subject: Paying Off Debt - Facing The Financial Future [print this page] Believe it or not, there are right ways and wrong ways to pay off debt. For the millions of American consumers who feel they are drowning in debt, this may seem like a silly statement, but it true. There are ways to pay off debt that are more sensible than others, and there are ways that will ultimately do more financial damage than others, too.
It's an American belief that owning one's own home is one of the most fundamental practices. While it is important, paying off one's mortgage shouldn't be the sole focus of a person's finances. Getting a few extra mortgage payments ahead is fantastic, but not if they are at the expense of credit card and other types of debt. That's called targeting the wrong debt. If there are high interest credit card loans outstanding, those are the ones to be paying attention to! If not, a familiar scenario is going into a debt consolidation program for paying off debt, and that means a second mortgage or home equity loan, and that's to be avoided if at all possible.
In knee jerk reactions to mounting debt, people often dip into their retirement savings, which can also be a disastrous idea. There are immediate tax penalties involved not to mention replacing it later - if at all. That's a long term repercussion even when suspending contributions for a while. The same thing can be said for overwhelming debt caused by medical bills and bad business loans. The key to paying off debt is to look at all the avenues. Programs like debt management and debt settlement are valid ways to renegotiate and pay off credit debt while leaving hard assets like property untouched.
Bankruptcy used to give people something of a fresh financial start, but the laws are being redesigned and that isn't necessarily the case any longer. The declaration of bankruptcy doesn't mean that credit loans are waived off nor does it mean that property assets can't be touched. It makes far more sense to try to struggle through paying off debt. With other plans in place today, every consumer has the hope of financial recovery.
Good programs for paying off debt are out there, and any of them can be customized to the consumer's specific situation. These are excellent alternatives for the consumer who feels completely overwhelmed and incapable of examining their own finances in an objective way. There's nothing wrong in seeking help. It may help to pay debts off in the right way and not in a way that will effect life for years to come.
by: Vicki Hall
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