Pay Off Debt
If you have ever owed anyone money before, you know the burden it can have held over your head. Also, it depends on who you owe money to whether or not it is a burden or at least how much of a burden it is.
Have you ever borrowed ten or twenty dollars to a friend or family member, you probably didn't feel very obliged to pay it back because you agreed you'd pay it back when you could. If you instead owed them a thousand dollars with a 10 percent agreed upon interest rate, you'd have a bit more of a burden on your shoulders.
The money you owe to family and friends is nothing compared to larger debts with higher interest rates that are not borrowed from family or friends. One of the worst is credit cards. They can have huge interest rates which cause the debt to pile up faster and faster.
The answer to the question, 'should you pay off your debt?' is a resounding yes. As an individual, you should work to pay off all your debt. If you are married and have a family, you have an even bigger obligation to pay off your debt. The more debt you have, the faster and longer it will grow and the less money you will have.
One argument is the tax deduction you get from your mortgage. The truth is you only get to deduct the interest you pay on your mortgage and when you deduct it, you only save a percentage.
For instance, if you paid $3,000 for the year in interest on your mortgage and you were in the 20% tax bracket, you would only save 20% of that $3,000, or $600, not the entire $3,000. If you didn't have a mortgage, you'd save the whole $3,000 in interest.
Another reason people say you should have a mortgage is that you could invest the money that you haven't put down on the house and invest it at a higher rate than you are paying. Sure, this could work, but how many people actually have all that money put aside right now and how many would actually invest it like that?
Even if you kept your mortgage and paid it off in 15 or 30 years, all your other debt should be paid off as soon as possible. Even better, don't take out loans for things you can't afford. A house is enough. Otherwise, buy used and save until you can buy what you want.
Have you ever borrowed ten or twenty dollars to a friend or family member, you probably didn't feel very obliged to pay it back because you agreed you'd pay it back when you could. If you instead owed them a thousand dollars with a 10 percent agreed upon interest rate, you'd have a bit more of a burden on your shoulders.
The money you owe to family and friends is nothing compared to larger debts with higher interest rates that are not borrowed from family or friends. One of the worst is credit cards. They can have huge interest rates which cause the debt to pile up faster and faster.
The answer to the question, 'should you pay off your debt?' is a resounding yes. As an individual, you should work to pay off all your debt. If you are married and have a family, you have an even bigger obligation to pay off your debt. The more debt you have, the faster and longer it will grow and the less money you will have.
One argument is the tax deduction you get from your mortgage. The truth is you only get to deduct the interest you pay on your mortgage and when you deduct it, you only save a percentage.
For instance, if you paid $3,000 for the year in interest on your mortgage and you were in the 20% tax bracket, you would only save 20% of that $3,000, or $600, not the entire $3,000. If you didn't have a mortgage, you'd save the whole $3,000 in interest.
Another reason people say you should have a mortgage is that you could invest the money that you haven't put down on the house and invest it at a higher rate than you are paying. Sure, this could work, but how many people actually have all that money put aside right now and how many would actually invest it like that?
Even if you kept your mortgage and paid it off in 15 or 30 years, all your other debt should be paid off as soon as possible. Even better, don't take out loans for things you can't afford. A house is enough. Otherwise, buy used and save until you can buy what you want.
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posted by Debt Consolidation Loan at
7:19 AM
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