree, it’s worth the effort. A reduced interest rate can save you a significant amount of money over time. To increase your chances of success, prepare a solid report highlighting your payment history, credit score, and any competing offers from other lenders.

4. Is It Better To Pay Off High-Interest Debt Or Invest In My Retirement Accounts?

Prioritizing high-interest debt repayment is generally recommended, as the interest you save by paying off the debt is often higher than the returns you can expect from investments. However, if your employer offers a retirement plan with matching contributions, it’s a good idea to contribute  enough to receive the full match, as this is essentially “free money.” Once your high-interest debt is under control, focus on increasing your retirement savings and investments.

5. What Should I Do If I’m Struggling To Make Progress On My High-Interest Debt Repayment?

If you’re having difficulty making progress on your debt repayment, consider seeking professional help from a credit counselor or financial planner. These experts can help you create a personalized plan to tackle your debt and provide guidance on budgeting, saving, and investing. Additionally, consider exploring debt relief options, such as debt consolidation or debt settlement, to potentially lower your interest rates and monthly payments.

Featured Image Credit: Ekrem; Pexels: Thank You!

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CEO at Due
John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due.

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