How can you calculate what you can save? Steve Rhode’s “What Repaying Your Debt Will Cost You in Retirement - Calculator” from GetOutOfDebt.org was extremely compelling and helpful. I had not thought of this idea before.
How The Calculator Works
Steve’s calculator was very easy to use. There are only 6 points of information that it requests and he provides helpful explanations for each of these inputs:
- Current Age: Enter your current age.
- Monthly Payment: Enter monthly payment of debt plan.
- Monthly Payment After Payment Plan: Enter any payment you expect to make on a monthly basis into your retirement plan upon getting out of debt. Leave this as 0 if you just want to see the future cost of lost retirement from a repayment plan.
- Length of Payment Plan: Enter the number of years the repayment plan will take.
- Interest Rate: Enter the rate of return you anticipate your retirement plan to have.
- Estimated Retirement Age: The age you anticipate retiring at. (try Savology's free retirement calculator to better understand your projected outcome)
What is the Result of the Calculator?
The result is astonishing, and shows how Chapter 7 bankruptcy can be a compelling option for those who are unable to afford their debt and need debt relief. For my example below, I have a future retirement loss of $460,845.01 for just a 5-year program, assuming a 10% return, a 5-year program, and a monthly payment of $300. That is a huge loss.
Should you do a Chapter 7 if you qualify and have a large, unaffordable debt burden?
For many, Chapter 7 bankruptcy is the right choice and the relief you need. I like how Steve Rhode provides insight into how bankruptcy helps in his article, “The Incredible Healing Power of Bankruptcy.”
I also asked this very question to a close friend who owns and operates a bankruptcy firm. The answer in most cases is “Yes, a Chapter 7 can be extremely useful.” However, he did mention that it depends on each individual’s situation. For example, he stated if you have a high value asset such as a boat and your debt amount owed is less than the value of the asset and you are already behind, then debt settlement can be a very good option.
We provides resources, tools, and information to help individuals get out of debt. We can help you if you are interested in filing for bankruptcy. Ascend can also help if you want to explore debt settlement or debt management options. You may also want to consider reading 8 other potentially costly mistakes to avoid when considering bankruptcy. Feel free to contact us or call us at (310) 307-5134.
We want you to have all the information available about debt relief options so that you can choose the best option for you.