When You Should Leave Your Debt Alone
When You Should Leave Your Debt Alone
When You Should Leave Your Debt Alone
Would you be surprised to learn that there are plenty of homeowners who have less equity in their homes than they do credit card balances? This just further proves how much the average consumer is straining under debt - and unless you make a real commitment to pay down these debts, this burden can wreak severe financial, emotional and mental havoc. You may have been intrigued by the title of this article - leave debt alone? Isn't everyone struggling to pay off debt because, well, it's bad? Yes, there's no doubt that debt is bad, especially when it's eating up a majority of your monthly income. However, the debts that you're targeting might be able to take the backburner in favor of other debts; therefore, in the interest of using your money wisely, here are the debts that you should attack - and the ones that you should just make minimum payments on for now: Don't Pay Off Your Mortgage Early. Many people think that they'll be able to tap into their equity sooner or increase the value on their home if they pay down their mortgage faster. However, it's going to take a lot of money and discipline to pay down your mortgage sooner, especially as it's likely to be one of the largest debts that you have. In the meantime, what about those credit card bills? Paying down your mortgage earlier won't improve your credit score; however, getting rid of your credit card balances will definitely do a lot to skyrocket your score. Stop throwing your money at your mortgage and focus it on the "bad debts" - these include credit card bills, personal loans and everything else that might be negatively affecting your credit score.Focus On Retirement. It's important to learn the concept of paying yourself first before paying others. Always make sure you're saving for retirement, as you don't want to be left without a single penny to your name upon your retirement age (and no one likes the idea of working for the rest of their life!). Save what you can for retirement, then focus on your debt payments. Even if you can only make minimum payments for now, it's vitally important to take care of number one first. Make money on the side or take a closer look at your budget to come up with a few extra dollars that can go towards your bad debts.What If It's Impossible? While many people have been able to pay off mountains of debt and lead happy lives, there are some people who, no matter how hard they try, will never be able to pay off their debts. If a financial advisor has indicated that this is your situation, don't waste any more of your money paying for debts that will never disappear. Instead, you'll need to take legal action by declaring bankruptcy. While many people are afraid of what this does to their credit scores, think about it this way - your debt has already destroyed your score. Bankruptcy will give you the chance to start over.
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