Your Debt: What you have and what to Pay down First
In a perfect world you would have no debt. What does your world look like? Chances are that you have some sort of debt, no matter what form it comes in. This is something that most Americans have to deal with. There is nothing wrong with having debt as long as you know how to manage it. More specifically, you need to know how much debt you have and what you are going to tackle first.
Is your debt organized? Do you know where your debt stands and how much you owe? If you answered yes to these questions you are in good shape. This will allow you to track your progress each month while also making sure that you stay on top of every payment. There is nothing worse than forgetting about a payment, and in turn harming your credit score and getting hit with a finance charge.
If you have extra money to put towards debt you need to decide where you are going to start. Most experts agree that you should pay down the debt that has the highest interest first. That being said, this is not always a rule that you should follow. For instance, just because your car loan has a higher rate than a credit card does not mean that you should pay it down first. Credit card debt is bad debt, whereas a car loan is something that you probably need.
When you know what type of debt you have, what you owe on each account, and what you are paying down first, you will be able to better your financial life. And when you do you are going to feel relieved in more ways than one.
November 6th, 2008 at 1:07 pm
[…] trying to get out of debt, it is very important to consider what type of debt you have. Not all debt is created equal, and you should pay off the most detrimental debts first. This means […]